Company Quick10K Filing
Vycor Medical
Price0.14 EPS-0
Shares25 P/E-6
MCap3 P/FCF41
Net Debt-0 EBIT-1
TTM 2019-09-30, in MM, except price, ratios
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VYCO 10K Annual Report

Part I
Item 1. Description of Business.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. [Removed and Reserved]
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
Item 9B. Other Information.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services.
Part IV
Item 15. Exhibits, Financial Statement Schedules
EX-31.1 d29286_ex31-1.htm
EX-31.2 d29286_ex31-2.htm
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EX-32.2 d29286_ex32-2.htm

Vycor Medical Earnings 2011-12-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

10-K 1 d29286_10-k.htm 10-K HTML


Washington, D.C. 20549

Form 10-K


For the fiscal year ended December 31, 2011



For the transition period from  ___________ to ___________

Commission file number: 333-149782



(Exact name of registrant as specified in charter)


  Delaware     20-3369218  
  (State or other jurisdiction of     (I.R.S. Employer  
  incorporation or organization)     Identification No.)  

6401 Congress Ave., Suite 140, Boca Raton, FL 33487
(Address of principal executive offices) (Zip Code)

Registrant's telephone Number: (561) 558-2000

Securities registered pursuant to section 12(g) of the Act:

Common Stock par value $.0001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     o   Yes     x   No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     o   Yes     x   No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     x   Yes     o   No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

  Large Accelerated Filer o           Accelerated Filer o  
  Non-accelerated Filer o (Do not check if a smaller reporting company)           Smaller Reporting Company x  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     o   Yes     x   No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $11,716,930 (assuming $0.04 per share)

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 837,472,111 shares of common stock par value $0.0001 as of March 23, 2012.




        PART I        
  Item 1.     Business     4  
  Item 1A     Risk Factors     11  
  Item 1B     Unresolved Staff Comments     11  
  Item 2.     Properties     11  
  Item 3.     Legal Proceedings     11  
  Item 4.     [Removed and Reserved]     11  
        PART II        
  Item 5.     Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities     11  
  Item 6     Selected Financial Data     14  
  Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operation     14  
  Item 7A     Quantitative and Qualitative Disclosures About Market Risk     18  
  Item 8.     Financial Statements and Supplementary Data     18  
  Item 9.     Changes In and Disagreements with Accountants on Accounting and Financial Disclosure     F-21  
  Item 9A.     Controls and Procedures     F-21  
  Item 9B.     Other Information     F-21  
        PART III        
  Item 10.     Directors, Executive Officers, Promoters and Corporate Governance     F-22  
  Item 11.     Executive Compensation     F-25  
  Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     F-26  
  Item 13.     Certain Relationships and Related Transactions, and Director Independence     F-27  
  Item 14.     Principal Accountant Fees and Services     F-28  
        PART IV        
  Item 15.     Exhibits, Financial Statement Schedules     F-28  
  SIGNATURES     F-29  


This Form 10-K contains some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as in this Form 10-K generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise.


1. Organizational History

We were formed as a limited liability company under the laws of the State of New York on June 17, 2005 as "Vycor Medical LLC". On August 14, 2007, we converted into a Delaware corporation and changed our name to "Vycor Medical, Inc." ("Vycor" or the "Company"). The Company's listing went effective on February 2009 and on November 29, 2010, Vycor completed an acquisition of substantially all of the assets of NovaVision, Inc., a company that had been in the business of researching, developing and providing medical technologies to restore the vision of patients with neurological visual loss predominantly resulting from Stroke or Traumatic Brain Injury.

2. Overview of Business

Vycor operates two distinct business units--Vycor Medical Inc. ("Vycor Medical") and NovaVision, Inc ("NovaVision"). Vycor Medical is a medical device company that designs, develops and markets medical devices for use in neurosurgery. NovaVision develops non-invasive, computer-based visual neuro-stimulation therapy called VRT for those suffering from vision loss resulting from neurological trauma. In addition to our existing products and products in development, we actively seek acquisition, joint venture and in-licensing opportunities in the medical device field which we believe will add shareholder value.

Vycor Medical, Inc.


Vycor Medical is a medical device company that designs, develops and markets medical devices for use in neurosurgery. Vycor Medical is ISO 13485:2003 compliant, has U.S. FDA 510(k) clearance for brain and spine surgeries, CE Marking for Europe and Canadian HPB licensing for sale in Canada of its brain access system. Vycor Medical's first product, the ViewSite Brain Access System (VBAS), is a next generation access system which was commercially launched in November 2008. The VBAS addresses a market that has not changed materially in over 50 years in contrast to development in most other neuro-surgical technologies.

The second product in Vycor Medical's pipeline is the Cervical Access System (VCAS), which requires further prototyping and successful market testing prior to commercialization launch. Like the VBAS, this product is designed to assist the surgeon in cervical surgeries, allowing the surgeon to gain access to the anterior cervical surgery site.


Vycor Medical has received FDA 510(k) clearance for its products, with which we are authorized to take market our products in the U.S. without further approvals.

Vycor Medical's Products

Viewsite Brain Access System (VBAS)

To access a surgical site in the brain, the surgeon needs to remove part of the skull (crainiotomy) and then part (retract) the soft brain tissue to access the target site. The current standard of care utilizes a metal blade retractor to force the tissue apart; to maintain the opening the blades are attached to a head frame and tension is applied to the tissue

The VBAS series is used by neurosurgeons to access the surgical site in the brain. This is done by inserting the VBAS into the brain tissue and then removing the VBAS introducer, leaving the remaining hollow working channel in place to provide the surgeon with access to the precise location desired for surgery.

The VBAS is available in multiple sizes and is a single-use product. The series consists of twelve disposable products, offered in four different port diameters of 17mm and 21mm, 12mm and 28 mm and a choice of three lengths for each of 3, 5, and 7cm. We intend to add additional models in the future.

We believe our Brain Access System offers several advantages over the brain retractor systems, commonly known as ribbon or blade retractors that are metallic. When designing the products, we felt that if we could incorporate certain features into our products, the surgeon reaction and acceptance would be favorable. We attempted to incorporate the following features:

      Gently separate delicate tissue by utilizing a tapered forward edge;  
      Minimize venous pressure caused by pulling tissue in one direction in the brain;  
      To allow direct surgical visualization of the brain tissue via optically transparent construction;  
      Reduce "target shift" to allow the surgeon to reach the site accurately;  
      Minimize healthy tissue damage while reaching the target site;  
      Allow for accurate neuronavigational image guidance systems ("IGS") performance;  
      Integrate in due course with the leading surgical IGS systems such as Medtronic® and BrainLab®, Stryker and GE;  
      Improve surgical outcomes (reducing potential surgeon and hospital liability), for example, decreased insertion tissue trauma, less need for readjustment during surgery and minimum interface surface pressures;  
      Reduce damage to healthy brain tissue potentially leading to shorter post-op recovery and reduced hospital stay  

VBAS products have the potential to significantly reduce brain tissue trauma resulting from the currently used retractors when accessing deep brain targets. First, the unique design of the product can minimize the size of the brain entry access necessary for surgical procedures, and in turn the amount of brain tissue exposed. For instance, a brain procedure involving the removal of a 7cm cystic astrocyctoma would result in an access site (corticotomy) of approximately 20mm. However, the same procedure that was performed utilizing the Company's VBAS product required a corticotomy of only 2mm.

Because our products are relatively new to the market, there is no guarantee that any of the above mentioned features would prove effective and be useful to the end user.

IGS Opportunity for the Brain Access System

The VBAS product has the potential to improve accuracy in targeting the surgical site when used with Image Guidance Systems (IGS), by addressing two substantial IGS-related problems of target shifting and the lack of real-time retractor positioning data during procedures:

•     Target Shifting

The normal surgical procedure utilizing standard retractors in brain surgery require pulling away the healthy tissue to expose the targeted region of the brain located underneath. However, in many cases, the amount of pulling required causes the targeted area to shift away from what is shown on the IGS system. This target shifting then requires the surgeon to cause possible additional trauma to healthy tissue and spend additional time as the shifted target area is located and the retractor is repositioned. The VBAS system is designed to minimize or eliminate target shift, as the elliptical shape of the product distributes relatively uniform pressure on the surrounding brain tissue.


•     Real-Time Retractor Positioning Data

Current retractor technology (commonly known as ribbon or blade retractors) does not integrate well with IGS systems. During insertion and retraction, the surgeon typically does not have real-time data to allow visualization of retractor insertion on the IGS monitor. The VBAS product line has the potential to adapt to IGS systems, such that the use of a Brain Access System unit will allow the surgeon to see on the surgical monitor, in real-time, exactly where the retractor is in relation to critical brain structures and underlying pathologies. With the IGS enabled unit, the tip of the introducer is literally the "pointer" on the IGS system.

Vycor Medical Product Pipeline

Brain Access and Related Products

The Company's future plans include developing additional Brain Access Systems that are designed for the requirements of specific surgical applications like aneurisms, tumors and endoscopic work and identifying other products that can be used in conjunction with our VBAS product.

Cervical Access Products

The Company will continue its preliminary work to design Cervical Access System products which would be used by the surgeon to access the anterior cervical surgical site (the uppermost vertebrae located in the neck). While the Company has filed certain intellectual property applications with respect to this technology, such development is in an early stage.

Sales and Marketing

Domestic Sales Strategy

VBAS was launched in November 2008 with a strategy of driving sales through leading neurosurgeons. In this regard, the Company has adopted a dual strategy of targeting both the leading neurosurgeons and the leading neurosurgery hospitals. The Company believes that out of the 4,500 neurosurgeons in the US approximately 1,500 focus predominantly on craniotomies or cranial procedures that could potentially benefit from the VBAS product.

We are currently using independent distributors who have existing relationships with neurosurgeons and target hospitals to drive our sales. The Company's distributors have approximately 50 sales representatives who cover approximately 75% of the U.S. population.

International Sales

The Company utilizes select medical device distributors with experience in neurosurgical devices in select countries. In Europe, the company has agreements with distributors for Spain, Italy, Belgium, Scandinavia, Switzerland and the U.K. who are all focused in neurosurgery. In China, Vycor Medical has an exclusive distribution agreement for VBAS, which received SFDA approval in December 2011 when the first shipments were made. Vycor also has regulatory approval in Japan and Australia with distribution agreements in place or being put into place, and has filed for regulatory approval in Russia and Korea.

Reference Hospitals Program

The Company has developed a Reference Hospital Program to identify centers of excellence and to provide neurosurgeons with evidence of support for our products.

VBAS Market and the Hospital Adoption Process

The market for VBAS in the US is relatively concentrated, with approximately 1,500 neurosurgeons focusing on the relevant procedures. Teaching hospitals not only carry out more relevant procedures but also provide a natural way to drive adoption through the conversion of new surgeons. We focus our efforts initially on surgeons as the principle proponent within the hospital. Vycor has found that the learning curve is only 1-2 cases for surgeons, who like the simplicity of design and ease of use after trialing the product. Hospital Administration is required to approve the purchase of a new product and sometimes even a trial or evaluation product. The focus for Hospital Administration is the potential hard and soft cost savings and benefits of VBAS versus the cost compared to existing practice. We use clinical studies, papers and other peer reviews evidencing the clinical benefits of the products as well as surgery time in the operating room.


Experience has been that the approval process can take up to six months for each hospital, and in some cases may even be longer. However, this time reduces as more leading hospitals become approved and as more clinical paper/studies and other peer reviews are published. Management is assembling a body of clinical evidence to speed up the adoption process.

Peer Review and Other Clinical Studies

The publication of clinical papers in neurosurgery journals by surgeon-users of VBAS regarding their experiences with the products (peer review papers), and the publication of other clinical data, is important for the Company as it continues to evidence the clinical superiority of VBAS. During 2011 the following papers were published:

"Usage of a Minimally Invasive Tubular Retraction System for Deep-Seated Tumors in Pediatric Patients" in Journal of Neurosurgery in May 2011: Pediatrics. Co-authors Pablo Recinos, M.D., of the Cleveland Clinic and George Jallo, M.D., of Johns Hopkins University conclude that while access to deep-seated, intra-axial tumors is challenging, the ViewSite™ tubular retractor and frameless neuro navigation facilitated the surgical approach and the combination of these technologies adds to the surgeon's armamentarium to safely approach tumors in deep locations.

"Vycor Viewsite TC: Endoscope-guided Intraparenchimal Brain Tumor Resection," by Daniel Prevedello, M.D., Director of the Minimally Invasive Cranial Surgery Program at the Ohio State University. Dr Prevedello reported on a case with a patient taking Avastin®, which delays surgical wound healing. He said the Viewsite TC was essential to the surgery; otherwise, no procedure could have been performed on the patient.

"Minimally Invasive Trans-Portal Resection of Deep Intracranial Lesions" in Minimally Invasive Neurosurgery, February 2011 a Johns Hopkins University paper by lead author A. Quinones Hinojosa. The authors reported a case series of 9 adult and pediatric patients with a variety of pathologies, including colloid cyst, DNET, papillary pineal tumor, anaplastic astrocytoma, toxoplasmosis and lymphoma. The locations of the lesions approached included: lateral ventricle, basal ganglia, pulvinar/posterior thalamus and insular cortex. Post-operative imaging was assessed to determine extent of resection and extent of white matter damage along the surgical trajectory. Satisfactory resection or biopsy was obtained in all patients. "VBAS lends itself well to minimally invasive microsurgical approaches and can be used in combination with modern navigational systems. The use of navigation permits not only the creation of a smaller craniotomy but also facilitates the creation of a trajectory that provides efficient and safe means for splitting white fiber tracts," said the authors.

A comparative clinical animal study is currently being conducted at a leading university hospital, in which procedures will be performed using VBAS and blade retractors at the same time. Time and ease of surgery, and white matter damage will be comparatively measured during surgery and by post-operative MRI.


Vycor Medical has executed agreements with Lacey Manufacturing Company of Bridgeport, Connecticut ("Lacey") and C&J Industries, Meadville PA ("C&J") to provide a full range of engineering, contract manufacturing and logistical support for our products.

Lacey and C&J are recognized leaders in the medical contract manufacturing sector, providing vertically integrated full services. They are U.S. Food and Drug Administration registered and meet ISO standards and certifications. Lacey and C&J have shipped orders to Vycor Medical and have made production runs of all 12 sizes.


The market for our Brain Access System product lines is the neurosurgical community. The Company has analyzed and estimated the market for its products from an analysis of available statistics, discussion with surgeons, distributors and other market participants. Vycor Medical is currently focusing its attention for VBAS on the US, China and Europe.


Competitive manufacturers of brain retractors include:

      Cardinal Health (V. Mueller line)  
      Integra Life Science  
      Codman (Division of Johnson & Johnson)  


Cervical Access System competitors include Medtronic, Asculap/B. Braun, Cardinal and Nuvasive, Cloward Instruments, among others. In addition to the standard "blade retractors" distributed by the aforementioned companies. In addition companies such as Endius and EBI have announced cervical retractor systems.


Vycor Medical sells to stocking regional distributors and direct to hospitals through independent representatives. The Company believes that its products currently are being evaluated or utilized in approximately 80 hospitals in the United States. In addition, in year ended December 31, 2011 and 2010 international sales accounted for approximately 39% and 20% of revenues, respectively.

Intellectual Property

Patent Applications

Vycor Medical has the following issued, patents:

Russia (2009124446) - Surgical Access Instruments for use with Delicate Tissues (Brain)

China (200680056889.9) - Surgical Access Instruments for use with Delicate Tissues (Brain)

Additionally, Vycor has 13 patents pending for its Brain and Spine technology and products in: the U.S. (3), Canada (2), Europe (2), India (2), Japan (2), and Hong Kong (2).


VYCOR MEDICAL is a registered trademark and VIEWSITE is pending registration as a trademark with the United States Patent and Trademark Office.

NovaVision, Inc.


NovaVision develops non-invasive, computer-based visual neuro-stimulation therapy called VRT for those suffering from vision loss resulting from neurological trauma. VRT is a patient-specific diagnostic and therapeutic platform that improves patient's vision and enables them to experience significant functional improvements. VRT is currently focused on visual deficits resulting from stroke, traumatic brain injury, or other acquired brain injuries. NovaVision operates in the US and in Germany through a wholly-owned subsidiary.

VRT is successful in treating vision loss because people look with their eyes and see with their brain. VRT is based on NovaVision's platform technology which management believes induces neuroplasticity, the brain's natural ability to repair or remap broken neural connections that cause vision loss. Before VRT, such patients were informed that their vision loss would likely be permanent and they were prescribed therapy or aids to merely compensate for their lost vision.

VRT is a patient-specific diagnostic and therapeutic platform. The VRT diagnostic program maps the area of lost visual field. Proprietary algorithms help generate a customized therapy which delivers light-based stimuli to neurologically stimulate the visual cortex of the brain and restore the lost visual field. VRT is generally performed over a six month period, twice a day for an hour total, six days a week. The Company maintains broad IP protection. NovaVision has collected significant amounts of data from clinical studies and peer reviewed papers that support the Company's claims about the benefits of its platform technology for vision restoration and other indications. NovaVision has received 510(k) clearance and CE Marking for VRT.

Platform Technology

The management of NovaVision believes that the underlying basis for the visual field recovery it has witnessed, and the functional outcome improvements it has noted with its patients is largely due to neuroplasticity of the visual field which is the brain's ability to remap or repair itself in response to a pre-programmed and deliberate stimulation. Neuroplasticity has been discussed over the last 20 years or so and as far back as 1990 Gilbert & Weisel talked about the cortex not having a fixed functional architecture.. The platform technology is comprised of proprietary algorithms that generate patient-specific therapies which enable NovaVision's products to be used as both diagnostic and therapeutic tools. The platform technology generates light-based, or photic, stimulus programs consisting of a fixation point on a display screen. As the patient focuses on this fixation point, a series of photic stimuli are delivered on the screen that are specific to the patient's neurological requirements, and relayed directly to the brain using the eye as a conduit.


Management believes that it is this programmed light sequences that stimulate the border zone between the "seeing" and "blind" visual fields and which induces neuroplasticity. The diagnostic algorithm in the VRT product first maps the visual field and defines the areas of defect in patients suffering vision loss. The therapeutic algorithm in the VRT product is then specifically designed for each patient based upon the results of the diagnostic program and it repetitively challenges the visual cortex with thousands of stimuli over the course of time. While neuroplasticity for explaining VRT has never been conclusively demonstrated, Randy Mashall's study using MRI did demonstrate that VRT results in increased neural activity in the visual cortex. Management is also aware of other studies which should be published during the course of 2011 which will shed further light on this. Irrespective of mechanism, patient studies point to significantly improved functional outcomes for patients who have done VRT treatment. This improvement manifests itself in greater confidence to move around and an average shift of 4.9 degrees in the border between seeing and blind visual fields. The visual field is the portion of space surrounding an individual which is visible at any given time by that individual while their gaze is held stationary. To humans, the central 10° of visual field holds the greatest functional importance for focal and cognitive tasks.

Clinical Data Relating to VRT

NovaVision has accumulated significant amounts of clinical data as a result of company-sponsored trials as well as studies conducted by independent third parties.

A large retrospective VRT study indicated that 88% of patients experience an improvement in at least one of their daily life activities

75% of patients experience and improvement in their mobility which is regarded as the most important functional task

Time since injury does not seem to matter so historical backlog of patients can be treated

Results do not appear to be not age or gender dependent

Pipeline Products Utilizing NovaVision's Platform Technology

Management is looking to further develop its product range leveraging its existing technology platform. To this end it is in the process of launching a second generation of portable visual field screening device called head mounted perimeter (HMP). The Company has registration to sell the HMP as a Class 1 device as a screening tool for physicians. Physicians would use this novel portable HMP as a low-cost screening tool providing automated perimetry for visual field screenings performed more efficiently in the clinician's office, waiting room, nursing homes or within the hospital setting by Ophthalmologists, Optometrists and even the Primary Care Physician. The visual field test qualifies for reimbursement under CPT code 92082 (ranging from $60 - $70). While entirely focused on just screening and as such not as complex as an Oculus or Humphreys its screening ability is actually more resolute as it tests every 4 degrees compared to every 6 degrees. Its greatest advantage is its portability which enables it to be utilized in a number of situations where patients with a Visual Field Deficit may otherwise not be able to take a table mounted test.

Regulatory Matters

In the U.S., NovaVision's products are regulated by the Food and Drug Administration ("FDA") as Class U medical devices subject to 510(k) clearances, and in Europe NovaVision has CE Marking for VRT as a Class I device. NovaVision received its 510(k) clearance for VRT specific to Stroke and TBI indications in 2003.

Intellectual Property


NovaVision maintains a portfolio of patent protection on its methods and apparatus in the form of issued patents and applications, both domestically and internationally, with a total of 23 granted and 15 pending patents.

The Company's 23 granted patents are in the U.S. (11), Canada (2), Europe (4), Australia (1), China (2), Hong Kong (1), India (1) and Japan (1).

The Company's 15 pending patents are in the U.S. and Canada (5), Europe (5), Australia (2), and Japan (3).


NovaVision maintains a portfolio of registered trademarks for NOVAVISION, NOVAVISION VRT and VISION RESTORATION THERAPY amongst others, both in the US and internationally.


Manufacturing and Operations

NovaVision is based at the Vycor Medical, Inc. group headquarters at a 10,000 square foot leased facility in Boca Raton, Florida. NovaVision purchases electronics and custom fabricated hardware from third party vendors and assembles and tests all of its medical devices within the facility. NovaVision has an FDA Establishment Registration and the Company does not have any long-term contractual obligations with its vendors to purchase products from them, nor are suppliers contractually obligated to sell products to NovaVision.

Acquisition of Sight Science, Ltd.

On January 4, 2012, NovaVision, entered into various agreements with Professor Arash Sahraie ("Prof. Sahraie") and the University of Aberdeen (Scotland) (the "University"), relating to the acquisition of all of the shares of Sight Science, Ltd. ("Sight Science") by NovaVision. In consideration of the Share Purchase Agreement and other transaction agreements, the Company agreed to pay the Sight Science shareholders £200,000 (US$ 310,660) cash, of which £100,000 (US$155,330) was paid at the Closing and an additional £100,000 (US$155,330) cash to be paid to the Sight Science shareholders on the one-year anniversary of the Closing. In addition, the Sight Science shareholders received at Closing further consideration in the form of an aggregate of 14,350,000 restricted shares of the Company, which are the subject of lock-up agreements between the Parties and which at Closing were valued at £184,768 (US$287,000).

Sight Science was established in 2009 based on the research of Professor Arash Sahraie at the University of Aberdeen. Sight Science, which is owned jointly by Prof. Sahraie and the University of Aberdeen, provides an interactive computer-based therapy called Neuro-Eye Therapy ("NeET"), which patients administer at home. To date, over 100 patients have utilized NeET. The Company has 5 patents granted in the UK, France, Germany, Switzerland and Singapore and 2 patents pending in the U.S. and Canada. Prof. Sahraie has conducted extensive research on blindsight and residual visual processing after brain injury, and is highly regarded in the field.

As part of the transaction, Prof. Sahraie agreed to join NovaVision as its Chief Scientific Officer on a part-time secondment basis from the University for a minimum of 5 years. Prof. Sahraie is responsible for driving NovaVision's scientific effort to develop and validate technologies in vision rehabilitation for visual field defects resulting from brain injury. The acquisition also created a long-term relationship between the Company, NovaVision and the University, which is a leading medical research center. In connection with the transaction, the University entered into an Option Agreement with Sight Science whereby Sight Science is granted an option over certain related developments created by Prof. Sahraie and his laboratory. The University also entered into a Patent Agreement and Assignation Agreement with Sight Science where all of the intellectual property held by the University and which was related to Sight Science's business was assigned to Sight Science.

Both NovaVision's VRT and Sight Science's NeET work on the basis that repeated stimulation of the blind areas by either bright patches of light (VRT) or the specific spatial patterns (NeET) and can lead to increases in sensitivity of the blind areas. Patients progress after VRT appears to be initiated at the blind and sighted borders whereas NeET results in changes deep within the field damage. Both therapies are able to demonstrate improvements in both visual sensitivity and activities of daily living. The Company believes that these therapies are highly complementary.

3. Other Matters

Product Liability Insurance

We presently have Product Liability insurance for both Vycor Medical and NovaVision.

Government Regulations

We are committed to an integrated total quality management system. We believe that we have completed the necessary procedures and are certified to the ISO standards expected of medical device manufacturers as follows:

ISO 13485:2003 Medical Devices — Quality Management Systems

The certification of a quality management system to ISO 13485, specifically for medical devices, is advantageous and often essential for medical companies to export their products to the global market, as well as maintain and enter into certain agreements and business growth opportunities within the U.S. For example, Canada requires that medical device manufacturers marketing their products in Canada must have a quality system certified to ISO 13485:2003. The certification is also required for placement of branded devices into the European Union.


Vycor Medical has the following certification/licensing:

Fully Quality Assurance System Directive 93/42/EEC for Medical Devices, Annex II (3)

EC Design-Examination Certificate Directive 93/42/EEC for Medical Devices, Annex II (4)

ISO 13485.2003


We currently have 21 full-time employees.


Smaller reporting companies are not required to provide the information required by this item.




The Company leases approximately 10,000 sq. ft located at 6401 Congress Ave., Suite 140, Boca Raton, FL 33487 from Catexor Limited Partnership for a gross rent of $14,260 plus sales tax per month. The term of the lease is 5 years and 6 months months terminating July, 2017


We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.





Beginning on July 20, 2009, our Common Stock was quoted on the OTC Bulletin Board under the symbol "VYCO".

The following table shows the high and low prices of our common shares on the OTC Bulletin Board for each quarter since our common stock began to trade on the OTC Bulletin Board in July 2009. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

  Period     High     Low  
  July 20, 2009-September 30, 2009     $0.04     $0.02  
  October 1, 2009-December 31, 2009     $0.07     $0.01  
  January 1, 2010-March 31, 2010     $0.15     $0.04  
  April 1, 2010-June 30, 2010     $0.06     $0.01  
  July 1, 2010-September 30, 2010     $0.03     $0.01  
  October 1, 2010-December 31, 2010     $0.04     $0.01  
  January 1, 2011-March 31, 2011     $0.03     $0.015  
  April 1, 2011-June 30, 2011     $0.045     $0.02  
  July 1, 2011-September 30, 2011     $0.05     $0.025  
  October 1, 2011-December 31, 2011     $0.04     $0.015  

The market price of our common stock, like that of other technology companies, is highly volatile and is subject to fluctuations in response to variations in operating results, announcements of technological innovations or new products, or other events or factors. Our stock price may also be affected by broader market trends unrelated to our performance.



As of March 23, 2012 there were 837,472,111 shares of common stock outstanding and approximately 91 stockholders of record.

Transfer Agent and Registrar

Our transfer agent is Computershare, 350 Indiana Street, Suite 800, Golden, CO 80401; telephone (303) 262-0600.

Dividend Policy

We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.


Below is a list of securities sold by us from January 1, 2011 through March 24, 2012 which were not registered under the Securities Act.

Common Stock:


Name of Purchaser


Issue Date

    Security     Shares    


  Stephen M. Rathkopf     Feb. 1, 2011     Common Stock     1,000,000         $ 19,000  
  Steven Girgenti     Feb. 4, 2011     Common Stock     250,000           Director's Services  
  Datavision Computer Video,
    Mar. 1, 2011     Common Stock     1,315,789         $ 25,000  
  Wayne Fleischacker     Mar. 14, 2011     Common Stock     5,263,158         $ 100,000  
  ILEX Investments, LP     April 19, 2011     Common Stock     8,888,888         $ 200,000  
  Stephen Nicholas Bunzl     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Robert Crames     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Sal DeMarco & Kathryn
    May 16, 2011     Common Stock     1,111,111         $ 25,000  
  Steven Girgenti     May 16, 2011     Common Stock     222,222           Director's Services  
  Jack Lens     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Duane John Renfro     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Carol Tambor     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Neil Weiss     May 16, 2011     Common Stock     4,444,000         $ 100,000  
  Myles F. Wittenstein     May 16, 2011     Common Stock     2,222,222         $ 50,000  
  Jerrald Ginder     May 17, 2011     Common Stock     18,000,000           Consulting Services  
  Maurice Reissman     May 24, 2011     Common Stock     4,444,444         $ 100,000  
  Daksha Solanky     June 30, 2011     Common Stock     888,888         $ 20,000  
  Berardino Investment Group     July 7, 2011     Common Stock     2,167,902           Debenture Conversion  
  Greenbridge Capital Partners
    July 13, 2011     Common Stock     15,500,000           Consulting Services  
  Jerrald Ginder     July 22, 2011     Common Stock     2,666,667           Consulting Services  
  Jason Adelman     Aug. 9, 2011     Common Stock     200,000           Consulting Services  
  Matthew Balk     Aug. 9, 2011     Common Stock     700,000           Consulting Services  
  Daniel Schneiderman     Aug. 9, 2011     Common Stock     100,000           Consulting Services  
  Steven Girgenti     Aug. 25, 2011     Common Stock     154,600           Director's Services  
  McCombie Group, LLC     Aug. 25, 2011     Common Stock     428,571           Consulting Services  



Name of Purchaser


Issue Date

    Security     Shares    


  Alvaro Pascual Leone     Aug. 25, 2011     Common Stock     78,300           Advisory Comm. Fee  
  Steven Girgenti     Nov. 7, 2011     Common Stock     166,667           Director's Services  
  Alvaro Pascual Leone     Nov. 7, 2011     Common Stock     104,167           Advisory Comm. Fee  
  Joseph Simone     Nov. 16, 2011     Common Stock     510,000         $ 15,300  
  Fountainhead Capital Management Limited     Jan. 1, 2012     Common Stock     402,965           Stock option exercise  
  Chase Family Trust     Jan. 17, 2012     Common Stock     4,444,444           Conv. Preferred Stock  
  Professor Arash Sahraie     Jan. 19, 2012     Common Stock     9,901,500           Purch. Sight Science  
  University of Aberdeen     Jan. 19, 2012     Common Stock     4,448,500           Purch. Sight Science  
  Jason J S Barton     Jan. 23, 2012     Common Stock     138,890           Director's Services  
  Oscar Bronsther     Jan. 23, 2012     Common Stock     96,620           Director's Services  
  Steven Girgenti     Jan. 23, 2012     Common Stock     222,222           Director's Services  
  Jose Romano     Jan. 23, 2012     Common Stock     138,890           Director's Services  
  Glenn Fleischacker     Jan. 27, 2012     Common Stock     4,444,444           Conv. Preferred Stock  
  Steven Reichbach     Jan. 27, 2012     Common Stock     2,222,222           Conv. Preferred Stock  
  Myles Wittenstein     Jan. 31, 2012     Common Stock     2,222,222           Conv. Preferred Stock  
  Alvaro Pascual Leone     Jan 31, 2012     Common Stock     138,890           Advisory Comm. Fee  
  Matteo Rosselli     Feb. 9, 2012     Common Stock     2,222,222           Conv. Preferred Stock  

Series C Preferred Stock:



              Issue Date     Security    

            Shares Consideration

  MKM Opportunity Master Fund, Ltd.     June 6, 2011     Ser. C Pref. Stock     5.00         $ 250,000  
  Andrew Mitchell     June 6, 2011     Ser. C Pref. Stock     0.50         $ 25,000  
  Matthew Balk     June 6, 2011     Ser. C Pref. Stock     0.80         $ 40,000  
  Daniel Balk     June 6, 2011     Ser. C Pref. Stock     1.10         $ 55,000  
  David Balk     June 6, 2011     Ser. C Pref. Stock     1.10         $ 55,000  
  Daniel Schneiderman     June 6, 2011     Ser. C Pref. Stock     0.45         $ 22,500  
  Jonathan Balk     June 6, 2011     Ser. C Pref. Stock     0.50         $ 25,000  
  Richard L. Hoffman     June 6, 2011     Ser. C Pref. Stock     0.45         $ 22,500  
  Robert J and Sandra S. Neborsky Living Trust     June 6, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Skriloff Family Irrev. Trust fbo Samuel Skriloff     June 6, 2011     Ser. C Pref. Stock     0.10         $ 5,000  
  Skriloff Family Irrev. Trust fbo Olivia Skriloff     June 6, 2011     Ser. C Pref. Stock     0.10         $ 5,000  
  Jason Adelman     June 6, 2011     Ser. C Pref. Stock     1.80         $ 90,000  
  Robert and Amy Bernstein     June 6, 2011     Ser. C Pref. Stock     0.50         $ 25,000  
  Dick F. Chase, Jr.     June 6, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Boris and Alexandra Smirnov     June 6, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Nadejda Kassatkina     June 6, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Irina Pavlova     June 6, 2011     Ser. C Pref. Stock     1.00         $ 50,000.00  
  Jeffrey J. and Jennifer S. Clayton     June 6, 2011     Ser. C Pref. Stock     1.00         $ 50,000.00  
  Greenbridge Capital Partners IV, LLC     June 6, 2011     Ser. C Pref. Stock     1.50         $ 75,000.00  
  Core Capital IV Trust     June 6, 2011     Ser. C Pref. Stock     1.50         $ 75,000  
  Rolant Investments Limited     June 6, 2011     Ser. C Pref. Stock     6.00         $ 300,000  




              Issue Date     Security    

            Shares Consideration

  David Wiener*     June 28, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  One East Partners Opportunity, L.P.     June 28, 2011     Ser. C Pref. Stock     2.70         $ 135,000  
  One East Partners Master, L.P.     June 28, 2011     Ser. C Pref. Stock     5.30         $ 270,000  
  Narang Family Partnership, L.P.     June 28, 2011     Ser. C Pref. Stock     0.50         $ 25,000  
  Hugh Scott Campbell     June 28, 2011     Ser. C Pref. Stock     0.20         $ 10,000  
  Fraser Campbell     June 28, 2011     Ser. C Pref. Stock     0.20         $ 10,000  
  Sean Campbell     June 28, 2011     Ser. C Pref. Stock     0.50         $ 25,000  
  Wayne Fleischacker     June 28, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Glenn Fleischacker     June 28, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Jane Ellis     June 28, 2011     Ser. C Pref. Stock     2.00         $ 100,000  
  Duane Renfro     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Guri Dauti     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Matteo Joseph Rosselli     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Sarah Benveniste     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Steven Reichbach     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Glenn Fleischacker     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Myles Wittenstein     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Neil Weiss     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Randolf Kahn     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Wayne Fleischacker     Aug. 4, 2011     Ser. C Pref. Stock     1.00         $ 50,000  
  Marc A. Cohen     Aug. 4, 2011     Ser. C Pref. Stock     2.20         $ 110,000  

*The share transaction with David Wiener on June 28, 2011 was mutually rescinded in December 2011 and the shares were cancelled and funds returned to the investor.

The securities issued in the abovementioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act and Rule 506 of Regulation D.


        12/31/11     12/31/10     12/31/09  
              (Restated)     (Restated)  
  Revenues   $ 971,367   $ 316,450   $ 199,046  
  Net loss   $ (4,778,541 ) $ (1,983,822 ) $ (1,164,036 )
  Net loss per share   $ (0.006 ) $ (0.003 ) $ (0.040 )
  Weighted average no. shares     780,096,806     663,168,900     29,183,482  
  Stockholders' equity (deficit)   $ 875,324   $ 88,714   $ (1,245,940 )
  Total assets   $ 3,571,640   $ 2,153,694   $ 400,960  
  Total liabilities   $ 2,696,316   $ 2,064,980   $ 1,646,900  


Critical Accounting Policies and Estimates

Uses of estimates in the preparation of financial statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated. To the extent management's estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant estimates and assumptions contained in the accompanying consolidated financial statements include management's estimate of the allowance for uncollectible accounts receivable, amortization of intangible assets, and the fair values of options and warrant included in the determination of debt discounts and share based compensation.


Going Concern

The Company's financial statements have been presented on a basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and assumes the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $4,778,541 for the year ended December 31, 2011, and the Company expects to continue to incur substantial additional losses in the future, including additional development costs, costs related to marketing and manufacturing expenses. The Company has incurred negative cash flows from operations since inception. As of December 31, 2011 the Company had a stockholders' equity of $875,324 and cash and cash equivalents of $950,841. The Company believes it would not have enough cash to meet its various cash needs unless the Company is able to obtain additional cash from the issuance of debt or equity securities. There is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Research and Development

The Company expenses all research and development costs as incurred. For the years ended December 31, 2011 and 2010, the amounts charged to research and development expenses were $115,665 and $15,208, respectively.

Cash and cash equivalents

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash balances may at times exceed the FDIC insured limits. Cash also includes a US investment account in a money market backed by government securities up to 105% of the account balance. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Included within cash are deposits paid by patients, held by the Company until the patient returns the VRT device at the end of therapy. At December 31, 2011 and 2010 patient deposits amounted to $25,000 and $0, respectively, and are reserved against in Other Current Liabilities.

Property and equipment

The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful life of the assets, which is estimated to be between three and seven years. Maintenance, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized

Income taxes

The Company accounts for income taxes in accordance with the current authoritative guidance. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when it is more likely than not that such benefit will not be realized.

Patents and Other Intangible Assets

The Company capitalizes legal and related costs associated with the establishment and enhancement of patents for its products once patents have been applied for. Costs associated with the development of the patented item or processes are charged to research and development costs as incurred. The capitalized costs are amortized over the life of the patent. The Company reviews intangible assets on an annual basis using a present value, cash flow method based upon the authoritative guidance. Trademarks have an indefinite life and are reviewed annually by management for impairment in accordance with the authoritative guidance.

Revenue Recognition

Vycor Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue when a completed contract for the sale exists, the product is invoiced and shipped to the customer. Vycor Medical does provide for product returns or warranty costs.


NovaVision generates revenues from various programs, therapy services and other sources such as government grants. Therapy services revenues represent fees from NovaVision's vision restoration therapy software, diagnostic software, medical devices, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision recognizes revenue for providing the vision restoration therapy as the Company's work effort is expended. NovaVision provides vision restoration therapy directly to patients. The typical vision restoration therapy consists of six modules, performed on average over 6 months in the U.S. and 10 months in Germany. A patient contract comprise set-up fees and monthly therapy fees. Set-up fees are recognized at the outset of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being completed by a patient within a specified time frame.

Research grants and other subsidies represent revenue from certain German government agencies to cover certain patients within an insurance group and also to reimburse NovaVision AG for certain payroll and other costs. The Company recognizes grant revenue when services or costs have been incurred which would entitle the Company to use the German government funds, and the grant requirements have been satisfied.

Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.

Accounts Receivable

The Company's accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly therapy or physicians for diagnostic products in the case of NovaVision. Accounts receivable are due once products have been delivered or at the time the therapy is initiated; however, for NovaVision therapy patients sometimes credit is extended through various payment plans based on individual financial conditions, generally not to exceed the 9 or 10 month therapy period. The outstanding balances are stated net of an allowance for doubtful accounts. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, and the customer's ability to pay its obligations. The Company writes off accounts receivable when they become uncollectible.


Inventories are comprised of Vycor Medical VBAS devices, components ancillary to NovaVision's medical device provided to patients and centers and diagnostic products, and are stated at the lower of cost or market, determined under the first-in, first-out method. The inventory is charged to cost of revenue at the time that a device is shipped to a customer or patient.

Foreign Currency

The Euro is the local currency of the country in which NovaVision AG conducts its operations and is considered the functional currency of this entity. All balance sheet amounts are translated to U.S. dollars using the U.S. exchange rate at the balance sheet date except for the equity section which is translated at historical rates. Operating statement amounts are translated using an average exchange rate for the period of operations. Foreign currency translation effects are accumulated as part of the accumulated other comprehensive income (loss) and included in shareholders' (deficit) in the accompanying Consolidated Balance Sheet.

Educational marketing and advertising expenses

The Company may incur costs for the education of customers on the uses and benefits of its products. The Company will include education, marketing and advertising expense as a component of selling, general and administrative costs as such costs are incurred.


Comparison of the Year Ended December 31, 2011 to the Year Ended December 31, 2010

Revenue and Gross Margin:

        2011     2010     % Change  
  Vycor Medical   $ 548,463   $ 307,582     78 %
  NovaVision   $ 422,904   $ 8,868     NM  
      $ 971,367   $ 316,450     207 %


        2011     2010     % Change  
  Cost of Revenue:                     
  Vycor Medical    $ (109,021 ) $ (47,607 )   128 %
  NovaVision    $ (67,237 ) $ (1,130 )   NM  
      $ (176,258 ) $ (48,737 )   262 %
  Gross Profit                     
  Vycor Medical    $ 439,422   $ 259,975     69 %
  NovaVision    $ 355,687   $ 7,738     NM  
      $ 795,109   $ 267,713     197 %

Vycor Medical recorded revenue of $548,463 from the sale of its products in 2011, an increase of 78% over 2010. The increase in sales was attributable to greater penetration and usage of our product in hospitals in the United States both direct and through distributors, and increased sales internationally. In December 2011 VBAS received SFDA approval to be marketed in the People's Republic of China (PRC) and shipped its first order with a value of $170,000. Approximately 39% of sales were international in 2011 compared to 20% in 2010. Gross margin of 80% was achieved in 2011 compared to 85% for 2010. Gross margin is mostly a product of sale mix between US sales through distributors, US sales direct and international sales. International sales are all indirect through distributors and end-market prices internationally tend to be lower. In addition in 2011 Vycor Medical had one-off costs from a packaging life extension program.

NovaVision recorded revenues of $422,904 for the period ended December 31, 2011 and a gross margin of 84%.

Research and Development Expense:
Research and development expenses were $115,665 in 2011 compared to $15,208 for 2010. The increase in R&D expense relates primarily to the inclusion of NovaVision in the 2011 period and the development work carried out on new products and technologies.

General and Administrative Expenses:

General and administrative expenses increased by $3,067,946 to $4,987,120 for 2011 from $1,919,174 for 2010. Included within General and Administrative Expenses are non-cash charges for share based compensation as the result of amortizing employee and non-employee shares, warrants and options which have been issued by the Company over various periods. The charge for 2011 was $1,755,661, an increase of $1,412,797 over $342,864 in 2010. The increase was primarily related to the recognition of $658,651 for fully vested warrants issued to Fountainhead during the 2011 period, the recognition of common stock issued to Jerrald Ginder and GreenBridge Capital Partners IV, LLC and the addition of members to the Board of Directors and the NovaVision Scientific Advisory Board who are partly compensated in stock. The remaining General and Administrative increase of $1,655,149 reflects approximately $1,150,990 of additional expenses related to the inclusion of NovaVision in 2011, increased professional and consulting fees, including increased consulting fees with Fountainhead following the NovaVision acquisition, and higher levels of marketing activities in Vycor Medical. In addition there were $119,273 of non-recurring costs; $70,463 with regard the accrual of a retention bonus to Ken Coviello, the Chief Executive, in relation to the 2009 Recapitalization Agreement; and $48,810 with regard to the accrual of a vendor settlement relating to the distribution of certain NovaVision products in Germany prior to the acquisition of NovaVision by Vycor.

Interest Expense:

Interest expense comprises: interest expense on the Company's debt and insurance policy financing. Interest expense for 2011 was increased by $81,260 to $127,142 from $45,882 for 2010, as a result of an increase in average debt levels during the year.


Liquidity and Capital Resources


The following table shows cash flow and liquidity data for the periods ended December 31, 2011 and December 31, 2010:

        December 31, 2011     December 31, 2010     $ Change  
  Cash   $ 950,841   $ 127,081   $ 823,760  
  Accounts receivable, inventory and other current assets     1,378,754     774,122     604,632  
  Total current liabilities     (2,696,316 )   (2,064,980 )   (631,336 )
  Working capital (deficit)   $ (366,721 ) $ (1,163,777 ) $ 797,056
  Cash provided by financing activities   $ 4,173,426   $ 2,489,500   $ 1,683,926  

As of December 31, 2011 we had $950,841 cash, a working capital deficit of $366,721 and an accumulated deficit of $11,661,704. The Stockholders' equity at December 31, 2011 was $875,324, an improvement from $786,610 at December 31, 2010. Debt at December 31, 2011 was $1,636,125 compared to $1,415,662 at December 31, 2010.

Off-Balance Sheet Arrangements

As of December 31, 2011, we had no off-balance sheet arrangements.


Our operating results are not affected by seasonality.


Our business and operating results are not affected in any material way by inflation.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. See "Uses of estimates in the preparation of financial statements" above.

Contractual Obligations

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.


As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.


The financial information required by Item 8 begins on the following page.



Paritz & Company, P.A.


15 Warren Street, Suite 25
Hackensack, New Jersey 07601
Fax: (201) 342-7598
E-Mail: paritz


Certified Public Accountants



Board of Directors
Vycor Medical Inc. and Subsidiaries
Boca Raton, Florida

We have audited the accompanying consolidated balance sheets of Vycor Medical Inc. and Subsidiaries as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vycor Medical Inc. and Subsidiaries as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Paritz & Company, P.A.
Hackensack, New Jersey
March 29, 2012


Consolidated Balance Sheets

        December 31, 2011
    December 31, 2010
  Current Assets              
  Cash   $ 950,841   $ 127,081  
  Accounts receivable, net     313,679     76,460  
  Inventory     184,070     52,360  
  Prepaid expenses and other current assets     881,005     645,302  
        2,329,595     901,203  
  Fixed assets, net     671,291     773,188  
  Intangible and Other assets:              
  Trademarks     130,000     130,000  
  Patents, net of accumulated amortization     379,579     333,072  
  Website, net of accumulated amortization     4,906     3,932  
  Security deposits     56,269     12,299  
        570,754     479,303  
  TOTAL ASSETS   $ 3,571,640   $ 2,153,694  
  Current Liabilities              
  Accounts payable   $ 176,181   $ 114,447  
  Accrued interest     56,993     36,992  
  Accrued liabilities     754,895     406,998  
  Other current liabilities     72,122     90,881  
  Notes payable - current     1,636,125     1,415,662  
  TOTAL LIABILITIES     2,696,316     2,064,980  
  STOCKHOLDERS' EQUITY              
  Preferred stock, $0.0001 par value, 10,000,000 shares authorized Series C Convertible Preferred Stock, 63.8 and 0 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively     1     -  
  Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 807,205,445 and 724,488,929 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively     80,721     72,449  
  Additional Paid-in Capital     12,432,114     6,902,427  
  Accumulated Deficit     (11,661,704 )   (6,883,163 )
  Accumulated Other Comprehensive Loss     24,192     (2,999 )
        875,324     88,714  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 3,571,640   $ 2,153,694  

See accompanying notes to financial statements


Consolidated Statement of Operations

        For the twelve months ended December 31,  
  Revenue   $ 971,367   $ 316,450  
  Cost of Goods Sold     176,258     48,737  
  Gross Profit     795,109     267,713  
  Operating expenses:              
  Research and development     115,665     15,208  
  Depreciation and Amortization     209,973     56,801  
  General and administrative     4,987,120     1,919,174  
  Goodwill on Acquisition of Subsidiary     -     58,027  
  Costs related to Aqcuisition of Subsidiary     110,032     154,203  
  Total Operating expenses     5,422,790     2,203,413  
  Operating loss     (4,627,681 )   (1,935,700 )
  Other income (expense)              
  Other income (expense)     (23,718 )   8  
  Interest expense, net     (127,142 )   (45,882 )
  Total Other Income (expense)     (150,860 )   (45,874 )
  Net Loss Before Taxes     (4,778,541 )   (1,981,574 )
  Taxes     -     (2,248 )
  Net Loss   $ (4,778,541 ) $ (1,983,822 )
  Loss Per Share              
  Basic and diluted   $ (0.006 ) $ (0.003 )
  Weighted Average Number of Shares Outstanding     780,096,806     663,168,900  

See accompanying notes to financial statements


Statement of Stockholders' Equity

        Shares     Common
Stock -
Series B
Stock -
Series C
OCI (Loss)
  Balance at January 1, 2010     557,798,599   $ 55,780   $ 0   $ 0   $ 3,597,621   $ (4,899,341 ) $ 0   $ (1,245,940 )
  Issuance of stock for consulting fees     2,612,500     261                 40,364                 40,625  
  Share-based compensation for consulting services                             823,693                 823,693  
  Share-based compensation - employee options vesting                             57,840                 57,840  
  Purchases of equity - Series B preferred                 14           139,986                 140,000  
  Common stock issuance for conversion of Series B preferred and interest     11,768,197     1,177     (14 )         5,939                 7,102  
  Common stock issuance for conversion of debt     64,295,200     6,430                 797,260                 803,690  
  Beneficial conversion feature on convertible debt                                               0  
  Purchases of equity - Common stock     87,079,447     8,708                 1,425,792                 1,434,500  
  Common stock issuance for satisfaction of accounts payable     934,986     93                 13,932                 14,025  
  Accumulated Comprehensive Loss                                         (2,999 )   (2,999 )
  Net loss for twelve months ended December 31, 2010                                 $ (1,983,822 )       $ (1,983,822 )
  Balance at December 31, 2010     724,488,929   $ 72,449   $ 0   $ 0   $ 6,902,427   $ (6,883,163 ) $ (2,999 ) $ 88,714  
  Issuance of stock for consulting fees     39,455,594     3,946                 852,279                 856,225  
  Share-based compensation for consulting services                             699,605                 699,605  
  Share-based compensation - employee options vesting                             29,796                 29,796  
  Purchases of equity - Common stock     40,690,055     4,069                 884,931                 889,000  
  Purchases of equity - Series C preferred                       1     2,971,455                 2,971,456  
  Common stock issuance for conversion of debt     2,167,902     217                 40,973                 41,190  
  Common stock issuance for warrant exercise     402,965     40                 403                 443  
  Preferred Stock issue placement agent warrants                             50,245                 50,245  
  Accumulated Comprehensive Loss                                         27,191     27,191  
  Net loss for twelve months ended December 31, 2011                                 $ (4,778,541 )         (4,778,541 )
  Balance at December 31, 2011     807,205,445