Company Quick10K Filing
Vycor Medical
Price0.14 EPS-0
Shares25 P/E-6
MCap3 P/FCF41
Net Debt-0 EBIT-1
TEV3 TEV/EBIT-6
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-13
10-Q 2020-06-30 Filed 2020-08-17
10-Q 2020-03-31 Filed 2020-05-12
10-K 2019-12-31 Filed 2020-03-27
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-13
10-K 2018-12-31 Filed 2019-03-29
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-10
10-Q 2018-03-31 Filed 2018-05-11
10-K 2017-12-31 Filed 2018-03-30
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-08-11
10-Q 2017-03-31 Filed 2017-05-11
10-K 2016-12-31 Filed 2017-03-31
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-04-28
10-K 2015-12-31 Filed 2016-03-30
10-Q 2015-09-30 Filed 2015-11-13
10-Q 2015-06-30 Filed 2015-08-14
10-Q 2015-03-31 Filed 2015-05-15
10-K 2014-12-31 Filed 2015-03-31
10-Q 2014-09-30 Filed 2014-11-12
10-Q 2014-06-30 Filed 2014-08-12
10-Q 2014-03-31 Filed 2014-05-15
10-K 2013-12-31 Filed 2014-04-07
10-Q 2013-09-30 Filed 2013-11-15
10-Q 2013-06-30 Filed 2013-08-14
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-04-01
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-15
10-K 2011-12-31 Filed 2012-03-30
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-22
10-Q 2011-03-31 Filed 2011-05-13
10-K 2010-12-31 Filed 2011-03-31
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-16
10-Q 2010-03-31 Filed 2010-05-12
10-K 2009-12-31 Filed 2010-03-31
8-K 2020-06-30
8-K 2020-03-23
8-K 2019-03-29
8-K 2018-10-09
8-K 2018-03-30

VYCO 10Q Quarterly Report

Part I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
EX-31.1 vyco_ex311.htm
EX-31.2 vyco_ex312.htm
EX-32.1 vyco_ex321.htm
EX-32.2 vyco_ex322.htm

Vycor Medical Earnings 2015-09-30

Balance SheetIncome StatementCash Flow
4.93.21.6-0.1-1.7-3.42012201420172020
Assets, Equity
0.50.1-0.2-0.6-0.9-1.32012201420172020
Rev, G Profit, Net Income
3.92.91.90.8-0.2-1.22012201420172020
Ops, Inv, Fin

10-Q 1 vyco_10q.htm QUARTERLY REPORT vyco_10q.htm


U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.  20549

FORM 10-Q

(Mark One)
 
þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal quarter ended                 September 30, 2015                 

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from                              to

VYCOR MEDICAL, INC.
(Exact name of small business issuer as specified in its charter)

Delaware
 
333-149782
 
20-3369218
(State of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
6401 Congress Ave., Suite 140, Boca Raton, FL 33487
 (Address of principal executive offices) (Zip code)

Issuer’s telephone number: (561) 558-2020

Securities registered under Section 12(g) of the Exchange Act:
Common Stock par value $0.0001

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. Yes þ    No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ    No 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o
Accelerated filer o
Non-accelerated filer o   
Smaller reporting company þ
(Do not check if a smaller reporting company)  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No þ
 
There were 10,894,803 shares outstanding of registrant’s common stock, par value $0.0001 per share, as of November 11, 2015.

Transitional Small Business Disclosure Format (check one):     Yes o   No þ
 


 
 
 
 
 
TABLE OF CONTENTS

PART I
     
3
     
  3
     
  4
     
  5
     
  6
     
15
     
27
     
27
     
PART II
     
28
     
28
     
28
     
28
     
28
     
28
     
28
     
29
 
 
2

 
 
PART I


Consolidated Balance Sheets
(unaudited)
 
   
September 30
2015
   
December 31,
2014
 
ASSETS 
           
             
Current Assets 
           
Cash
  $ 622,485     $ 1,891,658  
Trade accounts receivable, net of allowance for doubtful accounts of $2,711 and $2,721
    112,763       123,815  
Inventory
    271,041       336,021  
Prepaid expenses and other current assets
    275,608       217,800  
Total Current Assets
    1,281,897       2,569,294  
                 
Fixed assets, net 
    428,484       582,434  
                 
Intangible and Other assets: 
               
Trademarks
    251,157       251,157  
Patents, net of accumulated amortization
    345,588       345,113  
Website, net of accumulated amortization
    27,319       12,576  
Security deposits
    49,091       53,169  
Total Intangible and Other assets
    673,155       662,015  
                 
TOTAL ASSETS 
  $ 2,383,536     $ 3,813,743  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Current Liabilities 
               
Accounts payable
  $ 181,795     $ 221,703  
Accrued interest
    76,535       40,634  
Accrued liabilities
    276,575       320,927  
Derivative liability
    -       19,792  
Notes payable
    332,141       321,785  
TOTAL CURRENT LIABILITIES 
    867,046       924,841  
                 
STOCKHOLDERS’ EQUITY
               
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 252,336  and 235,560 issued and outstanding as at September 30, 2015 and December 31, 2014 respectively
  $ 25     $ 24  
Common Stock, $0.0001 par value, 25,000,000 shares authorized 10,988,296 and 10,879,899 shares issued and 10,884,962 and 10,776,565 outstanding at September 30, 2015 and December 31, 2014 respectively
    1,099       1,088  
Additional Paid-in Capital
    24,286,164       23,903,793  
Treasury Stock (103,334 shares of Common Stock as of September 30, 2015 and December 31, 2014 respectively, at cost)
    (1,033 )     (1,033 )
Accumulated Deficit
    (22,901,135 )     (21,082,118 )
Accumulated Other Comprehensive Income
    131,370       67,148  
                 
Total Stockholders’ Equity
    1,516,490       2,888,902  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 2,383,536     $ 3,813,743  

See accompanying notes to financial statements
 
 
3

 
 
Consolidated Statements of Comprehensive Loss
(unaudited)
 
   
For the three months ended
September 30,
   
For the nine months ended
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
Revenue
  $ 242,863     $ 334,339     $ 857,432     $ 991,001  
                                 
Cost of Goods Sold
    26,255       47,340       111,930       125,980  
                                 
Gross Profit
    216,608       286,999       745,502       865,021  
                                 
Operating expenses:
                               
Research and development
    29,346       6,933       68,244       59,684  
Depreciation and Amortization
    91,778       93,860       261,134       286,955  
General and administrative
    604,655       623,993       1,991,726       2,652,393  
                                 
Total Operating expenses
    725,779       724,786       2,321,104       2,999,032  
                                 
Operating loss
    (509,171 )     (437,787 )     (1,575,602 )     (2,134,011 )
                                 
Other Income (Expense)
                               
Interest expense – Related Party
    -       (13,706 )     -       (80,093 )
Interest expense -  Other
    (11,934 )     (11,169 )     (35,616 )     (38,844 )
Gain (loss) on foreign currency exchange
    14,315       (62,273 )     (59,813 )     (68,390 )
Change in fair value derivative liability
    -       8,332       19,792       (261,661 )
Loss on extinguishment of debt
            (682,039 )             (682,039 )
Loss on extension of warrants
            (146,488 )             (146,488 )
       Total Other expense
    2,381       (907,343 )     (75,637 )     (1,277,515 )
                                 
                                 
Loss before Provision for Income Taxes
  $ (506,790 )   $ (1,345,130 )   $ (1,651,239 )   $ (3,411,526 )
                                 
Provision for Income Taxes
    -       -       -       -  
                                 
Net Loss
  $ (506,790 )   $ (1,345,130 )   $ (1,651,239 )   $ (3,411,526 )
                                 
Preferred Dividends
    (85,331 )     -       (167,777 )     -  
                                 
Net Loss available to common shareholders
  $ (592,121 )   $ (1,345,130 )   $ (1,819,016 )   $ (3,411,526 )
                                 
Comprehensive Loss                                
                                 
          Foreign Currency Translation Adjustment
    16,356       67,268       (64,222 )     73,695  
                                 
Net Comprehensive Loss
  $ (575,765 )   $ (1,277,862 )   $ (1,883,238 )   $ (3,337,831 )
                                 
Loss Per Share
                               
Basic and diluted
  $ (0.05 )   $ (0.12 )   $ (0.17 )   $ (0.33 )
                                 
Weighted Average Number of Shares Outstanding
    10,849,903       10,735,884       10,821,019       10,106,903  

See accompanying notes to financial statements
 
 
4

 
 
Consolidated Statement of Cash Flows
(unaudited)
 
   
For the nine months ended
September 30,
 
   
2015
   
2014
 
Cash flows from operating activities:
           
Net loss
  $ (1,651,239 )   $ (3,411,526 )
Adjustments to reconcile net loss to cash used in operating activities:
               
Amortization of intangible assets
    68,329       107,833  
Depreciation of fixed assets
    200,995       190,057  
Provision for inventory
    12,632       -  
Share based compensation expense
    214,607       319,051  
Loss on foreign exchange
    59,813       68,390  
Change in fair value of derivative liability
    (19,792 )     261,661  
Loss on extinguishment of debt
    -       682,039  
Loss on extension of warrants
    -       146,488  
Changes in assets and liabilities:
               
Accounts receivable
    11,051       60,761  
Inventory
    52,349       (54,623 )
Prepaid expenses
    21,456       (84,663 )
Security Deposits
    4,078       -  
Accounts payable
    (39,907 )     (108,189 )
Accrued interest: Related Party
    -       (206,244 )
Accrued interest: Other
    35,901       (102,715 )
Accrued liabilities
    (44,355 )     9,297  
                 
Cash used in operating activities
  $ (1,074,082 )   $ (2,122,383 )
Cash flows used in investing activities:
               
Purchase of fixed assets
    (47,083 )     (107,648 )
Purchase of website
    (18,010 )     (13,842 )
Acquisition of patents
    (66,276 )     (20,191 )
Cash used in investing activities
    (131,369 )     (141,681 )
Cash flows from financing activities:
               
Proceeds from issuance of Common Stock Offering
    -       5,000,000  
Repayment of Notes Payable: Related Party
    -       (126,519 )
Repayment of Notes Payable: Other
    (68,909 )     (198,551 )
Cash provided by financing activities
    (68,909 )     4,674,930  
Effect of exchange rate changes on cash
    5,187       4,978  
Net increase (decrease) in cash
    (1,269,173 )     2,415,844  
Cash at beginning of period
    1,891,658       31,303  
Cash at end of period
  $ 622,485     $ 2,447,147  
                 
Supplemental Disclosures of Cash Flow information:
               
Interest paid:
  $ -     $ 430,208  
Preferred stock dividends satisfied in new preferred stock
  $ 167,777     $ -  
 
See accompanying notes to financial statements
 
 
5

 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
(unaudited)
 
1.  BASIS OF PRESENTATION
 
The consolidated financial statements of the Company present the financial position, results of operations, and cash flows of Vycor Medical, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 derives from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
 
The condensed consolidated financial statements for the three and nine months ended September 30, 2015 and 2014, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for any other interim period or for the entire year. Certain prior period amounts have been reclassified to conform to the current presentation.
 
2.   SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
 
The consolidated financial statements include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a Delaware corporation), NovaVision GmbH (a German corporation) and Sight Science Limited (a UK corporation), both wholly owned subsidiaries of NovaVision, Inc. The Company is headquartered in Boca Raton, FL. All material inter-company accounts, transactions, and profits have been eliminated in consolidation.

Recent Accounting Pronouncements
 
From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

Derivative Liability
 
The Company has accounted for the 34,723 Series A Warrants issued in connection with the Offering (all as defined in Note 5), the holders of which have not waived their anti-dilution rights (as detailed further in Note 5) in accordance with the guidance contained in ASC 815-40-15-7D, whereby under that provision, because they had anti-dilution rights, they did not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classified the warrant instrument as a liability at its fair value and adjusted the instrument to fair value at each reporting period. This liability was subject to re-measurement at each balance sheet date until exercised or until the anti-dilution provisions contained within the warrant agreements expired, and was classified in the balance sheet as a current liability. Any change in fair value of the warrant liability was recognized in the Company’s statement of operations as other income (loss). The anti-dilution provisions expired on June 11, 2015 and accordingly the liability has been extinguished.

Software Development Costs
 
The authoritative accounting guidance requires software development costs to be capitalized upon completion of the preliminary project stage.  Accordingly, direct internal and external costs associated with the development of the features and functionality of the Company’s software, incurred during the application development stage, are capitalized and amortized using the straight-line method of the estimated life of five years once the software has been brought into service. Capitalized software development costs for the nine months ended September 30, 2015 and 2014 were $32,483 and $100,487, respectively.
 
 
6

 
 
Net Loss Per Share
 
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock and convertible debt.  Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. No dilution adjustment has been made to the weighted average outstanding common shares in the periods presented because the assumed exercise of outstanding options and warrants and the conversion of preferred stock and debt would be anti-dilutive.

The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share:

   
September 30,
   
September 30,
 
   
2015
   
2014
 
Stock options outstanding
    25,557       5,557  
Warrants to purchase common stock
    6,007,048       5,911,715  
Debentures convertible into common stock
    209,186       171,138  
Preferred shares convertible into common stock
    1,188,471       1,110,438  
Total
    7,430,262       7,198,848  


3.   NOTES PAYABLE

As of September 30, 2015 and December 31, 2014, Notes Payable consists of:
 
   
September 30,
2015
   
December 31,
2014
 
On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”). The term note bears interest at 16% per annum and was due June 25, 2011. In connection with the loan the Company also issued EuroAmerican warrants to purchase 400,000 shares of the Company’s common stock at an exercise price of $4.50 per share for a period of three (3) years. On June 25, 2011 the due date for this note was extended to September 25, 2011 and the Holder was granted the right to convert all or any amount of the principal face amount of the debenture then outstanding and accrued interest into shares of common stock of the Company an adjusted conversion price of $1.80 per share, subject to adjustment and does not require bifurcation. The due date for this note has been extended to December 31, 2015.
    300,000       300,000  
                 
Insurance policy finance agreements. During the period ended September 30, 2015 the Company received proceeds from Insurance policy finance agreements of $79,265 and made repayments of $68,909. The notes are due over the next twelve months.
    32,141       21,785  
                 
Total Notes Payable:
  $ 332,141     $ 321,785  
 
 
 
7

 
 
The company assesses the value of the beneficial conversion feature of its convertible debt by determining the intrinsic value of such conversion, under ASC 470, at the time of issuance. At the time of issuance of the convertible debt instruments set out above, the fair value of the stock was either the same or less than the conversion price, and so there was no value attributable to any beneficial conversion feature.

4.   SEGMENT REPORTING, GEOGRAPHICAL INFORMATION
 
(a) Business segments
 
The Company operates in two business segments: Vycor Medical, which focuses on devices for neurosurgery; and NovaVision, which focuses on neuro stimulation therapies and diagnostic devices for the treatment and screening of vision field loss and which includes Sight Science. Set out below are the revenues, gross profits and total assets for each segment.

   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
Revenue:
                       
Vycor Medical
  $ 182,889     $ 243,841     $ 662,996     $ 710,743  
NovaVision
    59,974       90,498       194,436       280,258  
Total Revenue
  $ 242,863     $ 334,339     $ 857,432     $ 991,001  
Gross Profit:
                               
Vycor Medical
  $ 167,187     $ 207,827     $ 579,980     $ 618,952  
NovaVision
    49,421       79,172       165,522       246,069  
Total Gross Profit
  $ 216,608     $ 286,999     $ 745,502     $ 865,021  

   
September 30,
2015
   
December 31,
2014
 
Total Assets:
           
Vycor Medical
  $ 1,395,496     $ 2,644,513  
NovaVision
    988,040       1,169,230  
Total Assets
  $ 2,383,536     $ 3,813,743  

(b) Geographic information
 
The Company operates in two geographic segments, the United States and Europe. Set out below are the revenues, gross profits and total assets for each segment.

   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
Revenue:
                       
United States
  $ 205,674     $ 288,063     $ 737,671     $ 819,699  
Europe
    37,189       46,276       119,761       171,302  
Total Revenue
  $ 242,863     $ 334,339     $ 857,432     $ 991,001  
Gross Profit:
                               
United States
  $ 185,521     $ 246,755     $ 641,847     $ 712,572  
Europe
    31,087       40,244       103,655       152,449  
Total Gross Profit
  $ 216,608     $ 286,999     $ 745,502     $ 865,021  
 
 
8

 
 
   
September 30,
2015
   
December 31,
2014
 
Total Assets:
           
United States
  $ 2,012,215     $ 3,367,679  
Europe
    371,321       446,064  
Total Assets
  $ 2,383,536     $ 3,813,743  

5.   EQUITY 

Equity Issuance

During the period January to September 2015, the Company issued: 8,802 shares of Common Stock (valued at $15,000) to Steven Girgenti, 9,463 shares of Common Stock (valued at $15,000) to each of Oscar Bronsther and Lowell Rush in consideration for services provided to the Board of Directors; and 3,028 shares of Common Stock (valued at $4,688) to Alvaro Pasual-Leone, 6,054 shares of Common Stock (valued at $9,375) to Josef Zihl and 2,957 shares of Common Stock (valued at $4,688) to each of Jason Barton and Jose Romano in respect of their roles as members of the NovaVision, Inc. Scientific Advisory Board.

During the period January to September 2015, in accordance with the terms the Consulting Agreement, the Company issued 33,152 shares of Common Stock (valued at $60,000) to Fountainhead, a related party.

During the period ended September 2015, in accordance with the terms of an investor relations advisory agreement, the Company issued 27,779 shares of Common Stock (valued at $50,000) to Acorn Management Partners.

During the period ended September 2015, in accordance with the terms of an investor relations advisory agreement, the Company issued 4,742 shares of Common Stock (valued at $6,667) to Liolios Group.

During the period ended September 2015 Preferred D Stock, convertible into shares of Common Stock at $2.15, was issued in respect of Preferred Dividends as follows: 11,691 shares of Preferred D Stock (valued at $116,915), convertible into 54,377 shares of Common Stock to Fountainhead; 4,313 shares of Preferred D Stock (valued at $43,130), convertible into 20,060 shares of Common Stock to Peter Zachariou; and 773 shares of Preferred D Stock (valued at $7,731), convertible into 3,595 shares of Common Stock to Craig Kirsch.
 
Warrants and Options

The details of the outstanding warrants and options are as follows: 
 
STOCK WARRANTS:
 
Number of shares
   
Weighted average exercise price
per share
 
Outstanding at December 31, 2013
    1,404,599     $ 3.39  
Granted
    5,226,120       2.61  
Exercised
    -       -  
Cancelled or expired
    (719,004 )     4.46  
Outstanding at December 31, 2014
    5,911,715     $ 2.57  
Granted
    100,000       2.56  
Exercised
    -       -  
Cancelled or expired
    (4,667 )     -  
Outstanding at September 30, 2015
    6,007,048     $ 2.57  
 
 
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STOCK OPTIONS:
 
Number of shares
   
Weighted average exercise price
per share
 
Outstanding at December 31, 2013
    5,557     $ 20.25  
Granted
    20,000     $ 2.00  
Exercised
    -       -  
Cancelled or expired
    -       -  
Outstanding at December 31, 2014
    25,557     $ 5.97  
Granted
    -       -  
Exercised
    -       -  
Cancelled or expired
    -       -  
Outstanding at September 30, 2015
    25,557     $ 5.97  
 
As of September 30, 2015, the weighted-average remaining contractual life of outstanding warrants and options is 1.51 and 2.43 years, respectively. 

6.   SHARE-BASED COMPENSATION

Stock Option Plan

The Company adopted the Vycor Medical, Inc. Employee, Director, and Consultant Stock Plan (the “Plan”) as of February 13, 2008.  The Plan provides for both incentive stock options and nonqualified stock options to be granted to employees, officers, consultants, independent contractors, directors and affiliates of the Company.   The board of directors establishes the terms and conditions of all stock option grants, subject to the Plan and applicable provisions of the Internal Revenue Code.  Incentive stock options must be granted at an exercise price not less than the fair market value of the common stock on the grant date.  The options granted to participants owning more than 10% of the Company’s outstanding voting stock must be granted at an exercise price not less than 110% of the fair market value of the common stock on the grant date.  The options expire on the date determined by the board of directors, but may not extend mare than 10 years from the grant date, while incentive stock options granted to participants owning more than 10% of the Company’s outstanding voting stock expire five years from the grant date. The vesting period for employees is generally over three years.  The vesting Period for non-employees is determined based on the services being provided. The maximum number of shares of stock which may be delivered under the plan shall automatically increase by a number sufficient to cause the number of shares covered by the plan to equal 10% of the total number of shares of stock then outstanding on a fully diluted basis.

Under ASC Topic 718, the Company estimates the fair value of option awards on the date of grant using an option pricing model. The grant date fair value is recognized over the option vesting period, the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Under these standards, compensation cost for employee cost for employee stock-based awards is based on the estimated grant-date fair value and recognized over the vesting period of the applicable award on a straight-line basis.   For the period ended September 30, 2015 and 2014, the Company recognized share-based compensation of $25,011 and $0, respectively, for employee stock options.

 
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Stock appreciation rights may be granted either on a stand alone basis or in conjunction with all or part of any other stock options granted under the plan.  As of September 30, 2015 there were no awards of any stock appreciation rights.

Non-Employee Stock Compensation
 
       
9 months ended
 
       
September 30, 2015
 
Name   Description  
$ in period
 
Steven Girgenti   8,802 shares issued for services rendered to the board of directors   $ 15,000  
Oscar Bronsther   9,463 shares issued for services rendered to the board of directors   $ 15,000  
Lowell Rush   9,463 shares issued for services rendered to the board of directors   $ 15,000  
Alvaro Pascual-Leone   3,028 shares issued for services rendered to the Scientific Advisory Board   $ 4,688  
Jason Barton   2,957 shares issued for services rendered to the Scientific Advisory Board   $ 4,688  
Jose Romano   2,957 shares issued for services rendered to the Scientific Advisory Board   $ 4,688  
Josef Zihl   6,054 shares issued for services rendered to the Scientific Advisory Board   $ 9,374  
Fountainhead Capital Mgmt   33,152 shares issued in accordance with the terms of the consulting agreement   $ 60,000  
Acorn Management Partners   27,779 shares issued in relation to an investor advisory agreement   $ 50,000  
Liolios Group   4,742 shares issued in relation to an investor advisory agreement   $ 6,666  
Gordon Holmes   100,000 warrants issued in relation to investor advisory agreement   $ 4,492  
Total Compensation       $ 189,596  
 
Totals and Fair Values

Aggregate stock-based compensation expense charged to operations for stock and warrants granted to the employees and non-employees for the three and nine months ended September 30, 2015 was $76,147 and $214,607. As of September 30, 2015, there was $0 of total unrecognized compensation costs related to warrant and stock awards and non-vested options.

 
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Stock-based compensation expenses related to common stock, options and warrants granted to employees and non-employees are recognized as the services are received or the stock, options and warrants are earned. The common stock, options or warrants meet the criteria for equity treatment and their fair is estimated at the grant date.  Expense related to common stock is recognized on a straight-line basis over the period during which services are to be received; expense related to options and warrants is recognized on a straight-line basis over the shorter of the period during which services are to be received or the life of the option or warrant.  The fair value of the common stock is determined by the then-prevailing share price. The grant date fair value of the options and warrants is estimated using the Black-Scholes option pricing model on the basis of the fair value of the underlying common stock on the measurement date, using the assumptions noted in the table below. Expected volatility is based on the historical volatility of a peer group of publicly traded companies.

The following assumptions were used in calculations of the Black-Scholes option pricing model for the nine months ended September 30, 2015 and 2014:

   
Nine months ended September 30,
 
   
2015
   
2014
 
Risk-free interest rates 
    1.07 %     0.78 %
Expected life 
 
3 years
   
3 years
 
Expected dividends
    0 %     0 %
Expected volatility 
    101 %     75 %
Vycor Common Stock fair value
  $ 2.00     $ 2.05  
 
7.   FAIR VALUE MEASUREMENTS

The Company has adopted ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The adoption of ASC 820 did not have an impact on the Company’s financial position or results of operations.
 
Under the terms of the Offering, during the period January 2 to April 25, 2014, in five separate closings, a total of 2,397,631 Series A Warrants and Placement Agent Warrants were issued, which carried anti-dilution rights. Effective May 15, 2014 these anti-dilution rights were waived for all but 34,723 of the Series A Warrants and for all of the Placement Agent Warrants.  The Company has accounted for the Series A Warrants in accordance with the guidance contained in ASC 815-40-15-7D, whereby under that provision, because they had anti-dilution rights, they did not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classified the warrant instrument as a liability at its fair value and adjusted the instrument to fair value at each reporting period. Effective June 11, 2015 the anti-dilution provisions of these remaining 34,723 Warrants expired and accordingly the liability has been extinguished.

The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis (the Series A Warrants described above) as of September 30, 2015 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the liability, and includes situations where there is little, if any, market activity for the liability:

Description
 
September 30,
2015
   
Level 1
   
Level 2
   
Level 3
 
                         
Warrant Liability
  $ -     $ -     $ -     $ -  

 
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The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3):

Balance at January 1, 2015
  $ 19,792  
         
Change in fair value to June 11, 2015
    485  
Extinguishment of liability June 11, 2015
    (20,277 )
         
Balance at September 30, 2015
  $ -  

The fair value of the Series A Warrants and Placement Agent Warrants was determined using a Monte Carlo Simulation. This model requires the input of highly subjective assumptions, including the expected price volatility, which is based on the historical volatility of a peer group of publicly traded companies. Changes in the subjective input assumptions can materially affect the estimate of fair value of the warrants and the Company’s results of operations could be impacted.

The following assumptions were used in calculations of the Monte Carlo Simulation model for the nine months ended September 30, 2015 and 2014:

   
Nine months ended September 30,
 
   
2015
   
2014
 
Risk-free interest rates 
    0.56-.73 %     0.58-0.93 %
Expected life 
 
1.65 years
   
3 years
 
Expected dividends
    0 %     0 %
Expected volatility 
    90-93 %     71-97 %
Vycor Common Stock fair value
  $ 1.59-1.84     $ 1.88-$2.70  
 
8.   COMMITMENTS AND CONTINGENCIES
 
Lease
 
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 terminating July, 2017. The Company’s subsidiaries in Germany and the UK occupy properties on short term lease agreements. Rent expense for the nine months ended September 30, 2015 and 2014 was $150,000 and $150,300 respectively.

Potential German tax liability
 
In June 2012 the Company's German subsidiary received a preliminary assessment for Magdeburg City trade tax of approximately €75,000 (approximately $94,000). This assessment is for the 2010 fiscal year and relates to the Company's acquisition of the assets of the former NovaVision, Inc. An initial assessment for corporate tax for the same period has been preliminarily reduced to zero. The Company has not accepted this trade tax assessment and is in discussion with the relevant tax authorities with a view to its reduction. The tax authorities have agreed to suspend the assessment pending the outcome of certain court hearings, and the Company has agreed to make limited monthly payments on account. To the extent that this assessment, a higher or a reduced amount, is ultimately confirmed by the tax authorities, the Company believes it has a very strong claim against certain professional advisors which would offset the liability in full. Accordingly, the Company has made no provision for this liability for the three and nine months ending September 30, 2015, other than recording the monthly payments as an expense.
 
 
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Potential Patent Infringement
 
The Company was made aware in 2012 that a competitor had been granted a patent for related technology, and appeared to be entering the market with products that infringe the Company’s own issued patent. Following investigation, the Company has taken steps to initiate an invalidation of the competitor’s patent and enforce its patent rights; in March 2014 the Patent Re-examination Board issued an Examination Decision invalidating all the claims of the competitor’s patent. The competitor has the right of appeal but the Company will contest any such appeal. The Company has also been made aware that a second competitor has filed a patent application for related technology and also may be producing a product that potentially infringes the Company’s patent, and is in the early stages of evaluation and has yet to determine what, if any actions to take in this instance, however as a general rule the Company intends to take all necessary action to protect its patent portfolio. As with all patent infringement actions, there is some risk that the accused infringer will not be found to infringe the claims, and an additional risk that the accused infringer will successfully challenge the validity of the asserted claims..

9. CONSULTING AND OTHER AGREEMENTS
 
The following agreements were entered into or remained in force during the nine months ended September 30, 2015:
 
Under the terms of an amended Consulting Agreement between the Company and Fountainhead, Fountainhead is paid a monthly retainer of $10,000 per month, payable $5,000 in cash or stock and $5,000 payable in Company Common Stock at the end of each quarter.

In January 2015, as amended in May 2015, the Company entered into a twelve (12) month agreement, subject to early termination, to provide financial advisory, strategic business planning and professional relations services, with Acorn Management Partners (“Acorn”).  Under the terms of the January 2015 Acorn Agreement, as amended in May and July 2015, Acorn receives a total of $53,000 in cash and $50,000 in shares of Restricted Common Stock during the period. The Acorn Agreement was terminated in October 2015.

In August 2015, the Company entered into three (3) month agreement to provide investor relations advisory and consulting services, with Liolios Group, Inc. (“Liolios”).  Under the terms of the Liolios Agreement, Liolios receives $5,000 in cash per month and $3,333 in Restricted Common Stock.

In March 2015, the Company entered into a twelve (12) month agreement to provide investor relations services with Gordon Holmes.  Under the terms of the agreement, Gordon Holmes received warrants to purchase 100,000 Vycor shares of Common Stock at $2.56, exercisable for a period of three years.

10.  RELATED PARTY TRANSACTIONS

During the period ended September 30 2015, in accordance with the terms of the Consulting Agreement referred to in Note 9, the Company issued 33,152 shares of Common Stock (valued at $60,000) to Fountainhead.

During the period ended September 2015 Preferred D Stock, convertible into shares of Common Stock, was issued in respect of Preferred Dividends as follows: 11,691 shares of Preferred D Stock (valued at $116,915), convertible into 54,377 shares of Common Stock to Fountainhead; and 4,313 shares of Preferred D Stock (valued at $43,130), convertible into 20,060 shares of Common Stock to Peter Zachariou.
 
11.  SUBSEQUENT EVENTS
 
The Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10Q:

Share Issuance

During October to November 2015, the Company issued 3,378 shares of Common Stock (valued at $5,000) to Steven Girgenti, in consideration for services provided to the Board of Directors; 1,995 and 2,216 shares of Common Stock respectively (valued at $2,812 and $3,125 respectively) to Alvaro Pascual-Leone and Josef Zihl in respect of their roles as members of the NovaVision, Inc. Scientific Advisory Board; and 2,252 shares of Common Stock (valued at $3,333) to Liolios in respect of the Liolios Agreement.

 
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Forward Looking Statements
 
This Interim Report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PLSRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding Vycor Medical, Inc. (the “Company” or “Vycor,” also referred to as “us”, “we” or “our”).  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 “Description of Business,” as well as in this Form 10-Q 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-Q 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. We intend that all forward-looking statements be subject to the safe harbor provisions of the PSLRA.
 
1. Organizational History

The Company was 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.”. The Company’s listing went effective on February 2009 and on November 29, 2010 Vycor completed the acquisition of substantially all of the assets of NovaVision, Inc. (“NovaVision”) and on January 4, 2012 Vycor, through its wholly-owned NovaVision subsidiary, completed the acquisition of all the shares of Sight Science Limited (“Sight Science”), a previous competitor to NovaVision.
 
BUSINESS OVERVIEW
 
Vycor is dedicated to providing the medical community with innovative and superior surgical and therapeutic solutions and operates two distinct business units within the medical industry. Vycor Medical designs, develops and markets medical devices for use in neurosurgery. NovaVision provides non-invasive rehabilitation therapies for those who have vision disorders resulting from neurological brain damage such as that caused by a stroke.
 
Both businesses adopt a minimally or non-invasive approach. Both technologies have strong sales growth potential, address large potential markets and have the requisite regulatory approvals. The Company has 45 issued or allowed patents and a further 14 pending. The Company leverages joint resources across the divisions to operate in a cost-efficient manner.
 
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 are complementary, can benefit from our existing infrastructure and will add shareholder value.
 
 
15

 
 
Vycor Medical
 
Introduction
 
Vycor Medical designs, develops and markets medical devices for use in neurosurgery. Vycor Medical’s ViewSite Brain Access System (“VBAS”) is a next generation retraction and access system that was fully commercialized in early 2010 and is the first significant technological change to brain tissue retraction in over 50 years in contrast to significant development in most other neuro-surgical technologies. Vycor Medical is ISO 13485:2003 compliant, and VBAS has U.S. FDA 510(k) clearance and CE Marking for Europe (Class III) for brain and spine surgeries, full regulatory approvals in Australia, Brazil, Canada, China, Korea and Japan and is seeking or has partial regulatory approvals in India, Russia, Taiwan and Vietnam.
 
Vycor Medical’s Products
 
VBAS
 
To access a surgical site in the brain, a surgeon usually needs to remove part of the skull (craniotomy) and then make an entry incision in the outer protective brain tissue (corticotomy); the soft brain tissue is then parted (retracted) to access the targeted site. The current standard of care, the blade retractor, utilizes a metal blade retractor to pull the tissue apart; to maintain the opening the blades are attached to a head frame and parting tension is applied to the tissue. In a typical procedure 2 or more blades are used.
 
Many clinical studies have shown that retractors can cause excessive pressure on brain tissues, resulting in damage and a prolonged patient recovery. The incidence of contusions (tissue injuries) or infarctions (blockage of blood supply) from brain retraction is as great as 5-10%.
 
Vycor’s VBAS is a significant improvement over current technologies for accessing regions within the brain. A disposable product that can be used with microscopic, endoscopic and neuro-navigation systems (IGS), the VBAS includes an introducer and working channel. Available in multiple sizes, the current series consists of 12 disposable products, offered in four different port (working channel) diameters of 12mm, 17mm, 21mm, and 28 mm and a choice of three lengths: 3cm, 5cm, and 7cm; two new sizes with diameters of 6mm and lengths of 5cm and 7cm will be introduced at the beginning of 2016. The surgeon makes a smaller corticotomy, inserts the clear, elliptical-shaped VBAS introducer through the brain tissue, removes the introducer and is left with a clear hollow working channel to provide access to the precise location desired for surgery.
 
VBAS’ clinical advantages are supported by a number of leading peer-reviewed articles (see Peer Review and Other Clinical Studies). Clinical benefits cited include: minimally invasive shape and less invasive procedure; resultant reduction of pressure on the brain; improved visual field; improved working channel; and more accurate target access. Management also believes, from anecdotal surgeon feedback, that although a disposable product VBAS offers potential cost savings from shorter operating theater time and reduced post-operative recovery time.
 
The Market For Vycor Medical’s VBAS Product
 
VBAS is used for craniotomy procedures. Based on statistics from the American Association of Neurological Surgeons (AANS), management estimates 700,000 such procedures were performed in the US in 2012. Of this, management believe approximately 200,000 (28 percent) are addressable by the VBAS range currently, with another 125,000 (total of 325,000 or 46 percent) addressable by an expanded future range. Management estimates, for the global market, there exists a current addressable market of approximately 1,000,000 procedures with another 600,000 addressable by an expanded VBAS range.
 
Competition
 
The VBAS device is both a brain access system and a retractor and is therefore unique with no direct competitors. Competitive manufacturers of brain retractors include Cardinal Health (V. Mueller line), Aesculap, Integra Life Science and Codman (Division of Johnson & Johnson). Nico Corporation has a brain access device specifically designed to work with its Myriad resection and suction product.
 
Sales and Marketing
 
Domestic
 
According to the American Board of Neurological Surgery (ABNS), there are approximately 3,500 neurosurgeons in the US, providing a well-defined target audience. Vycor Medical’s sales channels are to stocking regional distributors and direct to hospitals through independent representatives, all of whom have existing relationships with neurosurgeons and provide an experienced and efficient distribution infrastructure without the need for a large and costly dedicated Vycor regional sales team. The distributors and representatives are supported by Vycor Medical Sales, Marketing and Customer Service.
 
Vycor Medical 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. However, Hospital Administration is required to approve the purchase of a new product and sometimes even a trial or evaluation of the product in the hospital by the neurosurgeon and this is one of the key barriers to the speed of adoption as this process can take several months.
 
International Sales
 
Vycor Medical utilizes select medical device distributors with experience in neurosurgical devices in their countries or regions. Vycor Medical has regulatory approvals for VBAS in Australia, Brazil, Canada, China, Europe (Class III), Korea and Japan and is seeking or has partial regulatory approvals in India, Russia, Taiwan and Vietnam with distribution agreements in place or being sought.
 
 
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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 Vycor Medical. Such papers continue to evidence the clinical superiority of VBAS, which in turn drives its adoption and accelerates the hospital approval process, which in turn drives revenues. To date the Company has already had 9 Peer Reviewed published, including the following during 2015:
 
    “Rigid endoscopic resection of deep-seated or intraventricular brain tumors”, by Yukinori Akiyama, Masahiko Wanibuchi, Takeshi Mikami, Yoshifumi Horita, of the Dept of Neurosurgery, Sapporo Medical University, School of Medicine, Hokkaido Japan. Published in Neurological Research, Mar 2015. Conclusion: Strong retraction may cause significant brain and vascular damage; tubular retractors can help minimize retraction injury. The rigid endoscopic technique using a thick tubular sheath [VBAS] provides an alternative medial approach that improves visualization and increases working space. We believe that this technique [rigid endoscope resection through a sheath] is a safer, more reliable, and less invasive method for the treatment of deep-seated brain tumors.
     
    “3D Endoscope Transcallosal Approach to the Third Ventricle” by Alireza Shoakazemi, Alexander I. Evins, Justin C. Burrell, Philip E. Stieg and Antonio Bernardo of the Weill Cornell Medical Center. Published in The Journal of Neurosurgery, Mar 2015. Conclusion: A transtubular approach [utilizing VBAS] to the third ventricle is feasible and facilitates blunt dissection of the corpus callosum that may minimize retraction injury. This technique also provides an added degree of safety by limiting the free range of instrumental movement. The combination of 3D endoscopic visualization with a clear plastic retractor facilitates safe and direct monitoring of the surgical corridor.
     
    “A Percutaneous Transtubular Middle Fossa Approach for Intracanalicular Tumorsby Antonio Bernardo, Alexander I. Evins, Apostolos J Tsiouris and Philip E Stieg. of the Department of Neurological Surgery, Weill Cornell Medical College, New York-Presbyterian Hospital, New York. Published in World Neurosurgery Mar 2015 . Conclusion: “All 10 approaches were successfully completed through the tubular retractor [VBAS] with minimal retraction of the temporal lobe. Excellent visualization of the structures within the internal auditory canal was achieved with both the microscope and 3D endoscope…”
     
    “Endoscopic hematoma evacuation in patients with spontaneous supratentorial intracerebral hemorrhage”. Published in the Journal of the Chinese Medical Association, Feb 2015. By Wei-Hsin Wang, Yi-Chieh Hung, Sanford P.C. Hsu, Chun-Fu Lin, Hsin-Hung Chen, Yang-Hsin Shih, Cheng-Chia Lee of the Taipei Veterans General Hospital, and National Yang-Ming University School of Medicine. Taipei, Taiwan Conclusion: “With the introduction of the minimally invasive techniques and the evolution of the neuro-endoscope and hemostatic agents the median operative time and blood loss have been significantly decreased. Although the hematoma evacuation rates were similar between the endoscope (90%) and craniotomy (85%) groups, the median intensive care unit stay was decreased from 11 days to 6 days due to reduced surgical invasiveness. In addition, several series have reported a lower rate of rebleeding, morbidity and mortality in endoscopic hematoma evacuation surgery than in traditional craniotomy. The main reasons were less adjacent tissue injury, less blood loss, and less operation time. True minimally invasive surgery includes not only a minimal wound size but also minimal brain tissue trauma during the surgery”.
     
    “Use of a Minimally Invasive Retractor System for Retrieval of Intracranial Fragments in Wartime Trauma”. Published in the World Neurosurgery, May 2015. George N. Rymarczuk, Laurence Davidson, Meryl A. Severson, Rocco A. Armonda of the Walter Reed Army Medical Center and the National Naval Medical Center
Conclusion: “Wartime penetrating brain injury can result in deep-seated shrapnel, bullets and bone, posing risk of secondary injury. It has been recommended that aggressive removal of fragments be avoided. The goal of this study it to report our technique of minimally invasive removal of deep-seated fragments using a tubular retractor system [VBAS]. The authors feel that this technique offers a valid and safe option for treatment of patients that have incurred penetrating brain injuries and that have retained foreign bodies under circumstances in which removal is desirable”. In all cases the fragment was successfully removed. No patient had worsening of their neurological condition following surgery. The study concluded, “With this series of 6 service-members the authors have shown that VBAS can be used to successfully remove deep-seated foreign bodies from injuries sustained in war. Deep parenchymal and intraventricular fragments can be safely removed using a tubular retractor system [VBAS]”
     
    “Exoscope-Assisted Surgery for Deep-Seated Intraparenchymal Tumor”. Published in the Jpn J Neurosurg April 2015. Hideo Osada, M.D., Kimihiro Nagatani, M.D., Terushige Toyooka, M.D. Kojiro Wada, M.D., Naoki Otani, M.D., Arata Tomiyama, M.D., Satoshi Tomura, M.D., Hideaki Ueno, M.D., and Kentaro Mori, M.D of the Department of Neurosurgery, National Defense Medical College and Department of Neurosurgery, Kuki General Hospital. Conclusion: “The exoscope can provide a long working distance and a clear view from outside the operation field, so combined use with the ViewSite is very promising for surgery of deep-seated tumors”.
 
Manufacturing
 
Vycor Medical uses a sub-contract manufacturer to manufacture, package, label and sterilize its VBAS products. The Company is in the process of migrating all its VBAS manufacturing in phases to qualified sub-contract manufacturers which are FDA-registered and meet ISO standards and certifications.
 
 
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Intellectual Property

Patents
 
Vycor Medical maintains a portfolio of patent protection on its methods and apparatus for its Brain and Spine products and technology in the form of issued patents and applications, both domestically and internationally, with a total of 10 granted/allowed and 11 pending patents. This includes the purchase in March 2015 of a portfolio of two pending United States patent applications that disclose approaches to integrating surgical navigation systems into optically-transparent neurosurgical obturators.

Vycor Medical’s 10 granted/allowed patents are in Canada (Brain) China (Brain), Hong Kong (Brain), Russia (Brain), Japan (Brain and Spine) and US (Brain (3) and Spine).

Vycor Medical’s 11 pending patents are in: Canada (Spine), Europe (Brain, Spine), India (Brain, Spine), Hong Kong (Spine), US (Brain (5).

Trademarks
 
VYCOR MEDICAL is a registered trademark and VIEWSITE is a common law trademark.
 
Vycor Growth Strategy
 
Vycor Medical’s growth strategy is centered around:
 
1. Increasing U.S. market penetration through broader hospital coverage and targeted direct physician marketing.
 
Vycor Medical’s sales and marketing strategy is to penetrate a well defined target market of 3,500 neurosurgeons by trade shows, significantly increased direct marketing with VBAS samples and existing clinical data, and through its existing distributors which it is continually evaluating and upgrading as well as adding additional distributors in regions where it has little to no presence. In marketing to these hospitals and surgeons, Vycor Medical leads with those neurosurgical procedures where VBAS’ competitive advantages are most easily understood – deep seated tumors and other complicated deep procedures. The focus is both on adding new hospitals and expanding to additional surgeons in hospitals where VBAS is already approved and to expand usage to a broader range of procedures. Vycor Medical prioritizes its attention on teaching hospitals, which not only carry out more relevant procedures but also provide a natural way to drive adoption through the conversion of new surgeons.
 
2. Provision of more Clinical and Scientific Data supporting the products superiority over the current standard of care blade retractors and to demonstrate the products potential for cost savings. Clinical and scientific data (in the form of peer reviewed articles, clinical studies and other reports and case studies) are critical in driving adoption, and in turn revenues, further and faster by demonstrating VBAS' superiority as a minimally invasive access system which helps VBAS move further up the hospital cost/benefit curve. To date the Company has already had 9 Peer Reviewed studies and anticipates further studies to be published.
 
3. International Market Growth
 
Vycor Medical utilizes select medical device distributors with experience in neurosurgical devices in their countries or regions. In Europe, the Company currently only has a limited number of distributors and is only now turning its focus to this geographic region. VBAS has full regulatory approvals in Australia, Brazil, Canada, China, Europe (EU – Class III), Korea and Japan and is seeking or has partial regulatory approvals in India, Russia, Taiwan and Vietnam. Vycor Medical plans on focusing on the international markets and is actively pursuing new distribution agreements.
 
4. New Product Development
 
New Product Development is targeted at both driving the use of its existing VBAS product range through ancillaries that will facilitate the product’s use and through new product extensions to broaden VBAS applicability to procedures currently not addressed by the existing product line.
Vycor Medical has a current product pipeline aimed at expanding the applicable procedures it addresses by extending its VBAS range and at increasing the compatibility of its current VBAS range.
Vycor Medical is manufacturing two new smaller VBAS devices, which it anticipates being available by the beginning of 2016, and is in the advanced stages of development on a new set of VBAS devices that will be integrated with selected Image Guided Systems. Management strongly believes that the existing VBAS rigid structure lends itself well to being incorporated into the increasing trend of IGS surgery.
 
 
18

 
 
NovaVision, Inc.
 
Introduction
 
NovaVision provides non-invasive, computer-based rehabilitation targeted at a substantial and largely un-addressed market of people who have lost their sight as a result of stroke, Traumatic Brain Injury (TBI) or other neurological brain damage. NovaVision addresses a significant target market, estimated at approximately $2 billion in each of the U.S. and the EU and over $13 billion globally.
 
NovaVision has a family of therapies that both restore and compensate for lost vision:
 
●  
Restoration of vision: NovaVision’s VRT and Sight Science’s Neuro-Eye Therapy (NeET), aim to improve visual sensitivity in a persons blind area. VRT delivers a series of light stimuli along the border of the patient’s visual field loss. These programmed light sequences stimulate the border zone between the “seeing” and “blind” visual fields, repetitively challenging the visual cortex in the border zone with multiple stimuli over the course of time. NeET targets deep within the blind area by repeated stimulation, allowing patients to detect objects within the blind field.
 
●  
Compensation and re-training: Normal eye movements are also affected after brain injury adding to the problems of blindness. NeuroEyeCoach provides a complementary therapy to VRT and NeET, which re-trains a patient to move their eyes, re-integrate left and right vision and to make the most of their remaining visual field.
 
VRT and NeuroEyeCoach, provided in the US in an Internet-delivered suite (and in Europe during Q4 2015), are therefore highly complementary and ensure broad benefits to NovaVision's patients.
 
NovaVision also has models of VRT and NeuroEyeCoach for physicians and rehabilitation clinics, as well as VIDIT, a diagnostic program that enables therapists to perform high resolution visual field tests in less than ten minutes.
 
NovaVision operates in the US through our wholly-owned subsidiary, NovaVision, Inc., in Germany through our wholly-owned subsidiary, NovaVision GmbH and in the UK through our wholly-owned subsidiary, Sight Science Limited.
 
NovaVision’s VRT is the only medical device aimed at the restoration of vision lost as a result of neurological damage which has FDA 510(k) clearance to be marketed in the U.S; VRT and NeET both have CE Marking for the EU and NeuroEyeCoach is registered in the US as a Class I 510(k) exempt device. NovaVision has 35 granted and 3 pending patents worldwide.
 
NovaVision’s Products
 
VRT and NeET
 
VRT and NeET are aimed at those suffering from vision loss resulting from neurological brain damage such as stroke and traumatic brain injury (TBI). It is estimated that approximately 20% of these patients experience a permanent visual field deficit, reducing mobility and other activities of daily living.
 
Both VRT and NeET work on the basis that repeated stimulation of the blind or transition areas by either bright patches of light (VRT) or specific spatial patterns (NeET) can lead to increases in sensitivity of the blind areas. Patient progress after VRT appears to be initiated at the blind and sighted borders whereas NeET results in changes deep within the blind field. Both therapies are able to demonstrate improvements in both visual sensitivity and activities of daily living.
 
VRT and NeET are patient-specific diagnostic and therapeutic platforms with extensive clinical data supporting their ability to increase a patient’s visual field. The diagnostic algorithm first maps the visual field and defines the areas of defect in patients suffering vision loss. The therapeutic algorithm is then specifically designed for each patient based upon the results of the diagnostic program. The therapies are delivered through a computer device in the patient’s home and are generally performed over a six month period, twice a day for approximately an hour total, six days a week.
 
With VRT therapy, the patient first focuses on a fixation point on a display screen. Then, a series of light stimuli are presented along the border of the patient’s visual field loss. These programmed light sequences stimulate the border zone between the “seeing” and “blind” visual fields, repetitively challenging the visual cortex in the border zone with thousands of stimuli over the course of the therapy. With NeET, the patient responds to the images that appear on the screen, initially in the border area of the patient’s visual field loss and over time deeper within the damaged field of vision.
 
 
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NeuroEyeCoach
 
NeuroEyeCoach in the U.S. is also a computer-based program providing eye-movement training to those who have suffered a visual field loss as a result of neurological damage.
 
The program is supported by several decades of scientific findings and was developed as collaboration between NovaVision and Josef Zihl, a NovaVision Scientific Advisor who is a world thought leader in saccadic training and the pioneer of this computer based training technique. The program is designed to re-train the ability of a patient to scan the environment, re-integrate left and right vision and make the most of their remaining visual field. The therapy can be completed in two to four weeks to result in a meaningful improvement in the patients visual search performance resulting in improvements in their navigation and object finding skills. Given that NeuroEyeCoach addresses the patient’s difficulty with their eye movements and their ability to integrate visual information while VRT and NeET focuses on the restoration of lost vision the two therapy types are highly complementary.
 
NeuroEyeCoach is provided by NovaVision in one Internet-delivered therapy suite with VRT, providing broad benefits to patients, and is also provided on a standalone basis; those suffering non-permanent defects or those otherwise unsuited to VRT can benefit from NeuroEyeCoach. The program is also provided as a clinic-based version to enable healthcare professionals to provide the therapy to patients under supervision.
 
Vision Diagnostic (VIDIT)
 
NovaVision VIDIT is a diagnostic system that enables therapists in rehabilitation centers and other clinics to perform high-resolution visual field tests to screen for central visual field deficits commonly associated with stroke or brain injury. As an undetected visual field deficit may adversely impact other rehabilitation modalities, early detection and treatment are critical steps towards improving overall patient care and this diagnostic is therefore a valuable tool for such centers and clinics. Tests take less than 10 minutes while the patient is in the facility’s care.
 
The Market For NovaVision’s Therapies
 
The market for NovaVision’s therapies comprises those suffering from vision loss resulting from neurological trauma such as Stroke and Traumatic Brain Injury (TBI). The U.S. Centers for Disease Control (CDC) estimates there are approximately 8 million Americans who have previously had a stroke incident, with 795,000 additional strokes occurring annually; adjusting for repeat strokes and deaths, there are 481,000 new stroke survivors each year. Additionally, approximately 5.3 million Americans live with the long-term effects of a TBI. The most recent scientific research estimates that approximately 28.5% experience some visual impediment and 20.5% of these patients experience a permanent visual field deficit, reducing mobility and other activities of daily living. The target market for VRT and NeET is this 20.5% subset of patients who have suffered a permanent visual field deficit; NeuroEyeCoach addresses all 28.5% of patients who experience visual impediments. Management estimates that the addressable target market for its therapies is approximately 2.9 million people in the US, approximately 2.8 million people in Europe and approximately 12.9 million people throughout the rest of the world.
 
Competition
 
NovaVision provides restoration therapies (VRT and NeET) and compensation or saccadic therapies (NeuroEyeCoach) for those suffering vision loss as a result of neurological trauma. The other therapy type for this condition is substitution (optical aids such as prisms) and is not considered by NovaVision as competition.
 
In restoration, competition has been reduced through NovaVision’s acquisition of Sight Science and really only leaves two small companies, Teltra and Visiontrainer in Germany. Within compensation, competitors include RevitalVision, PositScience, Dynavision and Rehacom.
 
Clinical Data
 
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, of which some of the key findings can be summarized as:
 
 
Approximately 70% of patients experience positive outcome reflected by an increase in their visual field and studies have indicated an average increase of 4.9 degrees (Mueller I, et al., 2007; Romano JG, et al., 2008).
     
 
Elapsed time since injury does not seem to impact VRT and NeET therapies success. Therefore, a large historical backlog of patients can potentially be treated (Romano JG, et al., 2008).
     
 
Improvements are permanent and do not appear to be age or gender dependent.
 
 
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NeuroEyeCoach
 
The PC-based treatment approach was originally developed by Prof. Zihl (1988, 1990) and has since been used with various modifications in 13 studies on a total of 551 patients with homonymous visual field loss and persistent visual disabilities.
 
The main outcome is a significant improvement in visual search performance accompanied by more efficient oculomotor strategies, and a reduction in visual disability as assessed with standardized questionnaires and behavioral measures. The efficacy of this treatment approach for the improvement of visual overview and visual exploration is superior to practice with reading (Schuett et al., 2012), non-specific visual training (Roth et al., 2009), standard occupational therapy (Mödden et al., 2012) or counseling with regards to coping strategies (Zihl, 2011). Importantly, time since brain injury (Zihl, 2011) and age of hemianopic patients (Schuett & Zihl, 2012) d not play a significant role for the treatment effect. In conclusion, there is convincing scientific empirical evidence for the efficacy of the visual search treatment method. It is important to note that visual field borders do not change after the treatment, indicating that visual search training represents a compensatory technique and not a restorative approach; by addressing both compensation and restoration NovaVision is providing a broad solution to this large patient demographic.
 
Intellectual Property
 
Patents
 
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 35 granted and 3 pending patents (including Sight Science).
 
NovaVision’s 35 granted patents are in the U.S. (13), Canada (5), Europe (8), Australia (2), China (2), Hong Kong (1), Singapore (1), India (1) and Japan (2).
 
NovaVision’s 3 pending patents are in Europe.
 
Trademarks
 
NovaVision maintains a portfolio of registered trademarks for NOVAVISION, NOVAVISION VRT, VRT VISION RESTORATION THERAPY and NEUROEYCOACH, amongst others, along with relevant logos, both in the US and internationally.
 
NovaVision’s Growth Strategy
Our strategic vision for NovaVision has been to develop and provide a clinically supported, affordable and scalable visual therapy solution offering broad benefits to those suffering visual impairment following neurological brain damage; and to offer solutions for both patients and physicians alike. VRT was, in effect, a prototype with a delivery and service model too costly to be affordable and scalable, and with 70% of patients experiencing significant positive outcome but 30% of patients therefore experiencing little to no improvement.
 
Our first steps were to build a world-class scientific advisory board and acquire Sight Science, the only credible competitor, from Prof. Arash Sahraie and the University of Aberdeen. Prof. Sahraie, Chair in Vision Sciences at the University, became our Chief Scientific Officer and led the advisory board made up of experts in the field from Harvard Medical School, Univ. of Miami Miller School of Medicine and the Max Planck Institute in Germany, to develop the strategy to deliver our vision:
 
●  
Broadening Patient Benefits: the creation of NeuroEyeCoach. Two things happen when someone suffers from vision related disorders following a stroke or the like: there is a loss of visual field as well as difficulty with eye movement, affecting the ability to integrate visual information. NeuroEyeCoach addresses patients' difficulty with their eye movements and their ability to integrate visual information. While VRT addresses the restoration of lost vision, NeuroEyeCoach enables the patient to make the most of their remaining vision; the two therapies provided in a suite are therefore highly complementary and ensure broad benefits to NovaVision's patients.
 
●  
Cost Effective and Affordable. Migrated therapy delivery from provided-hardware to internet-delivered onto patients' computers, significantly reducing cost without changing the therapy itself. Further cost reduction has been achieved through considerable business process streamlining. The Internet-delivered therapy suite was made commercially available in June 2015 in the US and will be launched in Europe in Q4 2015.
 
●  
Scalable. NovaVision's therapy is now affordable, with broader benefits and truly scalable and deliverable to the mass market.
 
 
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NovaVision completed its development work and launched its Internet-based therapy suite in June 2015 and is now positioned, for the first time, with the suite of therapies and product offerings to deliver on our strategic vision: to provide a clinically supported, affordable and scalable visual therapy solution offering broad benefits to those suffering visual impairment following neurological damage; and to offer solutions for both patients and physicians alike.
 
For Patients:
 
●  
VRT and NeuroEyeCoach Therapy Suite. NovaVision recently launched in the US these two complementary therapies, internet-delivered in a package for $900.
 
●  
NeuroEyeCoach. For patients with visual impairments who are not suitable, for whatever reason, for VRT, we provide NeuroEyeCoach on its own for $450.
 
For Physicians:
 
●  
Vision Diagnostic (VIDIT). A diagnostic system that enables therapists to perform high-resolution visual field tests in less than 10 minutes to screen for visual field deficits as a result of neurological brain damage. NovaVision has received approval for and entered into an agreement to offer VIDIT throughout the 100+ network of HealthSouth rehabilitation centers in the U.S.; therapists are then able to refer patients to NovaVision. As we roll this out to the HealthSouth network we will also market this model to other rehabilitation chains and centers.
 
●  
NeuroEyeCoach Pro Center. Enables stroke rehabilitation and other centers to treat patients while in their care, both as in-patient and out-patient. NovaVision has recently entered into an additional agreement with HealthSouth to be able to offer NeuroEyeCoach Pro Center to the HealthSouth rehabilitation centers in the U.S.
 
●  
NovaVision Pro Physician. Enables physicians to register patients in their clinic who complete our therapies at home, supported by NovaVision but monitored by the physician through a dedicated portal.
 
We believe NovaVision's therapy and product offerings for patients and physicians are unique, and that we are now well placed to deliver value from this large potential market.

Employees
 
We currently have 14 employees.
 
Website.  The Company operates websites at www.vycormedical.com and www.novavision.com.

Comparison of the Three Months Ended September 30, 2015 to the Three Months Ended September 30, 2014
 
Revenue and Gross Margin:

   
2015
   
2014
   
% Change
 
Revenue:
                 
Vycor Medical
  $ 182,889     $ 243,841       (25 )%
NovaVision
    59,974       90,498       (34 )%
Total Revenue
  $ 242,863     $ 334,339       (27 )%
                         
Gross Profit 
                       
Vycor Medical 
  $ 167,187     $ 207,827       (20 )%
NovaVision 
    49,421       79,172       (38 )%
Total Gross Profit
  $ 216,608     $ 286,999       (25 )%

 
22

 
 
Vycor Medical recorded revenue of $182,889 from the sale of its products for the three months ended September 30, 2015, a decrease of $60,952, or 25%, over the same period in 2014. This reflected weak sales in particular in the US in July and August, which recovered in September and this recovery continued through October. Gross margin of 91% was recorded for the three months ended September 30, 2015 compared to 88% for the same period in 2014.
 
NovaVision recorded revenues of $59,974 for the nine months ended September 30, 2015, a decrease of $30,524 over the same period in 2014, and gross margin of 82%, compared to 88% for the same period in 2014. Following extensive development, NovaVision launched its new Internet-delivered therapy suite in the US at the end of June 2015, comprising its VRT restoration therapy and NeuroEyeCoach compensation therapy. This therapy suite is at a greatly reduced price to patients, making it affordable, and is highly scalable. New patient starts in the US for the three months ended September 30, 2015 increased by 27% over the same period in 2014, however the lower price and policy to recognize revenues over six months resulted in a decrease in revenue of $21,438. The growth in new lead generation and patient pipeline since the launch of the new therapy suite in June is also encouraging. Revenues in Europe were largely impacted by foreign exchange differences in the translation of revenues; on a local currency basis revenues decreased by $3,361. The Internet-delivered therapy suite will be launched in Europe during Q4 2015.

Research and Development Expense:
 
Research and development (“R&D”) expenses were $29,346 for the three months ended September 30, 2015, as compared to $6,933 for the same period in 2014. Capitalized software development costs for the three months ended September 30, 2015 and 2014 were $6,357 and $45,448, respectively.

General and Administrative Expenses:

General and administrative expenses decreased by $19,339 to $604,655 for the three months ended September 30, 2015 from $623,993 for the same period in 2014. 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 the three months ended September 30, 2015 was $76,146, an increase of $16,823 over $59,323 in 2014. Also included within General and Administrative Expenses are Sales Commissions, which decreased by $24,168 to $32,991. The remaining General and Administrative expenses decreased by $11,994 from $507,511 to $495,518.

An analysis of the change in cash and non-cash G&A is shown in the table below:
 
   
Cash G&A
   
Non-Cash G&A
 
Investor relations costs
    (3,590 )     1,823  
Board, financial and scientific advisory
    (10,742 )     15,000  
Legal, professional and other consulting
    (13,929 )     -  
Sales, marketing and travel
    26,994       -  
Payroll
    (23,199 )     -  
Other
    12,472       -  
Total change
  $ (11,994 )   $ 16,823  
 
Interest Expense:

Interest comprises expense on the Company’s debt and insurance policy financing. Related Party Interest expense for the three months ended September 30, 2015 decreased by $13,706 to $0 from 2014 due to the exchange of the Related Party notes to Series D Convertible Preferred Stock of Vycor in August 2014. Other Interest expense for 2015 increased by $765 to $11,934 from $11,169 for 2014, due to the exchange of the certain notes to Series D Convertible Preferred Stock of Vycor in August 2014.
 
 
23

 
 
Comparison of the Nine Months Ended September 30, 2015 to the Nine Months Ended September 30, 2014
 
Revenue and Gross Margin:

   
2015
   
2014
   
% Change
 
Revenue:
                 
Vycor Medical
  $ 662,996     $ 710,743       (7 )%
NovaVision
    194,436       280,258       (31 )%
Total Revenue
  $ 857,432     $ 991,001       (13 )%
                         
Gross Profit 
                       
Vycor Medical 
  $ 579,980     $ 618,952       (6 )%
NovaVision 
    165,522       246,069       (33 )%
Total Gross Profit
  $ 745,502     $ 865,021       (14 )%
 
Vycor Medical recorded revenue of $662,996 from the sale of its products for the nine months ended September 30, 2015, a decrease of $47,747, over the same period in 2014. This reflected weak sales in particular in the US in July and August, which recovered in September and this recovery continued through October. Gross margin of 86% was achieved in 2015 compared to 87% in the same period in 2014.

NovaVision recorded revenues of $194,437 for the nine months ended September 30, 2015, a decrease of $85,822 over the same period in 2014, and gross margin of 85%, compared to 88% for the same period in 2014. NovaVision revenues for the first six months of 2015 were impacted by the delayed launch of the new Internet-delivered therapy suite in the US, but new patient starts in the US for the three months ended September 30, 2015 increased by 100% over the three months ended June 30, 2015; and for the nine months ended September 30, 2015 new patient starts increased by 6% over the same period in 2014. The growth in new lead generation and patient pipeline since the launch of the new therapy suite in June is also encouraging. Foreign exchange differences in Europe accounted for $22,422 of the revenue decrease. The Internet-delivered therapy suite will be launched in Europe during Q4 2015.
 
Research and Development Expense:
 
Research and development (“R&D”) expenses were $68,244 for the nine months ended September 30, 2015, as compared to $59,684 for the same period in 2014. Capitalized software development costs for the nine months ended September 30, 2015 and 2014 were $32,483 and $100,487, respectively.

General and Administrative Expenses:

General and administrative expenses decreased by $660,667 to $1,991,726 for the nine months ended September 30, 2015 from $2,652,393 for the same period in 2014. 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 the nine months ended September 30, 2015 was $214,607, a decrease of $104,443 over $319,050 in 2014. Also included within General and Administrative Expenses are Sales Commissions, which decreased by $44,124 to $118,209. The remaining General and Administrative expenses decreased by $512,100 from $2,171,009 to $1,658,909, of which the Offering costs comprised $581,702.
 
 
24

 
 
An analysis of the change in cash and non-cash G&A is shown in the table below:
 
   
Cash G&A
   
Non-Cash G&A
 
Offering costs
  $ (581,702 )   $ -  
Investor relations and road show costs
    46,991       (74,180 )
Board, financial and scientific advisory
    35,543       (55,274 )
Legal, professional and other consulting
    (51,37 )     -  
Sales, marketing and travel
    62,528       -  
Payroll
    15,407       25,011  
Other
    (39,489 )     -  
Total change
  $ (512,100 )   $ (104,443 )
 
Interest Expense:

Interest expense comprises on the Company’s debt and insurance policy financing. Related Party Interest expense for the nine months ended September 30, 2015 decreased by $80,093 to $0 from 2014. Other Interest expense for 2015 decreased by $3,228 to $35,616 from $38,844 for 2014.

Liquidity and Capital Resources

Liquidity

The following table shows cash flow and liquidity data for the periods ended September 30, 2015 and December 31, 2014:

   
September 30,
2015
   
December 31,
2014
   
$ Change
 
Cash
  $ 622,485     $ 1,891,658     $ (1,269,173 )
Accounts receivable, inventory and other current assets
  $ 659,412     $ 677,636     $ (18,224 )
Total current liabilities
  $ (867,046 )   $ (924,841 )   $ 57,795  
Working capital/(deficit), excluding derivative liability
  $ 414,851     $ 1,644,453     $ (1,229,602 )
Cash provided/(used) by financing activities
  $ (68,909 )   $ 4,725,630     $ (4,794,538 )

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.

Research and Development

The Company expenses all research and development costs as incurred.

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 September 30, 2015 and December 31, 2014 patient deposits amounted to $29,213 and $34,217, respectively, and are reserved against in Accrued Liabilities
 
 
25

 
 
Property and equipment

The Company records fixed assets 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

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
 
 
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

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 and expensed as incurred. The capitalized costs are amortized over the life of the patent. The Company reviews intangible assets on an annual in accordance with the authoritative guidance. Trademarks have an indefinite life and are also 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 license sales. Therapy services revenues represent fees from NovaVision’s vision restoration therapy software, eye movement training software, diagnostic software, clinic set up and training fees, and the professional and support services associated with the therapy. 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 U.K. and 10 months in Germany. A patient contract comprises 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. NovaVision’s saccadic training software is generally completed within 2-4 weeks and revenue is therefore recognized fully at commencement.

Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.
 
 
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Accounts Receivable and Allowance for Doubtful Accounts Receivable

The Company’s accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly for 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.

Inventory

Inventories are stated at the weighted average cost method. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. The provision for inventory for the years ended September 30, 2015 and 2014 was $12,632 and $0, respectively.  Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company's consolidated statements of operations.

Foreign Currency

The Euro is the local currency of the country in which NovaVision GmbH conducts its operations and is considered the functional currency of this entity; the GB Pound is the local currency of the country in which Sight Science Limited 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.

 
Not applicable
 
 
 (a)           Disclosure Controls and Procedures
 
We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.

The Company’s management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our CEO and our CFO have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective as of that date to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that information required to be disclosed by the Company in the reports its files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO and its CFO, as appropriate, to allow timely decisions regarding required disclosure. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
(b)           Changes in Internal Controls

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.  

The Company’s management, including the Company’s CEO and CFO, does not expect that the Company’s internal control over financial reporting will prevent all errors and all fraud.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
 
 
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PART II

 
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of November 14, 2015, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.


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


The Company has issued the following unregistered shares of its Common Stock since July 1, 2015:

Shares
 
Date
 
Type
 
Number
 
Purpose
                 
STEVE GIRGENTI
 
7/1/15
 
Common
    3,425  
Board Fees
ALVARO PASCUAL-LEONE, M.D.
 
7/31/2015
 
Common
    1,184  
Consulting Fees
JOSEF ZIHL
 
7/31/2015
 
Common
    2,367  
Consulting Fees
LIOLIOS GROUP, INC.
 
8/6/2015
 
Common
    2,646  
Consulting Fees
ACORN MANAGEMENT PTS
 
8/15/15
 
Common
    4,630  
Consulting Fees
LIOLIOS GROUP, INC.
 
9/4/2015
 
Common
    2,096  
Consulting Fees
ACORN MANAGEMENT PTS
 
9/15/15
 
Common
    4,630  
Consulting Fees
JASON BARTON
 
9/30/15
 
Common
    1,056  
Consulting Fees
JOSE ROMANO
 
9/30/15
 
Common
    1,056  
Consulting Fees
OSCAR BRONSTHER
 
9/30/15
 
Common
    3,378  
Board Fees
LOWELL RUSH
 
9/30/15
 
Common
    3,378  
Board Fees
FOUNTAINHEAD CAPITAL MANAGEMENT LIMITED
 
9/30/15
 
Common
    16,667  
Consulting Fees

There were no cash proceeds from any of these issuances.

 
None.
 
 
Not applicable.
 
 
None

 
Exhibit No.   Description
     
 
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
 
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
 
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
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In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 13, 2015.

     
 
VYCOR MEDICAL, INC.
 
       
 
By:
/s/ Peter C. Zachariou                      
 
   
Peter C. Zachariou
 
   
President and
 
   
Director (Principal Executive Officer)
 
       
 
By:
/s/ Adrian C. Liddell                          
 
   
Adrian C. Liddell
 
   
Chairman of the Board and
 
   
Director (Principal Financial Officer)
 
       
       



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