UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal quarter ended | |
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
| For the transition period from to |
VYCOR MEDICAL, INCINC..
(Exact name of small business issuer as specified in its charter)
| Delaware | 001-34932 | 20-3369218 | ||
| (State of | (Commission | (IRS Employer | ||
| Incorporation) | File Number) | Identification No.) |
951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487
(Address of principal executive offices) (Zip code)
Issuer’s telephone number: ((561)561) 558-2020
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common Stock | VYCO | OTCQB |
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 ☒ No ☐
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 ☐ No ☒
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 ☐ | Accelerated Filer ☐ |
| Non-accelerated Filer ☐ (Do not check if a smaller reporting company) | 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 ☒ No
There were shares outstanding of registrant’s common stock, par value $0.0001 per share, as of November 12, 2021.May 10, 2022.
Transitional Small Business Disclosure Format (check one): Yes ☐ No ☒
TABLE OF CONTENTS
| 2 |
PART 1
ITEM 1. FINANCIAL STATEMENTS
VYCOR MEDICAL, INC.
Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 78,573 | $ | 46,002 | ||||
| Trade accounts receivable | 176,884 | 159,238 | ||||||
| Inventory | 221,664 | 181,096 | ||||||
| Prepaid expenses and other current assets | 84,759 | 76,988 | ||||||
| Current assets of discontinued operations | 339 | 577 | ||||||
| Total Current Assets | 562,219 | 463,901 | ||||||
| Fixed assets, net | 378,112 | 381,087 | ||||||
| Intangible and Other assets: | ||||||||
| Patents, net of accumulated amortization | 2,366 | 11,349 | ||||||
| Security deposits | 6,000 | 6,000 | ||||||
| Operating lease - right of use assets | 90,924 | 124,183 | ||||||
| Total Intangible and Other assets | 99,290 | 141,532 | ||||||
| TOTAL ASSETS | $ | 1,039,621 | $ | 986,520 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 188,578 | $ | 179,110 | ||||
| Accrued interest: Other | 369,168 | 328,897 | ||||||
| Accrued interest: Related party | 98,356 | 74,603 | ||||||
| Accrued liabilities – Other | 123,658 | 117,050 | ||||||
| Accrued liabilities - Related Party | 1,621,850 | 1,297,480 | ||||||
| Notes payable: Other | 338,727 | 384,587 | ||||||
| Notes payable: Related Party | 320,873 | 310,873 | ||||||
| Current operating lease liabilities | 46,324 | 44,623 | ||||||
| Current liabilities of discontinued operations | (424 | ) | 3,605 | |||||
| Total Current Liabilities | 3,107,110 | 2,740,828 | ||||||
| Loan Payable - SBA EIDL | $ | 150,000 | $ | 150,000 | ||||
| Operating lease liability - Long term | 42,625 | 77,008 | ||||||
| Total Long-term Liabilities | 192,625 | 227,008 | ||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock, $ par value, shares authorized, and issued and outstanding as at September 30, 2021 and December 31, 2020 respectively | 27 | 27 | ||||||
| Common Stock, $ par value, shares authorized at September 30, 2021 and December 31, 2020, and shares issued and and outstanding at September 30, 2021 and December 31, 2020 respectively | 3,085 | 2,753 | ||||||
| Additional Paid-in Capital | 29,120,212 | 28,826,378 | ||||||
| Treasury Stock ( shares of Common Stock as at September 30, 2021 and December 31, 2020 respectively, at cost) | (1,033 | ) | (1,033 | ) | ||||
| Accumulated Deficit | (31,510,080 | ) | (30,937,110 | ) | ||||
| Accumulated Other Comprehensive Income | 127,675 | 127,669 | ||||||
| Total Stockholders’ Deficiency | (2,260,114 | ) | (1,981,316 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | 1,039,621 | $ | 986,520 | ||||
March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 80,567 | $ | 90,941 | ||||
| Trade accounts receivable | 161,783 | 126,096 | ||||||
| Inventory | 204,466 | 207,521 | ||||||
| Prepaid expenses and other current assets | 65,886 | 62,473 | ||||||
| Current assets of discontinued operations | 182 | 380 | ||||||
| Total Current Assets | 512,884 | 487,411 | ||||||
| Fixed assets, net | 346,042 | 362,393 | ||||||
| Intangible and Other assets: | ||||||||
| Security deposits | 6,000 | 6,000 | ||||||
| Operating lease - right of use assets | 68,053 | 79,560 | ||||||
| Total Intangible and Other assets | 74,053 | 85,560 | ||||||
| TOTAL ASSETS | $ | 932,979 | $ | 935,364 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 182,573 | $ | 227,720 | ||||
| Accrued interest: Other | 390,599 | 380,479 | ||||||
| Accrued interest: Related party | 114,356 | 106,444 | ||||||
| Accrued liabilities - Other | 123,937 | 126,959 | ||||||
| Accrued liabilities - Related Party | 1,784,035 | 1,621,850 | ||||||
| Notes payable: Other | 309,057 | 319,329 | ||||||
| Notes payable: Related Party | 400,873 | 320,873 | ||||||
| Current operating lease liabilities | 47,518 | 46,915 | ||||||
| Current liabilities of discontinued operations | (616 | ) | (572 | ) | ||||
| Total Current Liabilities | 3,352,332 | 3,149,997 | ||||||
| Loan Payable - SBA EIDL | $ | 148,681 | $ | 150,000 | ||||
| Operating lease liability - Long term | 18,379 | 30,580 | ||||||
| Total Long-term Liabilities | 167,060 | 180,580 | ||||||
| Total Liabilities | 3,519,392 | 3,330,577 | ||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock, $ par value, shares authorized, and issued and outstanding as at March 31, 2022 and December 31, 2021 respectively | 27 | 27 | ||||||
| Common Stock, $ par value, shares authorized at March 31, 2022 and December 31, 2021, and shares issued and and outstanding at March 31, 2022 and December 31, 2021 respectively | 3,146 | 3,092 | ||||||
| Additional Paid-in Capital | 29,217,651 | 29,172,169 | ||||||
| Treasury Stock ( shares of Common Stock as at March 31, 2022 and December 31, 2021 respectively, at cost) | (1,033 | ) | (1,033 | ) | ||||
| Accumulated Deficit | (31,933,879 | ) | (31,697,142 | ) | ||||
| Accumulated Other Comprehensive Income | 127,675 | 127,674 | ||||||
| Total Stockholders’ Deficiency | (2,586,413 | ) | (2,395,213 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | 932,979 | $ | 935,364 | ||||
See accompanying notes to consolidated financial statements
| 3 |
VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited)
| 2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
| For the three months ended September 30, | For the nine months ended September 30, | For the three months ended March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
| �� | ||||||||||||||||||||||||
| Revenue | $ | 332,087 | $ | 275,925 | $ | 1,119,263 | $ | 850,430 | $ | 313,833 | $ | 295,749 | ||||||||||||
| Cost of Goods Sold | 35,145 | 40,551 | 102,950 | 98,338 | 33,409 | 28,477 | ||||||||||||||||||
| Gross Profit | 296,942 | 235,374 | 1,016,313 | 752,092 | 280,424 | 267,272 | ||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| Research and development | 1,825 | - | 8,454 | - | - | 2,700 | ||||||||||||||||||
| Depreciation and amortization | 17,728 | 14,495 | 49,275 | 43,780 | 14,649 | 13,945 | ||||||||||||||||||
| Selling, general and administrative | 365,785 | 427,250 | 1,230,340 | 1,260,742 | 318,674 | 457,476 | ||||||||||||||||||
| Total Operating Expenses | 385,338 | 441,745 | 1,288,069 | 1,304,522 | ||||||||||||||||||||
| Total Operating expenses | 333,323 | 474,121 | ||||||||||||||||||||||
| Operating loss | (88,396 | ) | (206,371 | ) | (271,756 | ) | (552,430 | ) | (52,899 | ) | (206,849 | ) | ||||||||||||
| Other income (Expense) | ||||||||||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||||||
| Interest expense: Related Party | (8,088 | ) | (7,836 | ) | (23,753 | ) | (21,846 | ) | (7,912 | ) | (7,665 | ) | ||||||||||||
| Interest expense: Other | (12,685 | ) | (12,099 | ) | (42,465 | ) | (36,033 | ) | (12,314 | ) | (16,118 | ) | ||||||||||||
| Loss on foreign currency exchange | (372 | ) | (484 | ) | (1,371 | ) | (829 | ) | (672 | ) | (115 | ) | ||||||||||||
| Gain on other income | - | 6,000 | - | 6,000 | ||||||||||||||||||||
| Forgiveness of debt: Paycheck Protection Program | 117,200 | - | 117,200 | - | ||||||||||||||||||||
| Total Other Income (Expense) | 96,055 | (14,419 | ) | 49,611 | (52,708 | ) | (20,898 | ) | (23,898 | ) | ||||||||||||||
| Income (Loss) Before Credit for Income Taxes | 7,659 | (220,790 | ) | (222,145 | ) | (605,138 | ) | |||||||||||||||||
| Loss Before Credit for Income Taxes | (73,797 | ) | (230,747 | ) | ||||||||||||||||||||
| Credit for income taxes | - | - | - | - | - | - | ||||||||||||||||||
| Net Income (Loss) from continuing operations | 7,659 | (220,790 | ) | (222,145 | ) | (605,138 | ) | |||||||||||||||||
| Income (Loss) from discontinued operations, net of tax | (3,966 | ) | 22,503 | (26,455 | ) | (16,984 | ) | |||||||||||||||||
| Net Income (Loss) | 3,693 | (198,287 | ) | (248,600 | ) | (622,122 | ) | |||||||||||||||||
| Net Loss from continuing operations | (73,797 | ) | (230,747 | ) | ||||||||||||||||||||
| Loss from discontinued operations | (755 | ) | (12,172 | ) | ||||||||||||||||||||
| Net loss | (74,552 | ) | (242,919 | ) | ||||||||||||||||||||
| Preferred stock dividends | (162,185 | ) | (162,185 | ) | (324,370 | ) | (324,370 | ) | (162,185 | ) | (162,185 | ) | ||||||||||||
| Net Loss Available to Common Stockholders | $ | (158,492 | ) | $ | (360,472 | ) | $ | (572,970 | ) | $ | (946,492 | ) | $ | (236,737 | ) | $ | (405,104 | ) | ||||||
| Other Comprehensive Income (Loss) | ||||||||||||||||||||||||
| Other Comprehensive Income | ||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | 4 | 3 | 6 | 5 | 1 | 7 | ||||||||||||||||||
| Comprehensive Income (Loss) | $ | 3,697 | $ | (198,284 | ) | $ | (248,594 | ) | $ | (622,117 | ) | |||||||||||||
| Comprehensive Loss | $ | (74,551 | ) | $ | (242,912 | ) | ||||||||||||||||||
| Net Income (Loss) Per Share - basic and diluted | ||||||||||||||||||||||||
| Income (Loss) from continuing operations | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||||||||||||
| Income (Loss) from discontinued operations | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | |||||||||||||
| Net loss available to common stockholders | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.04 | ) | ||||||||||||
| Net Loss Per Share – basic and diluted | ||||||||||||||||||||||||
| Loss from continuing operations | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||||||||||
| Loss from discontinued operations | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||||||||||||
| Net Loss available to common shareholders | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||||||||||
| Weighted Average Number of Shares Outstanding – Basic and Diluted | 30,219,556 | 26,365,801 | 29,249,192 | 25,832,084 | 30,824,320 | 27,831,540 | ||||||||||||||||||
See accompanying notes to consolidated financial statements
| 4 |
VYCOR MEDICAL, INC.
Consolidated Statement of Stockholders’ Deficiency
(Unaudited)
| Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | 30,317,067 | $ | 3,032 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 29,043,123 | $ | (31,351,588 | ) | $ | 127,671 | $ | (2,178,768 | ) | ||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | 535,714 | 53 | 77,089 | 77,142 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | - | - | - | - | - | - | - | - | - | - | 4 | 4 | ||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | (158,492 | ) | (158,492 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | 30,852,781 | $ | 3,085 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 29,120,212 | $ | (31,510,080 | ) | $ | 127,675 | $ | (2,260,114 | ) | ||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | 30,921,701 | $ | 3,093 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ 29,172,169 | $ | (31,697,142 | ) | $ | 127,674 | $ | (2,395,213 | ) | |||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | 535,714 | 54 | 45,482 | 45,536 | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Loss | - | - | - | - | - | - | - | 1 | 1 | |||||||||||||||||||||||||||||||||||||||
| Net loss for period ended March 31, 2022 | (236,737 | ) | (236,737 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 | 31,457,415 | $ | 3,147 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 29,217,651 | $ | (31,933,879 | ) | $ | 127,675 | $ | (2,586,413 | ) | ||||||||||||||||||||||||
| Additional | Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum | Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | 27,534,740 | $ | 2,753 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,826,378 | $ | (30,937,110 | ) | $ | 127,669 | $ | (1,981,316 | ) | 27,534,740 | $ | 2,753 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,826,378 | $ | (30,937,110 | ) | $ | 127,669 | $ | (1,981,316 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | 27,534,740 | $ | 2,753 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,826,378 | $ | (30,937,110 | ) | $ | 127,669 | $ | (1,981,316 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | 1,708,805 | 171 | 272,995 | 273,166 | 535,714 | 54 | 101,376 | 101,430 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors | 1,609,236 | 161 | - | - | - | - | - | - | (161 | ) | - | - | - | 466,794 | 47 | (47 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | - | 21,000 | 21,000 | - | - | - | - | - | - | - | 21,000 | - | 21,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | 6 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | (572,970 | ) | (572,970 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | 30,852,781 | $ | 3,085 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 29,120,212 | $ | (31,510,080 | ) | $ | 127,675 | $ | (2,260,114 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Loss | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period ended March 31, 2021 | (405,104 | ) | (405,104 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | (405,104 | ) | (405,104 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | 28,537,248 | $ | 2,854 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,948,707 | $ | (31,342,214 | ) | $ | 127,676 | $ | (2,263,983 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | 28,537,248 | $ | 2,854 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,948,707 | $ | (31,342,214 | ) | $ | 127,676 | $ | (2,263,983 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | 26,463,312 | $ | 2,646 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,573,484 | $ | (30,376,278 | ) | $ | 127,672 | $ | (1,673,482 | ) | ||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | 535,714 | 54 | 112,447 | 112,501 | ||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | - | - | - | - | - | - | - | 14,000 | - | - | 14,000 | |||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | 3 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | (360,472 | ) | (360,472 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | 26,999,026 | $ | 2,700 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,699,931 | $ | (30,736,750 | ) | $ | 127,675 | $ | (1,907,450 | ) | ||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | 25,391,884 | $ | 2,539 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,306,592 | $ | (29,790,258 | ) | $ | 127,670 | $ | (1,354,463 | ) | ||||||||||||||||||||||||
| Balance | 25,391,884 | $ | 2,539 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,306,592 | $ | (29,790,258 | ) | $ | 127,670 | $ | (1,354,463 | ) | ||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | 1,607,142 | 161 | 337,339 | 337,500 | ||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | - | - | - | - | - | - | - | 56,000 | - | - | 56,000 | |||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | (946,492 | ) | (946,492 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | 26,999,026 | $ | 2,700 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,699,931 | $ | (30,736,750 | ) | $ | 127,675 | $ | (1,907,450 | ) | ||||||||||||||||||||||||
| Balance | 26,999,026 | $ | 2,700 | 1 | $ | 0 | 270,306 | $ | 27 | (103,334 | ) | $ | (1,033 | ) | $ | 28,699,931 | $ | (30,736,750 | ) | $ | 127,675 | $ | (1,907,450 | ) | ||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
| 5 |
VYCOR MEDICAL, INC.
Consolidated StatementofStatement of Cash Flows
(Unaudited)
| March 31, | March 31, | |||||||||||||||
| For the nine months ended | For the three months ended | |||||||||||||||
| September 30, | March 31, | March 31, | ||||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net loss | $ | (248,600 | ) | $ | (622,122 | ) | $ | (74,552 | ) | $ | (242,919 | ) | ||||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||||||||||||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||||||
| Amortization of intangible assets | 8,983 | 8,983 | - | 2,994 | ||||||||||||
| Depreciation of fixed assets | 41,665 | 35,939 | 15,563 | 11,162 | ||||||||||||
| Inventory provision | 9,270 | 9,418 | 5,960 | 3,090 | ||||||||||||
| Stock based compensation | 284,102 | 393,500 | 50,568 | 122,430 | ||||||||||||
| Forgiveness of debt Paycheck Protection Program | (117,200 | ) | - | |||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| Accounts receivable | (17,646 | ) | 137,154 | (35,686 | ) | 15,382 | ||||||||||
| Inventory | (49,838 | ) | 19,221 | (2,117 | ) | (21,628 | ) | |||||||||
| Prepaid expenses | 2,871 | 2,661 | (8,536 | ) | 16,600 | |||||||||||
| Accrued interest - Related Party | 23,753 | 21,846 | 7,912 | 7,665 | ||||||||||||
| Accrued interest - Other | 40,271 | 36,033 | 10,120 | 16,118 | ||||||||||||
| Accounts payable | 9,468 | (114,295 | ) | (45,147 | ) | 36,038 | ||||||||||
| Accrued liabilities - Other | 6,608 | (116,982 | ) | (3,021 | ) | 4,391 | ||||||||||
| Changes in discontinued operations, net | (3,791 | ) | (54,218 | ) | 156 | (5,483 | ) | |||||||||
| Cash provided by (used in) operating activities | (10,084 | ) | (242,862 | ) | ||||||||||||
| Cash used in operating activities | (78,780 | ) | (34,160 | ) | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of fixed assets | (38,690 | ) | (60,132 | ) | - | (23,935 | ) | |||||||||
| Changes in investing activities of discontinued operations, net | - | 9,574 | ||||||||||||||
| Cash used in investing activities | (38,690 | ) | (50,558 | ) | - | (23,935 | ) | |||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from Notes Payable - Related Party | 10,000 | 80,000 | 80,000 | 10,000 | ||||||||||||
| Proceeds from Paycheck Protection Program | 58,600 | 208,600 | ||||||||||||||
| Proceeds from Paycheck Protection Program and EIDL | - | 58,600 | ||||||||||||||
| Proceeds net of repayments Notes Payable - Other | 12,740 | 19,034 | (11,591 | ) | (17,470 | ) | ||||||||||
| Cash provided by (used in) financing activities | 81,340 | 307,634 | ||||||||||||||
| Cash provided by financing activities | 68,409 | 51,130 | ||||||||||||||
| Effect of exchange rate changes on cash | 5 | 4 | (3 | ) | 7 | |||||||||||
| Net decrease in cash | 32,571 | 14,218 | ||||||||||||||
| Net increase (decrease) in cash | (10,376 | ) | (6,958 | ) | ||||||||||||
| Cash at beginning of period | 46,002 | 60,717 | 90,941 | 46,002 | ||||||||||||
| Cash at end of period | $ | 78,573 | $ | 74,935 | $ | 80,567 | $ | 39,044 | ||||||||
| Supplemental Disclosures of Cash Flow information: | ||||||||||||||||
| Cash paid for interest | $ | 2,193 | $ | 0 | $ | 2,193 | $ | 0 | ||||||||
| Cash paid for income tax | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
See accompanying notes to consolidated financial statements`statements
| 6 |
VYCOR MEDICAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021March 31, 2022
(Unaudited)
1.BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Vycor Medical, Inc. (the “Company” or “Vycor”) 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 8 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 20202021 derives from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These unaudited consolidated 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, 2020.2021.
The unaudited consolidated financial statements as of and for the three and nine months ended September 30,March 31, 2022 and 2021, and 2020, 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, results of operations and cash flows. The results of operations for the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 are not necessarily indicative of the results to be expected for any other interim period or for the entire year. Certain prior period amounts on the unaudited consolidated financial statements have been reclassified to conform to the current period presentation.
Ability to continue as a Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $248,600236,737 for the ninethree months ended September 30, 2021March 31, 2022 and has not generated sufficient positive cash flows from operations. As of September 30, 2021March 31, 2022 the Company had a working capital deficiency of $503,812540,184, excluding related party liabilities of $2,041,0792,299,264. These conditions, among others, raise substantial doubt regarding our ability to continue as a going concern. The unaudited consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
The Company is executing on a plan to achieve a reduction in cash operating losses. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $364,798388,733, which has a maturity date of March 31, 2022,2023, having been extended on a number of occasions from its initial due date of June 11, 2011. At this time, it is not known whether any further extension of the note beyond March 31, 20222023 will be available. However, the Company believes it may not have sufficient cash to meet its various cash needs and repayment obligations through November 30,May 31, 2022 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. Fountainhead, Capital Management Limited (“Fountainhead”), the Company’s largest shareholder, has provided working capital funding to the Company on an as-needed basis, although there is no guarantee that this will continue to be the case. The Company may consider seeking additional equity or debt funding, although there is no assurance that this would be available on acceptable terms or at all. If adequate funds are not available, the Company may have to delay or curtail development or commercialization of products, or cease some of its operations.
| 7 |
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The unaudited 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 account balances, transactions, and profits have been eliminated in consolidation. Following the decision in April 2020 to close the German office of NovaVision, the activities of NovaVision GmbH have been accounted for as discontinued operations.
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 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.
Discontinued Operations
In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations (which we presented as operations to be disposed and operations disposed), less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.
Accounting for forgivable loan received under the Small Business Administration Paycheck Protection Program
During the year ended December 31, 2020 the Company received a loan of $58,600 (“First Draw Loan”), pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act. During the nine monthsyear ended September 30,December 31, 2021 the Company received an additional PPP loan of $58,600 (“Second Draw Loan”). Under the terms of the PPP, both the First Draw Loan and Second Draw Loan were forgiven during the periodyear ended December 31, 2021 as they were used for qualifying expenses as described in the CARES Act.
The Company accounted for the loans as a financial liability in accordance with FASB ASC 470 and accrued interest in accordance with the interest method under FASB ASC 835-30. For purposes of derecognition of the liability, FASB ASC 470-50-15-4 refers to guidance in FASB ASC 405-20. Based on this guidance, the proceeds of the loans were recorded as a liability until either (1) the loans are, in part or wholly, forgiven and the Company has been “legally released”, or (2) the Company pays off the loans. The Company has accordingly reduced the liability by the amount forgiven and recorded a gain on the extinguishment.
Basic net loss per share is computed by dividing net loss available to common stockholders 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.
| 8 |
SCHEDULE OF COMMON STOCK NOT INCLUDED IN CALCULATION OF DILUTED NET LOSS PER SHARE
| September 30, 2021 | September 30, 2020 | |||||||
| Stock options outstanding | - | 680,000 | ||||||
| Debentures convertible into common stock | 3,165,705 | 2,937,133 | ||||||
| Preferred shares convertible into common stock | 1,272,052 | 1,272,052 | ||||||
| Directors Deferred Compensation Plan | - | 1,442,571 | ||||||
| Total | 4,437,757 | 6,331,756 | ||||||
Covid-19
Vycor Medical experienced a significant reduction in demand during the twelve months ended December 31, 2020 in the US and Europe, particularly in the second quarter, with some recovery in the third and fourth quarters. This recovery continued at a stronger level during the nine months ended September 30, 2021 such that sales for the Vycor Medical division increased by 32% over the same period in 2020. Although neurosurgery is not considered an elective procedure, general hospital dislocation and diversion of resources away from non-emergency surgeries, or surgeries that can be postponed for a short period without harm, has impacted our revenues during the twelve months ended December 31, 2020 and although this has recovered during the nine months ended September 30, 2021, COVID-19 remains classified as a pandemic and this could impact future sales. In addition, sales and marketing efforts by Vycor’s representatives were disrupted or curtailed during periods of lockdown and social distancing, and this may continue to hinder the recovery of revenues, particularly in certain international territories where vaccination rates remain relatively low. While our operations are principally located in the United States, and our sub-contract manufacturers are located in the United States, we participate in a global supply chain, and COVID-19 may impact our ability to conduct normal business operations, which could adversely affect our results of operations and liquidity. Furthermore, our sub-contract manufacturers have experienced, and continue to experience, staffing shortages and this has elongated our production lead times. Disruptions to our supply chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from supplier staff absences due to COVID-19 illness or isolation requirements, the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, or restrictions on the shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects on our manufacturing output and delivery schedule. Although we have implemented business continuity plans for our offices and personnel to enable continuity of service remotely if required, if a critical number of our employees become too ill to work, or we are not able to access a sufficient quantity of our inventory for shipment due to enforced office closures, our production ability could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business consequences due to COVID-19, or any other, pandemic, demand for our products could also be materially adversely affected in a rapid manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities in which we or our suppliers and customers operate. Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations.
March 31, 2022 | March 31, 2021 | |||||||
| Stock options outstanding | - | 660,000 | ||||||
| Debentures convertible into common stock | 3,279,676 | 3,051,106 | ||||||
| Preferred shares convertible into common stock | 1,272,052 | 1,272,052 | ||||||
| Directors Deferred Compensation Plan | - | 1,142,442 | ||||||
| Total | 4,551,728 | 6,125,600 | ||||||
3. DISCONTINUED OPERATIONS
In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model; in June 2020 Vycor announced that it would be entering into a license agreement and transition agreement (the “Agreements”) with HelferApp GmbH, a cognitive therapy specialist. Under the Agreements, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals; and has assumed responsibility for the current patients of NovaVision in the territory. The NovaVision German office was closed effective June 30, 2020. The Company will continue to fund the remaining expenses of the German operations, which are non-material, until such a time as NovaVision GmbH iswill be formally wound up.
Reconciliation of the major line items from discontinued operations that are presented in the unaudited consolidated balance sheets and unaudited consolidated statements of comprehensive loss are as follows:
Major line items constituting assets and liabilities in the unaudited consolidated balance sheets
SCHEDULE OF LOSS FROM DISCONTINUED OPERATIONS
| September 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash | $ | 339 | $ | 577 | $ | 182 | $ | 380 | ||||||||
| Total Current Assets | 339 | 577 | 182 | 380 | ||||||||||||
| TOTAL ASSETS | $ | 339 | $ | 577 | $ | 182 | $ | 380 | ||||||||
| LIABILITIES | ||||||||||||||||
| Current Liabilities | ||||||||||||||||
| Accounts payable | $ | 4 | $ | 422 | $ | 4 | $ | 4 | ||||||||
| Accrued liabilities – Other | - | 3,168 | ||||||||||||||
| Accrued liabilities - Other | - | - | ||||||||||||||
| Other current liabilities | (428 | ) | 15 | (620 | ) | (576 | ) | |||||||||
| Total Current Liabilities | $ | (424 | ) | $ | 3,605 | $ | (616 | ) | $ | (572 | ) | |||||
Major line items constituting loss from discontinued operations
| 2022 | 2021 | |||||||||||||||||||||||
For the three months ended March 31, | ||||||||||||||||||||||||
| For the three months ended September 30, | For the nine months ended September 30, | 2022 | 2021 | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||
| Revenue | $ | - | $ | 2,851 | $ | - | $ | 41,527 | $ | - | $ | - | ||||||||||||
| Cost of Goods Sold | - | 616 | - | 4,835 | - | - | ||||||||||||||||||
| Gross Profit | - | 2,235 | - | 36,692 | - | - | ||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| Selling, general and administrative | 3,921 | 15,304 | 25,567 | 87,986 | 751 | 11,569 | ||||||||||||||||||
| Total Operating Expenses | 3,921 | 15,304 | 25,567 | 87,986 | ||||||||||||||||||||
| Total Operating expenses | 751 | 11,569 | ||||||||||||||||||||||
| Operating Loss | (3,921 | ) | (13,069 | ) | (25,567 | ) | (51,294 | ) | (751 | ) | (11,569 | ) | ||||||||||||
| Other Income (Expense) | ||||||||||||||||||||||||
| Loss on foreign currency exchange | (45 | ) | (879 | ) | (888 | ) | (2,141 | ) | (4 | ) | (603 | ) | ||||||||||||
| Other income (loss) | - | 36,451 | - | 36,451 | ||||||||||||||||||||
| Total Other Income (Expense) | (45 | ) | 35,572 | (888 | ) | (34,310 | ) | (4 | ) | (603 | ) | |||||||||||||
| Income (Loss) Before Credit for Income Taxes | (3,966 | ) | 22,503 | (26,455 | ) | (16,984 | ) | |||||||||||||||||
| Loss Before Credit for Income Taxes | (755 | ) | (12,172 | ) | ||||||||||||||||||||
| Credit for income taxes | - | - | - | - | - | - | ||||||||||||||||||
| Income (Loss) from discontinued operations, net of tax | $ | (3,966 | ) | $ | 22,503 | $ | (26,455 | ) | $ | (16,984 | ) | |||||||||||||
| Loss from discontinued operations, net of tax | $ | (755 | ) | $ | (12,172 | ) | ||||||||||||||||||
4. NOTES PAYABLE
Related Parties Notes Payable
Related Party Notes Payable consists of:
SUMMARY OF NOTES PAYABLE
| September 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| $ | 30,000 | $ | 30,000 | |||||||||||||
| On June 25, 2018 the Company issued promissory notes to Peter Zachariou for $30,000. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. The note was extended for another twelve months on its due date to June 25, 2022 or on demand by the Payee. | $ | 30,000 | $ | 30,000 | ||||||||||||
| Between March 26, 2018 and March 12, 2021 the Company issued eleven promissory notes to Fountainhead Capital Management Limited for $290,873. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. Ten notes were extended on their due dates for another twelve months. The Notes will be due between December 2021 and July 2022 or on demand by the Payee. | 290,873 | 280,873 | ||||||||||||||
| On June 25, 2018 the Company issued promissory notes to Peter Zachariou for $30,000. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. The note was extended for another twelve months on its due date to June 25, 2022 or on demand by the Payee. | $ | 30,000 | $ | 30,000 | ||||||||||||
| Between March 26, 2018 and March 25, 2022 the Company issued twelve promissory notes to Fountainhead Capital Management Limited for $370,873. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. Eleven notes were extended on their due dates for another twelve months. The Notes will be due between July 2022 and May 2023 or on demand by the Payee. | 370,873 | 290,873 | ||||||||||||||
| Total Related Party Notes Payable | $ | 320,873 | $ | 310,873 | $ | 400,873 | $ | 320,873 | ||||||||
Other Notes Payable
Other Notes Payable consists of:
| September 30, 2021 | December 31, 2020 | |||||||
| 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, and has been extended on a number of occasions. On the note’s most recent due date, the note was amended and extended to March 31, 2022. See further note below. | $ | 300,000 | $ | 300,000 | ||||
| On May 16, 2020, the Company was granted a loan from Citizens Bank N.A. in the amount of $58,600, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a Note issued by the Borrower, matures on May 16, 2022 and bears interest at a rate of 1% per annum. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, the Loan has been forgiven as it was used for qualifying expenses as described in the CARES Act. | - | 58,600 | ||||||
| On January 1, 2021, the Company was granted a second PPP loan from Citizens Bank N.A. in the amount of $58,600. The Loan, which was in the form of a Note issued by the Borrower, matures on January 1, 2026 and bears interest at a rate of 1% per annum. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Under the terms of the PPP, the Loan has been forgiven as it was used for qualifying expenses as described in the CARES Act. | - | - | ||||||
| Insurance policy finance agreements. | 38,727 | 25,987 | ||||||
| Total Notes Payable: | $ | 338,727 | $ | 384,587 | ||||
March 31, 2022 | December 31, 2021 | |||||||
| 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, and has been extended on a number of occasions. On the note’s most recent due date, the note was amended and extended to March 31, 2023. See further note below. | $ | 300,000 | $ | 300,000 | ||||
| Current portion of Long-Term Notes payable, see below | 1,319 | - | ||||||
| Insurance policy finance agreements. | 7,738 | 19,329 | ||||||
| Total Notes Payable: | $ | 309,057 | $ | 319,329 | ||||
Long-Term Notes Payable consists of:
| September 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| On July 7, 2020, the Company was advised that the Small Business Administration (SBA) had approved a $150,000 loan under the Economic Injury Disaster Loan Program pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act (“Loan”). The Loan, evidenced by a promissory note dated July 7, 2020, has a term of thirty (30) years, bears interest at a fixed rate of three and three-quarters percent (3.75%) per annum, with monthly payments in the amount of $731.00 per month commencing July 7, 2021 and is secured by essentially all of the assets of the Company. The proceeds of the Loan have been used for general working capital purposes to alleviate economic injury caused by disaster occurring in the month of January 2020 and continuing thereafter. | $ | 150,000 | $ | 150,000 | ||||||||||||
| On July 7, 2020, the Company was advised that the Small Business Administration (SBA) had approved a $150,000 loan under the Economic Injury Disaster Loan Program pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act (“Loan”). The Loan, evidenced by a promissory note dated July 7, 2020, has a term of thirty (30) years, bears interest at a fixed rate of three and three-quarters percent (3.75%) per annum, with monthly payments in the amount of $731.00 per month commencing twelve (12) months from the date of the note and is secured by essentially all of the assets of the Company. The proceeds of the Loan will be used for general working capital purposes to alleviate economic injury caused by disaster occurring in the month of January 2020 and continuing thereafter. | $ | 148,681 | $ | 150,000 | ||||||||||||
| Total Long-Term Notes Payable: | $ | 150,000 | $ | 150,000 | $ | 148,681 | $ | 150,000 | ||||||||
| 10 |
In January 2018 the Company entered into an amendment agreement (the “Amendment”) with EuroAmerican Investments (“EuroAmerican”) regarding its $300,000 loan note (the “Note”). Under the Amendment, the Note was extended and the conversion terms of the Note were reduced to $0.21, the same as the offering price of the 2018 Offering. Conversion of the Note and accrued interest would result in the issuance of shares of Common Stock as of September 30, 2021.March 31, 2022. Notwithstanding, EuroAmerican agreed that the Note could not be converted without first offering the Company the right to redeem the Note at principal and accrued interest, and secondly Fountainhead has the right to purchase the Note, which cannot be converted prior to such offer and the failure of the Company and Fountainhead to exercise such option in accordance with the amendment terms. The amendment was recognized as a modification, based on the guidance in ASC 470-50. On March 29, 2022 the maturity date of the Note was extended to March 31, 2023. No other term was amended on the Note.
The Company routinely finances all their insurance policies through a third party finance company which requires a down payment and subsequent monthly payments, the time periods vary from 10 months to 12 equal monthly payments.
5. LEASE
The Company recognized the following related to a lease in its unaudited consolidated balance sheet at September 30, 2021March 31, 2022 and December 31, 2020:2021:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
| September 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| Operating Lease ROU Assets | $ | 90,924 | $ | 124,183 | $ | 68,053 | $ | 79,560 | ||||||||
| Operating Lease ROU Assets | $ | 90,924 | $ | 124,183 | $ | 68,053 | $ | 79,560 | ||||||||
| Operating Lease Liabilities | ||||||||||||||||
| Current portion | $ | 46,324 | $ | 44,623 | 47,518 | 46,915 | ||||||||||
| Long-term portion | 42,625 | 77,008 | $ | 18,379 | $ | 30,580 | ||||||||||
| Operating Lease Liabilities | $ | 88,949 | $ | 121,631 | $ | 65,897 | $ | 77,495 | ||||||||
6. 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. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment:
SCHEDULE OF BUSINESS SEGMENTS INFORMATION
| 2022 | 2021 | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Vycor Medical | $ | 301,540 | $ | 250,648 | $ | 1,026,572 | $ | 776,932 | $ | 287,356 | $ | 262,714 | ||||||||||||
| NovaVision | $ | 30,547 | $ | 25,277 | $ | 92,691 | $ | 73,498 | $ | 26,477 | $ | 33,035 | ||||||||||||
| Revenue | $ | 332,087 | $ | 275,925 | $ | 1,119,263 | $ | 850,430 | $ | 313,833 | $ | 295,749 | ||||||||||||
| Gross Profit | ||||||||||||||||||||||||
| Vycor Medical | $ | 269,986 | $ | 211,089 | $ | 930,180 | $ | 683,125 | $ | 256,337 | $ | 235,932 | ||||||||||||
| NovaVision | $ | 26,956 | $ | 24,285 | $ | 86,133 | $ | 68,967 | $ | 24,087 | $ | 31,340 | ||||||||||||
| Gross Profit | $ | 296,942 | $ | 235,374 | $ | 1,016,313 | $ | 752,092 | $ | 280,424 | $ | 267,272 | ||||||||||||
| September 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| Total Assets: | ||||||||||||||||
| Vycor Medical | $ | 1,009,665 | $ | 953,730 | $ | 910,098 | $ | 901,930 | ||||||||
| NovaVision | 29,617 | 32,213 | 22,699 | 33,054 | ||||||||||||
| Discontinued operations | 339 | 577 | 182 | 380 | ||||||||||||
| Total Assets | $ | 1,039,621 | $ | 986,520 | $ | 932,979 | $ | 935,364 | ||||||||
(b) Geographic information
The Company operates in two geographic segments, the United States and Europe. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment.
SUMMARY OF GEOGRAPHIC INFORMATION
| 2022 | 2021 | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| United States | $ | 328,250 | $ | 270,851 | $ | 1,104,939 | $ | 839,992 | $ | 310,605 | $ | 288,780 | ||||||||||||
| Europe | $ | 3,837 | $ | 5,074 | $ | 14,324 | $ | 10,438 | $ | 3,228 | $ | 6,969 | ||||||||||||
| Revenue | $ | 332,087 | $ | 275,925 | $ | 1,119,263 | $ | 850,430 | $ | 313,833 | $ | 295,749 | ||||||||||||
| Gross Profit | ||||||||||||||||||||||||
| United States | $ | 293,187 | $ | 230,321 | $ | 1,002,169 | $ | 741,675 | $ | 277,212 | $ | 260,371 | ||||||||||||
| Europe | $ | 3,755 | $ | 5,053 | $ | 14,144 | $ | 10,417 | $ | 3,212 | $ | 6,901 | ||||||||||||
| Gross Profit | $ | 296,942 | $ | 235,374 | $ | 1,016,313 | $ | 752,092 | $ | 280,424 | $ | 267,272 | ||||||||||||
| September 30, | December 31, | March 31, | December 31, | |||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| Total Assets: | ||||||||||||||||
| United States | $ | 1,033,820 | $ | 980,239 | $ | 926,757 | $ | 928,761 | ||||||||
| Europe | 5,462 | 5,704 | 6,040 | 6,223 | ||||||||||||
| Discontinued operations | 339 | 577 | 182 | 380 | ||||||||||||
| Total Assets | $ | 1,039,621 | $ | 986,520 | $ | 932,979 | $ | 935,364 | ||||||||
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7. EQUITY
Common Stock GrantsEquity Transactions
During January to SeptemberMarch 2022 and 2021, and 2020, the Company granted and shares of Common Stock respectively, (valued at $ and $) and shares of Common Stock (valued at $), respectively, respectively) to non-employee Directors. Under the terms of the Directors Deferred Compensation Plan, the receipt of these shares is deferred until the January 15th following the termination of their services as a director, or following the termination of the Plan. The Plan was terminated on April 1, 2021 and the Companyshares issued and shares of common stock to Steve Girgenti and Lowell Rush in respect of their Deferred Compensation shares following their resignations from the board.period end (see Note 13).
In January 2021 the Company issued shares of common stock to Oscar Bronsther in respect of the shares granted under the Directors’ Deferred Compensation plan, following his resignation from the board of directors effective July 1, 2020.
On April 1, 2021 the Company issued shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement (see Note 10)14).
During January to SeptemberMarch 2022 and 2021, and 2020, under the terms of the Consulting Agreement referred to in note 10, the Company issued of Common Stock to Fountainhead valued at $253,03745,536 and $337,500101,430, respectively.
Stock Options
The details of the outstanding stock options are as follows:
| Weighted average | ||||||||||||||||
| Number of shares | exercise price per share | Number of shares | Weighted average exercise price | |||||||||||||
| Outstanding at December 31, 2020 | 680,000 | $ | 0.28 | 680,000 | $ | 0.28 | ||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Cancelled or expired | (680,000 | ) | (0.28 | ) | (680,000 | ) | 0.28 | |||||||||
| Outstanding at September 30, 2021 | - | $ | - | |||||||||||||
| Outstanding at December 31, 2021 | - | $ | - | |||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Cancelled or expired | - | - | ||||||||||||||
| Outstanding at March 31, 2022 | - | $ | - | |||||||||||||
As of March 31, 2022, the weighted-average remaining contractual life of outstanding options is years.
The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the “measurement date” using an option pricing model, or their contractual value if different in the case of common stock. The “measurement date” for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant.
Non-Employee Stock Compensation
Aggregate stock-based compensation for stock granted to non-employees for each of the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 was $ and $ respectively. The expense related to stock not issued during each of the nine months ended September 30, 2021 and 2020 comprises $0 and $56,000122,430, respectively, related to stock granted but not issued to directors under the Directors Deferred Compensation Plan.respectively. As of September 30, 2021,March 31, 2022, there was $ of total unrecognized compensation costs related to warrant and stock awards and non-vested options.
9. COMMITMENTS AND CONTINGENCIES
Lease
The Company leases office space located at 951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487 from WPT Land 2 L.P., for a gross rent of approximately $4,000per month, plus other charges of approximately $2,500 1,500per month. The lease terminated September 30, 2020 and was extended for a further three years to August 31, 2023.The Company’s subsidiary in Germany occupied premises on a rolling 12 month lease agreement with a 3 month notice period of EUR1,650per month (approximately $1,815), which was terminated effective June 30, 2020. Rent expense for the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 for the continuing operations was $58,69120,604 and $59,00819,477 respectively. See Note 5.
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Potential German tax liability
In June 2012 the Company’s NovaVision German subsidiary received a preliminary assessment for Magdeburg City trade tax of €75,000 (approximately $82,000), with an additional interest charge of €12,000 (approximately $13,200). 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 was preliminarily reduced to zero. The Company did not accept this trade tax assessment and appealed against it to the relevant tax authorities with a view to its reduction. The relevant tax authorities agreed to suspend the assessment pending the outcome of certain court hearings and proposed tax legislation, and the Company agreed to make monthly payments on account totaling €75,000 (approximately $82,000) which were completed in October 2016 and fully expensed. At that time the Company appealed against the interest charge of €12,000 (approximately $13,200) which the tax authorities did not accept but also agreed to suspend pending the outcome of the hearings and proposed legislation outlined above. Accordingly, the Company has made no provision for this liability in the ninethree months ended September 30, 2021March 31, 2022 and the year ended December 31, 20202021 respectively. The Company is in the process of winding down the entity, as disclosed in Note 3.
10. CONSULTING AND OTHER AGREEMENTS
The following agreements were entered into or remained in force during the period ended September 30, 2021:March 31, 2022:
Consulting Agreement with Fountainhead
In March 2017 and effective April 1, 2017, the Company amended the Fountainhead Consulting Agreement. Under the Amended Agreement, fees of $450,000 are payable to Fountainhead, with an option to receive $5,000 per month in cash and the remainder payable in Company Common Stock issued at the higher of $ and the average price for the 30 days prior to issuance, and deliverable at the end of each fiscal quarter. The Consulting Agreement also contains provisions for Fountainhead to receive a higher proportion of its fees in cash subject to certain future liquidity events and Board approval.
Effective January 1, 2021, the Company made a slight amendment to the Fountainhead Consulting Agreement (“the Amended Agreement”). Under the Amended Agreement, fees are payable to Fountainhead, with an option to receive $ per month in cash, and the remainder payable in Company Common Stock (“Shares”) as follows: 1) Shares on the last day of each quarter; to the extent there are cash retainer payments during the quarter, the Shares shall be reduced by a number calculated by dividing the cash amount by the average closing price of the Shares for the 30 trading days prior to issuance; or 2) if the average closing price of the Shares for the 30 trading days prior to issuance is above $, a number of Shares calculated by dividing $112,500 by the average closing price of the Shares for the 30 trading days prior to issuance. The Consulting Agreement also contains provisions for Fountainhead to receive a higher proportion of its fees in cash subject to certain future liquidity events and Board approval. Under the terms of the Amended Agreement, Fountainhead continues to provide the executive management team of the Company, including the positions of CEO, President and CFO, whose employment agreements with the Company stipulate they receive no remuneration from the Company.
During the ninethree months ended September 30,March 31, 2022 and March 31, 2021, and September 30, 2020, under the terms of the Amended Agreement, Fountainhead received shares of Company Common Stock, valued at $253,03745,536 and shares of common stock valued at $337,500101,430, respectively.
Other Agreements
On March 30, 2021, Vycor entered into a Consulting Agreement with Ricardo J. Komotar, M.D. (the “Agreement”) to provide certain specified services over the three-year term of the Agreement. Under the Agreement, Dr. Komotar will provide general scientific advisory consultancy services, and will also provide scientific advisory services based around certain specific pre-determined milestones. In consideration of the Consultant’s services, the Company agreed to deliver to the Consultant over the course of the three-year term, a total of shares of Company Common Stock in respect of the general consultancy, and up to shares of Company Common Stock in respect of the milestones, the actual number of shares to be delivered being determined by the achievement of the pre-determined milestones. On April 1, 2021 shares of Company Common Stock (valued at market price totaling $20,129) were issued under the terms of the Agreement which is being amortized over twelve months.(see Note 13).
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11. RELATED PARTY TRANSACTIONS
Peter Zachariou and David Cantor, directors of the Company, are investment managers of Fountainhead which owned, at September 30, 2021,March 31, 2022, 59.2%61.5% of the Company’s Common Stock and 70%69.7% of the Company’s Series D Preferred D Stock. Peter Zachariou owns 0.2%0.16% of the Company’s Common Stock and 26%25.7% of the Company’s Series D Preferred D Stock. Adrian Liddell, Chairman is a consultant forto Fountainhead.
During each of the ninethree months ended September 30,March 31, 2022 and March 31, 2021, and September 30, 2020, under the terms of the Consulting Agreement referred to in note 10, the Company issued shares of Common Stock to Fountainhead valued at $253,03745,536 and $337,500101,430, respectively.
During each of the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, the Company accrued an aggregate of $324,370162,185 of Preferred D Stock dividends, of which $226,037113,019 was in respect ofregarding Fountainhead and $83,38641,693 was in respectregarding of Peter Zachariou. Total accrued Preferred D Stock dividends at March 31, 2022 and 2021 was $1,784,040 and $1,459,669, respectively, of which $1,243,205 and $1,017,167, respectively, was regarding Fountainhead and $458,622 and $375,237, respectively, was regarding of Peter Zachariou.
During the ninethree months ended September 30,March 31, 2022 and 2021 and 2020 the Company issued unsecured loan notes to Fountainhead for a total of $10,00080,000 and $80,00010,000, respectively. The loan notes bear interest at a rate of 10%10% and are due on demand or by their one-year anniversary (see Note 4).
There were 0 other related party transactions during the ninethree months ended September 30, 2021March 31, 2022 and 2020.2021.
12. CONCENTRATION
Vycor Medical sells its neurosurgical devices in the US primarily direct to hospitals, and internationally through distributors who in turn sell to hospitals.
SCHEDULE OF CONCENTRATION
Sales Concentration:
| Three Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Number of customers over 10% | - | - | ||||||
| Percentage of sales | 0 | % | 0 | % | ||||
| Nine Months Ended September 30, | ||||||||||||||||
| 2021 | 2020 | Three Months Ended March 31, | ||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Number of customers over 10% | - | 1 | 0 | 0 | ||||||||||||
| Percentage of sales | 0 | % | 14 | % | 0 | % | 0 | % | ||||||||
Accounts Receivable Concentration
| At September 30, | At December 31, | At March 31, | At December 31, | |||||||||||||
| 2021 | 2020 | 2022 | 2021 | |||||||||||||
| Number of customers over 10% | 0 | 2 | 0 | 1 | ||||||||||||
| Percentage of accounts receivable | 0 | % | 10 | % | 0 | % | 11 | % | ||||||||
The Company has three sub-contract manufacturers from which it purchases, respectively, VBAS injection molded parts, completed and sterilized VBAS units, and VBAS extension arms. Purchases from these manufacturers vary from quarter to quarter, with no purchases in some quarters, however on an annual basis purchases from each manufacturer represent over 10%10% of total annual purchases.
13. SUBSEQUENT EVENTS
On April 1, 2022 the Company issued shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement (see Note 10).
The Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the unaudited consolidated financial statements were issued and has determined that, other than that disclosed above, there were no significant subsequent events or transactions whichthat would require recognition or disclosure in the financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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.” (“Vycor”). 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.
2. Overview of Business
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 device 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 6761 issued or allowed patents and a further 10 pending. The Company leverages joint resources across the divisions to operate in a cost-efficient manner.
The Company periodically engages in discussions with potential strategic partners for or purchasers of each or both of our operating divisions. In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model; in June 2020 Vycor announced that it would be entering into a license agreement and transition agreement (the “Agreements”) with HelferApp GmbH, a cognitive therapy specialist. Under the Agreements, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals; and has assumed responsibility for the current patients of NovaVision in the territory.professionals. The NovaVision German office was closed effective June 30, 2020.
Vycor Medical
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.system. Vycor Medical is ISO 13485:2016 and MDSAP (Medical Device Single Audit Program) certified, and VBAS has U.S. FDA 510(k) clearance and CE Marking for Europe (Class III) for brain and spine surgeries, and regulatory approvals in a number of other international markets. Vycor Medical has 2930 granted and 10 pending patents.
NovaVision
NovaVision provides non-invasive, computer-based rehabilitation therapies targeted at people who have impaired vision as a result of stroke or other brain injury, and has 3831 granted patents.
Strategy
The Company is continuing to execute on a plan to achieve revenue growth and a reduction in annual cash operating losses1 and generated a small cash operating profit1 during the three and nine months ended September 30, 2021.March 31, 2022. For Vycor Medical this plan includes: increasing market penetration in the US; increasing international growth in territories where we are not represented or under-represented and continued new product development in response to market demands.demands and demonstrating applicability in a broader range of pathologies. In the US the Company is focused on increasing market penetration through targeting neurosurgeons systematically, both through its distribution network and also directly by leveraging existing KOL neurosurgeon VBAS supporters to access new neurosurgeon users.
The Company continues to target key international territories including Europe where it intends to drive adoption of its VBAS product through selected key KOL neurosurgeon VBAS users in each territory to identify both new potential users and also high qualityhigh-quality distribution partners to bolster our existing network.
1 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
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The Company has for some time been working to better integrate its VBAS with neuronavigation. The first phase of the modification of the existing VBAS product range was completed in September 2017 and has been well received by surgeons. The second phase involves the introduction of an optional Alignment Clip accessory that will snap onto the VBAS and allow for a neuronavigation pointer to be fully integrated into the body of the VBAS. This VBAS AC model range has received US FDA 510(k) clearance, EU clearance and is going through the regulatory process elsewhere internationally; it is envisaged that it will be available early induring 2022. The Company will continue to work with neuronavigation companies to seek ways to further integrate the VBAS with neuronavigation and with other companies with complementary technologies used in neurosurgery. We will also be exploring with neurosurgeons and focus groups additional selected development work targeted at increasing the ease and applicability of our products to additional common procedures.
For NovaVision, given the company’s resources, and the large size and diversity of its end markets, we believe that the most efficient way to tackle the distribution of its broad range of patient and professional products is by partnering with entities in selected geographies that have either direct access to the end users or a desire and financial wherewithal to leverage the NovaVision therapy platform.platform, including into new areas. As a result, the Company closed the NovaVision German office and entered into a license agreement with HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland, and is seeking similar partnerships in other territories with regional companies able to leverage NovaVision’s clinically supported vision therapies. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
1 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
COVID-19
Vycor Medical experienced a significant reduction in demand during the twelve months ended December 31, 2020 in the US and Europe, particularly in the second quarter, with some recovery in the third and fourth quarters. This recovery continued at a stronger level during the nine months ended September 30, 2021 such that sales for the Vycor Medical division increased by 32% over the same period in 2020. Although neurosurgery is not considered an elective procedure, general hospital dislocation and diversion of resources away from non-emergency surgeries, or surgeries that can be postponed for a short period without harm, has impacted our revenues during the twelve months ended December 31, 2020 and although this has recovered during the nine months ended September 30, 2021, COVID-19 remains classified as a pandemic and this could impact future sales. In addition, sales and marketing efforts by Vycor’s representatives were disrupted or curtailed during periods of lockdown and social distancing, and this may continue to hinder the recovery of revenues, particularly in certain international territories where vaccination rates remain relatively low. While our operations are principally located in the United States, and our sub-contract manufacturers are located in the United States, we participate in a global supply chain, and COVID-19 may impact our ability to conduct normal business operations, which could adversely affect our results of operations and liquidity. Furthermore, our sub-contract manufacturers have experienced, and continue to experience staffing shortages and this has elongated our production lead times. Disruptions to our supply chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from supplier staff absences due to COVID-19 illness or isolation requirements, the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, or restrictions on the shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects on our manufacturing output and delivery schedule. Although we have implemented business continuity plans for our offices and personnel to enable continuity of service remotely if required, if a critical number of our employees become too ill to work, or we are not able to access a sufficient quantity of our inventory for shipment due to enforced office closures, our production ability could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business consequences due to COVID-19, or any other, pandemic, demand for our products could also be materially adversely affected in a rapid manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities in which we or our suppliers and customers operate. Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations.
Comparison of the Three Months Ended September 30, 2021March 31, 2022 to the Three Months Ended September 30, 2020March 31, 2021
Revenue and Gross Margin:
| Three months ended | Three months ended | |||||||||||||||||||||||
| September 30, | March 31, | |||||||||||||||||||||||
| 2021 | 2020 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Vycor Medical | $ | 301,540 | $ | 250,648 | 20 | % | $ | 287,356 | $ | 262,714 | 9 | % | ||||||||||||
| NovaVision | $ | 30,547 | $ | 25,277 | 21 | % | $ | 26,477 | $ | 33,035 | -20 | % | ||||||||||||
| $ | 332,087 | $ | 275,925 | 20 | % | $ | 313,833 | $ | 295,749 | 6 | % | |||||||||||||
| Gross Profit | ||||||||||||||||||||||||
| Vycor Medical | $ | 269,986 | $ | 211,089 | 28 | % | $ | 256,337 | $ | 235,932 | 9 | % | ||||||||||||
| NovaVision | $ | 26,956 | $ | 24,285 | 11 | % | $ | 24,087 | $ | 31,340 | -23 | % | ||||||||||||
| $ | 296,942 | $ | 235,374 | 26 | % | $ | 280,424 | $ | 267,272 | 5 | % | |||||||||||||
Vycor Medical recorded revenue of $301,540$287,356 from the sale of its products for the three months ended September 30, 2021,March 31, 2022, an increase of $50,892,$24,642, or 20%9%, over the same period in 2020. This reflected continued recovery in the US and certain international markets following the easing of COVID-19 issues as well as results from Vycor’s strategy to increase penetration described under “Strategy” above.2021. Gross margin of 90%89% and 84%90% was recorded for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively.
NovaVision recorded revenues of $30,547$26,477 for the three months ended September 30, 2021, an increaseMarch 31, 2022, a decrease of $5,270$6,559 over the same period in 2020.2021, of which $5,096 related to delayed recording of 2020 licensing fees from NovaVision’s German licensee during the three months ended March 31, 2021. Gross margin was 88%91%, compared to 96%95% for the same period in 2020.2021.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $61,465$138,802 to $365,785$318,674 for the three months ended September 30, 2021March 31, 2022 from $427,250$457,476 for the same period in 2020.2021. Included within Selling, General and Administrative Expenses are non-cash charges for stock 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, 2021March 31, 2022 was $82,175,$50,568, a $44,325$71,682 decrease from the charge in 20202021 of $126,500 following the departures from the board of Messrs. Girgenti and Rush and lower calculated fees to Fountainhead.$122,430. Also included within Selling, General and Administrative Expenses are Sales Commissions, which increased by $8,792$9,656 from $52,806$47,670 to $61,598$57,326 in 2021.2021, reflecting a proportional increase in US sales.
The remaining Selling, General and Administrative expenses decreased by $25,932$76,595 from $247,944$287,376 to $222,012$210,780 in 2021.2022. Patent costs increaseddecreased by $14,457$15,998 due toa lower level of Vycor division patent activity during the period, and software development and associated scientific and clinicalregulatory fees decreased by $18,604 as a result of EU audit costs related to additional development in NovaVision increased by $14,680; there was also a reduction in professional costs related to the closure of NovaVision Germany of $7,498.prior year.
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 | Cash G&A | Non-Cash G&A | |||||||||||||
| Commissions | 8,792 | - | 9,656 | - | ||||||||||||
| Scientific, clinical and software development | 10,930 | 1,005 | - | |||||||||||||
| Payroll | (625 | ) | - | |||||||||||||
| Regulatory | (4,197 | ) | - | (18,604 | ) | - | ||||||||||
| Other (travel/insurance/premises/payroll) | (13,782 | ) | - | |||||||||||||
| Legal, patent, audit/accounting | (18,883 | ) | - | (23,662 | ) | - | ||||||||||
| Other (travel/regulatory/premises) | (34,709 | ) | ||||||||||||||
| Board and financial | - | (44,325 | ) | - | (71,682 | ) | ||||||||||
| Total change | (17,140 | ) | (44,325 | ) | (66,939 | ) | (71,682 | ) | ||||||||
| 17 |
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, 2021 and 2020March 31, 2022 was $8,088 and $7,836, respectively.$7,912 compared to $7,665 for 2021. Other Interest expense for the three months ended September 30, 2021 and 2020March 31, 2022 was $12,685 and $12,099, respectively.$12,314 compared to $16,118 for 2021.
Operating income (loss)loss from Discontinued Operations:
Operating incomeloss from Discontinued Operations decreased by $26,469$11,417 to a loss of $3,966$755 in 20212022 from the income of $22,503$12,172 in 2020; The income in 2020 resulted from recording other income of $36,451. The2021; the Company has some minor ongoing costs related to the wind-down of the discontinued operations in Germany but no revenues.
Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020
Revenue and Gross Margin:
| Nine months ended | ||||||||||||
| September 30, | ||||||||||||
| 2021 | 2020 | % Change | ||||||||||
| Revenue: | ||||||||||||
| Vycor Medical | $ | 1,026,572 | $ | 776,932 | 32 | % | ||||||
| NovaVision | $ | 92,691 | $ | 73,498 | 26 | % | ||||||
| $ | 1,119,263 | $ | 850,430 | 32 | % | |||||||
| Gross Profit | ||||||||||||
| Vycor Medical | $ | 930,180 | $ | 683,125 | 36 | % | ||||||
| NovaVision | $ | 86,133 | $ | 68,967 | 25 | % | ||||||
| $ | 1,016,313 | $ | 752,092 | 35 | % | |||||||
Vycor Medical recorded revenue of $1,026,572 from the sale of its products for the nine months ended September 30, 2021, an increase of $249,640. This reflected a strong recovery in the US and certain international markets following the easing of COVID-19 issues as well as results from Vycor’s strategy to increase penetration described under “Strategy” above during the second quarter. Gross margin of 91% and 88% was recorded for the nine months ended September 30, 2021 and for the same period in 2020.
NovaVision recorded revenues of $92,691 for the nine months ended September 30, 2021, an increase of $19,193 over the same period in 2020, of which $7,378 related to licensing fees from NovaVision’s German licensee, and gross margin of 93%, compared to 94% for the same period in 2020.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $30,402 to $1,230,340 for the nine months ended September 30, 2021 from $1,260,742 for the same period in 2020. Included within Selling, General and Administrative Expenses are non-cash charges for stock 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, 2021 was $284,102, a decrease of $109,398 over $393,500 in 2020 following the departures from the board of Messrs. Girgenti and Rush and lower calculated fees to Fountainhead. Also included within Selling, General and Administrative Expenses are Sales Commissions, which increased by $63,561 from $149,363 to $212,924, as a result of higher revenues in the US market.
The remaining Selling, General and Administrative expenses increased by $15,435 from $717,879 to $733,314. Patent costs increased by $32,185 due to Vycor division patent activity during the period and software development and associated scientific and clinical costs related to additional development in NovaVision increased by $38,824; regulatory costs decreased by $14,788 due to the costs of international regulatory costs during the 2020 period and there was also a reduction in professional costs related to the closure of NovaVision Germany of $12,277.
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 | |||||||
| Commissions | 63,561 | - | ||||||
| Scientific, clinical and software development | 39,797 | |||||||
| Legal, patent, audit/accounting | 19,922 | - | ||||||
| Other (travel/insurance/premises) | (14,567 | ) | - | |||||
| Regulatory | (14,788 | ) | - | |||||
| Payroll | (14,929 | ) | - | |||||
| Board and financial | - | (109,398 | ) | |||||
| Total change | 78,996 | (109,398 | ) | |||||
Interest Expense:
Interest comprises expense on the Company’s debt and insurance policy financing. Related Party Interest expense for the nine months ended September 30, 2021 was $23,753 compared to $21,846 for 2020. Other Interest expense for the nine months ended September 30, 2021 was $42,465 compared to $36,033 for 2020.
Liquidity
The following table shows cash flow and liquidity data for the periods ended September 30, 2021March 31, 2022 and December 31, 2020:2021:
| September 30, 2021 | December 31, 2020 | $ Change | March 31, 2022 | December 31, 2021 | $ Change | |||||||||||||||||||
| Cash | $ | 78,573 | $ | 46,002 | $ | 32,571 | $ | 80,567 | $ | 90,941 | $ | (10,374 | ) | |||||||||||
| Accounts receivable, inventory and other current assets | $ | 483,646 | $ | 417,899 | $ | 65,747 | $ | 432,317 | $ | 396,470 | $ | 35,847 | ||||||||||||
| Total current liabilities | $ | (3,107,110 | ) | $ | (2,740,828 | ) | $ | (366,282 | ) | $ | (3,352,332 | ) | $ | (3,149,997 | ) | $ | (202,335 | ) | ||||||
| Working capital | $ | (2,544,891 | ) | $ | (2,276,927 | ) | $ | (267,964 | ) | $ | (2,839,448 | ) | $ | (2,662,586 | ) | $ | (176,862 | ) | ||||||
| Cash provided by (used in) financing activities | $ | 81,340 | $ | 286,552 | $ | (205,212 | ) | |||||||||||||||||
| Cash provided by financing activities | $ | 68,409 | $ | 51,130 | $ | 17,279 | �� | |||||||||||||||||
Operating Activities. Cash used in operating activities comprises net loss adjusted for non-cash items and the effect of changes in working capital and other activities. The net repayment of normal insurance financing should also be taken into account when considering cash provided by (used in)used in operating activities.
The following table shows the principle components of cash provided by (used in)used in operating activities during the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, with a commentary of changes during the periods and known or anticipated future changes:
| September 30, 2021 | September 30, 2020 | $ Change | ||||||||||
| Net loss | $ | (248,600 | ) | $ | (622,122 | ) | $ | 373,522 | ||||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||||||||
| Amortization and depreciation of assets | $ | 50,648 | $ | 44,922 | $ | 5,726 | ||||||
| Forgiveness of debt Paycheck Protection Program | $ | (117,200 | ) | $ | - | $ | (117,200 | ) | ||||
| Stock based compensation | $ | 284,102 | $ | 393,500 | $ | (109,398 | ) | |||||
| Other | $ | 9,270 | $ | 9,418 | $ | (148 | ) | |||||
| $ | 226,820 | $ | 447,840 | $ | (221,020 | ) | ||||||
| Net loss adjusted for non-cash items | $ | (21,780 | ) | $ | (174,282 | ) | $ | 152,502 | ||||
| Changes in working capital | ||||||||||||
| Accounts receivable | $ | (17,646 | ) | $ | 137,154 | $ | (154,800 | ) | ||||
| Accounts payable and accrued liabilities | $ | 16,076 | $ | (231,277 | ) | $ | 247,353 | |||||
| Inventory | $ | (49,838 | ) | $ | 19,221 | $ | (69,059 | ) | ||||
| Prepaid expenses and net insurance financing repayments | $ | 15,611 | $ | 21,695 | $ | (6,084 | ) | |||||
| Accrued interest (not paid in cash) | $ | 64,024 | $ | 57,879 | $ | 6,145 | ||||||
| Changes in discontinued operations, net | $ | (3,791 | ) | $ | (54,218 | ) | $ | 50,427 | ||||
| $ | 24,436 | $ | (49,546 | ) | $ | 73,982 | ||||||
| Cash provided by (used in) operating activities, adjusted for net insurance repayments | $ | 2,656 | $ | (223,828 | ) | $ | 226,484 | |||||
March 31, 2022 | March 31, 2021 | $ Change | ||||||||||
| Net loss | $ | (74,552 | ) | $ | (242,919 | ) | $ | 168,367 | ||||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||
| Amortization and depreciation of assets | $ | 15,563 | $ | 14,156 | $ | 1,407 | ||||||
| Share based compensation | $ | 50,568 | $ | 122,430 | $ | (71,862 | ) | |||||
| Other | $ | 5,960 | $ | 3,090 | $ | 2,870 | ||||||
| $ | 72,091 | $ | 139,676 | $ | (67,585 | ) | ||||||
| Net loss adjusted for non-cash items | $ | (2,461 | ) | $ | (103,243 | ) | $ | 100,782 | ||||
| Changes in working capital | ||||||||||||
| Accounts receivable | $ | (35,686 | ) | $ | 15,382 | $ | (51,068 | ) | ||||
| Accounts payable and accrued liabilities | $ | (48,168 | ) | $ | 40,429 | $ | (88,597 | ) | ||||
| Inventory | $ | (2,117 | ) | $ | (21,628 | ) | $ | 19,511 | ||||
| Prepaid expenses and net insurance financing repayments | $ | (20,127 | ) | $ | (870 | ) | $ | (19,257 | ) | |||
| Accrued interest (not paid in cash) | $ | 18,032 | $ | 23,783 | $ | (5,751 | ) | |||||
| Changes in discontinued operations, net | $ | 154 | $ | (5,483 | ) | $ | 5,637 | |||||
| $ | (87,912 | ) | $ | 51,613 | $ | (139,525 | ) | |||||
| Cash provided by (used in) operating activities, adjusted for net insurance repayments | $ | (90,373 | ) | $ | (51,630 | ) | $ | (38,743 | ) | |||
The adjustments to reconcile net loss to cash of $226,820$72,091 in the period have no impact on liquidity. The negativepositive change in Netnet loss adjusted for non-cash items of $221,020$100,784 was primarily due toan increase in sales in the Vycor division, which also accounts for the increase in sales as a resultaccounts receivable of recovery from the impact of COVID-19 on the Vycor division and results from the Company’s strategic initiatives. At December 31, 2019 there had been an increase in accounts payable and accrued liabilities mainly due to expenditure on regulatory for the transition to a new EU Notified Body, and regulatory and testing for the VBAS development occurring during the fourth quarter of 2019.$51,068. The change in accounts payable and accrued liabilities of $247,353$88,597 between the 20212022 and 20202021 periods was mainly due to the settlement of these accountsexpenses incurred during the nine months ended September 30, 2020.final quarter of 2021.
Additional inventory of $127,313$23,823 was purchased during the ninethree months ended September 30, 2021March 31, 2022 as part of normal production, and the Company anticipates purchasing additional new inventory of approximately $80,000$100,000 during the next twelve months for VBAS and VBAS AC. In January 2021 the Company received FDA 510(k) clearance for its new VBAS AC model range, and in April 2021 received EU clearance. The VBAS AC provides significantly greater integration with IGS by enabling an IGS pointer to be held securely within the device.
Investing Activities. CashThere was no cash used in investing activities of continuing operations forduring the ninethree months ended September 30, 2021 was $38,690, which primarily reflected expenditure onMarch 31, 2022 and the completion of VBAS AC.Company anticipates limited investing activities during the next twelve months.
Financing Activities. During the ninethree months ended September 30, 2021March 31, 2022 the Company received funds of $10,000$80,000 in respect of loans from Fountainhead. The Company also received a second loan of $58,600 during the period pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act. Both loans received under the Paycheck Protection Program were forgiven in August 2021 and have resulted in an extinguishment of debt for $117,200.
Liquidity and Plan of Operations, Ability to Continue as a Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $248,600$236,737 for the ninethree months ended September 30, 2021March 31, 2022 and has not generated sufficient positive cash flows from operations. As of September 30, 2021March 31, 2022 the Company had a working capital deficiency of $503,812,$540,184, excluding related party liabilities of $2,041,079.$2,299,264. These conditions, among others, raise substantial doubt regarding our ability to continue as a going concern. The unaudited consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
As described earlier in this ITEM 2 “Strategy”, Thethe Company is continuing to execute on a plan to achieve revenue growth and a reduction in annual cash operating losses21 and generated a small cash operating profit21 during the ninethree months ended September 30, 2021.March 31, 2022. For Vycor Medical this plan includes: increasing market penetration in the US; increasing international growth in territories where we are not represented or under-represented and continued new product development.development in response to market demands and demonstrating applicability in a broader range of pathologies. In the US the Company is focused on increasing market penetration through targeting neurosurgeons systematically, both through its distribution network and also directly by leveraging existing KOL neurosurgeon VBAS supporters in each territory to access new neurosurgeon users. The Company continues to target key international territories including Europe where it intends to drive adoption of its VBAS product through selected key KOL neurosurgeon VBAS users in each territory to identify both new potential users and also high qualityhigh-quality distribution partners to bolster our existing network. The Company has for some time been working to better integrate its VBAS with neuronavigation. The first phase of the modification of the existing VBAS product range was completed in September 2017 and has been well received by surgeons. The second phase involves the introduction of an optional Alignment Clip accessory that will snap onto the VBAS and allow for a neuronavigation pointer to be fully integrated into the body of the VBAS. This VBAS AC model range has received US FDA 510(k) clearance, EU clearance and is going through the regulatory process elsewhere internationally; it is envisaged that it will be available early induring 2022. The Company will continue to work with neuronavigation companies to seek ways to further integrate the VBAS with neuronavigation and with other companies with complementary technologies used in neurosurgery. We will also be exploring with neurosurgeons and focus groups additional selected development work targeted at increasing the ease and applicability of our products to additional common procedures. For NovaVision, given the company’s resources, and the large size and diversity of its end markets, we believe that the most efficient way to tackle the distribution of its broad range of patient and professional products is by partnering with entities in selected geographies that have either direct access to the end users or a desire and financial wherewithal to leverage the NovaVision therapy platform.platform, including into new areas. As a result, the Company closed the NovaVision German office and entered into a license agreement with HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland, and is seeking similar partnerships in other territories with regional companies able to leverage NovaVision’s clinically supported vision therapies. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
2 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
However, the Company believes it may not have sufficient cash to meet its various cash needs through November 30, 2022May 31, 2023 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $364,798,$388,732, which has a maturity date of March 31, 2022,2023, having been extended on a number of occasions from its initial due date of June 11, 2011. At this time, it is not known whether any further extension of the note beyond March 31, 20222023 will be available. Fountainhead, the Company’s largest shareholder, has provided working capital funding to the Company on an as-needed basis, although there is no guarantee that this will continue to be the case. The Company may consider seeking additional equity or debt funding, although there is no assurance that this would be available on acceptable terms or at all. If adequate funds are not available, the Company may have to delay or curtail development or commercialization of products, or cease some of its operations.
Critical Accounting Policies and Estimates
Uses of estimates in the preparation of financial statements
The preparation of unaudited consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the unaudited 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 unaudited 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 stock-based compensation.
A detailed description of our significant accounting policies can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2020.2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
(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.
| 20 |
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 a material weakness occurred as of April 1, 2021 with the resignation of the independent members of the Company’s Audit Committee as of that date. Effective that date, our disclosure and controls were no longer effective to ensure 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.
The matter involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were a lack of a functioning audit committee with independent members, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. This weakness occurred as of April 1, 2021 due to the resignation of the independent members of the Audit Committee from the Board of Directors effective as of April 1, 2021.
Management believes that the material weakness set forth did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors, results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
(b) Changes in Internal Controls
Effective April 1, 2021, the independent members of the Audit Committee resigned from the Board of Directors. There have not been no otherany 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.
PART II
ITEM 1. LEGAL PROCEEDINGS
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of November 12, 2021,May 10, 2022, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.
ITEM 1A. RISK FACTORS.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company issued the following unregistered shares of Common Stock between January and September 2021:
| Issuance Type | Security | Shares | ||||
| FHC Management Fees | Common | |||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
| 21 |
ITEM 5. OTHER INFORMATION
None
Index to Exhibits
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
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 12, 2021May 10, 2022
| Vycor Medical, Inc. | ||
| (Registrant) | ||
| By: | /s/ Peter C. Zachariou | |
| Peter C. Zachariou | ||
| Chief Executive Officer and Director (Principal Executive Officer) | ||
| Date | ||
| By: | /s/ Adrian Liddell | |
| Adrian Liddell | ||
| Chairman of the Board and Director | ||
| (Principal Financial and Accounting Officer) | ||
| Date | ||