UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
__________________
__________________
Delaware | 333-149782 | 20-3369218 | ||||||||||||||||
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) | ||||||||||||||||
3651 FAU Boulevard, Suite 300, Boca Raton, FL | 33434 | |||||||||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Registrant's
n/a
(Address of Principal Offices)
CALCULATION OF REGISTRATION FEE
Title of each
class of securities to be registered Amount to be registered Proposed maximum
offering price per share(1) Proposed maximum
aggregate offering price Amount of registration fee Common Stock, $0.0001 par value 93,602,221 $0.04 $3,744,089 $435.38 Total 93,602,221 $0.04 $3,744,089 $435.38
Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per share(1) | Proposed maximum aggregate offering price | Amount of registration fee | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common Stock, $0.0001 par value | 93,602,221 | $ | 0.04 | $ | 3,744,089 | $ | 435.38 | |||||||||||
Total | 93,602,221 | $ | 0.04 | $ | 3,744,089 | $ | 435,38 |
______________
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(e) under the Securities Act of 1933. |
(1)Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(e) under the Securities Act of 1933.
VYCOR MEDICAL, INC.
TABLE OF CONTENTS
PAGE | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
PART I. INFORMATION REQUIRED IN A PROSPECTUS | |||||||||||||||||||
ITEM 3. | SUMMARY INFORMATION AND RISK FACTORS | 1 | |||||||||||||||||
ITEM 4. | USE OF PROCEEDS | ||||||||||||||||||
ITEM 5. | DETERMINATION OF OFFERING PRICE | ||||||||||||||||||
ITEM 6. | DILUTION | ||||||||||||||||||
ITEM 7. | SELLING STOCKHOLDERS | ||||||||||||||||||
ITEM 8. | PLAN OF DISTRIBUTION | ||||||||||||||||||
ITEM 9. | DESCRIPTION OF SECURITIES TO BE REGISTERED | ||||||||||||||||||
ITEM 10. | INTEREST OF NAMED COUNSEL AND EXPERT | ||||||||||||||||||
ITEM 11. | INFORMATION WITH RESPECT TO THE REGISTRANT | ||||||||||||||||||
BACKGROUND | |||||||||||||||||||
LEGAL PROCEEDINGS | |||||||||||||||||||
DESCRIPTION OF PROPERTY | |||||||||||||||||||
CHANGES AND | |||||||||||||||||||
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS | |||||||||||||||||||
EXECUTIVE COMPENSATION | |||||||||||||||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |||||||||||||||||||
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS AND DIRECTOR | |||||||||||||||||||
EXPERTS | |||||||||||||||||||
WHERE YOU CAN FIND ADDITIONAL INFORMATION | |||||||||||||||||||
ITEM 12. | INCORPORATION OF CERTAIN MATERIAL BY REFERENCE | ||||||||||||||||||
ITEM 12A. | DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | ||||||||||||||||||
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS | |||||||||||||||||||
ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION | II-1 | |||||||||||||||||
ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS | II-1 | |||||||||||||||||
ITEM 15. | RECENT SALES OF UNREGISTERED SECURITIES | II-1 | |||||||||||||||||
ITEM 16. | EXHIBITS | II-5 | |||||||||||||||||
ITEM 17. | UNDERTAKINGS | ||||||||||||||||||
SIGNATURES | |||||||||||||||||||
EXHIBIT LIST |
INFORMATION REQUIRED IN A PROSPECTUS
1
Viewsite Brain Access System (VBAS)
• | |||||
Less Invasive Procedure: The VBAS’ shape and minimal footprint enables the surgeon to access a specific target with a smaller incision, resulting in a smaller corticotomy and less disruption to surrounding tissues. |
• | |||||
Reduction of Venous |
• | Superior Field of |
• | More Accurate | trauma. |
• | Minimizes target |
• | Potential ability to address previously difficult or inoperable |
• | As compared to existing blade retractors diameter of our device is fixed as opposed to variable which might give the surgeon less flexibility once he is at the desired location. |
• | The diameters and lengths of our devices are set to specific measurements, which may limit the surgeon to these specific sizes. |
• | Depending on the case, usage of a disposable product may be viewed as more costly and may not be accepted by our potential end users. |
• | Our device uses an ellipitical channel which potentially limits the working area compared to a round channel |
• | Certain procedures such as aneurysms require greater site access and therefore are less appropriate for VBAS’ minimal approach. |
2
Because our products are relatively new to the market, there is no guarantee that any of the above mentioned features would prove effective and be useful by the end user, and the extent to which we are successful in achieving our objectives will be judged by the acceptance of the devices in the market.
3
Intellectual Property
Trademarks
4
Product shortcomings
• | There are certain conditions for which VRT may not be suitable, including: those with a light sensitive seizure disorder such as epilepsy; those with acute central nervous system or eye disease; those with significant cognitive difficulties that would preclude understanding the instructions or maintaining attention for the daily therapy sessions; and those with best corrected visual acuity worse than 20/200, and therefore with an inability to detect the stimuli | reliably. |
• | Results can vary significantly, and some patients who have been treated have had little to no improvement in their vision field. |
• | There may be side effects. The majority of patients who undergo VRT do not experience any noticeable side effects, though a small number of patients have reported infrequent |
Marketing
NovaVision's
NovaVision's
5
Government Regulations
• | Fully Quality Assurance System Directive 93/42/EEC for Medical Devices, Annex II (3) |
• | EC Design-Examination Certificate Directive 93/42/EEC for Medical Devices, Annex II (4) |
• | ISO 13485.2003 |
• | HPB Licensing for Canada |
6
• | quality system regulation, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process; |
• | labeling regulations, which prohibit the promotion of products for unapproved or |
• | medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur. |
• | fines, injunctions, and civil penalties; |
• | recall or seizure of our products; |
• | operating restrictions, partial suspension or total shutdown of production; |
• | �� | Refusing a request for 510(k) clearance or premarket approval of new products; |
• | withdrawing 510(k) clearance or premarket approvals that are already granted; and |
• | criminal prosecution. |
7
Fiscal Year End.End. The Company'sCompany’s fiscal year end is December 31.
Common stock currently outstanding | 806,157,246 shares(1) | |||||||
Common stock offered by the selling stockholders | 93,602,221 shares | |||||||
Use of proceeds | We will not receive any proceeds from the sale of common stock offered by this prospectus. |
(1) | Shares of common stock outstanding as of October 21 , 2011. |
__________________
(1) Shares of common stock outstanding as of August 31, 2011.
8
FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
12/31/10 (as restated) | 12/31/09 (as restated) | 12/31/08 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 316,450 | $ | 199,046 | $ | 129,947 | ||||||||
Net loss | $ | (1,983,822 | ) | $ | (1,164,036 | ) | $ | (2,381,295 | ) | |||||
Net loss per share | $ | (0.003 | ) | $ | (0.040 | ) | $ | (0.108 | ) | |||||
Weighted average no. shares | 663,168,900 | 29,183,482 | 21,977,954 | |||||||||||
Stockholders’ equity (deficit) | $ | 88,714 | $ | (1,245,940 | ) | $ | (921,427 | ) | ||||||
Total assets | $ | 2,153,694 | $ | 400,960 | $ | 633,437 | ||||||||
Total liabilities | $ | 2,064,980 | $ | 1,646,900 | $ | 1,554,864 |
12/31/10
(as restated) 12/31/09
(as restated) 12/31/08 Revenues $ 316,450 $ 199,046 $ 129,947 Net loss $ (1,983,822 ) $ (1,164,036 ) $ (2,381,295 ) Net loss per share $ (0.003 ) $ (0.040 ) $ (0.108 ) Weighted average no. shares 663,168,900 29,183,482 21,977,954 Stockholders' equity (deficit) $ 88,714 $ (1,245,940 ) $ (921,427 ) Total assets $ 2,153,694 $ 400,960 $ 633,437 Total liabilities $ 2,064,980 $ 1,646,900 $ 1,554,864
As of June 30, 2011 | As of June 30, 2010 (restated) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance Sheet Data: | ||||||||||
Assets | $ | 4,760,602 | $ | 2,153,694 | ||||||
Liabilities | $ | 2,816,966 | $ | 2,064,980 | ||||||
Total Stockholders’ Equity | $ | 4,760,602 | $ | 2,153,694 | ||||||
Statement of Operations Data | ||||||||||
Revenue | $ | 142,331 | $ | 74,817 | ||||||
Operating Expenses | $ | 1,912,851 | $ | 477,021 | ||||||
Net Loss | $ | (1,835,258 | ) | $ | (420,185 | ) | ||||
Basis and Diluted Loss Per Share | $ | (0.002 | ) | $ | (0.001 | ) | ||||
Weighted Average Number of Shares Outstanding | 780,845,969 | 649,281,287 |
As of
June 30,
2011 As of
June 30,
2010
(restated) Balance Sheet Data: Assets $ 4,760,602 $ 2,153,694 Liabilities $ 2,816,966 $ 2,064,980 Total Stockholders' Equity $ 4,760,602 $ 2,153,694 Statement of Operations Data Revenue $ 142,331 $ 74,817 Operating Expenses $ 1,912,851 $ 477,021 Net Loss $ (1,835,258 ) $ (420,185 ) Basis and Diluted Loss Per Share $ (0.002 ) $ (0.001 Weighted Average Number of Shares Outstanding 780,845,969 649,281,287
9
The absence of significant operating history for us makes forecasting our revenue and expenses difficult, and we may be unable to adjust our spending in a timely manner to compensate for unexpected revenue shortfalls or unexpected expenses.
• | competition; |
• | need for acceptance of products and therapies — there can be no assured market for our products and therapies and there is no guarantee of orders or surgeon and patient acceptance; |
• | ability to continue to develop and extend brand identity; |
• | ability to anticipate and adapt to a competitive market; |
• | ability to effectively manage rapidly expanding operations; |
• | amount and timing of operating costs and capital expenditures relating to expansion of our business, operations, and infrastructure; and |
• | dependence upon key personnel to market and sell our products and the loss of one of our key managers may adversely affect the marketing of our products. |
10
the validity or enforceability of any of our patents or, if instituted, that such challenges will not be successful. The cost of litigation to uphold the validity of a patent and enforce it against infringement can be substantial and we do not have patent insurance. Even issued patents may later be modified or revoked by the Patent and Trademark Office or in legal proceedings. Patent applications in the United States are maintained in secrecy until the patent issues and, since publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries, we cannot be certain that we were the first creator of the inventions covered by our pending patent applications or the first to file patent applications on such inventions.
11
on a per use basis. We are assuming that notwithstanding the difference in price that surgeons will elect to use our devices because of their perception that our devices will permit safer and less invasive surgery. However, hospitals, medical insurance providers, health maintenance organizations and others approving surgical costs may decide that the cost outweighs the benefit. In addition, surgeons may opt to use other devices.
• | warning letters or untitled letters; |
• | fines and civil penalties; |
• | unanticipated expenditures; |
• | withdrawal or suspension of approval by the FDA or other regulatory bodies; |
• | product recall or seizure; |
• | orders for physician notification or device repair, replacement or refund; |
• | interruption of production; |
• | operating restrictions; |
• | injunctions; and |
• | criminal prosecution. |
12
Similarly, in Canada, Health Canada could place a hold on imports from us and could revoke any licenses held for violations of its rules and regulations. Health Canada could issue a warning the first time around and we would be obligated to fix the problem and follow up with Health Canada.
13
We are subject to compliance with securities law, which exposes us to potential liabilities, including potential rescission rights.
14
We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our products and implement our business objectives could be adversely affected.
15
Our common stock is subject to the Penny Stock Regulations
16
to us to be a registered broker-dealer or an affiliate of a registered broker-dealer. Each of the selling stockholders has acquired his, her or its shares solely for investment and not with a view to or for resale or distribution of such securities. Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the securities.
Name(1) | Shares of common stock owned prior to the offering | Shares of common stock to be sold(2) | Shares of common stock owned after the offering | Percentage of common stock owned after this offering | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
MKM Opportunity Master Fund, Limited | 5,555,556 | 5,555,556 | 0 | 0.00 | % | |||||||||||||
Andrew Mitchell | 555,556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Matthew Balk | 3,589,333 | 3,589,333 | 0 | 0.00 | % | |||||||||||||
Daniel Balk | 1,222,222 | 1,222,222 | 0 | 0.00 | % | |||||||||||||
David Balk | 1,222,222 | 1,222,222 | 0 | 0.00 | % | |||||||||||||
Daniel Schneiderman | 885,778 | 885,778 | 0 | 0.00 | % | |||||||||||||
Jonathan Balk | 555,556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Richard L. Hoffman | 500,000 | 500,000 | 0 | 0.00 | % | |||||||||||||
Robert I and Sandra S Neborsky Living Trust | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Skriloff Family Irrevocable Trust for benefit of Samuel Skriloff | 111,111 | 111,111 | 0 | 0.00 | % | |||||||||||||
Skriloff Family Irrevocable Trust for benefit of Olivia Skriloff | 111,111 | 111,111 | 0 | 0.00 | % | |||||||||||||
Jason Adelman | 2,771,556 | 2,771,556 | 0 | 0.00 | % | |||||||||||||
Robert and Amy Bernstein | 555,556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Dick F. Chase, Jr. | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Boris and Alexandra Smirnov | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Nadegda Kassatkina | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Irina Pavlova | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Jeffrey J and Jennifer S. Clayton | 1,111,111 | 1,111,111 | 0 | 0.00 | % |
Name(1) Shares of common stock
owned prior to the offering Shares of common stock
to be sold(2) Shares of common stock
owned after the offering Percentage of common stock
owned after this offering MKM Opportunity Master Fund, Limited 5,555,556 5,555,556 0 0.00 % Andrew Mitchell 555,556 555,556 0 0.00 % Matthew Balk 3,589,333 3,589,333 0 0.00 % Daniel Balk 1,222,222 1,222,222 0 0.00 % David Balk 1,222,222 1,222,222 0 0.00 % Daniel Schneiderman 885,778 885,778 0 0.00 % Jonathan Balk 555,556 555,556 0 0.00 % Richard L. Hoffman 500,000 500,000 0 0.00 % Robert I and Sandra S Neborsky Living Trust 2,222,222 2,222,222 0 0.00 % Skriloff Family Irrevocable Trust for benefit of Samuel Skriloff 111,111 111,111 0 0.00 % Skriloff Family Irrevocable Trust for benefit of Olivia Skriloff 111,111 111,111 0 0.00 % Jason Adelman 2,771,556 2,771,556 0 0.00 % Robert and Amy Bernstein 555,556 555,556 0 0.00 % Dick F. Chase, Jr. 2,222,222 2,222,222 0 0.00 % Boris and Alexandra Smirnov 2,222,222 2,222,222 0 0.00 % Nadegda Kassatkina 2,222,222 2,222,222 0 0.00 % Irina Pavlova 1,111,111 1,111,111 0 0.00 % Jeffrey J and Jennifer S. Clayton 1,111,111 1,111,111 0 0.00 % Greenbridge Capital Partners IV, L.L.C 1,666,667 1,666,667 0 0.00 % Core Capital IV Trust 1,666,667 1,666,667 0 0.00 % Rolant Investments Limited 6,666,667 6,666,667 0 0.00 % David Wiener 1,111,111 1,111,111 0 0.00 % One East Partners Opportunity L.P. 3,000,000 3,000,000 0 0.00 % One East Partners Master L.P. 5,888,889 5,888,889 0 0.00 % Narang Family Partnership, L.P. 555,556 555,556 0 0.00 % Hugh Scott Campbell 222,222 222,222 0 0.00 % Fraser Campbell 222,222 222,222 0 0.00 % Sean Campbell 555,556 555,556 0 0.00 % Dr. Wayne Fleischacker 4,444,444 4,444,444 0 0.00 % Dr. Glenn Fleischacker 2,222,222 2,222,222 0 0.00 % Jane Ellis 2,222,222 2,222,222 0 0.00 % Duane Renfro 2,222,222 2,222,222 0 0.00 % Guri Dauti 1,111,111 1,111,111 0 0.00 % Matteo Joseph Rosselli 1,111,111 1,111,111 0 0.00 % Sarah Benveniste 1,111,111 1,111,111 0 0.00 % Steven Reichbach 1,111,111 1,111,111 0 0.00 % Myles Wittenstein 2,222,222 2,222,222 0 0.00 %
Name(1) | Shares of common stock owned prior to the offering | Shares of common stock to be sold(2) | Shares of common stock owned after the offering | Percentage of common stock owned after this offering | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Greenbridge Capital Partners IV, L.L.C | 1,666,667 | 1,666,667 | 0 | 0.00 | % | |||||||||||||
Core Capital IV Trust | 1,666,667 | 1,666,667 | 0 | 0.00 | % | |||||||||||||
Rolant Investments Limited | 6,666,667 | 6,666,667 | 0 | 0.00 | % | |||||||||||||
David Wiener | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
One East Partners Opportunity L.P. | 3,000,000 | �� | 3,000,000 | 0 | 0.00 | % | ||||||||||||
One East Partners Master L.P. | 5,888,889 | 5,888,889 | 0 | 0.00 | % | |||||||||||||
Narang Family Partnership, L.P. | 555,556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Hugh Scott Campbell | 222,222 | 222,222 | 0 | 0.00 | % | |||||||||||||
Fraser Campbell | 222,222 | 222,222 | 0 | 0.00 | % | |||||||||||||
Sean Campbell | 555,556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Dr. Wayne Fleischacker | 4,444,444 | 4,444,444 | 0 | 0.00 | % | |||||||||||||
Dr. Glenn Fleischacker | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Jane Ellis | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Duane Renfro | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Guri Dauti | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Matteo Joseph Rosselli | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Sarah Benveniste | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Steven Reichbach | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Myles Wittenstein | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Neil Weiss | 3,333,333 | 3,333,333 | 0 | 0.00 | % | |||||||||||||
Randolf Kahn | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Marc S Cohen | 6,666,666 | 6,666,666 | 0 | 0.00 | % | |||||||||||||
Millennium Capital Corporation | 2,300,000 | 2,300,000 | 0 | 0.00 | % | |||||||||||||
Ilex Investments, L.P. | 4,444,444 | 4,444,444 | 0 | 0.00 | % | |||||||||||||
Carol Tambor | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Stephen Nicholas Bunzl | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Jack Lens | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Robert Crames | 1,111,111 | 1,111,111 | 0 | 0.00 | % | |||||||||||||
Sal & Kathryn DeMarco | 555.556 | 555,556 | 0 | 0.00 | % | |||||||||||||
Maurice Reissman | 2,222,222 | 2,222,222 | 0 | 0.00 | % | |||||||||||||
Dashka Solanky | 444,445 | 444,445 | 0 | 0.00 | % | |||||||||||||
Total | 93,602,221 | 93,602,221 | 0 | 0.00 | % |
17
Name(1) Shares of common stock
owned prior to the offering Shares of common stock
to be sold(2) Shares of common stock
owned after the offering Percentage of common stock
owned after this offering Neil Weiss 3,333,333 3,333,333 0 0.00 % Randolf Kahn 1,111,111 1,111,111 0 0.00 % Marc S Cohen 6,666,666 6,666,666 0 0.00 % Millennium Capital Corporation 2,300,000 2,300,000 0 0.00 % Ilex Investments, L.P. 4,444,444 4,444,444 0 0.00 % Carol Tambor 1,111,111 1,111,111 0 0.00 % Stephen Nicholas Bunzl 1,111,111 1,111,111 0 0.00 % Jack Lens 1,111,111 1,111,111 0 0.00 % Robert Crames 1,111,111 1,111,111 0 0.00 % Sal & Kathryn DeMarco 555.556 555,556 0 0.00 % Maurice Reissman 2,222,222 2,222,222 0 0.00 % Dashka Solanky 444,445 444,445 0 0.00 % Total 93,602,221 93,602,221 0 0.00 %
(1) | All shares are owned of record and beneficially unless otherwise indicated. Beneficial ownership information for the selling stockholders is provided as of |
(2) | Assumes the sale of all shares of common stock registered pursuant to this prospectus. The selling stockholders are under no obligation known to us to sell any shares of common stock at this time. |
• | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
• | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
• | an exchange distribution in accordance with the rules of the applicable exchange; |
• | privately negotiated transactions; |
• | short sales |
• | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
• | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
• | a combination of any such methods of sale; and |
• | any other method permitted pursuant to applicable law. |
18
Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
19
ITEM 9. DESCRIPTION OF SECURITIES TO BE REGISTERED
• | Restricting dividends on the common stock; |
• | diluting the voting power of the common stock; |
• | impairing the liquidation rights of the common stock; or |
• | delaying or preventing a change in control without further action by the stockholders. |
20
14,666,665 shares of the Company'sCompany’s Common Stock were issued in connection with the Final Closing. An aggregate of 60 Units were sold to Investors in the First Closing, Second Closing and Final Closing of the Preferred Offering for total proceeds of $3,000,000. A total of 60 shares of Series C Convertible Preferred Stock were issued, convertible into an aggregate of 133,333,324 shares of Common Stock, and Warrants to purchase 66,666,666 shares of the Company'sCompany’s Common Stock. The Company entered into a Registration Rights Agreement with the Investors with respect to the Warrants, and the Common Stock in respect of these Warrants are being registered hereunder.
Period High Low March 30, 2009-June 30, 2009 $0.35 $0.33 July 1, 2009-September 30, 2009 $0.33 $0.01 October 1, 2009-December 31, 2009 $0.07 $0.01 January 1, 2010-March 31, 2010 $0.15 $0.04 April 1, 2010-June 30, 2010 $0.06 $0.01 July 1, 2010-September 30, 2010 $0.03 $0.01 October 1, 2010-December 31, 2010 $0.04 $0.01 January 1, 2011-March 31, 2011 $0.03 $0.015 April 1, 2011-June 30, 2011 $0.048 $0.019
Period | | High | | Low | ||||||
---|---|---|---|---|---|---|---|---|---|---|
March 30, 2009–June 30, 2009 | $ | 0.35 | $ | 0.33 | ||||||
July 1, 2009–September 30, 2009 | $ | 0.33 | $ | 0.01 | ||||||
October 1, 2009–December 31, 2009 | $ | 0.07 | $ | 0.01 | ||||||
January 1, 2010–March 31, 2010 | $ | 0.15 | $ | 0.04 | ||||||
April 1, 2010–June 30, 2010 | $ | 0.06 | $ | 0.01 | ||||||
July 1, 2010–September 30, 2010 | $ | 0.03 | $ | 0.01 | ||||||
October 1, 2010–December 31, 2010 | $ | 0.04 | $ | 0.01 | ||||||
January 1, 2011–March 31, 2011 | $ | 0.03 | $ | 0.015 | ||||||
April 1, 2011–June 30, 2011 | $ | 0.048 | $ | 0.019 | ||||||
July 1, 2011 – September 30, 2011 | $ | 0.05 | $ | 0.02 |
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Transfer Agent and Registrar
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'spurchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions
22
involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.
23
ITEM 11. INFORMATION WITH RESPECT TO THE REGISTRANT
Business Overview
24
The VBAS is a single-use product and is available in multiple sizes. The series consists of twelve disposable products, offered in four different port diameters of 12mm, 17mm, 21mm and 28 mm and a choice of three lengths for each of 3, 5, and 7cm. We intend to add additional models in the future.
Because our products are relatively new to the market, there is no guarantee that any of the above mentioned features would prove effective and be useful by the end user, and the extent to which we are successful in achieving our objectives will be judged by the acceptance of the devices in the market.
25
Cervical Access Products
26
NovaVision, Inc.
27
Marketing
NovaVision markets its therapy through physicians and directly to patients, whom it refers to physicians for consultation, prescription and diagnosis prior to undergoing therapy. Its screening and diagnostic products are marketed to physicians, medical and rehabilitation centers as well as academic institutions. NovaVision is in the process of finalizing a significantly enhanced marketing strategy which will entail increased sales and marketing expenditure.
NovaVision's
NovaVision's
28
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk“Risk Factors," "Cautionary” “Cautionary Notice Regarding Forward-Looking Statements"Statements” and "Our Business"“Our Business” sections in this Form 8-K. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could,"“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
29
Income taxes
30
using an average exchange rate for the period of operations. Foreign currency translation effects are accumulated as part of the accumulated other comprehensive income (loss) and included in shareholders'shareholders’ (deficit) in the accompanying Consolidated Balance Sheet.
2010
(restated) 2009
(restated) % Change Revenue: Vycor Medical $ 307,582 $ 199,046 55 % NovaVision $ 8,868 $ - NM $ 316,450 $ 199,046 59 % Cost of Revenue: Vycor Medical $ (47,607 ) $ (22,482 ) 114 % NovaVision $ (1,130 ) $ - NM $ (48,737 ) $ (22,482 ) 100 % Gross Profit Vycor Medical $ 259,975 $ 176,564 49 % NovaVision $ 7,738 $ - NM $ 267,713 $ 176,564 54 %
2010 (restated) | 2009 (restated) | % Change | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: | ||||||||||||||
Vycor Medical | $ | 307,582 | $ | 199,046 | 55 | % | ||||||||
NovaVision | $ | 8,868 | $ | — | NM | |||||||||
$ | 316,450 | $ | 199,046 | 59 | % | |||||||||
Cost of Revenue: | ||||||||||||||
Vycor Medical | $ | (47,607 | ) | $ | (22,482 | ) | 114 | % | ||||||
NovaVision | $ | (1,130 | ) | $ | — | NM | ||||||||
$ | (48,737 | ) | $ | (22,482 | ) | 100 | % | |||||||
Gross Profit | ||||||||||||||
Vycor Medical | $ | 259,975 | $ | 176,564 | 49 | % | ||||||||
NovaVision | $ | 7,738 | $ | — | NM | |||||||||
$ | 267,713 | $ | 176,564 | 54 | % |
Stock Compensation Expense:
Stock Compensation expense is a non-cash charge for share based compensation as the result of amortizing shares, warrants and options which have been issued by the Company over various periods. The charge 2010 was $381,718, a decrease of $33,742 over $415,460 in 2009.
31
The increases for 2010 over 2009 are attributable to an increased level of: sales and marketing activity; personnel costs; fundraising fees and related costs and higher levels of consulting, professional and regulatory cost, as follows:
Total G&A expenses for the year ended December 31, 2009 $ 685,707 Increase in marketing expenditure and travel costs 249,182 Increase in personnel costs 228,599 Increase in fundraising costs 72,500 Increase in accrued consulting fees 90,768 Increase in professional and regulatory costs 127,910 Increase in other operating expenses 82,790 Total G&A expenses year ended December 31, 2010 $ 1,537,456
Total G&A expenses for the year ended December 31, 2009 | $ | 1,101,167 | ||||
Increase in marketing expenditure and travel costs | 249,182 | |||||
Increase in personnel costs | 228,599 | |||||
Decrease in personnel costs — non-cash stock compensation (1) | (324,954 | ) | ||||
Increase in fundraising costs | 72,500 | |||||
Increase in consulting fees | 90,768 | |||||
Increase in consulting fees — non-cash stock compensation (1) | 273,769 | |||||
Increase in professional and regulatory costs | 127,910 | |||||
Increase in other operating expenses | 191,233 | |||||
Total G&A expenses year ended December 31, 2010 | $ | 1, 919,174 |
December 31, 2010 (restated) | December 31, 2009 (restated) | $ Change | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash | $ | 127,081 | $ | 12,771 | $ | 114,310 | ||||||||
Accounts receivable, inventory and other current assets | 235,601 | 94,084 | 141,517 | |||||||||||
Total current liabilities | (2,064,980 | ) | (1,646,900 | ) | (418,080 | ) | ||||||||
Working capital (deficit) | $ | (1,163,777 | ) | $ | (1,540,045 | ) | $ | (376,268 | ) | |||||
Cash provided by financing activities | $ | 2,489,500 | $ | 422,552 | $ | 2,066,948 |
Net cash loss adjusted for change in accrued interest $ (1,446,086 ) Reduction in Vycor Medical accounts payable (242,011 ) Increase in accounts receivable and inventory (36,124 ) Increase in accrued liabilities 294,306 Net Change in other assets and liabilities (20,355 ) $ (1,450,270 )
Net cash loss adjusted for change in accrued interest | $ | (1,446,086 | ) | |||
Reduction in Vycor Medical accounts payable | (242,011 | ) | ||||
Increase in accounts receivable and inventory | (36,124 | ) | ||||
Increase in accrued liabilities | 294,306 | |||||
Net Change in other assets and liabilities | (20,355 | ) | ||||
$ | (1,450,270 | ) |
32
Comparison of the Three Months Ended June 30, 2011 to the Three Months Ended June 30, 2010
2011 2010 %
Change Revenue: Vycor Medical $ 82,239 $ 74,817 10 % NovaVision 60,092 - NM Total Revenue $ 142,331 $ 74,817 90 % Cost of Revenue: Vycor Medical (21,349 ) $ (6,184 ) 245 % NovaVision (13,843 ) $ - NM Total Cost of Revenue $ (35,192 ) $ (6,184 ) 469 % Gross Profit Vycor Medical 60,890 68,633 -11 % NovaVision 46,249 $ - NM Total Gross Profit $ 107,139 $ 68,633 56 %
2011 | 2010 | % Change | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: | ||||||||||||||
Vycor Medical | $ | 82,239 | $ | 74,817 | 10 | % | ||||||||
NovaVision | 60,092 | — | NM | |||||||||||
Total Revenue | $ | 142,331 | $ | 74,817 | 90 | % | ||||||||
Cost of Revenue: | ||||||||||||||
Vycor Medical | (21,349 | ) | $ | (6,184 | ) | 245 | % | |||||||
NovaVision | (13,843 | ) | $ | — | NM | |||||||||
Total Cost of Revenue | $ | (35,192 | ) | $ | (6,184 | ) | 469 | % | ||||||
Gross Profit | ||||||||||||||
Vycor Medical | 60,890 | 68,633 | –11 | % | ||||||||||
NovaVision | 46,249 | $ | — | NM | ||||||||||
Total Gross Profit | $ | 107,139 | $ | 68,633 | 56 | % |
Stock Compensation expense is a
The remaining General and Administrative Expenses:
General and administrative expenses increased by $462,701 to $866,838 for the three months ended June 30, 2011 from $404,137 for the same period in 2010. This increase of $464,799 reflects approximately $200,000 of additional expenses related to the inclusion of NovaVision as well as increased professional and consulting fees, including increased consulting fees with Fountainhead following the NovaVision acquisition, and a $70,000 contingent bonus accrual related to our employment agreement with our CEO, Kenneth Coviello.
33
Comparison of the Six Months Ended June 30, 2011 to the Six Months Ended June 30, 2010
2011 2010 % Change Revenue: Vycor Medical $ 182,081 $ 139,103 31 % NovaVision $ 105,372 $ - NM $ 287,453 $ 139,103 107 % Cost of Revenue: Vycor Medical $ (28,467 ) $ (18,772 ) 52 % NovaVision $ (29,098 ) $ - NM $ (57,565 ) $ (18,772 ) 207 % Gross Profit Vycor Medical $ 153,614 $ 120,331 28 % NovaVision $ 76,274 $ - NM $ 229,888 $ 120,331 91 %
2011 | 2010 | % Change | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue: | ||||||||||||||
Vycor Medical | $ | 182,081 | $ | 139,103 | 31 | % | ||||||||
NovaVision | $ | 105,372 | $ | — | NM | |||||||||
$ | 287,453 | $ | 139,103 | 107 | % | |||||||||
Cost of Revenue: | ||||||||||||||
Vycor Medical | $ | (28,467 | ) | $ | (18,772 | ) | 52 | % | ||||||
NovaVision | $ | (29,098 | ) | $ | — | NM | ||||||||
$ | (57,565 | ) | $ | (18,772 | ) | 207 | % | |||||||
Gross Profit | ||||||||||||||
Vycor Medical | $ | 153,614 | $ | 120,331 | 28 | % | ||||||||
NovaVision | $ | 76,274 | $ | — | NM | |||||||||
$ | 229,888 | $ | 120,331 | 91 | % |
Stock Compensation expense
Partners IV, LLC. The remaining General and Administrative Expenses:
General and administrative expenses increased by $933,456 to $1,619,348 for the six months ended June 30, 2011 from $146,367 for the same period in 2010. This increase of $935,534 reflects approximately $450,000 of additional expenses related to the inclusion of NovaVision in 2011, increased professional and consulting fees, including increased consulting fees with Fountainhead following the NovaVision acquisition, the $70,000 bonus accrual mentioned above, and higher levels of marketing activities in Vycor Medical.
34
Liquidity and Capital Resources
June 30, 2011 December 31, 2010 $ Change Cash $ 2,206,616 $ 127,081 $ 2,079,535 Accounts receivable, inventory and other current assets 1,338,297 774,122 564,175 Total current liabilities (1,500,604 ) (2,064,980 ) 564,376 Working capital surplus (deficit) $ 2,041,327 $ (1,163,777 ) $ 3,205,104 Cash provided by financing activities $ 3,556,194 $ 889,500 $ 2,666,694
June 30, 2011 | December 31, 2010 | $ Change | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash | $ | 2,206,616 | $ | 127,081 | $ | 2,079,535 | ||||||||
Accounts receivable, inventory and other current assets | 1,338,297 | 774,122 | 564,175 | |||||||||||
Total current liabilities | (1,500,604 | ) | (2,064,980 | ) | 564,376 | |||||||||
Working capital surplus (deficit) | $ | 2,041,327 | $ | (1,163,777 | ) | $ | 3,205,104 | |||||||
Cash provided by financing activities | $ | 3,556,194 | $ | 889,500 | $ | 2,666,694 |
35
Income taxes
36
Educational marketing and advertising expenses
37
Critical Accounting Policies
Directors and Executive Officers | Position/Title | Age | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Adrian Christopher Liddell | Chairman of the Board and a Director | 53 | |||||||||||||||||||||||
David Marc Cantor | President and a Director | 45 | |||||||||||||||||||||||
Peter C. Zachariou | Executive Vice President and a Director | 50 | |||||||||||||||||||||||
Kenneth T. Coviello | Chief Executive and a Director | 60 | |||||||||||||||||||||||
Heather N. Vinas | Director | 32 | |||||||||||||||||||||||
Pascale Mangiardi | Director | 39 | |||||||||||||||||||||||
Steven Girgenti | Director | 66 |
38
activities have predominantly been in U.S. emerging and growth companies across a broad range of industry sectors. He has also been proprietor and operator of several businesses in the U.K. and U.S. in the manufacturing, retail and leisure industries.
1999-2000
1992-1998
1972-1991
39
None of our directors and executive officers have during the past five years:
40
EXECUTIVE COMPENSATION
Name and
Principal
Position Year Salary
($) Bonus
($) Stock
Awards
($) (1) Option
Awards
($) Non-Equity
Incentive Plan
Compensation Non-Qualified Deferred
Compensation Earnings
($) All other
Compensation
($) Total
($) Kenneth T. Coviello 2010 $ 153,989 — — $ 29,212 — — $ 12,578 $ 195,779 (Chief Executive Officer) 2009 $ 102,230 — $ 162,477 $ 29,212 — — $ 21,813 $ 315,732 Heather N. Vinas 2010 $ 72,739 — — $ 29,212 — — $ 9,184 $ 111,135 (Former President) 2009 $ 102,230 — $ 162,477 $ 29,212 — — $ 26,644 $ 320,563 David Cantor 2010 $ — — — — — — — — (President)
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation | Non-Qualified Deferred Compensation Earnings ($) | All other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kenneth T. Coviello | 2010 | $ | 153,989 | — | — | $ | 29,212 | — | — | $ | 12,578 | $ | 195,779 | |||||||||||||||||||||||||
(Chief Executive Officer) | 2009 | $ | 102,230 | — | $ | 162,477 | $ | 29,212 | — | — | $ | 21,813 | $ | 315,732 | ||||||||||||||||||||||||
Heather N. Vinas | 2010 | $ | 72,739 | — | — | $ | 29,212 | — | — | $ | 9,184 | $ | 111,135 | |||||||||||||||||||||||||
(Former President) | 2009 | $ | 102,230 | — | $ | 162,477 | $ | 29,212 | — | — | $ | 26,644 | $ | 320,563 | ||||||||||||||||||||||||
David Cantor | 2010 | $ | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
(President) |
(1) Management Warrants
(1) | Management Warrants |
Option Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Number of Securities Underlying Unexercised Options (#) Unexercisable (1) Option
Exercise Price
($) Option
Expiration Date Kenneth T. Coviello 2/15/2008 - - 500,000 $ 0.135 2/12/2018 Heather N. Vinas 2/15/2008 - - 333,333 $ 0.135 2/12/2018
Option Awards | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||||||||
Kenneth T. Coviello | 2/15/2008 | — | — | 500,000 | $ | 0.135 | 2/12/2018 | ||||||||||||||||||||
Heather N. Vinas | 2/15/2008 | — | — | 333,333 | $ | 0.135 | 2/12/2018 |
Equity Compensation Plan Information Plan category Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights
(a) Weighted-average
exercise price of
outstanding options,
warrants and rights Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in column (a) Equity compensation plans approved by security holders 1,000,000 $ 0.135 2,651,345 Equity compensation plans not approved by security holders 50,000 0.19 - Total 1,050,000 $ 0.138 2,651,345
Equity Compensation Plan Information | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | |||||||||||||
Equity compensation plans approved by security holders | 1,000,000 | $ | 0.135 | 2,651,345 | ||||||||||||
Equity compensation plans not approved by security holders | 50,000 | 0.19 | — | |||||||||||||
Total | 1,050,000 | $ | 0.138 | 2,651,345 |
(1) As of December 31, 2010
(1) | As of December 31, 2010 |
41
Warrants Issued to Management
Name Grant Date Number of Securities Underlying Unexercised Exercisable
Warrants (1) Number of Securities Underlying Unexercised Exercisable
Warrants (1) Warrant
Exercise Price
($) Warrant
Expiration Date Kenneth T. Coviello 12/29/2009 - 16,450,066 $ 0.00717 12/29/2014 Heather N. Vinas 12/29/2009 - 8,225,063 $ 0.00717 12/29/2014 Total - 24,675,129 $ 0.00717
Name | Grant Date | Number of Securities Underlying Unexercised Exercisable Warrants (1) | Number of Securities Underlying Unexercised Exercisable Warrants (1) | Warrant Exercise Price ($) | Warrant Expiration Date | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kenneth T. Coviello | 12/29/2009 | — | 16,450,066 | $ | 0.00717 | 12/29/2014 | ||||||||||||||||
Heather N. Vinas | 12/29/2009 | — | 8,225,063 | $ | 0.00717 | 12/29/2014 | ||||||||||||||||
Total | — | 24,675,129 | $ | 0.00717 |
(1) As of December 31, 2010
(1) | As of December 31, 2010 |
* * 0.00 % * 1.5% 66.0% Title of Class Name and Address of Beneficial Owner Amount and Nature of
Beneficial Owner (1) Percent of
Class (2) Common Stock Kenneth Coviello 5,284,587 Common Stock Heather N. Vinas 5,284,587 Common Stock Pascale Mangiardi — Common Stock Steven Girgenti 1,378,948 Common Stock Adrian Christopher Liddell -- 0.00 % Common Stock Marc David Cantor -- 0.00 % Common Stock Peter C. Zachariou -- 0.00 % Common Stock All executive officers and directors as a group 11,947,462 Common Stock Fountainhead Capital Management Limited Portman House Hue Street, St. Helier, Jersey JB4 5RP 531,376,500
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner (1) | Percent of Class (2) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common Stock | Kenneth Coviello | 5,284,587 | * | |||||||||||
Common Stock | Heather N. Vinas | 5,284,587 | * | |||||||||||
Common Stock | Pascale Mangiardi | — | 0.00 | % | ||||||||||
Common Stock | Steven Girgenti | 1,378,948 | * | |||||||||||
Common Stock | Adrian Christopher Liddell | — | 0.00 | % | ||||||||||
Common Stock | Marc David Cantor | — | 0.00 | % | ||||||||||
Common Stock | Peter C. Zachariou | — | 0.00 | % | ||||||||||
Common Stock | All executive officers and directors as a group | 11,947,462 | 1.5 | % | ||||||||||
Common Stock | Fountainhead Capital Management Limited Portman House Hue Street, St. Helier, Jersey JB4 5RP | 531,376,500 | 66.0 | % |
* Less than 1%
42
* | Less than 1% |
(1) | In determining beneficial ownership of our common stock, the number of shares shown includes shares which the beneficial owner may acquire upon exercise of debentures, warrants and options which may be acquired within 60 days. In determining the percent of common stock owned by a person or entity on August 31, 2011, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which the beneficial ownership may acquire within 60 days of exercise of debentures, warrants and options, and (b) the denominator is the sum of (i) the total shares of that class outstanding on |
(2) | In addition, in determining the percent of common stock owned by a person or entity on |
PERSONS
AND DIRECTOR INDEPENDENCE
43
In January, February and March 2011 the Company issued unsecured, subordinated loan notes to Fountainhead for a total of $99,000. The loan notes are subordinated to the Company'sCompany’s secured debentures, bear interest at a rate of 6% and are due April 30, 20112011.
EXPERTS
44
Index to Financial Statements
Index to Financial Statements | |||||||
Fiscal years ended December 31, 2010 (restated) and December 31, 2009 (restated) (audited) | F-3 | ||||||
Three and Six Months ended June 30, 2011 and June 30, 2010 (restated) (unaudited) |
45
F-32 |
Paritz & Company, P.A. | 15 Warren Street, Suite 25 Hackensack, New Jersey 07601 (201)342-7753 Fax: (201) 342-7598 E-Mail: paritz @paritz.com | |||||
F-1
December 31, 2010 (restated) | December 31, 2009 (restated) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash | $ | 127,081 | $ | 12,771 | |||||||
Accounts receivable | 76,460 | 29,748 | |||||||||
Inventory | 52,360 | 41,967 | |||||||||
Prepaid expenses | 645,302 | 22,369 | |||||||||
Total Current Assets | 901,203 | 106,855 | |||||||||
Fixed assets, net | 773,188 | 191,009 | |||||||||
Intangible and Other assets: | |||||||||||
Trademarks | 130,000 | — | |||||||||
Patents, net of accumulated amortization | 333,072 | 93,704 | |||||||||
Website, net of accumulated amortization | 3,932 | 7,042 | |||||||||
Security deposits | 12,299 | 2,350 | |||||||||
479,303 | 103,096 | ||||||||||
TOTAL ASSETS | $ | 2,153,694 | $ | 400,960 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Accounts payable | $ | 114,447 | $ | 336,942 | |||||||
Accrued interest | 36,992 | 2,904 | |||||||||
Accrued liabilities | 406,998 | 62,002 | |||||||||
Other current liabilities | 106,162 | — | |||||||||
Notes payable | 1,400,381 | 1,245,052 | |||||||||
TOTAL LIABILITIES | 2,064,980 | 1,646,900 | |||||||||
STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding | — | — | |||||||||
Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 724,488,929 and 557,798,599 shares issued and outstanding at December 31, 2010 and 2009, respectively | 72,449 | 55,780 | |||||||||
Additional Paid-in Capital | 6,902,427 | 3,597,621 | |||||||||
Accumulated Deficit | (6,883,163 | ) | (4,899,341 | ) | |||||||
Accumulated Other Comprehensive Income | (2,999 | ) | — | ||||||||
88,714 | (1,245,940 | ) | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,153,694 | $ | 400,960 |
December 31,
2010
(restated) December 31,
2009
(restated) ASSETS Current Assets Cash $ 127,081 $ 12,771 Accounts receivable 76,460 29,748 Inventory 52,360 41,967 Prepaid expenses 645,302 22,369 Total Current Assets 901,203 106,855 Fixed assets, net 773,188 191,009 Intangible and Other assets: Trademarks 130,000 - Patents, net of accumulated amortization 333,072 93,704 Website, net of accumulated amortization 3,932 7,042 Security deposits 12,299 2,350 479,303 103,096 TOTAL ASSETS $ 2,153,694 $ 400,960 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 114,447 $ 336,942 Accrued interest 36,992 2,904 Accrued liabilities 406,998 62,002 Other current liabilities 106,162 - Notes payable 1,400,381 1,245,052 TOTAL LIABILITIES 2,064,980 1,646,900 STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding - - Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 724,488,929 and 557,798,599 shares issued and outstanding at December31,2010 and 2009,respectively 72,449 55,780 Additional Paid-in Capital 6,902,427 3,597,621 Accumulated Deficit (6,883,163 ) (4,899,341 ) Accumulated Other Comprehensive Income (2,999 ) - 88,714 (1,245,940 ) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,153,694 $ 400,960
F-2
VYCOR MEDICAL, INC.
Consolidated Statement of Operations
For the year ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2010 (restated) | 2009 (restated) | ||||||||||
Revenue | $ | 316,450 | $ | 199,046 | |||||||
Cost of Goods Sold | 48,737 | 22,482 | |||||||||
Gross Profit | 267,713 | 176,564 | |||||||||
Operating expenses: | |||||||||||
Research and development | 15,208 | 4,761 | |||||||||
Depreciation and Amortization | 56,801 | 36,995 | |||||||||
General and administrative | 1,919,174 | 1,101,167 | |||||||||
Goodwill on Acquisition of Subsidiary | 58,027 | — | |||||||||
Costs related to Acquisition of Subsidiary | 154,203 | — | |||||||||
Total Operating expenses | 2,203,413 | 1,142,923 | |||||||||
Operating loss | (1, 935,700 ) | (966,359 | ) | ||||||||
Other income (expense) | |||||||||||
Interest income | 8 | 257 | |||||||||
Interest expense | (45,882 | ) | (248,659 | ) | |||||||
Forgiveness of previously accrued salaries | — | 50,725 | |||||||||
Total Other Income (expense) | ( 45,874 ) | (197,677 | ) | ||||||||
Net Loss Before Taxes | (1,981,574 | ) | (1,164,036 | ) | |||||||
Taxes | (2,248 | ) | — | ||||||||
Net Loss | $ | (1,983,822 | ) | $ | (1,164,036 | ) | |||||
Loss Per Share | |||||||||||
Basic and diluted | $ | (0.003 | ) | $ | (0.040 | ) | |||||
Weighted Average Number of Shares Outstanding | 663,168,900 | 29,183,482 |
For the year ended December 31, 2010 2009 (restated) (restated) Revenue $ 316,450 $ 199,046 Cost of Goods Sold 48,737 22,482 Gross Profit 267,713 176,564 Operating expenses: Research and development 15,208 4,761 Depreciation and Amortization 56,801 36,995 Stock Compensation 381,718 415,460 General and administrative 1,537,456 685,707 Total Operating expenses 1,991,183 1,142,923 Operating loss (1,723,470 ) (966,359 ) Other income (expense) Interest income 8 257 Interest expense (45,882 ) (248,659 ) Forgiveness of previously accrued salaries - 50,725 Goodwill on Acquisition of Subsidiary (58,027 ) - Costs related to Acquisition of Subsidiary (154,203 ) Total Other Income (expense) (258,104 ) (197,677 ) Net Loss Before Taxes (1,981,574 ) (1,164,036 ) Taxes (2,248 ) - Net Loss $ (1,983,822 ) $ (1,164,036 ) Loss Per Share Basic and diluted $ (0.003 ) $ (0.040 ) Weighted Average Number of Shares Outstanding 663,168,900 29,183,482
F-3
VYCOR MEDICAL, INC.
Statement of Stockholders'Stockholders’ Equity (Deficiency) (Restated)
Shares | Common Stock | Preferred Stock – Series B | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2009 | 25,463,455 | $ | 25,463 | $ | — | $ | 2,788,415 | $ | (3,735,305 | ) | $ | (921,427 | ) | |||||||||||||
Common stock issued in conjunction with Altcar Investments note payable | 866,867 | $ | 867 | $ | 105,758 | $ | 106,625 | |||||||||||||||||||
Issuance of stock for consulting fees | 91,777 | 92 | 17,345 | 17,437 | ||||||||||||||||||||||
Share-based compensation for consulting services | 32,667 | 32,667 | ||||||||||||||||||||||||
Share-based compensation – employee options vesting | 57,840 | 57,840 | ||||||||||||||||||||||||
Share-based compensation – Coviello and Vinas, in accordance with FHC recapitalization transaction | 324,954 | 324,954 | ||||||||||||||||||||||||
Retroactive change to par value (see Note 10) | (23,780 | ) | 23,780 | — | ||||||||||||||||||||||
Retroactive reflection of conversion of Series A Preferred Shares in accordance with FHC recapitalization transaction (see Note 9) | 531,376,500 | 53,138 | 246,862 | 300,000 | ||||||||||||||||||||||
Net loss for twelve months ended December 31, 2009 | $ | (1,164,036 | ) | (1,164,036 | ) | |||||||||||||||||||||
Balance at December 31, 2009 | 557,798,599 | $ | 55,780 | $ | — | $ | 3,597,621 | $ | (4,899,341 | ) | $ | (1,245,940 | ) | |||||||||||||
Issuance of stock for consulting fees | 2,612,500 | 261 | 40,364 | 40,625 | ||||||||||||||||||||||
Share-based compensation for consulting services | 823,693 | 823,693 | ||||||||||||||||||||||||
Share-based compensation – employee options vesting | 57,840 | 57,840 | ||||||||||||||||||||||||
Purchases of equity – Series B preferred | 14 | 139,986 | 140,000 | |||||||||||||||||||||||
Common stock issuance for conversion of Series B preferred and interest | 11,768,197 | 1,177 | (14 | ) | 5,939 | 7,102 | ||||||||||||||||||||
Common stock issuance for conversion of debt | 64,295,200 | 6,430 | 797,260 | 803,690 | ||||||||||||||||||||||
Purchases of equity – Common stock | 87,079,447 | 8,708 | 1,425,792 | 1,434,500 | ||||||||||||||||||||||
Common stock issuance for satisfaction of accounts payable | 934,986 | 93 | 13,932 | 14,025 | ||||||||||||||||||||||
Net loss for twelve months ended December 31, 2010 | $ | (1,983,822 | ) | (1,983,822 | ) | |||||||||||||||||||||
Accumulated Comprehensive Loss | $ | (2,999 | ) | |||||||||||||||||||||||
Balance at December 31, 2010 | 724,488,929 | $ | 72,449 | $ | — | $ | 6,902,427 | $ | (6,883,163 | ) | $ | 88,714 |
Common Preferred
Stock - Additional
Paid-in Accumulated Shares Stock Series B Capital Deficit Total Balance at January 1, 2009 25,463,455 $ 25,463 $ - $ 2,788,415 $ (3,735,305 ) $ (921,427 ) Common stock issued in conjunction with Altcar Investments note payable 866,867 $ 867 $ 105,758 $ 106,625 Issuance of stock for consulting fees 91,777 92 17,345 17,437 Share-based compensation for consulting services 32,667 32,667 Share-based compensation - employee options vesting 57,840 57,840 Share-based compensation - Coviello and Vinas, in accordance with FHC recapitalization transaction 324,954 324,954 Retroactive change to par value (see Note 10) (23,780 ) 23,780 - Retroactive reflection of conversion of Series A Preferred Shares in accordance with FHC recapitalization transaction (see Note 9) 531,376,500 53,138 246,862 300,000 Net loss for twelve months ended December 31, 2009 $ (1,164,036 ) (1,164,036 ) Balance at December 31, 2009 557,798,599 $ 55,780 $ - $ 3,597,621 $ (4,899,341 ) $ (1,245,940 ) Issuance of stock for consulting fees 2,612,500 261 40,364 40,625 Share-based compensation for consulting services 823,693 823,693 Share-based compensation - employee options vesting 57,840 57,840 Purchases of equity - Series B preferred 14 139,986 140,000 Common stock issuance for conversion of Series B preferred and interest 11,768,197 1,177 (14 ) 5,939 7,102 Common stock issuance for conversion of debt 64,295,200 6,430 797,260 803,690 Purchases of equity - Common stock 87,079,447 8,708 1,425,792 1,434,500 Common stock issuance for satisfaction of accounts payable 934,986 93 13,932 14,025 Net loss for twelve months ended December 31, 2010 $ (1,983,822 ) (1,983,822 ) Accumulated Comprehensive Loss $ (2,999 ) Balance at December 31, 2010 724,488,929 $ 72,449 $ - $ 6,902,427 $ (6,883,163 ) $ 88,714
F-4
VYCOR MEDICAL, INC.
Consolidated Statement of Cash Flows
For the twelve months ended December 31 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2010 (restated) | 2009 (restated) | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (1,983,822 | ) | $ | (1,164,036 | ) | |||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Amortization of intangible assets | 21,539 | 14,046 | |||||||||
Depreciation of fixed assets | 35,262 | 22,949 | |||||||||
Amortization of debt discount expense | — | 145,302 | |||||||||
Share based compensation | 342,864 | 415,462 | |||||||||
Shares issued for consulting services | 38,854 | 17,437 | |||||||||
Interest satisfied with stock conversion | 7,102 | 6,625 | |||||||||
Goodwill written off on acquisition of subsidiary | 58,027 | — | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (40,032 | ) | 60,017 | ||||||||
Inventory | 3,908 | 29,560 | |||||||||
Prepaid expenses | (39,262 | ) | (15,329 | ) | |||||||
Security deposit | (9,949 | ) | — | ||||||||
Accounts payable | (247,163 | ) | 23,331 | ||||||||
Accounts payable satisfied with common stock | 14,025 | — | |||||||||
Accrued interest | 34,088 | (85,684 | ) | ||||||||
Accrued liabilities | 294,306 | (13,466 | ) | ||||||||
Other current liabilities | 19,983 | — | |||||||||
Cash used in operating activities | (1,450,270 | ) | (543,786 | ) | |||||||
Cash flows used in investing activities: | |||||||||||
Acquisition of subsidiary, net of cash acquired | (898,017 | ) | — | ||||||||
Purchase of fixed assets | (21,521 | ) | — | ||||||||
Acquisition of patents | (8,575 | ) | (62,133 | ) | |||||||
Cash used in investing activities | (928,113 | ) | (62,133 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from sale of equity — Common stock | 1,434,500 | 300,000 | |||||||||
Proceeds from sale of equity — Series B preferred | 140,000 | — | |||||||||
Proceeds from short term Notes Payable | 1,276,500 | 1,449,052 | |||||||||
Repayment of short term Notes Payable | (361,500 | ) | (1,326,500 | ) | |||||||
Cash provided by financing activities | 2,489,500 | 422,552 | |||||||||
Foreign currency translation adjustment | 3,193 | — | |||||||||
Net increase (decrease) in cash | 114,310 | (183,367 | ) | ||||||||
Cash at beginning of period | 12,771 | 196,138 | |||||||||
Cash at end of period | $ | 127,081 | $ | 12,771 | |||||||
Supplemental Disclosures of Cash Flow information: | |||||||||||
Interest paid: | $ | — | $ | — | |||||||
Taxes paid | $ | 2,248 | $ | — | |||||||
Non-Cash Transactions: | |||||||||||
Warrants, options and common stock issued for debt financing | $ | 803,690 | $ | 400,000 |
For the twelve months ended December 31 2010
(restated) 2009
(restated) Cash flows from operating activities: Net loss $ (1,983,822 ) $ (1,164,036 ) Adjustments to reconcile net loss to cash used in operating activities: Amortization of intangible assets 21,539 14,046 Depreciation of fixed assets 35,262 22,949 Amortization of debt discount expense - 145,302 Share based compensation 342,864 415,462 Shares issued for consulting services 38,854 17,437 Interest satisfied with stock conversion 7,102 6,625 Goodwill written off on acquisition of subsidiary 58,027 - Changes in assets and liabilities: Accounts receivable (40,032 ) 60,017 Inventory 3,908 29,560 Prepaid expenses (39,262 ) (15,329 ) Security deposit (9,949 ) - Accounts payable (247,163 ) 23,331 Accounts payable satisfied with common stock 14,025 - Accrued interest 34,088 (85,684 ) Accrued liabilities 294,306 (13,466 ) Other current liabilities 19,983 - Cash used in operating activities (1,450,270 ) (543,786 ) Cash flows used in investing activities: Acquisition of subsidiary, net of cash acquired (898,017 ) - Purchase of fixed assets (21,521 ) - Acquisition of patents (8,575 ) (62,133 ) Cash used in investing activities (928,113 ) (62,133 ) Cash flows from financing activities: Proceeds from sale of equity - Common stock 1,434,500 300,000 Proceeds from sale of equity - Series B preferred 140,000 - Proceeds from short term Notes Payable 1,276,500 1,449,052 Repayment of short term Notes Payable (361,500 ) (1,326,500 ) Cash provided by financing activities 2,489,500 422,552 Foreign currency translation adjustment 3,193 - Net increase (decrease) in cash 114,310 (183,367 ) Cash at beginning of period 12,771 196,138 Cash at end of period $ 127,081 $ 12,771 Supplemental Disclosures of Cash Flow information: Interest paid: $ - $ - Taxes paid $ 2,248 $ - Non-Cash Transactions: Warrants, options and common stock issued for debt financing $ 803,690 $ 400,000 See accompanying notes to financial statements
F-5
VYCOR MEDICAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
F-6
The following table represents the final purchase price allocation to the estimated fair value of the assets and liabilities assumed:
As of November 30, 2010 Amount US Purchased Software 10,000 Therapy Devices 31,000 Internally Developed Software 540,000 Inventory 9,179 Trademarks 130,000 Patents 250,000 Germany Therapy Devices, Machinery and Office Equipment 14,378 Current Assets 57,756 Current Liabilities (200,340 ) 841,973 Goodwill on acquisition $ 58,027 Purchase Price $ 900,000
As of November 30, 2010 | Amount | |||||
US | ||||||
Purchased Software | 10,000 | |||||
Therapy Devices | 31,000 | |||||
Internally Developed Software | 540,000 | |||||
Inventory | 9,179 | |||||
Trademarks | 130,000 | |||||
Patents | 250,000 | |||||
Germany | ||||||
Therapy Devices, Machinery and Office Equipment | 14,378 | |||||
Current Assets | 57,756 | |||||
Current Liabilities | (200,340 | ) | ||||
841,973 | ||||||
Goodwill on acquisition | $ | 58,027 | ||||
Purchase Price | $ | 900,000 |
F-7
considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash balances in Germany held at NovaVision AG at December 31, 2010 and 2009 includes $1,233 and $0, respectively.
F-8
Accounts Receivable
a) | Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources; |
b) | Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and |
c) | Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate. |
a) Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;
b) Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and
c) Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.
F-9
Financial assets and liabilities are valued using either level 1 inputs based on unadjusted quoted market prices within active markets or using level 2 inputs based primarily on quoted prices for similar assets or liabilities in active or inactive markets. For certain long-term debt, fair value is based on present value techniques using inputs derived
December 31, December 31, 2010 2009 Stock options outstanding 833,333 1,050,000 Warrants to purchase common stock 90,191,077 38,510,584 Debentures convertible into common stock 47,414,223 99,604,160 Total 138,438,633 139,164,744
December 31, 2010 | December 31, 2009 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Stock options outstanding | 833,333 | 1,050,000 | ||||||||
Warrants to purchase common stock | 90,191,077 | 38,510,584 | ||||||||
Debentures convertible into common stock | 47,414,223 | 99,604,160 | ||||||||
Total | 138,438,633 | 139,164,744 |
F-10
revised financial statements. According to the FASB, the revised statements include those that have been changed to correct an error or conform to a retrospective application of U.S. GAAP. The adoption of this ASU did not have a material impact on our consolidated financial statements.
(i) | for the year ended December 31, 2009, included in the |
(ii) | for the three months ended March 31, 2010, included in the |
(iii) | for the three and six months ended June 30, 2010, included in the |
(iv) | for the three and nine months ended September 30, 2010 included in the |
(v) | for the three months ended March 31, 2011 included in the |
F-11
conversion feature of convertible debt based on the fair value of the conversion feature on the date of issuance, rather than using the intrinsic value of the conversion feature on the date of issuance, as required under ASC Topic 470.
Vycor Medical, Inc.
Consolidated Balance Sheets December 31, 2010 December 31, 2009 As
Reported Adjustment Restated As
Reported Adjustment Restated Prepaid Expenses 106,782 538,520 a 645,302 22,369 - a 22,369 Total Current Assets 362,683 538,520 901,203 106,855 - 106,855 Total Assets 1,615,174 538,520 2,153,694 400,960 - 400,960 Notes Payable 1,344,300 56,081 b 1,400,381 1,111,053 133,999 b 1,245,052 Total Liabilities 2,008,899 56,081 2,064,980 1,512,901 133,999 1,646,900 Additional Paid-in Capital 6,375,175 527,252 a,b 6,902,427 3,708,967 (111,346 ) a,b,e 3,597,621 Accumulated Deficit (6,838,350 ) (44,813 ) c,d (6,883,163 ) (4,876,688 ) (22,653 ) d,e (4,899,341 ) Total Stockholders' Equity (Deficit) (393,725 ) 482,439 88,714 (1,111,941 ) (133,999 ) (1,245,940 ) Total Liabilities and Stockholders' Equity 1,615,174 538,520 2,153,694 400,960 - 400,960
Vycor Medical, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2010 December 31, 2009 As
Reported Adjustment Restated As
Reported Adjustment Restated �� Stock Compensation 152,069 229,649 c 381,718 391,704 23,756 e 415,460 General and administrative 1,576,158 (38,702 ) c 1,537,456 685,707 - 685,707 Total Operating Expenses 1,800,236 190,947 1,991,183 1,119,167 23,756 1,142,923 Total Operating Loss (1,532,523 ) (190,947 ) (1,723,470 ) (942,603 ) (23,756 ) (966,359 ) Interest Expense (214,661 ) 168,787 d (45,874 ) (249,505 ) (1,103 ) d (248,402 ) Total Other Income (Expense) (426,891 ) 168,787 (258,104 ) (198,780 ) 1,103 (197,677 ) Net Loss (1,961,662 ) (22,160 ) (1,983,822 ) (1,141,383 ) (22,653 ) (1,164,036 ) Net Loss per share (0.003 ) (0.000 ) (0.003 ) (0.039 ) (0.001 ) (0.040 )
F-12
Vycor Medical, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2010 December 31, 2009 As
Reported Adjustment Restated As
Reported Adjustment Restated Net Loss (1,961,662 ) (22,160 ) (1,983,822 ) (1,141,383 ) (22,653 ) (1,164,036 ) Amortization of Debt Discount Expense 168,785 (168,785 ) d - 146,405 (1,103 ) d 145,302 Share-based compensation 152,069 190,795 c 342,864 391,706 23,756 e 415,462 Shares issued for consulting services 40,625 (1,771 ) 38,854 17,437 - 17,437 Changes in Accrued liabilities 292,385 1,921 294,306 (13,466 ) - (13,466 ) Cash used in operating activities (1,450,270 ) - (1,450,270 ) (543,786 ) - (543,786 ) Cash used in investing activities (928,113 ) - (928,113 ) (62,133 ) - (62,133 ) Cash provided by financing activities 2,489,500 - 2,489,500 422,552 - 422,552 Foreign currency translation adjustments 3,193 - 3,193 - - - Net Increase (Decrease) in Cash 114,310 (0 ) 114,310 (183,367 ) - (183,367 )
December 31, 2010 | December 31, 2009 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||||
Prepaid Expenses | 106,782 | 538,520 | a | 645,302 | 22,369 | — | a | 22,369 | |||||||||||||||||||
Total Current Assets | 362,683 | 538,520 | 901,203 | 106,855 | — | 106,855 | |||||||||||||||||||||
Total Assets | 1,615,174 | 538,520 | 2,153,694 | 400,960 | — | 400,960 | |||||||||||||||||||||
Notes Payable | 1,344,300 | 56,081 | b | 1,400,381 | 1,111,053 | 133,999 | b | 1,245,052 | |||||||||||||||||||
Total Liabilities | 2,008,899 | 56,081 | 2,064,980 | 1,512,901 | 133,999 | 1,646,900 | |||||||||||||||||||||
Additional Paid-in Capital | 6,375,175 | 527,252 | a,b | 6,902,427 | 3,708,967 | (111,346 | ) a,b,e | 3,597,621 | |||||||||||||||||||
Accumulated Deficit | (6,838,350 | ) | (44,813 | ) c,d | (6,883,163 | ) | (4,876,688 | ) | (22,653 | ) d,e | (4,899,341 | ) | |||||||||||||||
Total Stockholders’ Equity (Deficit) | (393,725 | ) | 482,439 | 88,714 | (1,111,941 | ) | (133,999 | ) | (1,245,940 | ) | |||||||||||||||||
Total Liabilities and Stockholders’ Equity | 1,615,174 | 538,520 | 2,153,694 | 400,960 | — | 400,960 |
For the Years Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2010 | December 31, 2009 | ||||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||||
General and administrative | 1,728,227 | 190,947 | c | 1,919,174 | 1,077,411 | 23,756 | 1,101,167 | ||||||||||||||||||||
Goodwill on Acquisition of Subsidiary | — | (58,027 | ) f | (58,027 | ) | ||||||||||||||||||||||
Costs related to Acquisition of Subsidiary | — | (154,203 | ) f | (154,203 | ) | ||||||||||||||||||||||
Total Operating Expenses | 1,800,236 | 403,177 | 2,203,413 | 1,119,167 | 23,756 | 1,142,923 | |||||||||||||||||||||
Total Operating Loss | (1,532,523 | ) | (403,177 | ) | (1,935,700 | ) | (942,603 | ) | (23,756 | ) | (966,359 | ) | |||||||||||||||
Interest Expense | (214,661 | ) | 168,787 | d | (45,874 | ) | (249,505 | ) | (1,103 | ) d | (248,402 | ) | |||||||||||||||
Goodwill on Acquisition of Subsidiary | (58,027 | ) | — | f | 58,027 | ||||||||||||||||||||||
Costs related to Acquisition of Subsidiary | (154,203 | ) | — | f | 154,203 | ||||||||||||||||||||||
Total Other Income (Expense) | (426,891 | ) | 381,017 | (45,874 | ) | (198,780 | ) | 1,103 | (197,677 | ) | |||||||||||||||||
Net Loss | (1,961,662 | ) | (22,160 | ) | (1,983,822 | ) | (1,141,383 | ) | (22,653 | ) | (1,164,036 | ) | |||||||||||||||
Net Loss per share | (0.003 | ) | (0.000 | ) | (0.003 | ) | (0.039 | ) | (0.001 | ) | (0.040 | ) |
For the Years Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2010 | December 31, 2009 | ||||||||||||||||||||||||||
As Reported | Adjustment | Restated | As Reported | Adjustment | Restated | ||||||||||||||||||||||
Net Loss | (1,961,662 | ) | (22,160 | ) | (1,983,822 | ) | (1,141,383 | ) | (22,653 | ) | (1,164,036 | ) | |||||||||||||||
Amortization of Debt Discount Expense | �� | 168,785 | (168,785 | ) d | — | 146,405 | (1,103 | ) d | 145,302 | ||||||||||||||||||
Share-based compensation | 152,069 | 190,795 | c | 342,864 | 391,706 | 23,756 | e | 415,462 | |||||||||||||||||||
Shares issued for consulting services | 40,625 | (1,771 | ) | 38,854 | 17,437 | — | 17,437 | ||||||||||||||||||||
Changes in Accrued liabilities | 292,385 | 1,921 | 294,306 | (13,466 | ) | — | (13,466 | ) | |||||||||||||||||||
Cash used in operating activities | (1,450,270 | ) | — | (1,450,270 | ) | (543,786 | ) | — | (543,786 | ) | |||||||||||||||||
Cash used in investing activities | (928,113 | ) | — | (928,113 | ) | (62,133 | ) | — | (62,133 | ) | |||||||||||||||||
Cash provided by financing activities | 2,489,500 | — | 2,489,500 | 422,552 | — | 422,552 | |||||||||||||||||||||
Foreign currency translation adjustments | 3,193 | — | 3,193 | — | — | — | |||||||||||||||||||||
Net Increase (Decrease) in Cash | 114,310 | (0 | ) | 114,310 | (183,367 | ) | — | (183,367 | ) | ||||||||||||||||||
a | Grant date fair value of warrants issued for consulting services |
b | Elimination debt discount where no Beneficial Conversion Feature exists |
c | Net change in expense from converting amortization period from life of warrant to life of service agreement |
d | Reversal of BCF amortization where no Beneficial Conversion Feature exists |
e | Write-off of unamortized balance of share-based consulting fees for terminated agreements |
f | Re-presentation of Goodwill and Costs related to Acquisition of Subsidiary as operating expenses rather than non-operating expenses |
F-13
6. NOTES PAYABLE
December 31, 2010 | December 31, 2009 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
On December 29, 2009, in conjunction with a debt restructuring, the Company issued a convertible debenture in the amount of $70,000 payable to Fountainhead Capital Management Limited (“Fountainhead”). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On May 14, 2010, this loan was repaid | — | 70,000 | |||||||||
On December 29, 2009, in conjunction with a debt restructuring, the Company issued a convertible debenture in the amount of $371,362 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, was due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011 and on March 28, 2011 this was further extended to August 31, 2011. | 371,362 | 371,362 | |||||||||
On December 29, 2009, the Company issued a convertible debenture in the amount of $350,000 payable Regent Private Capital, LLC (“Regent”). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On December 29, 2009, this debenture was amended to provide for automatic conversion, subject to the Company authorizing sufficient shares to convert this, and other existing instruments, and transferred to three parties. On January 11, 2010 (see Note 10), these notes were satisfied in accordance with the automatic conversion clause. | — | 350,000 |
December 31, 2010 December 31, 2009 On December 29, 2009, in conjunction with a debt restructuring, the Company issued a convertible debenture in the amount of $70,000 payable to Fountainhead Capital Management Limited ("Fountainhead"). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passuwith, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On May 14, 2010, this loan was repaid - 70,000 On December 29, 2009, in conjunction with a debt restructuring, the Company issued a convertible debenture in the amount of $371,362 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, was due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passuwith, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011 and on March 28, 2011 this was further extended to August 31, 2011. 371,362 371,362 On December 29, 2009, the Company issued a convertible debenture in the amount of $350,000 payable Regent Private Capital, LLC ("Regent"). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On December 29, 2009, this debenture was amended to provide for automatic conversion, subject to the Company authorizing sufficient shares to convert this, and other existing instruments, and transferred to three parties. On January 11, 2010 (see Note 10), these notes were satisfied in accordance with the automatic conversion clause. - 350,000 On December 29, 2009, the Company issued a convertible debenture in the amount of $453,690 payable Regent Private Capital, LLC ("Regent"). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On December 29, 2009, this debenture was amended to provide for automatic conversion, subject to the Company authorizing sufficient shares to convert this, and other existing instruments, and transferred to five parties. On January 11, 2010, these notes were satisfied in accordance with the automatic conversion clause. - 453,690
F-14
December 31, 2010 | December 31, 2009 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
On December 29, 2009, the Company issued a convertible debenture in the amount of $453,690 payable Regent Private Capital, LLC (“Regent”). This debenture accrues interest rate of 6% per annum, is due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On December 29, 2009, this debenture was amended to provide for automatic conversion, subject to the Company authorizing sufficient shares to convert this, and other existing instruments, and transferred to five parties. On January 11, 2010, these notes were satisfied in accordance with the automatic conversion clause. | |||||||||||||||||||
— | |||||||||||||||||||
On February 3, 2010, the Company issued a convertible debenture in the amount of $70,000 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, was due August 31, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011 and on March 28, 2011 this was further extended to August 31, 2011. | 70,000 | — | |||||||||||||||||
On September 30, 2010, the Company issued a convertible debenture in the amount of $85,000 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, is due August 31, 2011, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0175 per share, subject to adjustment and does not require bifurcation. | 85,000 | — | |||||||||||||||||
On October 14, 2010, the Company issued a convertible debenture in the amount of $90,000 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, is due August 31, 2011, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.0175 per share, subject to adjustment and does not require bifurcation. | 90,000 | ||||||||||||||||||
— |
F-15
December 31, 2010 December 31, 2009 On December 3, 2010, the Company issued a debenture in the amount of $40,000 payable to Berardino Investment Group. This debenture accrues interest rate of 6% per annum, is due June 30, 2011, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. 40,000 - €33,000 unsecured, non-interest bearing loan from the chief executive of NovaVision AG, advanced a total of to NovaVision AG, which is being repaid in monthly installments to December 31, 2011 44,019 - Total Notes Payable: $ 1,400,381 $ 1,245,052
December 31, 2010 | December 31, 2009 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
On October 26, 2010, the Company issued a debenture in the amount of $77,500 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, is due on the earlier of August 31, 2011 or the date of receipt by the Company of cash from fundraisings in excess of a cumulative $3 million from October 26, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. | 77,500 | — | |||||||||
On November 15, 2010, the Company issued a debenture in the amount of $322,500 payable to Fountainhead. This debenture accrues interest rate of 6% per annum, is due on the earlier of August 31, 2011 or the date of receipt by the Company of cash from fundraisings in excess of a cumulative $3 million from October 26, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. | 322,500 | — | |||||||||
On November 15, 2010, the Company issued a convertible debenture in the amount of $350,000 payable to Peter Zachariou, a Director of the Company. This debenture accrues interest rate of 6% per annum, is due on the earlier of August 31, 2011 or the date of receipt by the Company of cash from fundraisings in excess of a cumulative $3 million from October 26, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. On December 20, the Company repaid $50,000 of this debenture and removed the convertible rights. | 300,000 | — | |||||||||
On December 3, 2010, the Company issued a debenture in the amount of $40,000 payable to Berardino Investment Group. This debenture accrues interest rate of 6% per annum, is due June 30, 2011, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. | 40,000 | — | |||||||||
e33,000 unsecured, non-interest bearing loan from the chief executive of NovaVision AG, advanced a total of to NovaVision AG, which is being repaid in monthly installments to December 31, 2011 | 44,019 | — | |||||||||
Total Notes Payable: | $ | 1,400,381 | $ | 1,245,052 |
Twelve months ending December 31, Amount 2011 $ 1,400,381 2012 - 2013 - 2014 - 2015 - Thereafter - $ 1,400,381
Twelve months ending December 31, | Amount | |||||
2011 | $ | 1,400,381 | ||||
2012 | — | |||||
2013 | — | |||||
2014 | — | |||||
2015 | — | |||||
Thereafter | — | |||||
$ | 1,400,381 |
(a) | Business segments |
(a) Business segments
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2010 | 2009 | ||||||||||
Revenue: | |||||||||||
Vycor Medical | $ | 307,582 | $ | 199,046 | |||||||
NovaVision | 8,868 | — | |||||||||
Total Revenue | $ | 316,450 | $ | 199,046 | |||||||
Gross Profit: | |||||||||||
Vycor Medical | 259,975 | 176,564 | |||||||||
NovaVision | 7,738 | — | |||||||||
Total Gross Profit | $ | 267,713 | $ | 176,564 | |||||||
Total Assets: | • (restated) | • (restated) | |||||||||
Vycor Medical | 1,085,680 | 400,960 | |||||||||
NovaVision | 1,068,014 | — | |||||||||
Total Assets | $ | 2,153,694 | $ | 400,960 |
(b) | Geographic information. The Company operates in two geographic segments, the United States and Germany. Set out below are the revenues, gross profits and total assets for each segment. |
December 31, 2010 2009 Revenue: Vycor Medical $ 307,582 $ 199,046 NovaVision 8,868 - Total Revenue $ 316,450 $ 199,046 Gross Profit: Vycor Medical 259,975 176,564 NovaVision 7,738 - Total Gross Profit $ 267,713 $ 176,564 Total Assets: (restated) (restated) Vycor Medical 1,085,680 400,960 NovaVision 1,068,014 - Total Assets $ 2,153,694 $ 400,960
F-16
(b) Geographic information. The Company operates in two geographic segments, the United States and Germany. Set out below are the revenues, gross profits and total assets for each segment.
December 31, 2010 2009 Revenue: United States $ 307,582 $ 199,046 Germany 8,868 - Total Revenue $ 316,450 $ 199,046 Gross Profit: United States 259,975 176,564 Germany 7,738 - Total Gross Profit $ 267,713 $ 176,564 Total Assets: (restated) (restated) United States 2,084,029 400,960 Germany 69,665 - Total Assets $ 2,153,694 $ 400,960
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2010 | 2009 | ||||||||||
Revenue: | |||||||||||
United States | $ | 307,582 | $ | 199,046 | |||||||
Germany | 8,868 | — | |||||||||
Total Revenue | $ | 316,450 | $ | 199,046 | |||||||
Gross Profit: | |||||||||||
United States | 259,975 | 176,564 | |||||||||
Germany | 7,738 | — | |||||||||
Total Gross Profit | $ | 267,713 | $ | 176,564 | |||||||
Total Assets: | • (restated) | • (restated) | |||||||||
United States | 2,084,029 | 400,960 | |||||||||
Germany | 69,665 | — | |||||||||
Total Assets | $ | 2,153,694 | $ | 400,960 |
2010 | 2009 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Machinery and equipment | $ | 93,764 | $ | 9,125 | ||||||
Purchased Software | 10,000 | — | ||||||||
Molds and Tooling | 230,830 | 211,240 | ||||||||
Furniture and fixtures | 18,288 | — | ||||||||
Therapy Devices | 44,412 | — | ||||||||
Internally Developed Software | 540,000 | — | ||||||||
937,294 | 220,365 | |||||||||
Less: Accumulated depreciation and amortization | (164,106 | ) | (29,356 | ) | ||||||
Property and Equipment, net | $ | 773,188 | $ | 191,009 |
2010 2009 Machinery and equipment $ 93,764 $ 9,125 Purchased Software 10,000 - Molds and Tooling 230,830 211,240 Furniture and fixtures 18,288 - Therapy Devices 44,412 - Internally Developed Software 540,000 - 937,294 220,365 Less: Accumulated depreciation and amortization (164,106 ) (29,356 ) Property and Equipment, net $ 773,188 $ 191,009
Therapy devices | 3 years | |||||||||||||
Computer equipment and software | 3 years | |||||||||||||
Furniture and fixtures | 7 years | |||||||||||||
Machinery and office equipment | 5 years | |||||||||||||
Internally Developed Software | 5 years |
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2009 | 2008 | ||||||||||
Amortized intangible assets: Patent (8 years useful life) | |||||||||||
Gross carrying Amount | $ | 381,740 | $ | 123,166 | |||||||
Accumulated Amortization | (48,668 | ) | (29,462 | ) | |||||||
$ | 333,072 | $ | 93,704 | ||||||||
Intangible assets not subject to amortization | |||||||||||
Trademarks | 130,000 | — |
December 31, 2009 2008 Amortized intangible assets: Patent (8 years useful life) Gross carrying Amount $ 381,740 $ 123,166 Accumulated Amortization (48,668 ) (29,462 ) $ 333,072 $ 93,704 Intangible assets not subject to amortization Trademarks 130,000 -
F-17
10. EQUITY
F-18
12. SHARE-BASED COMPENSATION
F-19
The details of the outstanding rights, options and warrants and value of such rights, options and warrants are as follows:
Number of shares | Weighted average exercise price per share | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2009 | 6,460,920 | $ | 0.39 | |||||||
Granted | 32,900,132 | 0.007 | ||||||||
Exercised | — | — | ||||||||
Cancelled or expired | (3,867,880 | ) | 0.26 | |||||||
Outstanding at January 1, 2010 | 35,493,172 | $ | 0.03 | |||||||
Granted | 90,191,077 | 0.015 | ||||||||
Exercised | — | — | ||||||||
Cancelled or expired | (9,079,473 | ) | 0.015 | |||||||
Outstanding at December 31, 2010 | 116,604,776 | $ | 0.019 |
Number of shares Weighted average exercise price per share Outstanding at January 1, 2009 6,460,920 $ 0.39 Granted 32,900,132 0.007 Exercised - - Cancelled or expired (3,867,880 ) 0.26 Outstanding at January 1, 2010 35,493,172 $ 0.03 Granted 90,191,077 0.015 Exercised - - Cancelled or expired (9,079,473 ) 0.015 Outstanding at December 31, 2010 116,604,776 $ 0.019
Number of shares | Weighted average exercise price per share | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2009 | 1,050,000 | $ | 0.14 | |||||||
Granted | — | — | ||||||||
Exercised | — | — | ||||||||
Cancelled or expired | (50,000 | ) | 0.14 | |||||||
Outstanding at January 1, 2010 | 1,000,000 | $ | 0.14 | |||||||
Granted | — | — | ||||||||
Exercised | — | — | ||||||||
Cancelled or expired | (166,667 | ) | 0.14 | |||||||
Outstanding at December 31, 2010 | 833,333 | $ | 0.14 |
Number of shares Weighted average exercise price per share Outstanding at January 1, 2009 1,050,000 $ 0.14 Granted - - Exercised - - Cancelled or expired (50,000 ) 0.14 Outstanding at January 1, 2010 1,000,000 $ 0.14 Granted - - Exercised - - Cancelled or expired (166,667 ) 0.14 Outstanding at December 31, 2010 833,333 $ 0.14
F-20
On May 14, 2010, upon the resignation and foregoing of the existing employment agreement, Heather N. Vinas ("Vinas"(“Vinas”) entered into a Consulting Agreement to provide transition services to the Company to assist in a seamless and smooth transition from her position with the Company. In this regard, Vinas will make herself available for up to five hours per month to provide services to the Company and will communicate with the Company'sCompany’s customers, related physicians, vendors and other persons or entities who do business with the Company to advise them of the new capacity under which she shall operate in support of the Company'sCompany’s good and continued relationships with
Year ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2010 | 2009 | ||||||||||
Risk-free interest rates | 0.10–2.39% | 0.10% | |||||||||
Expected life | 3 years | 3 years | |||||||||
Expected dividends | 0% | 0% | |||||||||
Expected volatility | 96% | 96% | |||||||||
Vycor Common Stock fair value | $0.0125–$0.019 | $0.0125 |
December 31, 2010 | December 31, 2009 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gross deferred tax assets | 1,573,000 | 1,032,500 | ||||||||
Valuation allowance | (1,573,000 | ) | (1,032,500 | ) | ||||||
Net deferred tax asset | — | — |
June 30, 2011 | December 31, 2010 (restated, refer to Note 5) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
Current Assets | ||||||||||
Cash | $ | 2,206,616 | $ | 127,081 | ||||||
Accounts receivable, net | 106,249 | 76,460 | ||||||||
Inventory | 67,234 | 52,360 | ||||||||
Prepaid expenses and other current assets | 1,164,832 | 645,302 | ||||||||
Total Current Assets | 3,541,931 | 901,203 | ||||||||
Fixed assets, net | 711,662 | 773,188 | ||||||||
Intangible and Other assets: | ||||||||||
Trademarks | 130,000 | 130,000 | ||||||||
Patents, net of accumulated amortization | 359,822 | 333,072 | ||||||||
Website, net of accumulated amortization | 5,935 | 3,932 | ||||||||
Security deposits | 11,252 | 12,299 | ||||||||
507,009 | 479,303 | |||||||||
TOTAL ASSETS | $ | 4,760,602 | $ | 2,153,694 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current Liabilities | ||||||||||
Accounts payable | $ | 233,010 | $ | 114,447 | ||||||
Accrued interest | 93,261 | 36,992 | ||||||||
Accrued liabilities | 514,934 | 406,998 | ||||||||
Other current liabilities | 154,574 | 90,881 | ||||||||
Notes payable — current | 504,825 | 1,415,662 | ||||||||
1,500,604 | 2,064,980 | |||||||||
Notes payable — long-term | 1,316,362 | — | ||||||||
TOTAL LIABILITIES | 2,816,966 | 2,064,980 | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 46.8 and none issued and outstanding as at June 30, 2011 and December 31, 2010 respectively | — | — | ||||||||
Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 804,985,775 and 724,488,929 shares issued and outstanding at June 30, 2011 and December 31, 2010 respectively | 80,499 | 72,449 | ||||||||
Additional Paid-in Capital | 11,537,350 | 6,902,427 | ||||||||
Accumulated Deficit | (9,654,121 | ) | (6,883,163 | ) | ||||||
Accumulated Other Comprehensive Income | (20,092 | ) | (2,999 | ) | ||||||
1,943,636 | 88,714 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 4,760,602 | $ | 2,153,694 |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 (restated, refer to Note 5) | 2011 | 2010 (restated, refer to Note 5) | ||||||||||||||||
Revenue | $ | 142,331 | $ | 74,817 | $ | 287,453 | $ | 139,103 | |||||||||||
Cost of Goods Sold | 35,192 | 6,184 | 57,565 | 18,772 | |||||||||||||||
Gross Profit | 107,139 | 68,633 | 229,888 | 120,331 | |||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 37,484 | 762 | 61,336 | 5,648 | |||||||||||||||
Depreciation and Amortization | 52,348 | 10,051 | 101,753 | 19,824 | |||||||||||||||
General and administrative | 1,823,019 | 466,208 | 2,783,748 | 830,181 | |||||||||||||||
Total Operating expenses | 1,912,851 | 477,021 | 2,946,837 | 855,653 | |||||||||||||||
Operating loss | (1,805,712 | ) | (408,388 | ) | (2,716,949 | ) | (735,322 | ) | |||||||||||
Other income (expense) | |||||||||||||||||||
Other income | 10,067 | — | 10,067 | — | |||||||||||||||
Interest expense | (39,613 | ) | (11,797 | ) | (63,534 | ) | (24,402 | ) | |||||||||||
Total Other expense | (29,546 | ) | (11,797 | ) | (53,467 | ) | (24,402 | ) | |||||||||||
Net Loss Before Taxes | (1,835,258 | ) | (420,185 | ) | (2,770,416 | ) | (759,724 | ) | |||||||||||
Taxes | — | — | 542 | 2,078 | |||||||||||||||
Net Loss | $ | (1,835,258 | ) | $ | (420,185 | ) | $ | (2,770,958 | ) | $ | (761,802 | ) | |||||||
Loss Per Share | |||||||||||||||||||
Basic and diluted | $ | (0.002 | ) | $ | (0.001 | ) | $ | (0.004 | ) | $ | (0.001 | ) | |||||||
Weighted Average Number of Shares Outstanding | 780,845,969 | 649,281,287 | 753,940,244 | 631,918,392 |
For the six months ended June 30 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 (restated, refer to Note 5) | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (2,770,958 | ) | $ | (761,802 | ) | |||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Amortization of intangible assets | 83,685 | 8,253 | |||||||||
Depreciation of fixed assets | 17,989 | 11,571 | |||||||||
Amortization of debt discount expense | 4,884 | — | |||||||||
Share based compensation | 1,164,600 | 146,367 | |||||||||
Foreign currency gain | (4,156 | ) | — | ||||||||
Net loss | (1,504,156 | )) | (595,612 | ) | |||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (29,592 | ) | (32,864 | ) | |||||||
Inventory | (14,467 | ) | (12,894 | ) | |||||||
Prepaid expenses | (187,517 | ) | (29,120 | ) | |||||||
Security deposit | 1,047 | (1,283 | ) | ||||||||
Accounts payable | 116,485 | (170,079 | ) | ||||||||
Accrued interest | 57,459 | 20,743 | |||||||||
Accrued liabilities | 102,909 | 51,497 | |||||||||
Other current liabilities | 56,535 | — | |||||||||
Cash used in operating activities | (1,401,297 | ) | (769,611 | ) | |||||||
Cash flows used in investing activities: | |||||||||||
Purchase of fixed assets | (16,071 | ) | (1,931 | ) | |||||||
Purchase of website | (3,360 | ) | — | ||||||||
(Acquisition of)/reduction of patents | (56,435 | ) | 2,387 | ||||||||
Cash used in investing activities | (75,866 | ) | 456 | ||||||||
Cash flows from financing activities: | |||||||||||
Net proceeds from issuance of Common stock | 889,000 | 749,500 | |||||||||
Net proceeds from issuance of Series B preferred stock | — | 140,000 | |||||||||
Net proceeds from issuance of Series C preferred stock | 2,218,200 | — | |||||||||
Net proceeds from issuance of Notes Payable | 530,576 | 291,500 | |||||||||
Repayment of Notes Payable | (81,582 | ) | (291,500 | ) | |||||||
Cash provided by financing activities | 3,556,194 | 889,500 | |||||||||
Effect of exchange rate changes on cash | 504 | — | |||||||||
Net increase in cash | 2,079,535 | 120,345 | |||||||||
Cash at beginning of period | 127,081 | 12,771 | |||||||||
Cash at end of period | $ | 2,206,616 | $ | 133,116 | |||||||
Supplemental Disclosures of Cash Flow information: | |||||||||||
Interest paid: | $ | — | $ | — | |||||||
Taxes paid | $ | — | $ | 2,078 | |||||||
Non-Cash Transactions: | |||||||||||
Warrants, options and common stock issued for debt financing | 40,000 | $ | 803,690 |
a) | Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources; |
b) | Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and |
c) | Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing |
models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate. |
June 30, 2011 | June 30, 2010 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Stock options outstanding | 833,333 | 833,333 | ||||||||
Warrants to purchase common stock | 243,142,310 | 66,139,264 | ||||||||
Debentures convertible into common stock | 55,308,960 | 35,308,960 | ||||||||
Preferred shares convertible into common stock | 103,999,993 | — | ||||||||
Total | 403,284,596 | 102,281,557 |
(i) | for the year ended December 31, 2009 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2010; |
(ii) | for the three months ended March 31, 2010, included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 12, 2010; |
(iii) | for the three and six months ended June 30, 2010, included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 16, 2010; |
(iv) | for the three and nine months ended September 30, 2010 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 15, 2010; and |
(v) | for the three months ended March 31, 2011 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 14, 201 1 |
Year Ended December 31, 2010 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported | As Restated | ||||||||||
ASSETS | |||||||||||
Prepaid expenses and other current assets | 106,782 | 645,302 | |||||||||
Total Current Assets | 362,683 | 901,203 | |||||||||
Total Assets | $ | 1,615,174 | $ | 2,153,694 | |||||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | |||||||||||
Notes payable | 1,344,300 | 1,415,662 | |||||||||
Total Liabilities | 2,008,899 | 2,064,980 | |||||||||
Additional Paid-in Capital | 6,375,175 | 6,902,427 | |||||||||
Accumulated Deficit | (6,838,350 | ) | (6,883,163 | ) | |||||||
Total Stockholder’s (Deficit) Equity | (393,725 | ) | 88,714 | ||||||||
Total Liabilities and Stockholders’ Deficit | $ | 1,615,174 | $ | 2,153,694 |
For the three months ended June 30, 2010 | For the six months ended June 30, 2010 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported | As Restated | As Previously Reported | As Restated | ||||||||||||||||
Operating expenses: | |||||||||||||||||||
General and administrative | 491,851 | 466,208 | 833,677 | 830,181 | |||||||||||||||
Total Operating expenses | 502,664 | 477,021 | 859,149 | 855,653 | |||||||||||||||
Operating loss | (434,031 | ) | (408,338 | ) | (738,818 | ) | (735,322 | ) | |||||||||||
Other income (expense) | |||||||||||||||||||
Interest expense | (27,047 | ) | (11,797 | ) | (96,184 | ) | (24,402 | ) | |||||||||||
Total Other Income (expense) | (27,047 | ) | (11,797 | ) | (96,184 | ) | (24,402 | ) | |||||||||||
Net Loss | $ | (461,078 | ) | $ | (420,185 | ) | $ | (837,080 | ) | $ | (761,802 | ) | |||||||
Loss Per Share | |||||||||||||||||||
Basic and diluted | $ | (0.001 | ) | $ | (0.001 | ) | $ | (0.001 | ) | $ | (0.001 | ) | |||||||
Weighted Average Number of Shares Outstanding | 649,281,287 | 649,281,287 | 631,918,392 | 631,918,392 |
For the six months ended June 30, 2010 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported | As Restated | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (837,080 | ) | $ | (761,802 | ) | |||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Amortization of debt discount expense | 71,781 | — | |||||||||
Share based compensation | 149,863 | 146,367 | |||||||||
Cash used in operating activities | (769,611 | ) | (769,611 | ) | |||||||
Cash provided by / (used in) investing activities | 456 | 456 | |||||||||
Cash provided by financing activities | 889,500 | 889,500 | |||||||||
Net increase (decrease) in cash | 120,345 | 120,345 | |||||||||
Cash at beginning of period | 12,771 | 12,771 | |||||||||
Cash at end of period | $ | 133,116 | $ | 133,116 |
June 30, 2011 | December 31, 2010 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
On December 29, 2009 and February 3, 2010, the Company issued convertible debentures in the amount of $371,362 and $70,000, respectively, payable to Fountainhead Capital Management (“Fountainhead”), the beneficial owner of more than 50% of the Company’s common stock. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. These debentures were originally due August 31, 2010. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011, on March 28, 2011 the due date was further extended to August 31, 2011 and on June 6, 2011 the due date was further extended to December 31, 2012. | 441,362 | 441,362 | |||||||||
June 30, 2011 | December 31, 2010 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
On September 30, 2010 and October 14, 2010, the Company issued convertible debentures payable to Fountainhead in the amount of $85,000 and $90,000, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0175 per share, subject to adjustment and does not require bifurcation. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012. | 175,000 | 175,000 | |||||||||
On October 26, 2010 and November 15, 2010, the Company issued debentures payable to Fountainhead in the amount of $77,500 and $322,500, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012. | 400,000 | 400,000 | |||||||||
On November 15, 2010, the Company issued a convertible debenture in the amount of $350,000 payable to Peter Zachariou, a Director of the Company. This debenture accrues interest rate of 6% per annum, is due on the earlier of August 31, 2011 or the date of receipt by the Company of cash from fundraisings in excess of a cumulative $3 million from October 26, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. On December 20, 2010, the Company repaid $50,000 of this debenture and removed the convertible rights. On June 6, 2011 the due date for satisfaction was extended to December 31, 2012. | 300,000 | 300,000 | |||||||||
On December 3, 2010, the Company issued a debenture in the amount of $40,000 payable to Berardino Investment Group. This debenture accrued interest at a rate of 6% per annum, was due June 30, 2011, was secured by a first priority security interest in all of the assets of the Company, and was senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder was entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and did not require bifurcation. On June 30, 2011, the entire principal and unpaid interest on this debenture was converted into 2,167,902 shares of the Company’s Common Stock at the conversion price of $0.019 per share. | — | 40,000 | |||||||||
June 30, 2011 | December 31, 2010 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
In January, February and March 2011 the Company issued short term, unsecured notes payable to Fountainhead in the amount of $15,000, $64,000 and $20,000, respectively. The notes accrue interest at a rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. | 99,000 | — | |||||||||
In January and February 2011 the Company issued short term, unsecured notes payable to Peter Zachariou in the amount of $15,000 and $40,000, respectively. The notes accrue interest rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. | 55,000 | — | |||||||||
In February 2011 the Company issued short term, unsecured notes in the amount of $10,000 payable to David Cantor, a Director of the Company. The notes accrue interest rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. | 10,000 | — | |||||||||
On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”). The term note bears interest at 16% per annum and was due June 25, 2011. In connection with the loan the Company also issued EuroAmerican warrants to purchase 400,000 shares of the Company’s common stock at an exercise price of $0.03 per share for a period of three (3) years. On June 25, 2011 the due date for this note was extended to September 25, 2011 and the Holder was granted the right to convert all or any amount of the principal face amount of the debenture then outstanding and accrued interest into shares of common stock of the Company at the conversion price of $0.03 per share, subject to adjustment and does not require bifurcation. | 300,000 | — | |||||||||
Unsecured, non-interest bearing loan from the chief executive of NovaVision AG, advanced a total of to NovaVision AG, which is being repaid in monthly installments to December 31, 2011. As of June 30, and December 31, 2010 the remaining balance is e19,500 and e33,000, respectively. | 27,701 | 44,019 | |||||||||
Insurance policy finance agreements | 13,124 | 15,281 | |||||||||
Total Notes Payable: | $ | 1,821,187 | $ | 1,415,662 |
Twelve months ending June 30, | Amount | |||||
2011 | $ | 504,825 | ||||
2012 | 1,316,362 | |||||
2013 | — | |||||
2014 | — | |||||
2015 | — | |||||
Thereafter | — | |||||
Total | $ | 1,821,187 |
(a) | Business segments |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 | 2011 | 2010 | ||||||||||||||||
Revenue: | |||||||||||||||||||
Vycor Medical | $ | 82,239 | $ | 74,817 | $ | 182,081 | $ | 139,103 | |||||||||||
NovaVision | 60,092 | — | 105,372 | — | |||||||||||||||
Total Revenue | $ | 142,331 | $ | 74,817 | $ | 287,453 | $ | 139,103 | |||||||||||
Gross Profit: | |||||||||||||||||||
Vycor Medical | 60,890 | 68,633 | 153,615 | 120,331 | |||||||||||||||
NovaVision | 46,249 | — | 76,273 | — | |||||||||||||||
Total Gross Profit | $ | 107,139 | $ | 68,633 | $ | 229,888 | $ | 120,331 |
June 30, 2011 | December 31, 2010 (restated, refer to Note 5) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total Assets: | ||||||||||
Vycor Medical | 3, 319,053 | 1,085,680 | ||||||||
NovaVision | 1,441,549 | 1,068,014 | ||||||||
Total Assets | $ | 4, 760,602 | $ | 2,153,694 |
(b) | Geographic information |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 | 2011 | 2010 | ||||||||||||||||
Revenue: | |||||||||||||||||||
United States | $ | 105,193 | $ | 74,817 | $ | 209,202 | $ | 139,103 | |||||||||||
Germany | 37,138 | — | 78,251 | — | |||||||||||||||
Total Revenue | $ | 142,331 | $ | 74,817 | $ | 287,453 | $ | 139,103 | |||||||||||
Gross Profit: | |||||||||||||||||||
United States | 79,767 | 68,633 | 173,658 | 120,331 | |||||||||||||||
Germany | 27,372 | — | 56,230 | — | |||||||||||||||
Total Gross Profit | $ | 107,139 | $ | 68,633 | $ | 229,888 | $ | 120,331 |
June 30, | December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 (restated, refer to Note 5) | |||||||||
Total Assets: | ||||||||||
United States | 4,69 1,472 | 2,084,029 | ||||||||
Germany | 69,130 | 69,665 | ||||||||
Total Assets | $ | 4, 760,602 | $ | 2,153,694 |
June 30, 2011 | December 31, 2010 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Machinery and equipment | $ | 103,993 | $ | 93,764 | ||||||
Purchased Software | 15,608 | 10,000 | ||||||||
Molds and Tooling | 230,830 | 230,830 | ||||||||
Furniture and fixtures | 19,729 | 18,288 | ||||||||
Therapy Devices | 52,219 | 44,412 | ||||||||
Internally Developed Software | 540,000 | 540,000 | ||||||||
962,379 | 937,294 | |||||||||
Less: Accumulated depreciation and amortization | (250,717 | ) | (164,106 | ) | ||||||
Property and Equipment, net | $ | 711,662 | $ | 773,188 |
Therapy devices | 3 years | |||||
Computer equipment and software | 3 years | |||||
Furniture and fixtures | 7 years | |||||
Machinery and office equipment | 5 years | |||||
Internally Developed Software | 5 years |
June 30, | December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 | |||||||||
Amortized intangible assets: Patent (8 years useful life) | ||||||||||
Gross carrying Amount | $ | 430,679 | $ | 381,740 | ||||||
Accumulated Amortization | (78,353 | ) | (48,668 | ) | ||||||
$ | 352,326 | $ | 333,072 | |||||||
Intangible assets not subject to amortization | ||||||||||
Trademarks | $ | 130,000 | $ | 130,000 |
Number of shares | Weighted average exercise price per share | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at December 31, 2009 | 35,493,172 | $ | 0.030 | ||||||||
Granted | 90,191,077 | 0.015 | |||||||||
Exercised | |||||||||||
Cancelled or expired | (9,079,473 | ) | 0.015 | ||||||||
Outstanding at December 31, 2010 | 116,604,776 | $ | 0.019 | ||||||||
Granted | 126,587,534 | 0.025 | |||||||||
Exercised | — | — | |||||||||
Cancelled or expired | (50,000 | ) | 0.500 | ||||||||
Outstanding at June 30, 2011 | 243,142,310 | $ | 0.022 |
Number of shares | Weighted average exercise price per share | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at December 31, 2009 | 1,000,000 | $ | 0.14 | ||||||||
Granted | |||||||||||
Exercised | |||||||||||
Cancelled or expired | (166,667 | ) | 0.14 | ||||||||
Outstanding at December 31, 2010 | 833,333 | $ | 0.14 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Cancelled or expired | — | — | |||||||||
Outstanding at June 30, 2011 | 833,333 | $ | 0.14 |
F-21
The following assumptions were used in calculations of the Black-Scholes option pricing model in the years ended December 31, 2010 and 2009:
Year ended December 31, 2010 2009 Risk-free interest rates 0.10-2.39 % 0.10 % Expected life 3 years 3 years Expected dividends 0% 0% Expected volatility 96% 96% Vycor Common Stock fair value $0.0125-$0.019 $0.0125
13. INCOME TAXES
The Company has incurred net operating losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the financial statements. Prior to August 15, 2007 the Company was a limited liability company and losses were flowed through to the individual members, therefore the Company only has potential tax benefits from the date it became a 'C' corporation.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.
Based on the level of historical taxable losses and projections of future taxable income (losses) over the periods in which the deferred tax assets can be realized, management currently believes that it is more likely than not that the Company will not realize the benefits of these deductible differences. Accordingly, the Company has provided a valuation allowance against the gross deferred tax assets as follows:
December 31,
2010 December 31,
2009 Gross deferred tax assets 1,573,000 1,032,500 Valuation allowance (1,573,000 ) (1,032,500 ) Net deferred tax asset — —
As of December 31, 2010 and 2009, the Company has U.S. federal net operating loss carryforwards of approximately $4,493,000 and $2,950,000, respectively. The federal net operating loss carryforwards expire in the tax years 2027 through 2030.
Federal tax laws impose significant restrictions on the utilization of net operating loss carryforwards and research and development credits in the event of a change in ownership of the Company, as defined by the Internal Revenue Code Section 382. The Company's net operating loss carryforwards and research and development credits may be subject to the above limitations.
At December 31, 2010 the Company has available for carryforward German net operating losses of approximately $130,000, to be applied against future German taxable income which may be subject to certain restrictions and limitations. Such carryforwards are subject to certain restrictions and limitations in the event of changes in the NovaVision AG's ownership.
The authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management has determined that a 100% valuation allowance is appropriate at December 31, 2010 and 2009.
14. COMMITMENTS AND CONTINGENCIES
Lease
The Company executed a lease agreement for administrative office space at its current location of 3651 FAU Boulevard, Boca Raton, Florida. The lease term is 12 months from December 1, 2010. Rental expense for the year ended December 31, 2010 and 2010 were $56,795 and $20,351, respectively.
F-22
15. RELATED PARTY TRANSACTIONS
In January 2010 the Company issued a convertible debenture for $74,500 to Fountainhead Capital Management Limited ("Fountainhead"), holder of approximately 72.6% of the common shares of the Company, as more fully disclosed in Note 6 of the Notes to the Financial Statements. This debenture was repaid in May 2010
In February 2010 the Company issued a convertible debenture for $70,000 to Fountainhead, as more fully disclosed in Note 6 of the Notes to the Financial Statements.
In February 2010 the Company entered into a Consulting Agreement with Fountainhead. Under the terms of the agreement, Fountainhead receives $8,500 as a monthly consulting fee, which is to be accrued and converted into stock or paid in cash once a certain level of cash has been raised. Under the terms of the agreement, the Company also issued warrants to Fountainhead to purchase up to 39,063,670 shares of the Company's common stock at $0.0125 per share. The warrants are valid from February 10, 2010 for a period of five years.
In March 2010 the Company issued a convertible debenture for $102,000 to Fountainhead, as more fully disclosed in Note 6 of the Notes to the Financial Statements. This debenture was repaid in May 2010
In May 2010 the Company issued a convertible debenture for $45,000 to Fountainhead, as more fully disclosed in Note 6 of the Notes to the Financial Statements. This debenture was repaid in May 2010.
In September 2010 the Company issued a convertible debenture for $85,000 to Fountainhead, as more fully disclosed in Note 6 of the Notes to the Financial Statements.
In September 2010 the Company entered into a new agreement with Fountainhead under which Fountainhead agreed to extend a previously disclosed agreement to fund or procure funding for Vycor Medical's monthly operating expenses for through August 2011. Under the terms of the agreement, the Company issued warrants to Fountainhead to purchase up to 50,627,407 shares of the Company's common stock at $.0175 per share. The warrants are valid from September 29, 2010 for a period of five years.
In October 2010 the Company issued a convertible debenture for $90,000, and a $77,500 non-convertible debenture to Fountainhead, as more fully disclosed in Note 6 of the Notes to the Financial Statements.
In November 2010 the Company issued a non-convertible debenture for $322,500, as more fully disclosed in Note 6 of the Notes to the Financial Statements.
In November 2010 the Company issued an unsecured, subordinated loan note to Fountainhead for $20,000. The note was repaid in December 2010.
In November 2010 the Company issued a convertible debenture for $350,000 to Peter Zachariou, a director of the Company, as more fully disclosed in Note 6 of the Notes to the Financial Statements. In December 2010 $50,000 of this debenture was repaid and the convertible rights removed.
In January, February and March 2011 the Company issued unsecured, subordinated loan notes to Fountainhead for a total of $99,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011
In January 2011 the Company issued an unsecured, subordinated loan note to Peter Zachariou, a director of the Company for $15,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011
In February 2011 the Company issued an unsecured, subordinated loan note to Peter Zachariou, a director of the Company for $40,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011
In February 2011 the Company issued an unsecured, subordinated loan note to David Cantor, a director of the Company for $10,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011
16. SUBSEQUENT EVENTS
Common Stock Subscriptions
In January and February 2011, the Company received subscription agreements from three investors to purchase an aggregate of 7,578,947 shares of Company common stock at a price of $0.010 per share for aggregate gross proceeds of $144,000.
F-23
On February 5, 2011, in consideration for services provided to the Board of Directors (valued at $5,000), the Company issued 250,000 shares of its common stock to Steven Girgenti.
Loan Agreements
In January, February and March 2011, the Company issued unsecured, subordinated loan notes to Fountainhead, Peter Zachariou and David Cantor - all related parties - totaling $164,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011.
In February and March 2011, the Company issued unsecured, subordinated loan notes to Craig Kirsch totaling $40,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due April 30, 2011.
On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. The term note bears interest at 16% per annum and is due June 25, 2011. In connection with the loan the company also issued warrants to purchase 400,000 shares of Company common stock at an exercise price of $0.03 per share for a period of three (3) years
Warrant Issuance
On March 2, 2011 the Company issued warrants to seven parties to purchase 14,710,530 shares of the Company's common stock at a price of $0.03 per share. The warrants are exercisable over a period of three years from the date of issuance.
Consulting Agreement
In March 2011 the Company entered into a consultancy agreement with Mr Jerold Ginder, a sales executive of Stryker Corporation. Mr Ginder has extensive experience in sales and marketing and the development of medical device products, and has contacts which will be of use to the Company. Under the terms of the one year agreement, which the Company has the right to terminate with 30 days notice, Mr Ginder will receive $5,000 a month and 18,000,000 restricted shares of common stock of the Company.
F-24
VYCOR MEDICAL, INC.Consolidated Balance Sheets(unaudited)
June 30,
2011 December 31,
2010
(restated, refer to Note 5) ASSETS Current Assets Cash $ 2,206,616 $ 127,081 Accounts receivable, net 106,249 76,460 Inventory 67,234 52,360 Prepaid expenses and other current assets 1,164,832 645,302 Total Current Assets 3,541,931 901,203 Fixed assets, net 711,662 773,188 Intangible and Other assets: Trademarks 130,000 130,000 Patents, net of accumulated amortization 359,822 333,072 Website, net of accumulated amortization 5,935 3,932 Security deposits 11,252 12,299 507,009 479,303 TOTAL ASSETS $ 4,760,602 $ 2,153,694 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 233,010 $ 114,447 Accrued interest 93,261 36,992 Accrued liabilities 514,934 406,998 Other current liabilities 154,574 90,881 Notes payable - current 504,825 1,415,662 1,500,604 2,064,980 Notes payable - long-term 1,316,362 - TOTAL LIABILITIES 2,816,966 2,064,980 STOCKHOLDERS' EQUITY Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 46.8 and none issued and outstanding as at June 30, 2011 and December 31, 2010 respectively - - Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 804,985,775 and 724,488,929 shares issued and outstanding at June 30, 2011 and December 31, 2010 respectively 80,499 72,449 Additional Paid-in Capital 11,537,350 6,902,427 Accumulated Deficit (9,654,121 ) (6,883,163 ) Accumulated Other Comprehensive Income (20,092 ) (2,999 ) 1,943,636 88,714 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,760,602 $ 2,153,694
See accompanying notes to financial statements
F-25
VYCOR MEDICAL, INC.Consolidated Statement of Operations(unaudited)
For the three months ended June 30, For the six months ended June 30, 2011 2010 2011 2010 (restated, refer to Note 5) (restated, refer to Note 5) Revenue $ 142,331 $ 74,817 $ 287,453 $ 139,103 Cost of Goods Sold 35,192 6,184 57,565 18,772 Gross Profit 107,139 68,633 229,888 120,331 Operating expenses: Research and development 37,484 762 61,336 5,648 Depreciation and Amortization 52,348 10,051 101,753 19,824 Stock Compensation 956,181 64,149 1,164,400 146,367 General and administrative 866,838 402,059 1,619,348 683,814 Total Operating expenses 1,912,851 477,021 2,946,837 855,653 Operating loss (1,805,712 ) (408,388 ) (2,716,949 ) (735,322 ) Other income (expense) Other income 10,067 - 10,067 - Interest expense (39,613 ) (11,797 ) (63,534 ) (24,402 ) Total Other expense (29,546 ) (11,797 ) (53,467 ) (24,402 ) Net Loss Before Taxes (1,835,258 ) (420,185 ) (2,770,416 ) (759,724 ) Taxes - - 542 2,078 Net Loss $ (1,835,258 ) $ (420,185 ) $ (2,770,958 ) $ (761,802 ) Loss Per Share Basic and diluted $ (0.002 ) $ (0.001 ) $ (0.004 ) $ (0.001 ) Weighted Average Number of Shares Outstanding 780,845,969 649,281,287 753,940,244 631,918,392
See accompanying notes to financial statements
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VYCOR MEDICAL, INC.Consolidated Statement of Cash Flows
(unaudited)
For the six months ended June 30 2011 2010
(restated, refer to Note 5) Cash flows from operating activities: Net loss $ (2,770,958 ) $ (761,802 ) Adjustments to reconcile net loss to cash used in operating activities: Amortization of intangible assets 83,685 8,253 Depreciation of fixed assets 17,989 11,571 Amortization of debt discount expense 4,884 - Share based compensation 1,164,600 146,367 Foreign currency gain (4,156 ) - Net loss (1,504,156 )) (595,612 ) Changes in assets and liabilities: Accounts receivable (29,592 ) (32,864 ) Inventory (14,467 ) (12,894 ) Prepaid expenses (187,517 ) (29,120 ) Security deposit 1,047 (1,283 ) Accounts payable 116,485 (170,079 ) Accrued interest 57,459 20,743 Accrued liabilities 102,909 51,497 Other current liabilities 56,535 - Cash used in operating activities (1,401,297 ) (769,611 ) Cash flows used in investing activities: Purchase of fixed assets (16,071 ) (1,931 ) Purchase of website (3,360 ) - (Acquisition of)/reduction of patents (56,435 ) 2,387 Cash used in investing activities (75,866 ) 456 Cash flows from financing activities: Net proceeds from issuance of Common stock 889,000 749,500 Net proceeds from issuance of Series B preferred stock - 140,000 Net proceeds from issuance of Series C preferred stock 2,218,200 - Net proceeds from issuance of Notes Payable 530,576 291,500 Repayment of Notes Payable (81,582 ) (291,500 ) Cash provided by financing activities 3,556,194 889,500 Effect of exchange rate changes on cash 504 - Net increase in cash 2,079,535 120,345 Cash at beginning of period 127,081 12,771 Cash at end of period $ 2,206,616 $ 133,116 Supplemental Disclosures of Cash Flow information: Interest paid: $ - $ - Taxes paid $ - $ 2,078 Non-Cash Transactions: Warrants, options and common stock issued for debt financing 40,000 $ 803,690 See accompanying notes to financial statements
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VYCOR MEDICAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2011(unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of December 31, 2010, which has been derived from restated audited financial statements, and the accompanying unaudited condensed financial statements have been prepared by Vycor Medical, Inc. (together with its consolidated subsidiaries, the "Company" or "Vycor") in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to the quarterly report on Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. These financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's annual report on Form 10-K/A for the year ended December 31, 2010, as amended and restated. Certain prior period amounts have been reclassified to conform to the current presentation. All financial information included in these Notes relating to the Company's financial position as of December 31, 2010 and results of operations for the interim periods ended June 30, 2010 have been restated to give effect to the accounting corrections discussed in Note 5.
2. FORMATION AND BUSINESS OF THE COMPANY
Business Description
Vycor Medical, LLC was formed on June 17, 2005 as a New York Limited Liability Company. The Company changed its name to Vycor Medical, Inc. and converted to a Delaware Corporation on August 14, 2007 and issued 16,048 shares of common stock in exchange for each of the 1,122 partnership units outstanding at date of conversion. The assets, liabilities and operations of the Company did not change pursuant to this reorganization, and the accompanying financial statements are presented as if the change occurred on the first day of the earliest period presented. Accordingly, all references to number of shares prior to the date of conversion are based upon the common stock equivalent of the partnership units outstanding on such dates.
The Company designs, develops and markets neurological medical devices and therapies through two operating divisions: Vycor Medical and NovaVision. Vycor Medical focuses on brain and cervical surgical access systems for sale to hospitals and medical professionals; NovaVision focuses on neuro-stimulation therapies and diagnostic devices for the treatment and screening of vision field loss.
3. GOING CONCERN
The Company's financial statements have been presented on a basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and assumes the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $2,770,958 for the six months ended June 30, 2011, and the Company expects to continue to incur substantial additional losses in the future, including significant development, marketing, manufacturing and distribution costs. The Company has generated negative cash flows from operations since inception. As of June 30, 2011 the Company had a stockholders' equity of $1,943,636 and cash and cash equivalents of $2,206,616. The Company believes it will not have enough cash to meet its various cash needs unless the Company is able to obtain additional cash from the issuance of debt or equity securities. There is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
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4. ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a Delaware corporation) and NovaVision AG (a German corporation), a wholly owned subsidiary of NovaVision, Inc. The Company is headquartered in Boca Raton, FL. The operations of NovaVision, Inc. have been consolidated from November 30, 2010, the date of the acquisition of substantially all the assets of the former NovaVision, Inc. All material inter-company accounts, transactions, and profits have been eliminated in consolidation.
Research and Development
The Company expenses all research and development costs as incurred. For the six months ended June 30, 2011 and 2010 the amounts charged to research and development expenses were $61,336 and $5,648, respectively.
Software Development Costs For Internal Use
The authoritative accounting guidance requires software development costs to be capitalized upon completion of the preliminary project stage. Accordingly, direct internal and external costs associated with the development of the features and functionality of the Company's software for internal use, incurred during the application development stage, are capitalized and amortized using the straight-line method of the estimated life of three years. The Company acquired internally developed software valued at $540,000 as part of the acquisition of the assets of NovaVision, Inc. on November 30, 2010. For the six months ended June 30, 2011 and 2010 there was no capitalization of software development costs.
Uses of estimates in the preparation of financial statements
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated. To the extent management's estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant estimates and assumptions contained in the accompanying consolidated financial statements include management's estimate of the allowance for uncollectible accounts receivable, amortization of intangible assets, and the fair values of options and warrants included in the determination of debt discounts and share based compensation.
Fair Values of Assets and Liabilities
Effective January 1, 2008, the relevant FASB standards define the fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. These standards require that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. These standards also established a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.
There are three general valuation techniques that may be used to measure fair value, as described below:
Financial assets and liabilities are valued using either level 1 inputs based on unadjusted quoted market prices within active markets or using level 2 inputs based primarily on quoted prices for similar assets or liabilities in active or inactive markets. For certain long-term debt, fair value is based on present value techniques using inputs principally derived or corroborated from market data. Using level 3 inputs uses management's assessment about the assumptions market participants would utilize in pricing the asset or liability. In the Company's case this entailed assumptions used in pricing models for attached warrant calculations. Valuation techniques utilized to determine fair value are consistently applied.
The Company has no items that are subject to these standards as of June 30, 2011.
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Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock and convertible debt. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. No dilution adjustment has been made to the weighted average outstanding common shares in the periods presented because the assumed exercise of outstanding options and warrants and the conversion of preferred stock and debt would be anti-dilutive.
The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share:
June 30, June 30, 2011 2010 Stock options outstanding 833,333 833,333 Warrants to purchase common stock 243,142,310 66,139,264 Debentures convertible into common stock 55,308,960 35,308,960 Preferred shares convertible into common stock 103,999,993 - Total 403,284,596 102,281,557
Recent Accounting Pronouncements
From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company's accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
5. RESTATEMENT
On August 15, 2011, the Company filed with the Securities and Exchange Commission ("SEC") a Current Report on Form 8-K, to report management's determination, and following discussions with the Company's independent registered public accounting firm, that the Company's financial statements for the year ended December 31, 2010, included in its Annual Report on Form 10-K filed with the SEC on March 13, 2011 (the "2010 Form 10-K"), should no longer be relied upon due to incorrect accounting in such financial statements with respect to warrants issued in connection with service agreements and for the beneficial conversion feature of certain convertible debentures. The Company determined that the historical financial statements for the year ended December 31, 2010 included in the Company's 2010 Form 10-K require restatement to properly record these warrants and beneficial conversion features.
The Current Report on Form 8-K which the Company filed with the SEC on August 15, 2011 also reported management's determination that the Company's financial statements should no longer be relied upon due to incorrect accounting in such financial statements with respect warrants issued in connection with service agreements and for the beneficial conversion feature of certain convertible debentures:
(i)for the year ended December 31, 2009 included in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2010;
(ii)for the three months ended March 31, 2010, included in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 12, 2010;
(iii)for the three and six months ended June 30, 2010, included in the Company's Quarterly Report on Form 10-Q filed with the SEC on August 16, 2010;
(iv)for the three and nine months ended September 30, 2010 included in the Company's Quarterly Report on Form 10-Q filed with the SEC on November 15, 2010; and
(v)for the three months ended March 31, 2011 included in the Company's Quarterly Report on Form 10-Q filed with the SEC on May 14, 2010
The Company's management re-evaluated certain of its accounting policies and procedures in connection with the preparation of the Company's financial statements for the periods ended June 30, 2011, and determined that it had not properly accounted
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for warrants issued in connection with service agreements and for the beneficial conversion feature of certain convertible debentures. The Company had previously not recognized the fair value of warrants issued in connection with consulting or other service agreements at the measurement date, and has previously recognized the expense ratably over the life of the warrant. The Company's management has determined that the proper accounting, following the guidance in ASC Topic 505, is to record the fair value of these warrants as a prepaid expense on the date of issuance, and recognize the expense ratably over the life of the underlying service agreement. The Company has, since December 2009, been determining the existence of a beneficial conversion feature of convertible debt based on the fair value of the conversion feature on the date of issuance, rather than using the intrinsic value of the conversion feature on the date of issuance, as required under ASC Topic 470.
The Company is in the process of preparing amendments to the Forms 10-Q and 10-K for the prior periods noted above and plans to file those amendments with the SEC, reflecting the restatements related to these warrants and convertible debentures.
The Company's board of directors and management has discussed the matters set forth herein with Paritz & Co., P.A., the Company's registered independent public accounting firm which was also the Company's independent public accounting firm for the period impacted by this restatement as described above
The tables below show the effects of the restatements on (i) the Company's consolidated balance sheet as of December 31, 2010, (ii) the consolidated statements of operations for the three and six months ended June 30, 2010 and (iii) the consolidated statement of cash flows for the six months ended June 30, 2010. These adjustments are non-cash items and do not impact the Company's operating activities or cash flows from operations in any way.
VYCOR MEDICAL, INC.Consolidated Balance Sheets(unaudited)
Prepaid expenses and other current assets Year Ended December 31, 2010 As Previously Reported As Restated ASSETS 106,782 645,302 Total Current Assets 362,683 901,203 Total Assets $ 1,615,174 $ 2,153,694 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Notes payable 1,344,300 1,415,662 Total Liabilities 2,008,899 2,064,980 Additional Paid-in Capital 6,375,175 6,902,427 Accumulated Deficit (6,838,350 ) (6,883,163 ) Total Stockholder's (Deficit) Equity (393,725 ) 88,714 Total Liabilities and Stockholders' Deficit $ 1,615,174 $ 2,153,694
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VYCOR MEDICAL, INC.Consolidated Statement of Operations(unaudited)
For the three months ended June 30, 2010 For the six months ended June 30, 2010 As Previously Reported As Restated As Previously Reported As Restated Operating expenses: Stock Compensation 89,795 64,149 149,863 146,367 General and administrative 402,056 402.059 683,814 683,814 Total Operating expenses 502,664 477,021 859,149 855,653 Operating loss (434,031 ) (408,338 ) (738,818 ) (735,322 ) Other income (expense) Interest expense (27,047 ) (11,797 ) (96,184 ) (24,402 ) Total Other Income (expense) (27,047 ) (11,797 ) (96,184 ) (24,402 ) Net Loss $ (461,078 ) $ (420,185 ) $ (837,080 ) $ (761,802 ) Loss Per Share Basic and diluted $ (0.001 ) $ (0.001 ) $ (0.001 ) $ (0.001 ) Weighted Average Number of Shares Outstanding 649,281,287 649,281,287 631,918,392 631,918,392
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VYCOR MEDICAL, INC.Statement of Cash Flows(unaudited)
For the six months ended June 30, 2010 As Previously Reported As Restated Cash flows from operating activities: Net loss $ (837,080 ) $ (761,802 ) Adjustments to reconcile net loss to cash used in operating activities: Amortization of debt discount expense 71,781 - Share based compensation 149,863 146,367 Cash used in operating activities (769,611 ) (769,611 ) Cash provided by / (used in) investing activities 456 456 Cash provided by financing activities 889,500 889,500 Net increase (decrease) in cash 120,345 120,345 Cash at beginning of period 12,771 12,771 Cash at end of period $ 133,116 $ 133,116
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6. NOTES PAYABLE
As of June 30, 2011 and December 31, 2010 Notes Payable consists of:
June 30, 2011 December 31, 2010 On December 29, 2009 and February 3, 2010, the Company issued convertible debentures in the amount of $371,362 and $70,000, respectively, payable to Fountainhead Capital Management ("Fountainhead"), the beneficial owner of more than 50% of the Company's common stock. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passuwith, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. These debentures were originally due August 31, 2010. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011, on March 28, 2011 the due date was further extended to August 31, 2011 and on June 6, 2011 the due date was further extended to December 31, 2012. 441,362 441,362 On September 30, 2010 and October 14, 2010, the Company issued convertible debentures payable to Fountainhead in the amount of $85,000 and $90,000, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0175 per share, subject to adjustment and does not require bifurcation. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012. 175,000 175,000 On October 26, 2010 and November 15, 2010, the Company issued debentures payable to Fountainhead in the amount of $77,500 and $322,500, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012. 400,000 400,000 On November 15, 2010, the Company issued a convertible debenture in the amount of $350,000 payable to Peter Zachariou, a Director of the Company. This debenture accrues interest rate of 6% per annum, is due on the earlier of August 31, 2011 or the date of receipt by the Company of cash from fundraisings in excess of a cumulative $3 million from October 26, 2010, is secured by a first priority security interest in all of the assets of the Company, and is senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. On December 20, 2010, the Company repaid $50,000 of this debenture and removed the convertible rights. On June 6, 2011 the due date for satisfaction was extended to December 31, 2012. 300,000 300,000
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June 30, 2011 December 31, 2010 On December 3, 2010, the Company issued a debenture in the amount of $40,000 payable to Berardino Investment Group. This debenture accrued interest at a rate of 6% per annum, was due June 30, 2011, was secured by a first priority security interest in all of the assets of the Company, and was senior to orpari passu with, all other obligations of the Company, subject to certain conditions. The Holder was entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and did not require bifurcation. On June 30, 2011, the entire principal and unpaid interest on this debenture was converted into 2,167,902 shares of the Company's Common Stock at the conversion price of $0.019 per share. - 40,000 In January, February and March 2011 the Company issued short term, unsecured notes payable to Fountainhead in the amount of $15,000, $64,000 and $20,000, respectively. The notes accrue interest at a rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. 99,000 - In January and February 2011 the Company issued short term, unsecured notes payable to Peter Zachariou in the amount of $15,000 and $40,000, respectively. The notes accrue interest rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. 55,000 - In February 2011 the Company issued short term, unsecured notes in the amount of $10,000 payable to David Cantor, a Director of the Company. The notes accrue interest rate of 6% per annum, are due on demand and are junior to the secured convertible and non-convertible debentures of the Company. 10,000 - On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. ("EuroAmerican"). The term note bears interest at 16% per annum and was due June 25, 2011. In connection with the loan the Company also issued EuroAmerican warrants to purchase 400,000 shares of the Company's common stock at an exercise price of $0.03 per share for a period of three (3) years. On June 25, 2011 the due date for this note was extended to September 25, 2011 and the Holder was granted the right to convert all or any amount of the principal face amount of the debenture then outstanding and accrued interest into shares of common stock of the Company at the conversion price of $0.03 per share, subject to adjustment and does not require bifurcation. 300,000 - Unsecured, non-interest bearing loan from the chief executive of NovaVision AG, advanced a total of to NovaVision AG, which is being repaid in monthly installments to December 31, 2011. As of June 30, and December 31, 2010 the remaining balance is €19,500 and €33,000, respectively. 27,701 44,019 Insurance policy finance agreements 13,124 15,281 Total Notes Payable: $ 1,821,187 $ 1,415,662
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The following is a schedule of future minimum loan payments:
Twelve months ending June 30, Amount 2011 $ 504,825 2012 1,316,362 2013 - 2014 - 2015 - Thereafter - Total $ 1,821,187
As of June 30, 2011, $1,316,362 of Company's notes payable are secured by a first security interest in all of the assets of the Company.
7. 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. Set out below are the revenues, gross profits and total assets for each segment.
Three Months Ended June 30, Six Months Ended June 30, 2011 2010 2011 2010 Revenue: Vycor Medical $ 82,239 $ 74,817 $ 182,081 $ 139,103 NovaVision 60,092 - 105,372 - Total Revenue $ 142,331 $ 74,817 $ 287,453 $ 139,103 Gross Profit: Vycor Medical 60,890 68,633 153,615 120,331 NovaVision 46,249 - 76,273 - Total Gross Profit $ 107,139 $ 68,633 $ 229,888 $ 120,331
June 30,
2011 December 31,
2010 (restated, refer to Note 5) Total Assets: Vycor Medical 3,322,035 1,085,680 NovaVision 1,441,549 1,068,014 Total Assets $ 4,763,584 $ 2,153,694
(b) Geographic information
The Company operates in two geographic segments, the United States and Germany. Set out below are the revenues, gross profits and total assets for each segment.
Three Months Ended June 30, Six Months Ended June 30, 2011 2010 2011 2010 Revenue: United States $ 105,193 $ 74,817 $ 209,202 $ 139,103 Germany 37,138 - 78,251 - Total Revenue $ 142,331 $ 74,817 $ 287,453 $ 139,103 Gross Profit: United States 79,767 68,633 173,658 120,331 Germany 27,372 - 56,230 - Total Gross Profit $ 107,139 $ 68,633 $ 229,888 $ 120,331
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Three Months Ended June 30, Six Months Ended June 30, 2011 2010 2011 2010 June 30, December 31, 2011 2010 (restated, refer to Note 5) Total Assets: United States 4,694,454 2,084,029 Germany 69,130 69,665 Total Assets $ 4,763,584 $ 2,153,694
8. PROPERTY AND EQUIPMENT
As of June 30, 2011 and December 31, 2010, Property and Equipment and the estimated lives used in the computation of depreciation is as follows:
June 30,
2011 December 31,
2010 Machinery and equipment $ 103,993 $ 93,764 Purchased Software 15,608 10,000 Molds and Tooling 230,830 230,830 Furniture and fixtures 19,729 18,288 Therapy Devices 52,219 44,412 Internally Developed Software 540,000 540,000 962,379 937,294 Less: Accumulated depreciation and amortization (250,717 ) (164,106 ) Property and Equipment, net $ 711,662 $ 773,188
Estimated useful lives of property and equipment are as follows:
9. INTANGIBLE ASSETS
As of June 30, 2011 and December 31, 2010, Intangible Assets consists of:
June 30, December 31, 2011 2010 Amortized intangible assets: Patent (8 years useful life) Gross carrying Amount $ 430,679 $ 381,740 Accumulated Amortization (78,353 ) (48,668 ) $ 352,326 $ 333,072 Intangible assets not subject to amortization Trademarks $ 130,000 $ 130,000
Amortization expense for the six month periods ended June 30, 2011 and 2010 was $29,685 and $8,253, respectively.
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9. EQUITY
Certain Equity Transactions
In January and February 2011, the Company issued an aggregate of 7,578,947 shares of common stock to three investors at a price of $0.019 per share for aggregate gross proceeds of $144,000.
In February 2011, the Company issued 250,000 shares of its common stock (valued at $5,000) to Steven Girgenti in consideration for services provided to the Board of Directors. In May 2011, the Company issued an additional 222,222 shares of its common stock (valued at $5,000) to Mr. Girgenti.
On March 2, 2011, the Company issued warrants to seven parties to purchase 14,710,530 shares of the Company's common stock at a price of $0.03 per share. The warrants are exercisable over a period of three years from the date of issuance.
On March 25, 2011, in connection with the issuance by the Company of a term note for $300,000 to EuroAmerican Investment Corp, the Company issued warrants to purchase 400,000 shares of Company common stock at an exercise price of $0.03 per share for a period of three years from the date of issuance. The estimated fair value of this warrant was recorded as a debt discount at issuance and was amortized over the three-month term of the loan as interest expense.
In April 2011, the Company issued 24,444,442 shares of common stock together with Warrants to purchase 12,222,221 shares of common stock at an exercise price of $0.03 per share for a period of three years for aggregate gross proceeds of $550,000.
In April 2011, in connection with a consultancy agreement, the Company issued 18,000,000 shares of common stock (valued at $360,000) to Jerrald Ginder. On June 25, 2011, pursuant to an amendment to this consultancy agreement, the Company issued an additional 2,666,667 shares of common stock to Mr. Ginder in lieu of aggregate monthly cash payments due under the agreement totaling $60,000.
In May 2011, the Company issued 8,666,666 shares of common stock together with Warrants to purchase 4,333,334 shares of Company common stock at an exercise price of $0.03 per share for a period of three years for aggregate gross proceeds of $195,000.
On June 7, 2011, the Company completed the sale of 31.4 Units comprising Series C Convertible Preferred Shares and Warrants (the "Units") to accredited investors (the "Investors") (the "Preferred Offering") for aggregate proceeds of $1,570,000. The Units were issued pursuant to separate Series C Convertible Preferred Stock Purchase Agreements (the "Agreements") between the Company and each of the Investors. This sale was an initial closing (the "Initial Closing") under the Agreements which allows for maximum proceeds of $3,000,000. Each Unit was priced at $50,000 and comprised one share of Series C Preferred Convertible Stock convertible (at the Holder's option or mandatorily upon the occurrence of certain events) into 2,222,222 shares of the Company's Common Stock ($0.0225 per share) and a Warrant to purchase 1,111,111 shares of the Company's Common Stock at $0.03 per share (subject to adjustments) for a period of three years (the "Warrant" or "Warrants"). A total of 31.4 shares of Series C Convertible Preferred Stock convertible into 69,777,773 shares of the Company's Common Stock and Warrants to purchase 34,888,890 shares of the Company's Common Stock were issued. On June 28, 2011, the Company completed a second closing of the Preferred Offering (the "Second Closing") with the sale of an additional 15.40 Units to Investors for aggregate proceeds of $770,000. An additional 15.40 shares of Series C Convertible Preferred Stock convertible into 34,222,220 shares of the common stock and Warrants to purchase 17,111,111 shares of the Company's common stock were issued in connection with the Second Closing. The Company entered into a Registration Rights Agreement with the Investors with respect to the Warrants.
On June 3, 2011, in connection with a consultancy agreement, the Company issued 15,500,000 shares of common stock (valued at $348,750) to GreenBridge Capital Partners IV, LLC.
On June 6, 2011, in connection with a consultancy agreement, the Company issued 1,000,000 shares of common stock (valued at $22,500) to Burnham Hill Advisors, LLC.
Burnham Hill Partners LLC ("BHP") served as placement agent in connection with the sale of 24.8 Units in the Preferred Offering. Pursuant to a placement agent agreement with BHP, the Company paid BHP a cash placement fee equal to seven percent (7%) of the gross proceeds received by the Company from Units placed by BHP. Also pursuant to the placement agent agreement, the Company issued BHP Warrants (the "Placement Agent Warrants") to purchase a number of shares equal to seven percent (7%) of the number of shares of common stock issuable upon conversion of the 24.8 Units placed by BHP (3,857,778 shares) in the Preferred Offering. The Placement Agent Warrants are exercisable for three years from the date of issuance at an exercise price of $0.0225 per share.
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On June 30, 2011, the entire principal and unpaid interest on a Debenture dated December 3, 2010 payable to Berardino Investment Group in the original principal amount of $40,000 was converted into 2,167,902 shares of common stock at a conversion price of $0.019 per share.
Under the terms of a Consulting Agreement dated February 10, 2010 with Fountainhead, the Company was required to issue to Fountainhead fully vested warrants to purchase 39,063,670 shares of the Company's common stock should certain conditions be met during the term of the Consulting Agreement. These warrants are exercisable at $0.0125 per share for a period of five years from February 2010. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011.
10. SHARE-BASED COMPENSATION
The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company's common stock or financial instruments that grant the recipient the right to acquire shares of the Company's common stock. For share-based payments to employees, which consist only of awards made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic 718, "Stock Compensation" (formerly referred to as SFAS No. 123(R)). Share-based payments to consultants, service providers and other non-employees are accounted for under in accordance with ASC Topic 718, ASC Topic 505, "Equity Payments to Non-Employees" or other applicable authoritative guidance.
Stock Option Plan
The Company adopted the Vycor Medical, Inc Employee, Director, and Consultant Stock Plan (the "Plan") as of February 13, 2008. The Plan provides for both incentive stock options and nonqualified stock options to be granted to employees, officers, consultants, independent contractors, directors and affiliates of the Company. The board of directors establishes the terms and conditions of all stock option grants, subject to the Plan and applicable provisions of the Internal Revenue Code. Incentive stock options must be granted at an exercise price not less than the fair market value of the common stock on the grant date. The options granted to participants owning more than 10% of the Company's outstanding voting stock must be granted at an exercise price not less than 110% of the fair market value of the common stock on the grant date. The options expire on the date determined by the board of directors, but may not extend mare than 10 years from the grant date, while incentive stock options granted to participants owning more than 10% of the Company's outstanding voting stock expire five years from the grant date. The vesting period for employees is generally over three years. The vesting Period for non-employees is determined based on the services being provided. The maximum number of shares of stock which may be delivered under the plan shall automatically increase by a number sufficient to cause the number of shares covered by the plan to equal 10% of the total number of shares of stock then outstanding on a fully diluted basis.
Under ASC Topic 718, the Company estimates the fair value of option awards on the date of grant using an option pricing model. The grant date fair value is recognized over the option vesting period, the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Under these standards, compensation cost for employee cost for employee stock-based awards is based on the estimated grant-date fair value and recognized over the vesting period of the applicable award on a straight-line basis. No employee stock options were granted for the six month periods ended June 30, 2011 and 2010.
Initial grants of options to purchase 500,000 shares were issued under the Plan on February 13, 2008 to each of Kenneth T. Coviello, the Company's Chief Executive Officer and Heather N. Vinas, the Company's President at an exercise price of $0.135 per share. The options vested 33-1/3% on each of the first, second, and third anniversary of the grant and expire February 12, 2018. Following Heather Vinas' resignation as President of the Company in May 2010, 166,667 unvested options were cancelled. Accordingly, for the six months ended June 30, 2011, the Company recognized share-based compensation only for the grant to Mr. Coviello.
Stock appreciation rights may be granted either on a stand alone basis or in conjunction with all or part of any other stock options granted under the plan. As of June 30, 2010 there were no awards of any stock appreciation rights.
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. 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.
F-39
The details of the outstanding rights, options and warrants and value of such rights, options and warrants are as follows:
STOCK WARRANTS: Number of shares Weighted average exercise price per share Outstanding at December 31, 2009 35,493,172 $ 0.030 Granted 90,191,077 0.015 Exercised Cancelled or expired (9,079,473 ) 0.015 Outstanding at December 31, 2010 116,604,776 $ 0.019 Granted 126,587,534 0.025 Exercised - - Cancelled or expired (50,000 ) 0.500 Outstanding at June 30, 2011 243,142,310 $ 0.022 STOCK OPTIONS: Number of shares Weighted average exercise price per share Outstanding at December 31, 2009 1,000,000 $ 0.14 Granted Exercised Cancelled or expired (166,667 ) 0.14 Outstanding at December 31, 2010 833,333 $ 0.14 Granted - - Exercised - - Cancelled or expired - - Outstanding at June 30, 2011 833,333 $ 0.14
As of June 30, 2011, the weighted-average remaining contractual life of outstanding warrants and options is 3.45 and 7.88 years, respectively.
Non-Employee Stock Compensation
Under the terms of a consulting agreement dated February 2010, the Company issued fully vested warrants to Fountainhead to purchase up to 39,063,670 shares of the Company's common stock at $0.0125 per share. The warrants are valid from February 10, 2010 for a period of five years. The fair value of these warrants was estimated using the Black-Scholes option pricing model and is being amortized over the two-year life of the consultancy agreement. For the six months ended June 30, 2011, $89,548 was recognized as share-based compensation in connection with this agreement. Under the same agreement, the Company was also required to issue fully vested warrants to purchase an additional 39,063,670 shares of the Company's common stock, at a price of $0.0125 per share should new funding totaling $3 million in aggregate in Common Stock of Vycor or in securities convertible into Common Stock of Vycor at a price of no less than $0.0125 per share of Common Stock be closed during the term of the Consulting Agreement. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011. The fair value of these warrants was estimated at $658,651 using the Black-Scholes model and, because the performance criteria of the warrants had been satisfied on the date of issuance the full value was expensed immediately.
During the six months ended June 30, 2011, the Company issued an aggregate of 472,222 shares of common stock to Steven Girgenti for services rendered to the board of directors. For the six months ended June 30, 2011, $10,000 was recognized as share-based compensation for the issuance of these shares.
Under the terms of a twelve month sales and marketing consulting agreement dated March 2010, the Company issued 750,000 shares of its Common Stock to Joe Simone, valued at $9,375. For the six months ended June 30, 2011, $1,771 was recognized as share-based compensation in connection with this agreement.
Under the terms of an Extension of Funding Commitment agreement dated September 2010, the Company issued warrants to Fountainhead to purchase up to 50,627,407 shares of the Company's common stock at $0.0175 per share. The warrants are valid from September 29, 2010 for a period of five years. The fair value of these warrants was estimated using the Black-Scholes
F-40
model and is being amortized over the life of the agreement to August 30, 2011. For the six months ended June 30, 2011, $252,086 was recognized as share-based compensation in connection with this agreement.
Under the terms of a one year consulting agreement dated December 6, 2010, the Company issued warrants to Market Media Connect, LLC to purchase up to 500,000 shares of the Company's common stock at $0.07 per share. The warrants are valid from December 1, 2010 for a period of three years. The fair value of these warrants was estimated using the Black-Scholes model and is being amortized over the life of the consulting agreement. For the six months ended June 30, 2011, $1,671 was recognized as share-based compensation in connection with this agreement.
In March 2011 the Company entered into a one year consultancy agreement with Mr Jerrald Ginder, effective April 1, 2011. Mr Ginder has extensive experience in sales and marketing and the development of medical device products, and has contacts which will be of use to the Company. Under the terms of the agreement, which the Company has the right to terminate with 30 days notice, Mr. Ginder was to receive $60,000 cash, payable monthly, and 18,000,000 restricted shares of common stock of the Company. The stock has been valued by the Company at $360,000 and is being amortized over the life of the agreement as share-based compensation expense. On June 22, 2011, the Company and Mr. Ginder entered into an Amendment to the Consulting Agreement. Pursuant to this amendment, the Company issued to Mr. Ginder an additional 2,666,667 shares of the Company's common stock in lieu of the $60,000 cash due under the Consulting Agreement. The $60,000 value of the additional shares is also being amortized as share-based compensation over the life of the agreement. For the six months ended June 30, 2011, aggregate compensation recognized in respect of the Consulting Agreement, as amended, was $91,720.
In June 2011, the Company entered into a one year Consulting Agreement with GreenBridge Capital Partners, IV, LLC, to provide consulting and advisory services to the Company. Under the terms of this agreement, GreenBridge is to receive up to 15,500,000 shares of the Company's common stock. The stock has been valued by the Company at $348,750 and is being amortized over the life of the agreement as share-based compensation expense. For the six months ended June 30, 2011, $26,156 was recognized as share-based compensation in connection with this agreement.
In June 2011 the Company entered into a Consulting Agreement with Burnham Hill Advisors LLC ("BHA") under which BHA shall provide, for a period of six months, financial and strategic advice to the Company. BHA received 1,000,000 restricted shares of the Company's common stock. The stock has been valued by the Company at $22,500 and is being amortized over the life of the agreement as share-based compensation expense. For the six months ended June 30, 2011, $3,000 was recognized as share-based compensation in connection with this agreement.
Aggregate stock-based compensation expense charged to operations on employee options and on stock and warrants granted to the above non-employees for the six months ended June 30, 2011 is $1,164,400. As of June 30, 2011, there was approximately $865,739 of total unrecognized compensation costs related to warrant and stock awards and non-vested options,, which are expected to be recognized over a weighted average period of approximately 0.79 years.
Stock-based compensation expenses related to employee options and warrants granted to non-employees are recognized as the stock options and warrants are earned. The fair value of the stock options or warrants granted is estimated at the grant date, using the Black-Scholes option pricing model, and the expense 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. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes option pricing model on the basis of the fair value of the underlying common stock on the measurement date, adjusted for the unique characteristics of those equity instruments, using the assumptions noted in the table below. The fair value of the common stock is determined by the then-prevailing private placement purchase price. Expected volatility was based on the historical volatility of a peer group of publicly traded companies. The expected term of options and warrants was based upon the life of the option, and the risk-free rate used was based on the U.S. Treasury Constant Maturity rate.
The following assumptions were used in calculations of the Black-Scholes option pricing model in the six month periods ended June 30, 2011 and 2010:
Six months ended June 30, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2011 | 2010 | ||||||||||
Risk-free interest rates | 0.57–1.60% | 2.39% | |||||||||
Expected life | 3 years | 3 years | |||||||||
Expected dividends | 0% | 0% | |||||||||
Expected volatility | 96% | 96% | |||||||||
Vycor Common Stock fair value | $0.0125 | $0.019–$0.0225 |
Six months ended June 30, 2011 2010 Risk-free interest rates 0.57 - 1.60 % 2.39 % Expected life 3 years 3 years Expected dividends 0% 0% Expected volatility 96% 96% Vycor Common Stock fair value $0.0125 $0.019-$0.0225
F-41
11. INCOME TAXES
June 30, 2011 | December 31, 2010 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gross deferred tax assets | 1,900,000 | 1,573,000 | ||||||||
Valuation allowance | (1,900,000 | ) | (1,573,000 | ) | ||||||
Net deferred tax asset | — | — |
June 30, 2011 December 31, 2010 Gross deferred tax assets 1,900,000 1,573,000 Valuation allowance (1,900,000 ) (1,573,000 ) Net deferred tax asset — —
F-42
has the right to terminate with 30 days notice, Mr. Ginder was to receive $60,000 cash, payable monthly, and 18,000,000 restricted shares of common stock of the Company. The stock has been valued by the Company at $360,000 and is being amortized over the life of the agreement as share-based compensation expense. On June 22, 2011, the Company and Mr. Ginder entered into an Amendment
F-43
of $0.0125 per share should new funding totaling $3 million in aggregate in Common Stock of Vycor or in securities convertible into Common Stock of Vycor at a price of no less than $0.0125 per share of Common Stock be closed during the term of the Consulting Agreement. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011.
F-44F-53
PART II
Nature of expense | Amount | |||||
---|---|---|---|---|---|---|
SEC Registration fee | $ | 435.00 | ||||
Accounting fees and expenses | $ | 5,000.00 | ||||
Legal fees and expenses | $ | 5,000.00 | ||||
Printing expenses | $ | 2,000.00 | ||||
Miscellaneous | $ | 1,000.00 | ||||
TOTAL | $ | 13,435.00 |
Nature of expense Amount SEC Registration fee $ 435.00 Accounting fees and expenses $ 5,000.00 Legal fees and expenses $ 5,000.00 Printing expenses $ 2,000.00 Miscellaneous $ 1,000.00 TOTAL $ 13,435.00
Name of Purchaser Date of Sale Title of
Security Amount of Securities
Sold Consideration Fountainhead Capital Management Limited January 11, 2010 Common Stock 531,376,500 Debenture Exchange Jodi Yeager January 11, 2010 Common Stock 4,000,000 Debenture Conv. Panamerica Capital Group, Inc. January 11, 2010 Common Stock 8,787,600 Debenture Conv. Hyperlink Media, LLC January 11, 2010 Common Stock 9,187,600 Debenture Conv. Karen Ginder January 11, 2010 Common Stock 10,320,000 Debenture Conv. Accessible Development Corp. January 11, 2010 Common Stock 4,000,000 Debenture Conv. Altitude Group, LLC January 11, 2010 Common Stock 16,000,000 Debenture Conv. Mario Zachariou January 11, 2010 Common Stock 6,000,000 Debenture Conv. Anthony Cantor January 11, 2010 Common Stock 6,000,000 Debenture Conv. SLJ Consulting Corp January 12, 2010 Series B. Pref. 80,000 $80,000 Joseph Simone January 12, 2010 Series B. Pref. 80,000 $35,000 Steven Girgenti February 23, 2010 Common Stock 800,000 Professional services
II-1
Name of Purchaser Date of Sale Title of
Security Amount of Securities
Sold Consideration Kenneth D. Watkins March 11, 2010 Series B. Pref. 25,000 $25,000 Jane G. Ellis April, 2010 Common Stock 6,666,667 $100,000 Gregory Sichenzia April 2010 Common Stock 934,986 Professional Services Joe Simone April 2010 Common Stock 750,000 Professional services Myles F. Wittenstein May 2010 Common Stock 3,300,000 $49,500 Guri Dauti May 2010 Common Stock 2,333,333 $35,000 Stanley Katz May 2010 Common Stock 3,000,000 $45,000 Stanley Katz May 2010 Common Stock 3,000,000 $45,000 Duane John Renfro May 2010 Common Stock 3,333,333 $50,000 Glenn Fleischacker May 2010 Common Stock 3,333,333 $50,000 Datavision Computer Video, Inc. May 2010 Common Stock 1,666,667 $25,000 Thomas Ambrose May 2010 Common Stock 3,333,333 $50,000 Jack Lens May 2010 Common Stock 3,333,333 $50,000 IRA Services Trust Company May 2010 Common Stock 13,333,333 $200,000 Falcon Partners BVBA May 2010 Common Stock 3,333,333 $50,000 Konstantin Slavin July 2010 Common Stock 262,500 Professional services Ramon Rak July 2010 Common Stock 300,000 Professional Services Steven Girgenti July 2010 Common Stock 250,000 Professional services Sal & Kathryn DeMarco July 2010 Common Stock 4,241,072 $76,250 Jarvis D & Molly Littlefield August 2010 Common Stock 2,857,143 $50,000 Berardino Investment Group August 2010 Common Stock 1,428,571 $25,000 Panayiotis Panayiotou August 2010 Common Stock 571,429 $10,000 Simon Becker August 2010 Common Stock 6,285,714 $110,000 Richard H. Lawson September 2010 Common Stock 1,428,571 $25,000 SLJ Consulting September 2010 Common Stock 6,548,515 Preferred Conversion Joe Simone September 2010 Common Stock 3,139,463 Preferred Conversion Kenny Watkins September 2010 Common Stock 2,080,219 Preferred Conversion Sal & Kathryn DeMarco October 2010 Common Stock 2,285,714 $40,000 Sal & Kathryn DeMarco November 2010 Common Stock 1,714,286 $30,000 Steven Girgenti November 2010 Common Stock 250,000 Professional services Myles F. Wittenstein November 2010 Common Stock 2,631,579 $50,000 Brunella Jacs LLC November 2010 Common Stock 2,631,579 $50,000 Dr. Sam Fox November 2010 Common Stock 2,631,579 $50,000 Neil A. Weiss December 2010 Common Stock 5,263,158 $100,000 Stephen Nicholas Bunzl December 2010 Common Stock 7,894,737 $150,000 Peter Lawrence December 2010 Common Stock 2,631,579 $50,000 Stephen Rathkopf January 2011 Common Stock 1,000,000 $19,000 Steven Girgenti January 2011 Common Stock 250,000 Professional services Datavision Computer Video, Inc. February 2011 Common Stock 1,315,789 $25,000 Dr. Wayne Fleischacker February 2011 Common Stock 5,263,158 $100,000 Jerrald Ginder April 2011 Common Stock 18,000,000 $360,000 Ilex Investments, LP April 2011 Common Stock 8,888,888 $200,000 Carol Tambor April 2011 Common Stock 2,222,222 $50,000 Neil Weiss April 2011 Common Stock 4,444,444 $100,000 Myles Wittenstein April 2011 Common Stock 2,222,222 $50,000 Duane John Renfro April 2011 Common Stock 2,222,222 $50,000 Stephen Nicholas Bunzl April 2011 Common Stock 2,222,222 $50,000 Jack Lens April 2011 Common Stock 2,222,222 $50,000 Robert Crames May 2011 Common Stock 2,222,222 $50,000 Sal & Kathryn DeMarco May 2011 Common Stock 1,111,111 $25,000 Steven Girgenti May 2011 Common Stock 222,222 Professional Services Maurice Reissman May 2011 Common Stock 4,444,444 $100,000
II-2
Name of Purchaser Date of Sale Title of
Security Amount of Securities
Sold Consideration GreenBridge Capital Partners IV, LLC June 2011 Common Stock 15,500,000 Consulting Services Matthew Balk June 2011 Common Stock 700,000 Financial Advisory Services Jason Adelman June 2011 Common Stock 200,000 Financial Advisory Services Daniel Schneiderman June 2011 Common Stock 100,000 Financial Advisory Services Dashka Solanky June 2011 Common Stock 888,889 $20,000 Berardino Investment Group June 2011 Common Stock 2,167,902 Debenture Conversion Jerrald Ginder June 2011 Common Stock 2,666,667 Debt Conversion Alvaro Pascale Leone August 2011 Common Stock 78,300 Services Steven Girgenti August 2011 Common Stock 154,600 Professional Services McCombie Group, LLC August 2011 Common Stock 428,571 Consulting Services MKM Opportunity Master Fund, Ltd June 7, 2011 Series C Preferred Stock 3.0* $250,000 Andrew Mitchell June 7, 2011 Series C Preferred Stock .5* $25,000 Matthew Balk June 7, 2011 Series C Preferred Stock .8* $40,000 Daniel Balk June 7, 2011 Series C Preferred Stock 1.1* $55,000 David Balk June 7, 2011 Series C Preferred Stock 1.1* $55,000 Daniel Schneiderman June 7, 2011 Series C Preferred Stock .45* $22,500 Jonathan Balk June 7, 2011 Series C Preferred Stock .5* $25,000 Richard L. Hoffman June 7, 2011 Series C Preferred Stock .45* $22,500 Robert I and Sandra S Neborsky Living Trust June 7, 2011 Series C Preferred Stock 2.0* $100,000 Skriloff Family Irrevocable Trust F/B/O Samuel Skriloff June 7, 2011 Series C Preferred Stock .1* $5,000 Skriloff Family Irrevocable Trust F/B/O Olivia Skriloff June 7, 2011 Series C Preferred Stock .1* $5,000 Jason Adelman June 7, 2011 Series C Preferred Stock 1.8* $90,000 Robert and Amy Bernstein June 7, 2011 Series C Preferred Stock .5* $25,000 Dick F. Chase, Jr. June 7, 2011 Series C Preferred Stock 2* $100,000 Boris and Alexandra Smirnov June 7, 2011 Series C Preferred Stock 2* $100,000 Nadegda Kassatkina June 7, 2011 Series C Preferred Stock 2* $100,000 Irina Pavlova June 7, 2011 Series C Preferred Stock 1* $50,000 Jeffrey J and Jennifer S. Clayton June 7, 2011 Series C Preferred Stock 1* $50,000 Greenbridge Capital Partners IV, LLC June 7, 2011 Series C Preferred Stock 1.5* 75,000
II-3
Name of Purchaser | Date of Sale | Title of Security | Amount of Securities Sold | Consideration | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fountainhead Capital Management Limited | January 11, 2010 | Common Stock | 531,376,500 | Debenture Exchange | |||||||||||||||||
Jodi Yeager | January 11, 2010 | Common Stock | 4,000,000 | Debenture Conv. | |||||||||||||||||
Panamerica Capital Group, Inc. | January 11, 2010 | ||||||||||||||||||||
Debenture Conv. | |||||||||||||||||||||
January 11, 2010 | Debenture Conv. | ||||||||||||||||||||
January 11, 2010 | Debenture Conv. | ||||||||||||||||||||
January 11, 2010 | Debenture Conv. |
Name of Purchaser | Date of Sale | Title of Security | Amount of Securities Sold | Consideration | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Altitude Group, LLC | January 11, 2010 | Common Stock | 16,000,000 | Debenture Conv. | ||||||||||||||
Mario Zachariou | January 11, 2010 | Common Stock | 6,000,000 | Debenture Conv. | ||||||||||||||
Anthony Cantor | January 11, 2010 | Common Stock | 6,000,000 | Debenture Conv. | ||||||||||||||
SLJ Consulting Corp | January 12, 2010 | Series B. Pref. | 80,000 | $80,000 | ||||||||||||||
Joseph Simone | January 12, 2010 | Series B. Pref. | 80,000 | $35,000 | ||||||||||||||
Steven Girgenti | February 23, 2010 | Common Stock | 800,000 | Professional services | ||||||||||||||
Kenneth D. Watkins | March 11, 2010 | Series B. Pref. | 25,000 | $25,000 | ||||||||||||||
Jane G. Ellis | April, 2010 | Common Stock | 6,666,667 | $100,000 | ||||||||||||||
Gregory Sichenzia | April 2010 | Common Stock | 934,986 | Professional Services | ||||||||||||||
Joe Simone | April 2010 | Common Stock | 750,000 | Professional services | ||||||||||||||
Myles F. Wittenstein | May 2010 | Common Stock | 3,300,000 | $49,500 | ||||||||||||||
Guri Dauti | May 2010 | Common Stock | 2,333,333 | $35,000 | ||||||||||||||
Stanley Katz | May 2010 | Common Stock | 3,000,000 | $45,000 | ||||||||||||||
Stanley Katz | May 2010 | Common Stock | 3,000,000 | $45,000 | ||||||||||||||
Duane John Renfro | May 2010 | Common Stock | 3,333,333 | $50,000 | ||||||||||||||
Glenn Fleischacker | May 2010 | Common Stock | 3,333,333 | $50,000 | ||||||||||||||
Datavision Computer Video, Inc. | May 2010 | Common Stock | 1,666,667 | $25,000 | ||||||||||||||
Thomas Ambrose | May 2010 | Common Stock | 3,333,333 | $50,000 | ||||||||||||||
Jack Lens | May 2010 | Common Stock | 3,333,333 | $50,000 | ||||||||||||||
IRA Services Trust Company | May 2010 | Common Stock | 13,333,333 | $200,000 | ||||||||||||||
Falcon Partners BVBA | May 2010 | Common Stock | 3,333,333 | $50,000 | ||||||||||||||
Konstantin Slavin | July 2010 | Common Stock | 262,500 | Professional services | ||||||||||||||
Ramon Rak | July 2010 | Common Stock | 300,000 | Professional Services | ||||||||||||||
Steven Girgenti | July 2010 | Common Stock | 250,000 | Professional services | ||||||||||||||
Sal & Kathryn DeMarco | July 2010 | Common Stock | 4,241,072 | $76,250 | ||||||||||||||
Jarvis D & Molly Littlefield | August 2010 | Common Stock | 2,857,143 | $50,000 | ||||||||||||||
Berardino Investment Group | August 2010 | Common Stock | 1,428,571 | $25,000 | ||||||||||||||
Panayiotis Panayiotou | August 2010 | Common Stock | 571,429 | $10,000 | ||||||||||||||
Simon Becker | August 2010 | Common Stock | 6,285,714 | $110,000 | ||||||||||||||
Richard H. Lawson | September 2010 | Common Stock | 1,428,571 | $25,000 | ||||||||||||||
SLJ Consulting | September 2010 | Common Stock | 6,548,515 | Preferred Conversion | ||||||||||||||
Joe Simone | September 2010 | Common Stock | 3,139,463 | Preferred Conversion | ||||||||||||||
Kenny Watkins | September 2010 | Common Stock | 2,080,219 | Preferred Conversion | ||||||||||||||
Sal & Kathryn DeMarco | October 2010 | Common Stock | 2,285,714 | $40,000 | ||||||||||||||
Sal & Kathryn DeMarco | November 2010 | Common Stock | 1,714,286 | $30,000 | ||||||||||||||
Steven Girgenti | November 2010 | Common Stock | 250,000 | Professional services | ||||||||||||||
Myles F. Wittenstein | November 2010 | Common Stock | 2,631,579 | $50,000 | ||||||||||||||
Brunella Jacs LLC | November 2010 | Common Stock | 2,631,579 | $50,000 | ||||||||||||||
Dr. Sam Fox | November 2010 | Common Stock | 2,631,579 | $50,000 | ||||||||||||||
Neil A. Weiss | December 2010 | Common Stock | 5,263,158 | $100,000 | ||||||||||||||
Stephen Nicholas Bunzl | December 2010 | Common Stock | 7,894,737 | $150,000 | ||||||||||||||
Peter Lawrence | December 2010 | Common Stock | 2,631,579 | $50,000 |
Name of Purchaser | Date of Sale | Title of Security | Amount of Securities Sold | Consideration | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Stephen Rathkopf | January 2011 | Common Stock | 1,000,000 | $19,000 | ||||||||||||||
Steven Girgenti | January 2011 | Common Stock | 250,000 | Professional services | ||||||||||||||
Datavision Computer Video, Inc. | February 2011 | Common Stock | 1,315,789 | $25,000 | ||||||||||||||
Dr. Wayne Fleischacker | February 2011 | Common Stock | 5,263,158 | $100,000 | ||||||||||||||
Jerrald Ginder | April 2011 | Common Stock | 18,000,000 | $360,000 | ||||||||||||||
Ilex Investments, LP | April 2011 | Common Stock | 8,888,888 | $200,000 | ||||||||||||||
Carol Tambor | April 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Neil Weiss | April 2011 | Common Stock | 4,444,444 | $100,000 | ||||||||||||||
Myles Wittenstein | April 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Duane John Renfro | April 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Stephen Nicholas Bunzl | April 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Jack Lens | April 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Robert Crames | May 2011 | Common Stock | 2,222,222 | $50,000 | ||||||||||||||
Sal & Kathryn DeMarco | May 2011 | Common Stock | 1,111,111 | $25,000 | ||||||||||||||
Steven Girgenti | May 2011 | Common Stock | 222,222 | Professional Services | ||||||||||||||
Maurice Reissman | May 2011 | Common Stock | 4,444,444 | $100,000 | ||||||||||||||
GreenBridge Capital Partners IV, LLC | June 2011 | Common Stock | 15,500,000 | Consulting Services | ||||||||||||||
Matthew Balk | June 2011 | Common Stock | 700,000 | Financial Advisory Services | ||||||||||||||
Jason Adelman | June 2011 | Common Stock | 200,000 | Financial Advisory Services | ||||||||||||||
Daniel Schneiderman | June 2011 | Common Stock | 100,000 | Financial Advisory Services | ||||||||||||||
Dashka Solanky | June 2011 | Common Stock | 888,889 | $20,000 | ||||||||||||||
Berardino Investment Group | June 2011 | Common Stock | 2,167,902 | Debenture Conversion | ||||||||||||||
Jerrald Ginder | June 2011 | Common Stock | 2,666,667 | Debt Conversion | ||||||||||||||
Alvaro Pascale Leone | August 2011 | Common Stock | 78,300 | Services | ||||||||||||||
Steven Girgenti | August 2011 | Common Stock | 154,600 | Professional Services | ||||||||||||||
McCombie Group, LLC | August 2011 | Common Stock | 428,571 | Consulting Services | ||||||||||||||
MKM Opportunity Master Fund, Ltd | June 7, 2011 | Series C Preferred Stock | 3.0 | * | $250,000 | |||||||||||||
Andrew Mitchell | June 7, 2011 | Series C Preferred Stock | .5 | * | $25,000 | |||||||||||||
Matthew Balk | June 7, 2011 | Series C Preferred Stock | .8 | * | $40,000 | |||||||||||||
Daniel Balk | June 7, 2011 | Series C Preferred Stock | 1.1 | * | $55,000 | |||||||||||||
David Balk | June 7, 2011 | Series C Preferred Stock | 1.1 | * | $55,000 | |||||||||||||
Daniel Schneiderman | June 7, 2011 | Series C Preferred Stock | .45 | * | $22,500 | |||||||||||||
Jonathan Balk | June 7, 2011 | Series C Preferred Stock | .5 | * | $25,000 |
Name of Purchaser | Date of Sale | Title of Security | Amount of Securities Sold | Consideration | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard L. Hoffman | June 7, 2011 | Series C Preferred Stock | .45 | * | $22,500 | |||||||||||||
Robert I and Sandra S Neborsky Living Trust | June 7, 2011 | Series C Preferred Stock | 2.0 | * | $100,000 | |||||||||||||
Skriloff Family Irrevocable Trust F/B/O Samuel Skriloff | June 7, 2011 | Series C Preferred Stock | .1 | * | $5,000 | |||||||||||||
Skriloff Family Irrevocable Trust F/B/O Olivia Skriloff | June 7, 2011 | Series C Preferred Stock | .1 | * | $5,000 | |||||||||||||
Jason Adelman | June 7, 2011 | Series C Preferred Stock | 1.8 | * | $90,000 | |||||||||||||
Robert and Amy Bernstein | June 7, 2011 | Series C Preferred Stock | .5 | * | $25,000 | |||||||||||||
Dick F. Chase, Jr. | June 7, 2011 | Series C Preferred Stock | 2 | * | $100,000 | |||||||||||||
Boris and Alexandra Smirnov | June 7, 2011 | Series C Preferred Stock | 2 | * | $100,000 | |||||||||||||
Nadegda Kassatkina | June 7, 2011 | Series C Preferred Stock | 2 | * | $100,000 | |||||||||||||
Irina Pavlova | June 7, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Jeffrey J and Jennifer S. Clayton | June 7, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Greenbridge Capital Partners IV, LLC | June 7, 2011 | Series C Preferred Stock | 1.5 | * | $75,000 | |||||||||||||
Core Capital IV Trust | June 7, 2011 | Series C Preferred Stock | 1.5 | * | $75,000 | |||||||||||||
Rolant Investments Limited | June 7, 2011 | Series C Preferred Stock | 6 | * | $300,000 | |||||||||||||
David Wiener | June 28, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
One East Partners Opportunity L.P. | June 28, 2011 | Series C Preferred Stock | 2.7 | * | $135,000 | |||||||||||||
One East Partners Master L.P. | June 28, 2011 | Series C Preferred Stock | 5.3 | * | $265,000 | |||||||||||||
Narang Family Partnership, LP | June 28, 2011 | Series C Preferred Stock | .5 | * | $25,000 | |||||||||||||
Hugh Scott Campbell | June 28, 2011 | Series C Preferred Stock | .2 | * | $10,000 | |||||||||||||
Fraser Campbell | June 28, 2011 | Series C Preferred Stock | .2 | * | $10,000 | |||||||||||||
Sean Campbell | June 28, 2011 | Series C Preferred Stock | .5 | * | $25,000 | |||||||||||||
Dr. Wayne Fleischacker | June 28, 2011 | Series C Preferred Stock | 2 | * | $100,000 |
Name of Purchaser | Date of Sale | Title of Security | Amount of Securities Sold | Consideration | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dr. Glenn Fleischacker | June 28, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Jane Ellis | June 28, 2011 | Series C Preferred Stock | 2 | * | $100,000 | |||||||||||||
Duane Renfro | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Guri Dauti | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Matteo Joseph Rosselli | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Sarah Benveniste | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Steven Reichbach | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Dr. Glenn Fleischacker | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Myles Wittenstein | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Neil Weiss | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Randolf Kahn | August 4, 2011 | Series C Preferred Stock | 1 | * | $50,000 | |||||||||||||
Dr. Wayne Fleischacker | August 4, 2011 | Series C Preferred Stock | 2 | * | $100,000 | |||||||||||||
Marc S Cohen | August 4, 2011 | Series C Preferred Stock | 2.2 | * | $110,000 | |||||||||||||
Marc S Cohen | August 26, 2011 | Series C Preferred Stock | 3.8 | * | $190,000 | |||||||||||||
Joseph Simone | September 30, 2011 | Common Stock | 510,000 | Consulting Services |
Units comprising one share of Series C Convertible Preferred Stock | ||||||||||||||
convertible into 2,222,222 shares of common stock and a warrant to purchase 1,111,111 shares of common stock at $0.0225 per share |
* Units comprising one share of Series C Convertible Preferred Stock convertible into 2,222,222 shares of common stock and a warrant to purchase 1,111,111 shares of common stock at $0.0225 per share
II-4
The securities issued in the abovementioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act and Rule 506 of Regulation D.
Exhibit No. | Description | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
3.1(a) | ||||||||||
Certificate of Incorporation of Vycor Medical, Inc. | (filed with Form S-1 on September 7, 2011) | |||||||||
3.1(b) | Certificate of Amendment to Certificate of Incorporation of Vycor Medical, Inc. dated as of January 11, 2010 | (filed with Form S-1 on September 7, 2011) | ||||||||
3.1(c) | Certificate of Amendment to Certificate of Incorporation of Vycor Medical, Inc. dated as of July 20, 2010 | (filed with Form S-1 on September 7, 2011) | ||||||||
3.2 | Bylaws of Vycor Medical, Inc. | (filed with Form S-1 on September 7, 2011) | ||||||||
5.1* | Legal Opinion of Legal Robert Diener, Esq. |
Exhibit No. | Description | |||||
---|---|---|---|---|---|---|
23.1* | ||||||
Legal Opinion of Legal Robert Diener, Esq. (included with Exhibit 5.1) | ||||||
23.2 | ||||||
Consent of Independent Auditors (filed with Form S-1 on September 7, 2011) |
* | filed herewith |
1. | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
i. | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the |
iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided however, That: |
(A) | Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; and |
(B) | Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. |
2. | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
3. | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
4. | If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished,provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of |
the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. |
5. | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
II-5
i. | If the registrant is relying on Rule 430B: |
A. | Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
B. | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or |
ii. | If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
6. | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
i. | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
ii. | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
iii. | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
iv. | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
II-6
SIGNATURES
Vycor Medical, Inc. | |||||||||||||||||||||
(Registrant) | |||||||||||||||||||||
By: | /s/ Kenneth T. Coviello | ||||||||||||||||||||
Chief Executive and Director (Principal Executive Officer) | |||||||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||||||
By: | |||||||||||||||||||||
/s/ Adrian Liddell | |||||||||||||||||||||
Adrian Liddell | |||||||||||||||||||||
Chairman of the Board and Director | |||||||||||||||||||||
(Principal Financial and Accounting Officer) | |||||||||||||||||||||
Date | October 26 , 2011 |
| |||||||||||||||||
By: | |||||||||||||||||
/s/ Kenneth T. Coviello | |||||||||||||||||
Kenneth T. Coviello | |||||||||||||||||
Chief Executive and Director (Principal Executive Officer) | |||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||
By: | |||||||||||||||||
/s/ Heather Vinas | |||||||||||||||||
Heather Vinas | |||||||||||||||||
Director | |||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||
By: | |||||||||||||||||
/s/ Pascale Mangiardi | |||||||||||||||||
Pascale Mangiardi | |||||||||||||||||
Director | |||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||
By: | Steven Girgenti | ||||||||||||||||
Director | |||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||
By: | |||||||||||||||||
II-7
/s/ Adrian Christopher Liddell | |||||||||||||||||
Adrian Christopher Liddell | |||||||||||||||||
Chairman of the Board and Director (Principal Financial and Accounting Officer) | |||||||||||||||||
Date | October 26 , 2011 |
By: | |||||||||||||||||
/s/ David Marc Cantor | |||||||||||||||||
David Marc Cantor | |||||||||||||||||
President and Director | |||||||||||||||||
Date | October 26 , 2011 | ||||||||||||||||
By: | |||||||||||||||||
/s/ Peter C. Zachariou | |||||||||||||||||
Peter C. Zachariou | |||||||||||||||||
Executive Vice President and Director | |||||||||||||||||
Date | October 26 , 2011 |
Exhibit No. | Description | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
3.1(a) | |||||||||||||||||
II-8
EXHIBIT LIST
Certificate of Incorporation of Vycor Medical, Inc. | (filed with Form S-1 on September 7, 2011) | |||||||||
3.1(b) | Certificate of Amendment to Certificate of Incorporation of Vycor Medical, Inc. dated as of January 11, 2010 | (filed with Form S-1 on September 7, 2011) | ||||||||
3.1(c) | Certificate of Amendment to Certificate of Incorporation of Vycor Medical, Inc. dated as of July 20, 2010 | (filed with Form S-1 on September 7, 2011) | ||||||||
3.2 | Bylaws of Vycor Medical, Inc. | (filed with Form S-1 on September 7, 2011) | ||||||||
5.1 * | Legal Opinion of Legal Robert Diener, Esq. | |||||||||
23.1 * | ||||||||||
Legal Opinion of Legal Robert Diener, Esq. (included with Exhibit 5.1) | ||||||||||
23.2 | ||||||||||
Consent of Independent Auditors (filed with Form S-1 on September 7, 2011) |
* | filed herewith |
II-9