| SIGNIFICANT ACCOUNTING POLICIES | Principles of Consolidation and Basis of Presentation The consolidated financial statements
include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a Delaware corporation), NovaVision
GmbH (a German corporation) and Sight Science Limited (a UK corporation), both wholly owned subsidiaries of NovaVision, Inc. The
Company is headquartered in Boca Raton, FL. All material inter-company accounts, transactions, and balances have been eliminated
in consolidation. Certain reclassifications and format changes have been made to prior year amounts to conform to the current year
presentation. Revenue Recognition Vycor Medical generates revenue from
the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue when a
completed contract for the sale exists, the product is invoiced and shipped to the customer. Vycor Medical does not provide for
product returns or warranty costs. NovaVision generates revenues from various
programs, therapy services and other sources such as license sales. Therapy services revenues represent fees from NovaVisions
vision restoration therapy software, eye movement training software, diagnostic software, clinic set up and training fees, and
the professional and support services associated with the therapy. NovaVision provides vision restoration therapy directly to patients.
The typical vision restoration therapy consists of six modules, performed on average over 6 months in the U.S. and U.K. and 10
months in Germany. A patient contract comprises set-up fees and monthly therapy fees. Set-up fees are recognized at the outset
of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being completed
by a patient within a specified time frame. NovaVisions saccadic training software is generally completed within 2-4 weeks
and revenue is therefore recognized fully at commencement. Deferred revenue results from patients
paying for the therapy in advance of receiving the therapy. Cash and cash equivalents The Company maintains cash balances at
various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000.
Cash balances may at times exceed the FDIC insured limits. Cash also includes a US investment account in a money market backed
by government securities up to 105% of the account balance. The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents. Included within cash are deposits paid by patients, held by the
Company until the patient returns the VRT device or chinrest at the end of therapy. At December 31, 2015 and 2014 patient deposits
amounted to $27,183 and $32,869, respectively, and are included in Other Current Liabilities. Accounts Receivable and Allowance
for Doubtful Accounts Receivable We have a policy of reserving for uncollectible
accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We extend credit
to our customers based on an evaluation of their financial condition and other factors. We generally do not require collateral
or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance
for potential bad debts if required. We determine whether an allowance for doubtful accounts is required by evaluating
specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases,
we use assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those
customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated
and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance.
We may also record a general allowance as necessary. Direct write-offs are taken in the period when we have exhausted
our efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that we should abandon
such efforts. Inventories Inventories are stated at the lower of cost determined using the weighted average cost method or market. Net realizable value
is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product.
If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value
in the period in which the impairment is first identified. The provision for inventory obsolescence for the years ended December
31, 2015 and 2014 was ,$29,923 and $17,200, respectively. Shipping and handling costs incurred for inventory purchases and
product shipments are recorded in cost of sales in the Company's consolidated statements of operations. Foreign Currency The Euro is the local currency of the
country in which NovaVision GmbH conducts its operations and is considered the functional currency of this entity; the GB Pound
is the local currency of the country in which Sight Science Limited conducts its operations and is considered the functional currency
of this entity. All balance sheet amounts are translated to U.S. dollars using the U.S. exchange rate at the balance sheet date
except for the equity section which is translated at historical rates. Operating statement amounts are translated using an average
exchange rate for the period of operations. Foreign currency translation effects are accumulated as part of the accumulated other
comprehensive income (loss) and included in stockholders equity in the accompanying Consolidated Balance Sheet. Educational marketing and advertising expenses The Company may incur costs for the education
of customers on the uses and benefits of its products. The Company will include education, marketing and advertising expense as
a component of selling, general and administrative costs as such costs are incurred. Income taxes We use the asset and liability method of accounting
for income taxes in accordance with ASC Topic 740, Income Taxes. Under this method, income tax expense is recognized
for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences
resulting from matters that have been recognized in an entitys financial statements or tax returns. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to
reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely
than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting
for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. Fixed assets Fixed assets are stated at cost less
accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Expenditures
for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. Derivative Liability The Company has accounted for
the 34,723 Series A Warrants issued in connection with the 2014 Offering (all as defined in Note 10), the holders of which had
not waived their anti-dilution rights (as detailed further in Note 10) in accordance with the guidance contained in ASC 815-40-15-7D,
whereby under that provision, because they had anti-dilution rights, they did not meet the criteria for equity treatment and must
be recorded as a liability. Accordingly, the Company classified the warrant instrument as a liability at its fair value and adjusted
the instrument to fair value at each reporting period. This liability was subject to re-measurement at each balance sheet date
until exercised or until the anti-dilution provisions contained within the warrant agreements expired, and was classified in the
balance sheet as a current liability. Any change in fair value of the warrant liability was recognized in the Companys statement
of operations as other income (loss). The anti-dilution provisions expired on June 11, 2015 and accordingly the liability has been
extinguished. Impairment of long-lived assets Long-lived assets are reviewed for impairment
when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, impairment
is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying
value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference
between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal
and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable
value. Research and Development The Company expenses all research and
development costs as incurred. For the years ended December 31, 2015 and 2014, the amounts charged to research and development
expenses were $71,512 and $69,114, respectively. Software Development Costs The Company accounts for software development
costs in accordance with ASC 350-40, whereby all costs incurred during the preliminary stage of a development project should be
charged to expense as incurred. Capitalization of costs begins after the preliminary stage has been completed, management commits
to funding the project, it is probable that the project will be completed, and the software will be used for its intended function.
All post-implementation costs are charged to expense as incurred. Accordingly, direct internal and external costs associated with
the development of the features and functionality of the Companys software, incurred during the application development
stage, are capitalized and amortized using the straight-line method of the estimated life of five 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 and $363,472
as part of the acquisition of the assets of Sight Science Limited on January 4, 2012. For the years ended December 31, 2015 and
2014, the amounts capitalized for software development were $32,843 and $124,660 respectively, for the Companys VRT 7.0
and NeuroEyeCoach programs. 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 managements
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 managements 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. Stock 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 Companys common stock or financial instruments that grant the recipient the right to acquire
shares of the Companys 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. 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. Convertible Instruments We evaluate and account for conversion
options embedded in convertible instruments in accordance with ASC 815 Derivatives and Hedging Activities. Applicable GAAP requires companies to
bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments
according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under
other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as
the embedded derivative instrument would be considered a derivative instrument. We account for convertible instruments
(when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows:
We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments
based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction
and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of
the related debt to their stated date of redemption. The embedded conversion option in connection with our convertible debt could
not be exercised unless and until we completed a Qualifying Financing transaction. Accordingly, we determined based on authoritative
guidance that the embedded conversion option is deemed to be a contingent conversion rather than active conversion option that
did not require accounting recognition at the commitment dates of the issuances of the Notes. Common Stock Purchase Warrants
and Other Derivative Financial Instruments We classify as equity any contracts that
require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares
(physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40
("Contracts in Entity's Own Equity"). We classify as assets or liabilities any contracts that require net-cash settlement
(including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the
counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification
of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change
in classification between assets and liabilities is required. Fair Value Measurements We adopted the provisions of ASC Topic
820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements,
establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial
instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical
cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of
our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include
contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion
options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines 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. ASC 820 also establishes
a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 quoted
prices in active markets for identical assets or liabilities Level 2 quoted prices
for similar assets and liabilities in active markets or inputs that are observable Level 3 inputs that
are unobservable (for example cash flow modeling inputs based on assumptions) 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:
December 31, December 31,
2015 2014
Stock options outstanding 25,557 25,557
Warrants to purchase common stock 6,007,048 5,911,715
Debentures convertible into common stock 215,908 171,138
Preferred shares convertible into common stock 1,188,471 1,110,438
Total 7,436,984 7,218,848 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 Companys 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. |
