Vycor Medical Inc 10-Q for FY2022 Q3
Vycor Medical Inc (VYCO)
About this 10-Q
Vycor Medical Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $309.97K
- down 6.7% from $332.09K a year earlier
- Net loss
- $114.81K
- compared with net income of $3693 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
(Mark One)
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the fiscal quarter
ended | |
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT | |
| For the transition period from to |
(Exact name of small business issuer as specified in its charter)
| (State | (Commission | (IRS Employer | ||
| of Incorporation) | File Number) | Identification No.) |
(Address of principal executive offices) (Zip code)
Issuer’s
telephone number:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| OTCQB |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller Reporting Company | |
| Emerging Growth Company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
There were shares outstanding of registrant’s common stock, par value $0.0001 per share, as of November 11, 2022.
Transitional Small Business Disclosure Format (check one): Yes ☐ No ☒
TABLE OF CONTENTS
| 2 |
PART 1
ITEM 1. FINANCIAL STATEMENTS
VYCOR MEDICAL, INC.
Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Trade accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total Current Assets | ||||||||
| Fixed assets, net | ||||||||
| Intangible and Other assets: | ||||||||
| Security deposits | ||||||||
| Operating lease - right of use assets | ||||||||
| Total Intangible and Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest: Other | ||||||||
| Accrued interest: Related party | ||||||||
| Accrued liabilities - Other | ||||||||
| Accrued liabilities - Related Party | ||||||||
| Notes payable: Other | ||||||||
| Notes payable: Related Party | ||||||||
| Current operating lease liabilities | ||||||||
| Current liabilities of discontinued operations | ( | ) | ( | ) | ||||
| Total Current Liabilities | ||||||||
| Loan Payable - SBA EIDL | ||||||||
| Operating lease liability - Long term | ||||||||
| Total Long-term Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock, $ par value, shares authorized, and issued and outstanding as at September 30, 2022 and December 31, 2021 respectively | ||||||||
| Common Stock, $ par value, shares authorized at September 30, 2022 and December 31, 2021, and shares issued and and outstanding at September 30, 2022 and December 31, 2021 respectively | ||||||||
| Additional Paid-in Capital | ||||||||
| Treasury Stock ( shares of Common Stock as at September 30, 2022 and December 31, 2021 respectively, at cost) | ( | ) | ( | ) | ||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Accumulated Other Comprehensive Income | ||||||||
| Total Stockholders’ Deficiency | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | $ | ||||||
See accompanying notes to consolidated financial statements
| 3 |
VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Loss
(Unaudited)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021` | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense: Related Party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense: Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on foreign currency exchange | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Forgiveness of debt Paycheck Protection Program | ||||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| Income (Loss) Before Credit for Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Credit for income taxes | ||||||||||||||||
| Net Income (Loss) from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from discontinued operations, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Income (Loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss Available to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other Comprehensive Income (Loss) | ||||||||||||||||
| Foreign Currency Translation Adjustment | ||||||||||||||||
| Comprehensive Income (Loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Net Income (Loss) Per Share - basic and diluted | ||||||||||||||||
| Income (Loss) from continuing operations | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Loss from discontinued operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Shares Outstanding – Basic and Diluted | ||||||||||||||||
See accompanying notes to consolidated financial statements
| 4 |
VYCOR MEDICAL, INC.
Consolidated Statement of Stockholders’ Deficiency
(Unaudited)
| Additional | Accum | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Additional | Accum | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Paid-in | Accumulated | Accum | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | OCI | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Balance | 27,534,740 | $ | 1 | $ | 270,306 | $ | (103,334 | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to deferred compensation of directors | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Directors deferred compensation granted | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for period available to common stockholders | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Balance | 30,852,781 | $ | 1 | $ | 270,306 | $ | (103,334 | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
| 5 |
VYCOR MEDICAL, INC.
Consolidated Statement of Cash Flows
(Unaudited)
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Amortization of intangible assets | ||||||||
| Depreciation of fixed assets | ||||||||
| Inventory provision | ||||||||
| Stock based compensation | ||||||||
| Forgiveness of debt Paycheck Protection Program | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ||||||
Accounts payable | ( | ) | ||||||
Accrued interest - Related Party | ||||||||
Accrued interest - Other | ||||||||
| Accrued liabilities - Other | ( | ) | ||||||
| Changes in discontinued operations, net | ( | ) | ( | ) | ||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Notes Payable - Related Party | ||||||||
| Proceeds from Paycheck Protection Program | ||||||||
| Proceeds net of repayments Notes Payable - Other | ||||||||
| Cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | $ | $ | ||||||
See accompanying notes to consolidated financial statements
| 6 |
VYCOR MEDICAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Vycor Medical, Inc. (the “Company” or “Vycor”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2021 derives from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
The unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Ability to continue as a Going Concern
The
accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
The Company has incurred losses since its inception, including a net loss of $
The
Company is executing on a plan to achieve a reduction in cash operating losses. Included within the working capital deficiency above
is a term note for $
| 7 |
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a Delaware corporation), NovaVision GmbH (a German corporation) and Sight Science Limited (a UK corporation), both wholly owned subsidiaries of NovaVision, Inc. The Company is headquartered in Boca Raton, FL. All material inter-company account balances, transactions, and profits have been eliminated in consolidation. Following the decision in April 2020 to close the German office of NovaVision, the activities of NovaVision GmbH have been accounted for as discontinued operations.
Recent Accounting Pronouncements
From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
Discontinued Operations
In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations (which we presented as operations to be disposed and operations disposed), less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.
Accounting for forgivable loan received under the Small Business Administration Paycheck Protection Program
During
the year ended December 31, 2020 the Company received a loan of $
The Company accounted for the loans as a financial liability in accordance with FASB ASC 470 and accrued interest in accordance with the interest method under FASB ASC 835-30. For purposes of derecognition of the liability, FASB ASC 470-50-15-4 refers to guidance in FASB ASC 405-20. Based on this guidance, the proceeds of the loans were recorded as a liability until either (1) the loans are, in part or wholly, forgiven and the Company has been “legally released”, or (2) the Company pays off the loans. The Company has accordingly reduced the liability by the amount forgiven and recorded a gain on the extinguishment.
Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock and convertible debt. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. No dilution adjustment has been made to the weighted average outstanding common shares in the periods presented because the assumed exercise of outstanding options and warrants and the conversion of preferred stock and debt would be anti-dilutive.
SCHEDULE OF COMMON STOCK NOT INCLUDED IN CALCULATION OF DILUTED NET LOSS PER SHARE
September 30, 2022 | September 30, 2021 | |||||||
| Debentures convertible into common stock | ||||||||
| Preferred shares convertible into common stock | ||||||||
| Total | ||||||||
3. DISCONTINUED OPERATIONS
In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model; in June 2020 Vycor announced that it would be entering into a license agreement and transition agreement (the “Agreements”) with HelferApp GmbH, a cognitive therapy specialist. Under the Agreements, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals; and has assumed responsibility for the current patients of NovaVision in the territory. The NovaVision German office was closed effective June 30, 2020. The Company will continue to fund the remaining expenses of the German operations, which are non-material, until such a time as NovaVision GmbH is formally wound up.
| 8 |
Reconciliation of the major line items from discontinued operations that are presented in the unaudited consolidated balance sheets and unaudited consolidated statements of comprehensive loss are as follows:
Major line items constituting assets and liabilities in the unaudited consolidated balance sheets
SCHEDULE OF LOSS FROM DISCONTINUED OPERATIONS
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | |||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Total Current Liabilities | $ | ( | ) | $ | ( | ) | ||
Major line items constituting loss from discontinued operations
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Loss on foreign currency exchange | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss Before Credit for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Credit for income taxes | ||||||||||||||||
| Loss from discontinued operations, net of tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 9 |
4. NOTES PAYABLE
Related Parties Notes Payable
Related Party Notes Payable consists of:
SUMMARY OF NOTES PAYABLE
September 30, 2022 | December 31, 2021 | |||||||
| On June 25, 2018 the Company issued promissory notes to Peter Zachariou for $ | $ | $ | ||||||
| Between March 26, 2018 and August 26, 2022 the Company issued thirteen promissory notes to Fountainhead Capital Management Limited for $ | ||||||||
| Total Related Party Notes Payable | $ | $ | ||||||
Other Notes Payable
Other Notes Payable consists of:
September 30, 2022 | December 31, 2021 | |||||||
| On March 25, 2011 the Company issued a term note for $ | $ | $ | ||||||
| Current portion of Long-Term Notes payable, see below | ||||||||
| Insurance policy finance agreements. | ||||||||
| Total Notes Payable: | $ | $ | ||||||
Long-Term Notes Payable consists of:
September 30, 2022 | December 31, 2021 | |||||||
| On July 7, 2020, the Company was advised that the Small Business Administration (SBA) had approved a $ | $ | $ | ||||||
| Total Long-Term Notes Payable: | $ | $ | ||||||
| 10 |
In
January 2018 the Company entered into an amendment agreement (the “Amendment”) with EuroAmerican Investments (“EuroAmerican”)
regarding its $
The Company routinely finances all their insurance policies through a third party finance company which requires a down payment and subsequent monthly payments, the time periods vary from 10 months to 12 equal monthly payments.
5. LEASE
The Company recognized the following related to a lease in its unaudited consolidated balance sheet at September 30, 2022 and December 31, 2021:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
| September 30, 2022 | December 31, 2021 | |||||||
| Operating Lease ROU Assets | $ | $ | ||||||
| Operating Lease ROU Assets | $ | $ | ||||||
| Operating Lease Liabilities | ||||||||
| Current portion | $ | $ | ||||||
| Long-term portion | ||||||||
| Operating Lease Liabilities | $ | $ | ||||||
6. SEGMENT REPORTING, GEOGRAPHICAL INFORMATION
(a) Business segments
The Company operates in two business segments: Vycor Medical, which focuses on devices for neurosurgery; and NovaVision, which focuses on neuro stimulation therapies and diagnostic devices for the treatment and screening of vision field loss and which includes Sight Science. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment:
SCHEDULE OF BUSINESS SEGMENTS INFORMATION
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue: | ||||||||||||||||
| Vycor Medical | $ | $ | $ | $ | ||||||||||||
| NovaVision | $ | $ | $ | $ | ||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross Profit | ||||||||||||||||
| Vycor Medical | $ | $ | $ | $ | ||||||||||||
| NovaVision | $ | $ | $ | $ | ||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Total Assets: | ||||||||
| Vycor Medical | $ | $ | ||||||
| NovaVision | ||||||||
| Discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
| 11 |
(b) Geographic information
The Company operates in two geographic segments, the United States and Europe. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment.
SUMMARY OF GEOGRAPHIC INFORMATION
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue: | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Europe | $ | $ | $ | $ | ||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross Profit | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Europe | $ | $ | $ | $ | ||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Total Assets: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
7. EQUITY
Common Stock Grants
During
January to September 2022 and 2021, under the terms of the Consulting Agreement referred to in Note 10, the Company issued
of Common Stock to Fountainhead valued at $
On April 1, 2022 and 2021 the Company issued shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement (see Note 10).
During January to September 2021, the Company granted shares of Common Stock (valued at $) to non-employee Directors. Under the terms of the Directors Deferred Compensation Plan, the receipt of these shares was deferred until the January 15th following the termination of their services as a director, or following the termination of the Plan. The Plan was terminated on April 1, 2021 and the Company issued and shares of common stock to Steve Girgenti and Lowell Rush in respect of their Deferred Compensation shares following their resignations from the board.
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Stock Options
SCHEDULE OF STOCK OPTIONS
Number of shares | Weighted average exercise price per share | |||||||
| Outstanding at December 31, 2020 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Cancelled or expired | ( | ) | ||||||
| Outstanding at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Cancelled or expired | ||||||||
| Outstanding at September 30, 2022 | $ | |||||||
The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the “measurement date” using an option pricing model, or their contractual value if different in the case of common stock. The “measurement date” for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant.
Non-Employee Stock Compensation
Aggregate stock-based compensation for stock granted to non-employees for each of the nine months ended September 30, 2022 and 2021 was $ and $, respectively.
9. COMMITMENTS AND CONTINGENCIES
Lease
The
Company leases office space located at 951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487 from WPT Land 2 L.P., for a gross rent
of approximately $
Potential German tax liability
In
June 2012 the Company’s NovaVision German subsidiary received a preliminary assessment for Magdeburg City trade tax of €
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10. CONSULTING AND OTHER AGREEMENTS
The following agreements were entered into or remained in force during the period ended September 30, 2022:
Consulting Agreement with Fountainhead
In
March 2017 and effective April 1, 2017, the Company amended the Fountainhead Consulting Agreement. Under the Amended Agreement, fees
of $
Effective
January 1, 2021, the Company made an amendment to the Fountainhead Consulting Agreement (“the Amended Agreement”).
Under the Amended Agreement, fees are payable to Fountainhead, with an option to receive $ per month in cash, and the remainder
payable in Company Common Stock (“Shares”) as follows: 1) Shares on the last day of each quarter; to the extent there
are cash retainer payments during the quarter, the Shares shall be reduced by a number calculated by dividing the cash amount by the
average closing price of the Shares for the 30 trading days prior to issuance; or 2) if the average closing price of the Shares for the
30 trading days prior to issuance is above $, a number of Shares calculated by dividing $
During
the nine months ended September 30, 2022 and September 30, 2021, under the terms of the Amended Agreement, Fountainhead received
of Common Stock to Fountainhead valued at $
Other Agreements
On March 30, 2021, Vycor entered into a Consulting Agreement with Ricardo J. Komotar, M.D. (the “Agreement”) to provide certain specified services over the three-year term of the Agreement. Under the Agreement, Dr. Komotar will provide general scientific advisory consultancy services, and will also provide scientific advisory services based around certain specific pre-determined milestones. In consideration of the Consultant’s services, the Company agreed to deliver to the Consultant over the course of the three-year term, a total of shares of Company Common Stock in respect of the general consultancy, and up to shares of Company Common Stock in respect of the milestones, the actual number of shares to be delivered being determined by the achievement of the pre-determined milestones. On April 1, 2021 and 2022 shares of Company Common Stock were issued under the terms of the Agreement.
11. RELATED PARTY TRANSACTIONS
Peter
Zachariou and David Cantor, directors of the Company, are investment managers of Fountainhead that owned, at September 30, 2022,
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During
each of the nine months ended September 30, 2022 and September 30, 2021, under the terms of the Amended Agreement referred to in Note
10, the Company issued shares of Common Stock to Fountainhead valued at $
During
each of the nine months ended September 30, 2022 and 2021, the Company accrued an aggregate of $
During
the nine months ended September 30, 2022 and 2021 the Company issued unsecured loan notes to Fountainhead for a total of $
There
were
12. CONCENTRATION
Vycor Medical sells its neurosurgical devices in the US primarily direct to hospitals, and internationally through distributors who in turn sell to hospitals.
Sales Concentration:
SCHEDULE OF CONCENTRATION
Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Number of customers over 10% | ||||||||
| Percentage of sales | % | % | ||||||
Nine months ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Number of customers over 10% | ||||||||
| Percentage of sales | % | % | ||||||
Accounts Receivable Concentration
| At September 30, | At December 31, | |||||||
| 2022 | 2021 | |||||||
| Number of customers over 10% | ||||||||
| Percentage of accounts receivable | % | % | ||||||
The
Company has three sub-contract manufacturers from which it purchases, respectively, VBAS injection molded parts, completed and sterilized
VBAS units, and VBAS extension arms. Purchases from these manufacturers vary from quarter to quarter, with no purchases in some quarters,
however on an annual basis purchases from each manufacturer represent over
13. SUBSEQUENT EVENTS
On
October 3, 2022 the Company issued unsecured loan notes to Fountainhead for $
The Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the unaudited consolidated financial statements were issued and has determined that, other than the above, there were no significant subsequent events or transactions which would require recognition or disclosure in the financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
This Interim Report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PLSRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding Vycor Medical, Inc. (the “Company” or “Vycor,” also referred to as “us”, “we” or “our”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in this Form 10-Q generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.
Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise. We intend that all forward-looking statements be subject to the safe harbor provisions of the PSLRA.
1. Organizational History
The Company was formed as a limited liability company under the laws of the State of New York on June 17, 2005 as “Vycor Medical LLC”. On August 14, 2007, we converted into a Delaware corporation and changed our name to “Vycor Medical, Inc.” (“Vycor”). The Company’s listing went effective on February 2009 and on November 29, 2010 Vycor completed the acquisition of substantially all of the assets of NovaVision, Inc. (“NovaVision”) and on January 4, 2012 Vycor, through its wholly-owned NovaVision subsidiary, completed the acquisition of all the shares of Sight Science Limited (“Sight Science”), a previous competitor to NovaVision.
2. Overview of Business
Vycor is dedicated to providing the medical community with innovative and superior surgical and therapeutic solutions and operates two distinct business units within the medical device industry. Vycor Medical designs, develops and markets medical devices for use in neurosurgery. NovaVision provides non-invasive rehabilitation therapies for those who have vision disorders resulting from neurological brain damage such as that caused by a stroke. Both businesses adopt a minimally or non-invasive approach. The Company has 61 issued or allowed patents and a further 11 pending. The Company leverages joint resources across the divisions to operate in a cost-efficient manner.
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The Company periodically engages in discussions with potential strategic partners for or purchasers of each or both of our operating divisions. In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model, entering into a license agreement with HelferApp GmbH, a cognitive therapy specialist. Under the agreement, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals. The NovaVision German office was closed effective June 30, 2020.
Vycor Medical
Vycor Medical designs, develops and markets medical devices for use in neurosurgery. Vycor Medical’s ViewSite Brain Access System (“VBAS”) is a next generation retraction and access system. Vycor Medical is ISO 13485:2016 and MDSAP (Medical Device Single Audit Program) certified, and VBAS has U.S. FDA 510(k) clearance and CE Marking for Europe (Class III) for brain and spine surgeries, and regulatory approvals in a number of other international markets. Vycor Medical has 30 granted and 11 pending patents.
NovaVision
NovaVision provides non-invasive, computer-based rehabilitation therapies targeted at people who have impaired vision as a result of stroke or other brain injury, and has 31 granted patents.
Strategy
The Company is continuing to execute on a plan to achieve revenue growth and a reduction in annual cash operating losses1 and generated a cash operating profit1 during the nine months ended September 30, 2022. For Vycor Medical this plan includes: increasing market penetration in the US; increasing international growth in territories where we are not represented or under-represented and continued new product development in response to market demands and demonstrating applicability in a broader range of pathologies. In the US the Company is focused on increasing market penetration through targeting neurosurgeons systematically, both through its distribution network and also directly by leveraging existing KOL neurosurgeon VBAS supporters to access new neurosurgeon users.
The Company continues to target key international territories including Europe where it intends to drive adoption of its VBAS product through selected key KOL neurosurgeon VBAS users in each territory to identify both new potential users and also high-quality distribution partners to bolster our existing network.
1 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
The Company has for some time been working to better integrate its VBAS with neuronavigation. The first phase of the modification of the existing VBAS product range was completed in September 2017 and has been well received by surgeons. The second phase involves the introduction of an optional Alignment Clip accessory that snaps onto the VBAS and allows for a neuronavigation pointer to be fully integrated into the body of the VBAS; this new model range, known as the VBAS AC, was launched in September 2022. The Company will continue to work with neuronavigation companies to seek ways to further integrate the VBAS with neuronavigation and with other companies with complementary technologies used in neurosurgery. We will also be exploring with neurosurgeons and focus groups additional selected development work targeted at increasing the ease and applicability of our products to additional common procedures.
For NovaVision, given the company’s resources, and the large size and diversity of its end markets, we believe that the most efficient way to tackle the distribution of its broad range of patient and professional products is by partnering with entities in selected geographies that have either direct access to the end users or a desire and financial wherewithal to leverage the NovaVision therapy platform, including into new areas. As a result, the Company closed the NovaVision German office and entered into a license agreement with HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland, and is seeking similar partnerships in other territories with regional companies able to leverage NovaVision’s clinically supported vision therapies. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
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Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021
Revenue and Gross Margin:
| Three months ended | ||||||||||||
| September 30, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Revenue: | ||||||||||||
| Vycor Medical | $ | 289,706 | $ | 301,540 | -4 | % | ||||||
| NovaVision | $ | 20,263 | $ | 30,547 | -34 | % | ||||||
| $ | 309,969 | $ | 332,087 | -7 | % | |||||||
| Gross Profit | ||||||||||||
| Vycor Medical | $ | 249,141 | $ | 269,986 | -8 | % | ||||||
| NovaVision | $ | 18,629 | $ | 26,956 | -31 | % | ||||||
| $ | 267,770 | $ | 296,942 | -10 | % | |||||||
Vycor Medical recorded revenue of $289,706 from the sale of its products for the three months ended September 30, 2022, a decrease of $11,834, or 4%, over the same period in 2021. Gross margin of 86% and 90% was recorded for the three months ended September 30, 2022 and 2021, respectively.
NovaVision recorded revenues of $20,263 for the three months ended September 30, 2022, a decrease of $10,284, or 34% over the same period in 2021. Gross margin was 92%, compared to 88% for the same period in 2021.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $24,529 to $341,256 for the three months ended September 30, 2022 from $365,785 for the same period in 2021. Included within Selling, General and Administrative Expenses are non-cash charges for stock based compensation as the result of amortizing employee and non-employee shares, warrants and options which have been issued by the Company over various periods. The charge for the three months ended September 30, 2022 was $59,836, a $22,339 decrease from the charge in 2021 of $82,175. Also included within Selling, General and Administrative Expenses are Sales Commissions, which decreased by $9,987 from $61,598 to $51,611 in 2022.
The remaining Selling, General and Administrative expenses increased by $7,797 to $229,809 from $222,012 in 2021. Patent costs increased by $17,147 mainly due to quarterly timing differences, and payroll costs increased by $14,252. Scientific and software development decreased by $10,099.
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An analysis of the change in cash and non-cash G&A is shown in the table below:
| Cash G&A | Non-Cash G&A | |||||||
| Payroll | 14,252 | - | ||||||
| Other (travel/insurance/premises) | 5,615 | - | ||||||
| Legal, patent, audit/accounting | 2,197 | - | ||||||
| Regulatory | (4,168 | ) | - | |||||
| Commissions | (9,987 | ) | - | |||||
| Scientific advisory | (10,099 | ) | ||||||
| Board and financial | - | (22,339 | ) | |||||
| Total change | (2,190 | ) | (22,339 | ) | ||||
Interest Expense:
Interest comprises expense on the Company’s debt and insurance policy financing. Related Party Interest expense for the three months ended September 30, 2022 and 2021 was $10,351 and $8,088, respectively. Other Interest expense for the three months ended September 30, 2022 and 2021 was $13,511 and $12,685, respectively.
Operating loss from Discontinued Operations:
Operating loss from Discontinued Operations decreased by $1,471 to $2,495 in 2022 from $3,966 in 2021; the Company has some ongoing costs related to the wind-down of the discontinued operations in Germany but no revenues.
Comparison of the Nine months ended September 30, 2022 to the Nine months ended September 30, 2021
Revenue and Gross Margin:
| ` | Nine months ended | |||||||||||
| September 30, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Revenue: | ||||||||||||
| Vycor Medical | $ | 875,785 | $ | 1,026,572 | -15 | % | ||||||
| NovaVision | $ | 75,940 | $ | 92,691 | -18 | % | ||||||
| $ | 951,725 | $ | 1,119,263 | -15 | % | |||||||
| Gross Profit | ||||||||||||
| Vycor Medical | $ | 777,963 | $ | 930,180 | -16 | % | ||||||
| NovaVision | $ | 70,269 | $ | 86,133 | -18 | % | ||||||
| $ | 848,232 | $ | 1,016,313 | -17 | % | |||||||
Vycor Medical recorded revenue of $875,785 from the sale of its products for the nine months ended September 30, 2022, a decrease of $150,787, or 15%, over the same period in 2021. The 2021 period had an unusually high level of activity as Vycor’s markets, particularly the US, recovered from Covid and hospitals re-stocked their inventories and recommenced surgeries and procedures that had been deferred or postponed, particularly in the three months ended June 30, 2021. Gross margin of 89% and 91% was recorded for the nine months ended September 30, 2022 and for the same period in 2021.
NovaVision recorded revenues of $75,940 for the nine months ended September 30, 2022, a decrease of $16,751 over the same period in 2021, and gross margin of 93%, for the both periods in 2022 and 2021.
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Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $210,646 to $1,019,693 for the nine months ended September 30, 2022 from $1,230,340 for the same period in 2021. Included within Selling, General and Administrative Expenses are non-cash charges for stock based compensation as the result of amortizing employee and non-employee shares, warrants and options which have been issued by the Company over various periods. The charge for the nine months ended September 30, 2022 was $187,381, a decrease of $96,721 over $284,102 in 2021. Also included within Selling, General and Administrative Expenses are Sales Commissions, which decreased by $45,317 from $212,924 to $167,607.
The remaining Selling, General and Administrative expenses decreased by $68,609 from $733,314 to $664,705. Patent costs decreased by $22,183 and scientific and software development costs by $28,329, reflecting lower levels of activity compared to 2021; payroll increased by $25,026.
An analysis of the change in cash and non-cash G&A is shown in the table below:
| Cash G&A | Non-Cash G&A | |||||||
| Payroll | 25,026 | - | ||||||
| Regulatory | (3,680 | ) | - | |||||
| Scientific advisory | (28,329 | ) | ||||||
| Other (travel/insurance/premises) | (28,446 | ) | - | |||||
| Legal, patent, audit/accounting | (33,180 | ) | - | |||||
| Commissions | (45,317 | ) | - | |||||
| Board and financial | - | (96,721 | ) | |||||
| Total change | (113,926 | ) | (96,721 | ) | ||||
Interest Expense:
Interest comprises expense on the Company’s debt and insurance policy financing. Related Party Interest expense for the nine months ended September 30, 2022 was $28,257 compared to $23,753 for 2021. Other Interest expense for the nine months ended September 30, 2022 was $39,195 compared to $42,465 for 2021 following the forgiveness of PPP loans.
Liquidity
The following table shows cash flow and liquidity data for the periods ended September 30, 2022 and December 31, 2021:
| September 30, 2022 | December 31, 2021 | $ Change | ||||||||||
| Cash | $ | 32,570 | $ | 90,941 | ($ | 58,371 | ) | |||||
| Accounts receivable, inventory and other current assets | $ | 547,224 | $ | 396,470 | $ | 150,754 | ||||||
| Total current liabilities | $ | (3,622,248 | ) | $ | (3,149,997 | ) | $ | (472,251 | ) | |||
| Working capital | $ | (3,042,454 | ) | $ | (2,662,586 | ) | $ | (379,868 | ) | |||
| Cash provided by financing activities | $ | 128,392 | $ | 61,945 | $ | (66,447 | ) | |||||
Operating Activities. Cash provided by (used in) operating activities comprises net loss adjusted for non-cash items and the effect of changes in working capital and other activities. The net repayment of normal insurance financing should also be taken into account when considering cash provided by (used in) operating activities.
| 20 |
The following table shows the principle components of cash provided by (used in) operating activities during the nine months ended September 30, 2022 and 2021, with a commentary of changes during the periods and known or anticipated future changes:
| September 30, 2022 | September 30, 2021 | $ Change | ||||||||||
| Net loss | $ | (288,369 | ) | $ | (248,600 | ) | $ | (39,769 | ) | |||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||
| Amortization and depreciation of assets | $ | 46,073 | $ | 50,648 | $ | (4,575 | ) | |||||
| Stock based compensation | $ | 187,381 | $ | 284,102 | $ | (96,721 | ) | |||||
| Other | $ | 11,360 | $ | (107,930 | ) | $ | 119,290 | |||||
| $ | 244,814 | $ | 226,820 | $ | 17,994 | |||||||
| Net loss adjusted for non-cash items | $ | (43,555 | ) | $ | (21,780 | ) | $ | (21,775 | ) | |||
| Changes in working capital | ||||||||||||
| Accounts receivable | $ | (54,462 | ) | $ | (17,646 | ) | $ | (36,816 | ) | |||
| Accounts payable and accrued liabilities | $ | (38,227 | ) | $ | 16,076 | $ | (54,303 | ) | ||||
| Inventory | $ | (71,381 | ) | $ | (49,838 | ) | $ | (21,543 | ) | |||
| Prepaid expenses and net insurance financing repayments | $ | (14,246 | ) | $ | 15,611 | $ | (29,857 | ) | ||||
| Accrued interest (not paid in cash) | $ | 57,938 | $ | 64,024 | $ | (6,086 | ) | |||||
| Changes in discontinued operations, net | $ | (1,337 | ) | $ | (3,791 | ) | $ | 2,454 | ||||
| $ | (121,715 | ) | $ | 24,436 | $ | (146,151 | ) | |||||
| Cash provided by (used in) operating activities, adjusted for net insurance repayments | $ | (165,270 | ) | $ | 2,656 | $ | (167,926 | ) | ||||
The adjustments to reconcile net loss to cash of $244,814 in the period have no impact on liquidity. The change in accounts payable and accrued liabilities of $54,303 between the 2022 and 2021 periods was mainly due to the settlement of expenses during the 2021 period incurred during the final quarter of 2020.
Additional inventory of $136,932 was purchased during the nine months ended September 30, 2022 as part of normal production, and the Company anticipates purchasing additional new inventory of approximately $130,000 during the next twelve months for VBAS and VBAS AC.
Investing Activities. Cash used in investing activities of continuing operations for the nine months ended September 30, 2022 was $3,102.
Financing Activities. During the nine months ended September 30, 2022 the Company received funds of $110,000 in respect of loans from Fountainhead.
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Liquidity and Plan of Operations, Ability to Continue as a Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $612,739 for the nine months ended September 30, 2022 and has not generated sufficient positive cash flows from operations. As of September 30, 2022 the Company had a working capital deficiency of $530,661, excluding related party liabilities of $2,511,793. These conditions, among others, raise substantial doubt regarding our ability to continue as a going concern. The unaudited consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
As described earlier in this ITEM 2 “Strategy”, The Company is continuing to execute on a plan to achieve revenue growth and a reduction in annual cash operating losses1 and generated a cash operating profit1 during the nine months ended September 30, 2022. For Vycor Medical this plan includes: increasing market penetration in the US; increasing international growth in territories where we are not represented or under-represented and continued new product development in response to market demands and demonstrating applicability in a broader range of pathologies. In the US the Company is focused on increasing market penetration through targeting neurosurgeons systematically, both through its distribution network and also directly by leveraging existing KOL neurosurgeon VBAS supporters to access new neurosurgeon users. The Company continues to target key international territories including Europe where it intends to drive adoption of its VBAS product through selected key KOL neurosurgeon VBAS users in each territory to identify both new potential users and also high-quality distribution partners to bolster our existing network. The Company has for some time been working to better integrate its VBAS with neuronavigation. The first phase of the modification of the existing VBAS product range was completed in September 2017 and has been well received by surgeons. The second phase involves the introduction of an optional Alignment Clip accessory that snaps onto the VBAS and allows for a neuronavigation pointer to be fully integrated into the body of the VBAS; this new model range, known as the VBAS AC, was launched in September 2022. The Company will continue to work with neuronavigation companies to seek ways to further integrate the VBAS with neuronavigation and with other companies with complementary technologies used in neurosurgery. We will also be exploring with neurosurgeons and focus groups additional selected development work targeted at increasing the ease and applicability of our products to additional common procedures. For NovaVision, given the company’s resources, and the large size and diversity of its end markets, we believe that the most efficient way to tackle the distribution of its broad range of patient and professional products is by partnering with entities in selected geographies that have either direct access to the end users or a desire and financial wherewithal to leverage the NovaVision therapy platform, including into new areas. As a result, the Company closed the NovaVision German office and entered into a license agreement with HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland, and is seeking similar partnerships in other territories with regional companies able to leverage NovaVision’s clinically supported vision therapies. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
2 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
However, the Company believes it may not have sufficient cash to meet its various cash needs through November 30, 2023 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $412,798, which has a maturity date of March 31, 2023, having been extended on a number of occasions from its initial due date of June 11, 2011. At this time, it is not known whether any further extension of the note beyond March 31, 2023 will be available. Fountainhead, the Company’s largest shareholder, has provided working capital funding to the Company on an as-needed basis, although there is no guarantee that this will continue to be the case. The Company may consider seeking additional equity or debt funding, although there is no assurance that this would be available on acceptable terms or at all. If adequate funds are not available, the Company may have to delay or curtail development or commercialization of products, or cease some of its operations.
Critical Accounting Policies and Estimates
A detailed description of our significant accounting policies can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2021.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.
The Company’s management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our CEO and our CFO have concluded that a material weakness occurred as of April 1, 2021 with the resignation of the independent members of the Company’s Audit Committee as of that date. Effective that date, our disclosure and controls were no longer effective to ensure that information required to be disclosed by the Company in the reports its files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO and its CFO, as appropriate, to allow timely decisions regarding required disclosure.
The matter involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were a lack of a functioning audit committee with independent members, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. This weakness occurred as of April 1, 2021 due to the resignation of the independent members of the Audit Committee from the Board of Directors effective as of April 1, 2021.
Management believes that the material weakness set forth did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors, results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
(b) Changes in Internal Controls
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company’s management, including the Company’s CEO and CFO, does not expect that the Company’s internal control over financial reporting will prevent all errors and all fraud. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
| 23 |
PART II
ITEM 1. LEGAL PROCEEDINGS
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of November 11, 2022, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company issued the following unregistered securities during the period from January 1, 2022 through November 11, 2022:
| Issuance Type | Security | Shares | ||||
| FHC Management Fees | Common | 1,607,142 | ||||
| Consulting agreement fees: Ricardo Komotar | Common | 101,663 | ||||
| Total | Common | 1,708,805 | ||||
There were no cash proceeds from these issuances
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None
Index to Exhibits
| 31.1 | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 24 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 14, 2022
| Vycor Medical, Inc. | ||
| (Registrant) | ||
| By: | /s/ Peter C. Zachariou | |
| Peter C. Zachariou | ||
| Chief Executive Officer and Director (Principal Executive Officer) | ||
| Date | November 14, 2022 | |
| By: | /s/ Adrian Liddell | |
| Adrian Liddell | ||
| Chairman of the Board and Director | ||
| (Principal Financial and Accounting Officer) | ||
| Date | November 14, 2022 | |
| 25 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Peter Zachariou, certify that:
| 1. | I have reviewed this Form 10-Q for the period ended September 30, 2022 of Vycor Medical, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | |
| /s/ Peter Zachariou | |
| Peter C. Zachariou | |
| Principal Executive Officer |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Adrian Liddell, certify that:
| 1. | I have reviewed this Form 10-Q for the period ended September 30, 2022 of Vycor Medical, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | |
| /s/ Adrian Liddell | |
| Adrian Liddell | |
| Principal Financial Officer |
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Vycor Medical, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The report on Form 10-Q for the period ended September 30, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 14, 2022
| /s/ Peter Zachariou | |
| Peter Zachariou | |
| Principal Executive Officer |
A signed original of this written statement required by Section 906 has been provided to VYCOR MEDICAL, INC. and will be retained by VYCOR MEDICAL, INC. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Vycor Medical, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The report on Form 10-Q for the period ended September 30, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 14, 2022
| /s/ Adrian Liddell | |
| Adrian Liddell | |
| Principal Accounting Officer |
A signed original of this written statement required by Section 906 has been provided to VYCOR MEDICAL, INC. and will be retained by VYCOR MEDICAL, INC. and furnished to the Securities and Exchange Commission or its staff upon request.