Vycor Medical Inc 10-Q for FY2023 Q3
Vycor Medical Inc (VYCO)
About this 10-Q
Vycor Medical Inc filed this 10-Q on November 13, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $308.59K
- down 0.4% from $309.97K a year earlier
- Net loss
- $51.9K
- compared with a net loss of $114.81K a year earlier
- Diluted EPS
- -$0.01
- compared with -$0.01 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 of Incorporation) |
(Commission File Number) |
(IRS Employer 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 13, 2023.
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, 2023 | December
31, 2022 | |||||||
| 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 interest | ||||||||
| Accrued liabilities - Other | ||||||||
| Accrued liabilities - Related Party | ||||||||
| Accrued liabilities | ||||||||
| Notes payable: Other | ||||||||
| Notes payable: Related Party | ||||||||
| Notes payable | ||||||||
| Current operating lease liabilities | ||||||||
| Current liabilities of discontinued operations | ( | ) | ( | ) | ||||
| Total Current Liabilities | ||||||||
| Long term lease liabilities | $ | |||||||
| Loan Payable - SBA EIDL | ||||||||
| Total Liabilities | ||||||||
| STOCKHOLDERS’ DEFICIENCY | ||||||||
| Preferred stock, $ par value, shares authorized, and issued and outstanding as at September 30, 2023 and December 31, 2022 respectively | ||||||||
| Common Stock, $ par value, shares authorized at September 30, 2023 and December 31, 2022, and shares issued and and outstanding at September 30, 2023 and December 31, 2022 respectively | ||||||||
| Additional Paid-in Capital | ||||||||
| Treasury Stock ( shares of Common Stock as at September 30, 2023 and December 31, 2022 respectively, at cost) | ( | ) | ( | ) | ||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Accumulated Other Comprehensive Income (Loss) | ||||||||
| Total Stockholders’ Deficiency | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | $ | ||||||
See accompanying notes to consolidated financial statements
| 3 |
VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For
the three months ended September 30, | For
the nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total Operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense: Related Party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense: Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense: | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on foreign currency exchange | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (Loss) Before Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||||
| Net Income (Loss) from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 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: | ||||||||||||||||
| Net 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)
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees, shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for three months ended September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at Sepember 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for nine months ended September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at Sepember 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for three months ended September 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Common Stock | Preferred C | Preferred D | Treasury Stock | Additional Paid-in | Accumulated | Accum OCI | ||||||||||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Number | Amount | Capital | Deficit | (Loss) | Total | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ($ | ) | |||||||||||||||||||||||||||||||||
| Balance , value | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ($ | ) | |||||||||||||||||||||||||||||||||
| Issuance of stock for board and consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for consulting fees | ||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for nine months ended September 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Balance , value | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
| 5 |
VYCOR MEDICAL, INC.
Consolidated Statement of Cash Flows
(Unaudited)
| September
30, 2023 | September
30, 2022 | |||||||
| For the nine months ended | ||||||||
| September
30, 2023 | September
30, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation of fixed assets | ||||||||
| Inventory provision | ||||||||
| Stock based compensation | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accrued interest - Related Party | ||||||||
| Accrued interest – Other | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued liabilities - Other | ( | ) | ||||||
| Changes in discontinued operations, net | ( | ) | ||||||
| Cash provided by (used in) 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 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, 2023
(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, 2022 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, 2022.
The unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022, 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, 2023 and 2022 are not necessarily indicative of the results to be expected for any other interim period or for the entire year. Certain prior period amounts on the unaudited consolidated financial statements have been reclassified to conform to the current period presentation.
Ability to continue as a Going Concern
The
accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
The Company has incurred losses since its inception, including a net loss available to common stockholders 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 $
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.
| 7 |
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.
Revenue Recognition
On January 1, 2018, the Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers and all the related amendments (new revenue standard) to all contracts. The adoption of the new accounting standard had no impact on company’s consolidated financial statements.
Vycor Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue from product sales when obligations under the terms of a contract with customers are satisfied. Generally, this occurs with the transfer of control of the goods to customers. Vycor Medical does not provide for product returns or warranty costs.
Vycor determines revenue recognition through the following steps:
| ● | Identification of the contract, or contracts, with a customer | |
| ● | Identification of the performance obligations in the contract | |
| ● | Determination of the transaction price | |
| ● | Allocation of the transaction price to the performance obligations in the contract | |
| ● | Recognition of revenue when Vycor satisfy a performance obligation |
NovaVision generates revenues from various programs, therapy services and other sources such as software license sales. Therapy services revenues represent fees from NovaVision’s vision restoration therapy software, eye movement training software, diagnostic software, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision provides vision restoration therapy directly to patients. The typical therapy program consists of NeuroEyeCoach, performed over 2-4 weeks, and six modules of Vision Restoration Therapy, performed over 6 months. 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.
Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.
The Company disaggregates its revenue by division – Vycor and NovaVision – and by geography – United States and Europe – and presents the disaggregation in Note 6.
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (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.
| 8 |
SCHEDULE OF COMMON STOCK NOT INCLUDED IN CALCULATION OF DILUTED NET LOSS PER SHARE
September
30, | September
30, | |||||||
| Debentures convertible into common stock | ||||||||
| Preferred shares convertible into common stock | ||||||||
| Total | ||||||||
| Anti-dilutive shares | ||||||||
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; effective July 1, 2020 ,Vycor entered into a license agreement with a German-based partner. 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 will be formally wound up.
Reconciliation of the major line items from discontinued operations that are presented in the unaudited consolidated balance sheets and unaudited consolidated statements of comprehensive income (loss) are as follows:
SCHEDULE OF DISCONTINUED OPERATIONS
Major line items constituting assets and liabilities in the unaudited consolidated balance sheets
| September
30, 2023 | December
31, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Total Current Liabilities | $ | ( | ) | $ | ( | ) | ||
| 9 |
Major line items constituting loss from discontinued operations
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For
the three months ended September 30, | For
the nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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 Provision for Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Loss from discontinued operations, net of tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
4. NOTES PAYABLE
Related Parties Notes Payable
Related Party Notes Payable consists of:
SUMMARY OF NOTES PAYABLE
| September
30, 2023 | December
31, 2022 | |||||||
| On June 25, 2018 the Company
issued promissory notes to Peter Zachariou for $ | $ | $ | ||||||
| Between March 26,
2018 and November 17, 2022 the Company issued fifteen promissory notes to Fountainhead Capital Management Limited for $ | ||||||||
| Total Related Party Notes Payable | $ | $ | ||||||
| 10 |
Other Notes Payable
Other Notes Payable consists of:
| September
30, 2023 | December
31, 2022 | |||||||
| 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, 2023 | December
31, 2022 | |||||||
| On
July 7, 2020, the Company was advised that the Small Business Administration (SBA) had approved a $ | $ | $ | ||||||
| Total Long-Term Notes Payable: | $ | $ | ||||||
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, 2023 and December 31, 2022:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
| September
30 2023 | December
31, 2022 | |||||||
| Operating Lease ROU Assets | $ | $ | ||||||
| Operating Lease ROU Assets | $ | $ | ||||||
| Operating Lease Liabilities | ||||||||
| Current portion | $ | $ | ||||||
| Long-term portion | ||||||||
| Operating Lease Liabilities | $ | $ | ||||||
| 11 |
6. SEGMENT REPORTING, GEOGRAPHICAL INFORMATION
(a) Business segments
The
Company operates in
SCHEDULE OF BUSINESS SEGMENTS INFORMATION
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Vycor Medical | $ | $ | $ | $ | ||||||||||||
| NovaVision | $ | $ | $ | $ | ||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross Profit | ||||||||||||||||
| Vycor Medical | $ | $ | $ | $ | ||||||||||||
| NovaVision | $ | $ | $ | $ | ||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| Operating Income (Loss) | ||||||||||||||||
| Vycor Medical | $ | $ | $ | $ | ||||||||||||
| NovaVision | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Corporate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Operating Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Total Assets: | ||||||||
| Vycor Medical | $ | $ | ||||||
| NovaVision | ||||||||
| Discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
| 12 |
(b) Geographic information
The
Company operates in
SUMMARY OF GEOGRAPHIC INFORMATION
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Europe | $ | $ | $ | $ | ||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross Profit | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Europe | $ | $ | $ | $ | ||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| Operating Income (Loss) | ||||||||||||||||
| United States | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Europe | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Operating Income (Loss) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Total Assets: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Discontinued operations | ||||||||
| Total Assets | $ | $ | ||||||
7. EQUITY
Equity Transactions
During
January to September 2023 and 2022, under the terms of the Consulting Agreement referred to in Note 10, the Company issued and
of Common Stock to Fountainhead valued at $
On April 1, 2023 and April 1, 2022 the Company issued shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement.
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Equity Classes
Our authorized capital stock consists of shares of common stock, par value $ per share, and shares of preferred stock, par value $ per share, the rights and preferences of which may be established from time to time by our board. As of November 13, 2023, there were shares of common stock, one () share of Series C Preferred Stock and shares of Series D Preferred Stock outstanding.
Holders of our common stock are entitled to one vote for each share on all matters voted upon by our stockholders, including the election of directors, and do not have cumulative voting rights. Subject to the rights of holders of any then outstanding shares of our preferred stock, our common stockholders are entitled to any dividends that may be declared by our board. Holders of our common stock are entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision for all liabilities and any preferential liquidation rights of our preferred stock then outstanding. Holders of our common stock have no preemptive rights to purchase shares of our stock. The shares of our common stock are not subject to any redemption provisions and are not convertible into any other shares of our capital stock. All outstanding shares of our common stock are, and the shares of common stock to be issued in the offering will be, upon payment therefor, fully paid and non-assessable. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future.
Series C Convertible Preferred Stock shares (“Preferred C Stock”) are convertible (at the Holder’s option or mandatorily upon the occurrence of certain events) into shares of the Company’s Common Stock (at $ per share). The Preferred C Stock carries no dividend or other rights.
Series
D Convertible Preferred shares (“Preferred D Stock”) are convertible into Company Common Shares at a price of $. The
Series D carry a cumulative preferred dividend of
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, 2023 and 2022 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 €
| 14 |
10. CONSULTING AND OTHER AGREEMENTS
The following agreements were entered into or remained in force during the periods ended September 30, 2023 and 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 October 1, 2022 the Amended Agreement was terminated by Fountainhead and the Company by mutual agreement. Effective the same date the Company entered into revised employment agreements with Peter Zachariou, David Cantor and Adrian Liddell under which they would continue as CEO, President and CFO respectively as individuals and not as representatives of Fountainhead; there is no compensation payable under the employment agreements.
During
the nine months ended September 30, 2023 and 2022 the Company issued and shares of Company Common Stock, 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, 2023 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, 2023,
During
the nine months ended September 30, 2023 and September 30, 2022, under the terms of the Amended Agreement referred to in Note 10, the
Company issued and shares of Common Stock to Fountainhead valued at $
During
each of the nine months ended September 30, 2023 and 2022, the Company accrued an aggregate of $
During
the nine months ended September 30, 2023 and 2022 the Company issued unsecured loan notes to Fountainhead for a total of $
During
the nine months ended September 30, 2023 and 2022 the Company accrued interest on related party loans of $
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12. CONCENTRATION
Vycor Medical sells its neurosurgical devices in the US primarily direct to hospitals, and internationally through distributors who in turn sell to hospitals.
SCHEDULE OF CONCENTRATION
Sales Concentration:
| Three
Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Number of customers over 10% | ||||||||
| Percentage of sales | % | % | ||||||
| Nine
months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Number of customers over 10% | ||||||||
| Percentage of sales | % | % | ||||||
Accounts Receivable Concentration
| At
September 30, | At
December 31, | |||||||
| 2023 | 2022 | |||||||
| 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
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 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 56 issued or allowed patents and a further 11 pending. The Company leverages joint resources across the divisions to operate in a cost-efficient manner.
The Company periodically engages in discussions with potential strategic partners for or purchasers of each or both of our operating divisions. In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model, entering into a license agreement with a local German partner. Under the agreement, the partner 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.
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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 38 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 18 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 cash operating income for the nine months ended September 30, 2023. 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 and marketing network and also directly by leveraging existing key opinion leader (“KOL”) neurosurgeon VBAS supporters to access new neurosurgeon users.
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 was well received by surgeons. The second phase involved 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, with the international roll-out being complete by the end of 2023. 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 a local German for Germany, Austria and Switzerland. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
1 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022
Revenue and Gross Margin:
| Three months ended | ||||||||||||
| September 30, | ||||||||||||
| 2023 | 2022 | % Change | ||||||||||
| Revenue: | ||||||||||||
| Vycor Medical | $ | 287,559 | $ | 289,706 | -1 | % | ||||||
| NovaVision | $ | 21,034 | $ | 20,263 | 4 | % | ||||||
| $ | 308,593 | $ | 309,969 | 0 | % | |||||||
| Gross Profit | ||||||||||||
| Vycor Medical | $ | 256,435 | $ | 249,141 | 3 | % | ||||||
| NovaVision | $ | 19,824 | $ | 18,629 | 6 | % | ||||||
| $ | 276,259 | $ | 267,770 | 3 | % | |||||||
| 18 |
Vycor Medical recorded revenue of 287,559 from the sale of its products for the three months ended September 30, 2023, a decrease of $2,147 or 1% over the same period in 2022. Gross margin of 89% and 86% was recorded for the three months ended September 30, 2023 and 2022, respectively.
NovaVision recorded revenues of $21,034 for the three months ended September 30, 2023, an increase of $771 or 4% over the same period in 2022. Gross margin was 94%, compared to 92% for the same period in 2022.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $61,143 to $280,113 for the three months ended September 30, 2023 from $341,256 for the same period in 2022. 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, which have been issued by the Company over various periods. The charge for the three months ended September 30, 2023 was $2,364, a $57,472 decrease from the charge in 2022 of $59,836 following the termination of the Fountainhead Consulting Agreement effective October 1, 2022. Also included within Selling, General and Administrative Expenses are Sales Commissions, which decreased by $1,523 to $50,088 from $51,611 in 2022.
The remaining Selling, General and Administrative expenses decreased marginally from $229,809 to $227,661 in 2023. Payroll decreased by $18,703 due to temporary gaps in staff changes, offset by an increase in legal/patent and accounting of $10,506.
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 | |||||||
| Legal, patent, audit/accounting | 10,506 | - | ||||||
| Regulatory | 4,043 | - | ||||||
| Scientific and clinical | 2,500 | |||||||
| Other (travel/regulatory/premises) | (494 | ) | ||||||
| Commissions | (1,523 | ) | - | |||||
| Payroll | (18,703 | ) | - | |||||
| Board and financial | - | (57,472 | ) | |||||
| Total change | (3,671 | ) | (57,472 | ) | ||||
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, 2023 and 2022 was $12,436 and $10,351, respectively. Other Interest expense for the three months ended September 30, 2023 and 2022 was $13,484 and $13,511, respectively.
Operating loss from Discontinued Operations:
Operating loss from Discontinued Operations decreased by $2,070 to $425 in 2023 from $2,495 in 2022; 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, 2023 to the Nine months Ended September 30, 2022
Revenue and Gross Margin:
| Nine months ended | ||||||||||||
| September 30, | ||||||||||||
| 2023 | 2022 | % Change | ||||||||||
| Revenue: | ||||||||||||
| Vycor Medical | $ | 1,087,758 | $ | 875,785 | 24 | % | ||||||
| NovaVision | $ | 64,597 | $ | 75,940 | -15 | % | ||||||
| $ | 1,152,355 | $ | 951,725 | 21 | % | |||||||
| Gross Profit | ||||||||||||
| Vycor Medical | $ | 989,288 | $ | 777,963 | 27 | % | ||||||
| NovaVision | $ | 60,137 | $ | 70,269 | -14 | % | ||||||
| $ | 1,049,425 | $ | 848,232 | 24 | % | |||||||
Vycor Medical recorded revenue of $1,087,758 from the sale of its products for the nine months ended September 30, 2023, an increase of $211,973, or 24%, over the same period in 2022. The increase was in the U.S. and Other International, reflecting the addition of new hospitals and improved utilization as the VBAS AC model has been rolled out. One international customer placed advance orders of VBAS and VBAS AC of which approximately $35,000 relates to sales that would normally have occurred in the October to December 2023 period. Gross margin of 91% and 89% was recorded for the nine months ended September 30, 2023 and for the same period in 2022.
NovaVision recorded revenues of $64,597 for the nine months ended September 30, 2023, a decrease of $11,343 or 15% over the same period in 2022, and gross margin of 93% was the same for both periods.
| 19 |
Selling, General and Administrative Expenses:
Selling, general and administrative expenses decreased by $137,949 to $881,744 for the nine months ended September 30, 2023 from $1,019,693 for the same period in 2022. 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, 2023 was $7,777, a decrease of $179,604 from $187,381 in 2022 following the termination of the Fountainhead Consulting Agreement effective October 1, 2022. Also included within Selling, General and Administrative Expenses are Sales Commissions, which increased by $40,952 from $167,607 to $208,559.
The remaining Selling, General and Administrative expenses increased marginally by $704 from $664,705 to $665,408. Patent costs decreased by $18,387 due lower costs of NovaVision patents during the period; decreased regulatory costs of $16,851 due to delayed notified body audits; offset by increased audit, accounting and insurance costs of $16,822.
An analysis of the change in cash and non-cash G&A is shown in the table below:
| Cash G&A | Non-Cash G&A | |||||||
| Commissions | 40,952 | |||||||
| Other (travel/regulatory/premises) | 35,742 | - | ||||||
| Payroll | (2,152 | ) | - | |||||
| Scientific and clinical | (5,072 | ) | - | |||||
| Legal, patent, audit/accounting | (10,964 | ) | ||||||
| Regulatory | (16,851 | ) | - | |||||
| Board and financial | - | (179,604 | ) | |||||
| Total change | 41,655 | (179,604 | ) | |||||
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, 2023 was $37,080 compared to $28,257 for 2022. Other Interest expense for the nine months ended September 30, 2023 was $40,077 compared to $39,195 for 2022 following the forgiveness of PPP loans.
Liquidity
The following table shows cash flow and liquidity data for the periods ended September 30, 2023 and December 31, 2022:
| September
30, 2023 | December
31, 2022 | $ Change | ||||||||||
| Cash | $ | 69,055 | $ | 37,035 | $ | 32,020 | ||||||
| Accounts receivable, inventory and other current assets | $ | 556,833 | $ | 480,728 | $ | 76,105 | ||||||
| Total current liabilities | $ | (4,031,212 | ) | $ | (3,654,796 | ) | $ | (376,416 | ) | |||
| Working capital | $ | (3,405,324 | ) | $ | (3,137,033 | ) | $ |
(268,291 | ) | |||
| Cash (used in) provided by financing activities | $ | 11,578 | $ | 165,889 | $ | (154,311 | ) | |||||
Operating Activities. Cash provided by (used in) operating activities comprises net income (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.
The following table shows the principal components of cash provided by (used in) operating activities during the nine months ended September 30, 2023 and 2022, with a commentary of changes during the periods and known or anticipated future changes:
| September
30, 2023 | September
30, 2022 | $ Change | ||||||||||
| Net Income (Loss) | $ | 23,364 | ($ | 288,369 | ) | $ | 311,733 | |||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||||||
| Depreciation | $ | 45,650 | $ | 46,073 | $ | (423 | ) | |||||
| Stock based compensation | $ | 7,777 | $ | 187,381 | $ | (179,604 | ) | |||||
| Other | $ | - | $ | 11,360 | $ | (11,360 | ) | |||||
| $ | 53,427 | $ | 244,814 | $ | (191,387 | ) | ||||||
| Net Income (Loss) adjusted for non-cash items | $ | 76,791 | $ | (43,555 | ) | $ | 120,346 | |||||
| Changes in working capital | ||||||||||||
| Accounts receivable | $ | (99,062 | ) | $ | (54,462 | ) | $ | (44,600 | ) | |||
| Accounts payable and accrued liabilities | $ | (56,319 | ) | $ | (38,227 | ) | $ | (18,092 | ) | |||
| Inventory | $ | 44,135 | $ | (71,381 | ) | $ | 115,516 | |||||
| Prepaid expenses and net insurance financing repayments | $ | (3,941 | ) | $ | (14,246 | ) | $ | 10,305 | ||||
| Accrued interest (not paid in cash) | $ | 72,981 | $ | 57,938 | $ | 15,043 | ||||||
| Changes in discontinued operations, net | $ | 915 | $ | (1,337 | ) | $ | 2,252 | |||||
| $ | (41,291 | ) | $ | (121,715 | ) | $ | 80,424 | |||||
| Cash provided by (used in) operating activities, adjusted for net insurance repayments | $ | 35,500 | $ | (165,270 | ) | $ | 200,770 | |||||
| 20 |
The adjustments to reconcile net income (loss) to cash of $53,427 in the period have no impact on liquidity, and the change in net income (loss) of $120,346 is due to the increase in Vycor sales, as is the change in accounts receivable of $44,600.
Additional inventory of $37,118 was purchased during the nine months ended September 30, 2023 as part of normal production, and the Company anticipates purchasing additional new inventory of approximately $60,000 during the next twelve months.
Investing Activities. Cash used in investing activities for the nine months ended September 30, 2023 was $3,482 and consisted of the purchase of chin rests for patients in NovaVision.
Financing Activities. During the nine months ended September 30, 2023 the Company paid down insurance of $11,578.
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 available to common stockholders of $301,006 for the nine months ended September 30, 2023 and since inception has not generated sufficient positive cash flows from operations, although did generate positive cash flows from operations for the nine months ended September 30, 2023. As of September 30, 2023 the Company had a working capital deficiency of $458,274, excluding related party liabilities of $2,947,050. 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 executing on a plan to achieve a reduction in cash operating losses2, and generated cash operating income for the nine months ended September 30, 2023. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $460,798, which has a maturity date of December 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 December 31, 2023 will be available. However, the Company believes it may not have sufficient cash to meet its various cash needs through November 30, 2024 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. 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.
2 Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
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, 2022.
| 21 |
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. As of November 13, 2023, this material weakness continues to exist.
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.
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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 13, 2023, 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
| Issuance Type | Security | Shares | ||
| Consulting agreement fees: Ricardo Komotar | Common | 101,663 |
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) |
| 23 |
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 13, 2023
| Vycor Medical, Inc. | ||
| (Registrant) | ||
| By: | /s/ Peter C. Zachariou | |
| Peter C. Zachariou | ||
| Chief Executive Officer and Director (Principal Executive Officer) | ||
| Date | November 13, 2023 | |
| By: | /s/ Adrian Liddell | |
| Adrian Liddell | ||
| Chairman of the Board and Director | ||
| (Principal Financial and Accounting Officer) | ||
| Date | November 13, 2023 | |
| 24 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Peter C. Zachariou, certify that:
| 1. | I have reviewed this Form 10-Q for the period ended September 30, 2023 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 13, 2023 | |
| /s/ Peter C. 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, 2023 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 13, 2023 | |
| /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, 2023 (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 13, 2023
| /s/ Peter C. Zachariou | |
| Peter C. 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, 2023 (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 13, 2023
| /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.