UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
Post-Effective Amendment No. 3 to
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
VYCOR MEDICAL,
INC.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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333-196334
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20-3369218
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File No.)
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(I.R.S.
Employer Identification No.)
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6401
Congress Ave. Suite 140, Boca Raton, FL
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33487
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(561) 558-2020
(Former
name or former address, if changed since last report)
Approximate
date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If any
of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
If this
Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following boxPr and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
If
delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
|
Large
accelerated filer [ ]
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Accelerated
Filer [ ]
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|
Non-accelerated
filer [ ]
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Smaller
reporting company [x]
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CALCULATION
OF REGISTRATION FEE
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Title of
each
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class of securities
to
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|
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be
registered
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|
|
|
|
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Shares
of Common
|
1,995,601
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$
2.05
|
$
4,090,982
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$
474.14
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|
Stock
underlying
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|
|
|
|
|
Series
A Warrants
|
|
|
|
|
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Shares
of Common
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1,995,601
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$
3.08
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$
6,146,451
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$
712,37
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|
Stock
underlying
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|
|
|
|
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Series
B Warrants
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|
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|
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Total
Registration
|
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$
1,186.51
(2)
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|
Statement
Fee
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|
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|
(1)
Estimated solely
for the purpose of calculating the registration fee in accordance
with Rule 457(e) under the Securities Act of 1933.
(2)
$2,033.69 paid
concurrent with the filing of the original Registration
Statement.
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Neither the Securities Exchange Commission nor any state securities
commissions have approved or disapproved of these securities or
passed upon the adequacy of the Prospectus. Any representation to
the contrary is a criminal offense.
Explanatory Note
Vycor
Medical, Inc., a Delaware corporation (the “Company”),
filed a Registration Statement on May 28, 2014, on Form S-1, which
was declared effective June 10, 2014, for the purpose of
registering 2,776,052 shares of common stock par value $0.0001,
1,995,601 shares of common stock underlying Series A warrants, and
1,995,601 shares of common stock underlying Series B warrants,
offered for sale by selling shareholders (the
“Offering”) under the Securities Act of
1933.
Thereafter,
the Company filed Post-Effective Amendment No. 1 to the Original
Registration Statement on Form S-1 which contained an updated
prospectus relating to the offering and sale of shares of common
stock underlying Series A and B warrants declared effective by the
Securities and Exchange Commission on June 10, 2014. The
registration of the 2,776,052 shares of common stock included in
the Original Registration Statement was terminated as those shares
are now all eligible for an exemption from registration under Rule
144 promulgated under the Securities Act of 1933, as amended. The
Post-Effective Amendment No. 1 on Form S-1 was filed to 1) extend
our offering date until July 31, 2016, and 2) include the audited
financial statements for the year ended December 31, 2014, and
unaudited financial statements for the interim period ended March
31, 2015. All filing fees payable in connection with the
registration of the shares being registered hereby were previously
paid in connection with the filing of the original registration
statement. Post-Effective Amendment No. 1 was then withdrawn and
the Company filed Post-Effective Amendment No. 2 in its
place.
Post-Effective
Amendment No. 2 updated the financial statements to include the
Company’s financial statements for the period ended June 30,
2015 (which replaced the financial statements for the period ended
March 31, 2015 included in Post-Effective Amendment No. 1). The
Post-Effective Amendment No. 2 corrected certain typographical
errors in Post-Effective Amendment #1 and extended our offering
date until October 31, 2016. Post-Effective Amendment No. 2 was
declared effective on September 18, 2015.
This
Post-Effective Amendment No. 3 fully updates all Company
information contained herein and updates the financial statements
to include the Company’s financial statements for the period
ended June 30, 2016 and extends our offering date to October 31,
2017.
Filed
Pursuant to Rule 424(b)(3)
Registration
No. _______________
Dated
October , 2016
VYCOR
MEDICAL, INC.
3,991,202
Shares of Common Stock Par Value $0.0001 Per Share
This
prospectus relates to the offering by the selling stockholders of
VYCOR MEDICAL
, INC. of up to
3,991,202 shares of our common stock underlying Series A and Series
B warrants, par value $0.0001 per share. We will not receive any
proceeds from the sale of common stock.
The
selling stockholders have advised us that they will sell the shares
of common stock from time to time in broker’s transactions,
in the open market, on the OTCQB, in privately negotiated
transactions or a combination of these methods, at market prices
prevailing at the time of sale, at prices related to the prevailing
market prices or at negotiated prices. We will pay the expenses
incurred to register the shares for resale, but the selling
stockholders will pay any underwriting discounts, commissions or
agent’s commissions related to the sale of their shares of
common stock.
Our
common stock is traded on the OTCQB under the symbol
“VYCO”. On September 29, 2016, the closing sale price
of our common stock was $0.35 per share.
You
should rely only on the information contained in this prospectus or
any prospectus supplement or amendment. We have not authorized
anyone to provide you with different information.
Investing in these securities involves significant risks. See
“Risk Factors” beginning on page 5
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed
upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The
date of this prospectus is October , 2016.
The
information contained in this prospectus is not complete and may be
changed. This prospectus is included in the registration statement
that was filed by VYCOR MEDICAL, INC. with the Securities and
Exchange Commission. The selling stockholders may not sell these
securities until the registration statement becomes effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
TABLE OF CONTENTS
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PAGE
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SUMMARY
INFORMATION AND RISK FACTORS
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1
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USE OF
PROCEEDS
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14
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DETERMINATION
OF OFFERING PRICE
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14
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DILUTION
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14
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SELLING
STOCKHOLDERS
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15
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PLAN OF
DISTRIBUTION
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16
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DESCRIPTION
OF SECURITIES TO BE REGISTERED
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19
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INTEREST
OF NAMED COUNSEL AND EXPERT
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19
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INFORMATION
WITH RESPECT TO THE REGISTRANT
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22
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LEGAL
PROCEEDINGS
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22
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DESCRIPTION
OF PROPERTY
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22
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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22
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CHANGES
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
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29
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DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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29
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EXECUTIVE
COMPENSATION
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31
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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33
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TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS AND
DIRECTOR INDEPENDENCE
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34
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EXPERTS
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35
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WHERE
YOU CAN FIND ADDITIONAL INFORMATION
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35
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INCORPORATION
OF CERTAIN MATERIAL BY REFERENCE
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35
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DISCLOSURE
OF COMMISSION POSITION ON INDEMINIFICATION FOR SECURITIES ACT
LIABILITIES
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35
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SUMMARY INFORMATION AND RISK FACTORS
The items in the following summary are described in more detail
later in this prospectus. This summary provides an overview of
selected information and does not contain all the information you
should consider before investing in the securities. Before making
an investment decision, you should read the entire prospectus
carefully, including the “Risk Factors” section, the
financial statements, and the notes to the financial
statements.
For purposes of this prospectus, unless otherwise indicated or the
context otherwise requires, all references herein to
“Vycor”, “the Company”, “we,”
“us,” and “our,” refer to VYCOR MEDICAL,
INC., a Delaware corporation.
SUMMARY OF THE COMPANY
This summary provides an overview of selected information and does
not contain all the information on the Company you should consider.
Therefore, this should be read in conjunction with the more
detailed information set out in this prospectus, the business and
other information provided in the SEC filings included as Exhibits,
and matters set forth under “Risk
Factors.”
Business
Overview
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.”. 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.
Vycor
is dedicated to providing the medical community with innovative and
superior surgical and therapeutic solutions and operates two
distinct business units within the medical device industry. Vycor
Medical designs, develops and markets medical devices for use in
neurosurgery. NovaVision provides non-invasive rehabilitation
therapies for those who have vision disorders resulting from
neurological brain damage such as that caused by a stroke. Both
businesses adopt a minimally or non-invasive approach. Both
technologies have strong sales growth potential, address large
potential markets and have the requisite regulatory approvals. The
Company has 57 issued or allowed patents and a further 13 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.
Vycor Medical
Vycor
Medical designs, develops and markets medical devices for use in
neurosurgery. Vycor Medical’s ViewSite Brain Access System
(“VBAS”) is a next generation retraction and access
system that was fully commercialized in early 2010 and is the first
significant technological change to brain tissue retraction in over
50 years in contrast to significant development in most other
neuro-surgical technologies. Vycor Medical is ISO 13485:2003
compliant, 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 Australia, Brazil, Canada, China, Korea,
Japan, Russia and Taiwan.
We
believe VBAS offers several advantages over other brain retractor
systems, commonly known as ribbon or blade retractors that are
metallic, including having the potential to significantly reduce
brain tissue trauma that arises from excessive pressure at the
edges of the blade. The design of VBAS can minimize the size of the
brain entry access necessary for surgical procedures, and is
believed to significantly reduce the pressure and hence trauma on
the surrounding brain tissue.
NovaVision
NovaVision provides
non-invasive, computer-based rehabilitation targeted at a
substantial and largely un-addressed market of people who have lost
their sight as a result of stroke or other brain injury. NovaVision
addresses a significant target market, estimated at approximately
$2 billion in each of the U.S. and the EU and over $13 billion
globally.
NovaVision has a
family of therapies that both restore and compensate for lost
vision:
●
Restoration of
vision: NovaVision’s VRT and Sight Science’s Neuro-Eye
Therapy (NeET), aim to improve visual sensitivity in a
person’s blind area. VRT delivers a series of light stimuli
along the border of the patient’s visual field loss. These
programmed light sequences stimulate the border zone between the
“seeing” and “blind” visual fields,
repetitively challenging the visual cortex in the border zone with
a large number of stimuli over the course of time. NeET targets
deep within the blind area by repeated stimulation, allowing
patients to detect objects within the blind field.
●
Compensation and
re-training: Normal eye movements are also affected after brain
injury adding to the problems of blindness. NeuroEyeCoach provides
a complementary therapy to VRT and NeET, which re-trains a patient
to move their eyes, re-integrate left and right vision and to make
the most of their remaining visual field.
VRT and
NeuroEyeCoach are therefore highly complementary and are provided
in an Internet-delivered suite to ensure broad benefits to
NovaVision's patients.
NovaVision
also has models of VRT and NeuroEyeCoach for physicians and
rehabilitation clinics, as well as VIDIT, a diagnostic program that
enables therapists to perform high-resolution visual field tests in
less than ten minutes.
NovaVision’s
VRT is the only medical device aimed at the restoration of vision
lost as a result of neurological damage which has FDA 510(k)
clearance to be marketed in the U.S; and NeuroEyeCoach is
registered in the US as a Class I 510(k) exempt device. VRT, NEC
and NeET have CE Marking for the EU. NovaVision has 41 granted and
2 pending patents worldwide.
Competition
The
VBAS device is both a brain access system and a retractor and is
therefore unique with no direct competitors. Competitive
manufacturers of brain retractors include Cardinal Health (V.
Mueller line), Aesculap, Integra Life Science and Codman (Division
of Johnson & Johnson). Nico Corporation has a brain access
device specifically designed to work with its Myriad resection and
suction product.
NovaVision
provides restoration therapies (VRT and NeET) and compensation or
saccadic therapies (NeuroEyeCoach) for those suffering vision loss
as a result of neurological trauma. The other therapy type for this
condition is substitution (optical aids such as prisms) and is not
considered by NovaVision as competition.
In
restoration, competition has been reduced through
NovaVision’s acquisition of Sight Science and there are a few
very small companies or entities offering some form of vision
rehabilitation product in Germany. Within compensation there are no
real direct competitors. Other companies in the general
rehabilitation space include RevitalVision, PositScience and
Dynavision. In the professional market, NovaVision competes with
aggregator products or those that provide a range of non-specific
therapies, such a Rehacom, Sanet Vision Integrator and Bioness
BITS. NovaVision’s products are dedicated to
vision.
The
Market For the Company’s Products And Therapies
VBAS is
used for craniotomy procedures. Based on statistics from the
American Association of Neurological Surgeons (AANS), management
estimates 700,000 such procedures are performed in the US annually.
Of this, management believe approximately 225,000 (32 percent) are
addressable by the VBAS range currently, with another 100,000
(total of 325,000 or 46 percent) addressable by an expanded future
range. Management estimates, for the global market, there exists a
current addressable market of approximately 1,100,000 procedures
with another 500,000 addressable by an expanded VBAS
range.
The
market for NovaVision’s therapies comprises those suffering
from vision loss resulting from neurological trauma such as stroke
or other brain injury. The U.S. Centers for Disease Control (CDC)
estimates there are approximately 8 million Americans who have
previously had a stroke incident, with 795,000 additional strokes
occurring annually; adjusting for repeat strokes and deaths, there
are 481,000 new stroke survivors each year. Additionally,
approximately 5.3 million Americans live with the long-term effects
of a TBI, with 275,000 hospitalizations each year. The most recent
scientific research estimates that approximately 28.5% experience
some visual impediment and 20.5% of these patients experience a
permanent visual field deficit, reducing mobility and other
activities of daily living. The target market for VRT and NeET is
this 20.5% subset of patients who have suffered a permanent visual
field deficit; NeuroEyeCoach addresses all 28.5% of patients who
experience visual impediments. Management estimates that the
addressable target market for its therapies is approximately 2.9
million people in the US, approximately 2.8 million people in
Europe and approximately 12.9 million people throughout the rest of
the world.
Our
Growth Strategy
Vycor Medical
Vycor
Medical’s growth strategy includes:
1.
Increasing U.S. market penetration through broader hospital
coverage and targeted direct physician marketing. Vycor
Medical’s sales and marketing strategy is to penetrate a
well-defined target market of 4,500 neurosurgeons. Vycor markets
direct to surgeons as well as marketing and distributing through
independent distributors, with a focus both on adding new hospitals
and expanding to additional surgeons in hospitals where VBAS is
already approved, and to expand usage to a broader range of
procedures. In order to expand its direct marketing and deepening
its penetration, Vycor is exploring the creation of a Centers of
Excellence medical education campaign and to that end will be
finalizing new surgeon education and training materials including
detailed videos produced with surgeons at Weill Cornell. Vycor is
pursuing a policy of continually evaluating and upgrading its
distributors as well as adding additional distributors in regions
where it has little to no presence.
2.
Provision of more Clinical and Scientific Data supporting the
products superiority over the current standard-of-care blade
retractors and to demonstrate VBAS’ potential for cost
savings. Clinical and scientific data (in the form of peer reviewed
articles, clinical studies and other reports and case studies) are
critical in driving adoption, and in turn revenues, further and
faster by demonstrating VBAS' superiority as a minimally invasive
access system which helps VBAS move further up the hospital
cost/benefit curve. To date the Company has already had 10 Peer
Reviewed studies and 4 other clinical papers and anticipates
further studies to be published.
3.
International Market Growth
Vycor
Medical utilizes select medical device distributors with experience
in neurosurgical devices in their countries or regions. VBAS has
full regulatory approvals in Australia, Brazil, Canada, China,
Europe (EU – Class III), Korea, Japan and Taiwan and is
seeking or has partial regulatory approvals in India, Russia and
Vietnam. Vycor Medical is actively pursuing new distribution
agreements in the countries where it does not have any in
place.
4. New
Product Development
New
Product Development is targeted at both driving the use of its
existing VBAS product range through ancillary products and
modalities that will facilitate the product’s use and through
new product extensions to broaden VBAS applicability to procedures
currently not addressed by the existing product line.
Vycor
is modifying its existing VBAS product suite to make it more easy
to integrate with Image Guidance Systems (IGS) by re-engineering
VBAS so that the entire range of 12 devices, excluding the
VBASmini, will be able to more easily accommodate pointers from all
the main IGS manufacturers. Increasingly, all major neuro centers
have image guidance systems, and where this is in place over 90% of
surgeries are carried out using IGS and management strongly
believes that the existing VBAS rigid structure lends itself well
to being incorporated into this increasing trend.
NovaVision
While
speech, physical, and occupational therapies are the long-standing
treatment standards for stroke and TBI survivors, VRT is the first
and only FDA-cleared clinical component of vision restoration to
physically enhance the visual field after a stroke or brain injury.
Increasingly the healthcare community, partly driven by strong
lobbying by stroke associations worldwide, are recognizing that
vision is not only a significant issue post stroke or brain injury,
but that visual field loss can have a significant impact on the
success of other rehabilitation modalities and the quality of
life.
Our
strategic vision for NovaVision has been to develop and provide a
clinically supported, affordable and scalable visual therapy
solution offering that provides broad benefits to those suffering
visual impairment following neurological brain damage; and to offer
solutions for both patients and physicians alike. Following a
prolonged development program, aimed at broadening patient
benefits, significantly reducing cost and making our therapies
affordable and scalable, NovaVision was able to launch its
Internet-delivered therapy suite in the US in June 2015 and in
Europe in December 2015.
NovaVision
has four routes-to-market aimed at patients and professionals,
comprising: direct-to-patient; rehabilitation centers and clinics;
stroke associations and support groups; and physicians. Given the
company’s limited resources NovaVision is initially focusing
on direct-to-patient, with a website lead-driven inbound and
outbound marketing strategy targeted at prospective patients and
relatives. Website metrics – particularly for the US and more
recently Germany – are strong, showing good growth in traffic
and rankings, and have been effective in generating leads. Our
analysis of the campaign metrics in the US (including Google Ads)
over the last 6 months have highlighted some key improvements that
needed to be implemented which we are carrying out and which we
believe could have a material impact on our lead
generation.
Following
the pilot launch of our NovaVision Center Model, comprising a
vision diagnostics program and the NeuroEyeCoach training program,
we are substantially broadening the delivery and licensing model in
response to feedback from clinics. The new Center Model will have a
complete suite for the professional market, including options for
software download, CD Rom, Cloud based and Hardware delivery with
flexible and cost-effective pricing options, and will be offered in
both the US and Europe.
Manufacturing
Vycor
Medical uses a sub-contract manufacturer to manufacture, package,
label and sterilize its VBAS products. The Company is in the
process of migrating all its VBAS manufacturing to Life Science
Outsourcing, Inc. in Brea, California that is FDA-registered and
meets ISO standards and certifications.
Intellectual
Property
Patents
Vycor
Medical maintains a portfolio of patent protection on its methods
and apparatus for its Brain and Spine products and technology in
the form of issued patents and applications, both domestically and
internationally, with a total of 16 granted/allowed and 11 pending
patents.
NovaVision
maintains a portfolio of patent protection on its methods and
apparatus in the form of issued patents and applications, both
domestically and internationally, with a total of 41 granted and 2
pending patents (including Sight Science).
NovaVision’s
VRT is the only medical device aimed at the restoration of vision
lost as a result of neurological damage which has FDA 510(k)
clearance to be marketed in the U.S; and NeuroEyeCoach is
registered in the US as a Class I 510(k) exempt
device.
Trademarks
VYCOR MEDICAL
is a registered trademark and
VIEWSITE
is a common law
trademark.
NovaVision
maintains a portfolio of registered trademarks for
NOVAVISION, NOVAVISION VRT
,
VRT VISION RESTORATION
THERAPY
and NEUROEYECOACH, amongst others, along with
relevant logos, both in the US and internationally.
Employees
We
currently have 12 employees.
Websites
The
Company operates websites at www.vycormedical.com,
www.novavision.com, www.novavisionvrt.com, www.neuroeyecoach.com
and www.sightscience.com.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. This prospectus
includes statements regarding our plans, goals, strategies, intent,
beliefs or current expectations. These statements are expressed in
good faith and based upon a reasonable basis when made, but there
can be no assurance that these expectations will be achieved or
accomplished. These forward looking statements can be identified by
the use of terms and phrases such as “believe,”
“plan,” “intend,” “anticipate,”
“target,” “estimate,” “expect,”
and the like, and/or future-tense or conditional constructions
“may,” “could,” “should,” etc.
Items contemplating or making assumptions about, actual or
potential future sales, market size, collaborations, and business
opportunities also constitute such forward-looking
statements.
Although
forward-looking statements in this report reflect the good faith
judgment of our management, forward-looking statements are
inherently subject to known and unknown risks, business, economic
and other risks and uncertainties that may cause actual results to
be materially different from those discussed in these
forward-looking statements. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this report. We assume no obligation to update any
forward- looking statements in order to reflect any event or
circumstance that may arise after the date of this report, other
than as may be required by applicable law or regulation. Readers
are urged to carefully review and consider the various disclosures
made by us in our reports filed with the Securities and Exchange
Commission which attempt to advise interested parties of the risks
and factors that may affect our business, financial condition,
results of operation and cash flows. If one or more of these risks
or uncertainties materialize, or if the underlying assumptions
prove incorrect, our actual results may vary materially from those
expected or projected.
CORPORATE
ADDRESS AND TELEPHONE NUMBER
The
Company maintains its designated office at 6401 Congress Ave.,
Suite 140, Boca Raton, FL 33487. The Company’s telephone
number is 561-558-2020.
THE
OFFERING
This
prospectus will be utilized in connection with the re-sale of
3,991,202 shares which could be potentially issued in the future as
of the result of the sale of common stock and the prospective
exercise of certain investor warrants and placement agent warrants
which were issued in connection with the Company’s recent
stock offering. The Company will not receive any proceeds from any
sales of these shares.
|
Common
stock currently outstanding
|
11,116,077
shares
(1)
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|
Common
stock offered by the selling stockholders
|
3,991,202
shares
|
(1) Shares of common stock outstanding as of September 29,
2016
Use of
proceeds
We will
not receive any proceeds from the sale of common stock offered by
this prospectus.
FINANCIAL
INFORMATION SELECTED CONSOLIDATED FINANCIAL DATA
The
following selected consolidated statement of operations data
contains consolidated statement of operations data and consolidated
balance sheet for the fiscal years ended December 31, 2015,
December 31, 2014 and December 31, 2013. The consolidated statement
of operations data and balance sheet data were derived from the
audited consolidated financial statements. All share amounts are
restated to reflect a one-for-150 reverse stock split which became
effective January 15, 2013. Such financial data should be read in
conjunction with the consolidated financial statements and the
notes to the consolidated financial statements and with
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
|
|
|
|
|
|
Revenues
|
$
1,138,634
|
$
1,250,292
|
$
1,089,374
|
|
Net comprehensive
loss
|
$
(2,315,379
)
|
$
(4,162,031
)
|
$
(2,410,116
)
|
|
Net comprehensive
loss per share
|
$
(0.21
)
|
$
(0.39
)
|
$
(0.39
)
|
|
Weighted average
no. shares
|
10,839,335
|
10,270,657
|
6,324,175
|
|
Stockholders’
equity (deficit)
|
$
1,145,722
|
$
2,888,902
|
$
(3,315,243
)
|
|
Total
assets
|
$
2,022,731
|
$
3,813,743
|
$
2,115,250
|
|
Total
liabilities
|
$
877,009
|
$
924,841
|
$
5,430,492
|
The
following selected data contains statement of operations data and
balance sheet for the three months ended June 30, 2016 and June 30,
2015. The statement of operations data and balance sheet data were
derived from the financial statements for the periods. Such
financial data should be read in conjunction with the unaudited
financial statements and the notes to the financial statements for
said periods and with “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.”
|
|
|
|
|
|
|
|
|
Balance Sheet
Data:
|
|
|
|
Assets
|
$
1,682,239
|
$
2,755,089
|
|
Liabilities
|
$
1,024,412
|
$
791,597
|
|
Total
Stockholders’ Equity
|
$
657,827
|
$
1,963,492
|
|
Statement of
Operations Data
|
|
|
|
Revenue
|
$
379,406
|
$
286,018
|
|
Operating
Expenses
|
$
622,822
|
$
710,130
|
|
Net Comprehensive
Loss
|
$
(302,442
)
|
$
(401,191
)
|
|
Basis and Diluted
Loss Per Share
|
$
(0.03
)
|
$
(0.04
)
|
|
Weighted Average
Number of Shares Outstanding
|
11,007,522
|
10,819,691
|
RISK
FACTORS
Investing in our securities involves a high degree of risk. You
should carefully consider the following risk factors, as well as
the financial and other information in this Prospectus, before
deciding to invest in our securities. If any of the following risks
actually occurs, our business, financial condition and results of
operations could be materially adversely affected. In such case,
the value of our securities could decline and you may lose all or
part of your investment in our securities.
Risks Related to Our Financials
We do not have a significant operating history and have not
achieved profitable operations. If we are unable to achieve
profitable operations, you may lose your entire
investment.
Our
independent auditors, Paritz & Co., P.A., certified public
accountants, have expressed substantial doubt concerning our
ability to continue as a going concern. We have incurred losses
since our inception, including a net loss of $2,250,420 for the
year ended December 31, 2015 and of $832,923 for the six months
ended June 30, 2016, and we expect to incur additional losses in
the future. We have incurred negative cash flows from operations
since inception. As of June 30, 2016 the Company had a
stockholders’ equity of $657,827 and cash and cash
equivalents of $87,709. Since we have no record of profitable
operations, there is high a possibility that you may suffer a
complete loss of your investment.
The absence of significant operating history for us makes
forecasting our revenue and expenses difficult, and we may be
unable to adjust our spending in a timely manner to compensate for
unexpected revenue shortfalls or unexpected expenses.
As a
result of the absence of profitable operating history for us, it is
difficult to accurately forecast our future revenue. In addition,
we have limited meaningful historical financial data upon which to
base planned operating expenses. Current and future expense levels
are based on our operating plans and estimates of future revenue.
Revenue and operating results are difficult to forecast because
they generally depend on our ability to promote and sell our
products and revenues can fluctuate due the timing impact of larger
orders. As a result, we may be unable to adjust our spending in a
timely manner to compensate for any unexpected revenue shortfall,
which would result in further losses. We may also be unable to
expand our operations in a timely manner to adequately meet demand
to the extent it exceeds expectations.
Our limited operating history does not afford investors a
sufficient history on which to base an investment
decision.
We were
formed on June 17, 2005, Vycor Medical’s products were only
fully launched at the beginning of 2010 and NovaVision’s
therapies were re-launched following re-development in June 2015 in
the US and December 2015 in Europe; we are therefore currently in
the relatively early stages of marketing our products and
therapies. There can be no assurance at this time that we will ever
operate profitably or that we will have adequate working capital to
meet our obligations as they become due. Investors must consider
the risks and difficulties frequently encountered by early stage
companies, particularly in rapidly evolving markets. Such risks
include the following:
●
need for acceptance
of products and therapies — there can be no assured market
for our products and therapies and there is no guarantee of orders
or of surgeon, physician or patient acceptance;
●
ability to continue
to develop and extend brand identity;
●
ability to
anticipate and adapt to a competitive market;
●
ability to
effectively manage rapidly expanding operations;
●
amount and timing
of operating costs and capital expenditures relating to expansion
of our business, operations, and infrastructure; and
●
dependence upon key
personnel to market and sell our products and the loss of one of
our key managers may adversely affect the marketing of our
products.
We
cannot be certain that our business strategy will be successful or
that we will successfully address these risks. In the event that we
do not successfully address these risks, our business, prospects,
financial condition, and results of operations could be materially
and adversely affected.
Our revenue is dependent upon acceptance of our products and
therapies by the market. The failure of such acceptance will cause
us to curtail or cease operations.
Our
revenue comes from the sale of our products and therapies. As a
result, we will continue to incur operating losses until such time
as sales of our products and therapies reach a mature level and we
are able to generate sufficient revenue from the sale of our
products and therapies to meet our operating expenses. There can be
no assurance that customers will adopt our technology and products,
or that businesses and prospective customers will agree to pay for
our products and therapies. In the event that we are not able to
significantly increase the number of customers that purchase our
products and therapies, or if we are unable to charge the necessary
prices, our financial condition and results of operations will be
materially and adversely affected.
We will need to raise additional funds to continue bring products
to market and operate.
Our
current funds are only sufficient to allow us to operate for a
limited period of time. We will require additional funds in order
to continue our operations after we exhaust our available funding.
For the six months ended June 30, 2016 the aggregate of cash used
in operating activities was $382,882, or an average monthly
“burn rate” of approximately $64,000. The cash and cash
equivalent balance of $87,709 at June 30, 2016 is therefore
equivalent to a little more than one month of “burn
rate”. This does not take into account any future sales
growth and/or future cost cutting. There have been no significant
changes in the operations of the Company since June 30, 2016 and
none are anticipated in the next six months which would have a
significant impact on the “burn rate”. Beyond this
period the Company believes it will not have enough cash to meet
its various cash needs unless the Company is able to obtain
additional cash from the issuance of debt or equity securities.
There is no assurance that additional funds from the issuance of
equity or debt will be available for the Company to finance its
operations on acceptable terms, or at all. If adequate funds are
not available, the Company may have to further reduce costs
(including marketing costs) or consider ceasing some or all of its
operations.
The majority of the assets on our balance sheet comprise assets
that are subject to annual accounting impairment review and
therefore may be subject to write-downs which will affect both the
balance sheet and net profit or loss.
The
assets on our balance sheet include patents, software, and
trademarks which are reviewed for impairment by the Company
annually in accordance with the authoritative guidance. Impairment
is recognized when the estimated undiscounted cash flows associated
with the asset or group of assets is less than their carrying
value. If impairment exists, an adjustment is made to write the
asset down to its fair value, and a loss is recorded as the
difference between the carrying value and fair value. We will
review these assets as part of the preparation of the financial
statements for 2016 and, if an impairment exists, would be required
to recognize an impairment to some or all of these assets which
would increase the losses for the year and reduce the value of the
assets on the balance sheet.
Risks Related to Our Business
Our existing products and therapies may not gain sufficient
acceptance in the marketplace, or may take longer to gain
acceptance than expected or may face regulatory
delays.
Uncertainty exists
as to whether our products and therapies will be fully accepted by
the market without additional clinical evaluations and more
widespread doctor acceptance, or that the time taken to gain
regulatory approval or acceptance may be longer than expected. A
number of factors may limit the market acceptance of our products
and therapies, including the availability of alternative products
and therapies and the price of our products and therapies relative
to alternative products and therapies.
There
is a risk that development of finalization of development of new
products takes longer than expected, or that longer than expected
regulatory processes in certain jurisdictions may slow the time
period to full commercialization
There
is a risk that surgeons will be encouraged to continue to use
multiple-use devices, such as standard blade retractors, instead of
our single use devices, or alternative techniques or other tubular
constructions or retractors. Our VBAS device is designed to be used
only once and then discarded. Vycor Medical’s competitors
include multiple use devices such as metal blade retractors. The
multiple use devices are significantly less expensive on a per use
basis than our single use devices. We are assuming that,
notwithstanding the difference in price, surgeons will elect to use
our devices because of their perception that our devices will
permit safer and less invasive surgery. However, hospitals, medical
insurance providers, health maintenance organizations and others
approving surgical costs may decide that the cost outweighs the
benefit. In addition, surgeons may opt to use other devices. While
Vycor Medical intends to continue to build clinical and other
scientific data demonstrating the cost benefit of VBAS over other
methodologies, this data may not be conclusive or may be viewed as
insufficient by hospitals or physicians.
In the
US, NovaVision’s therapies require physician prescriptions,
and physicians may not be persuaded by the effectiveness of our
therapies to prescribe them to their patients, given the price
compared to the physician perception of the therapy benefit. Whilst
NovaVision intends to continue to implement strategies to increase
awareness of its therapies, and their benefits, and has
significantly reduced their cost to patients through its
development program, there is no assurance that this strategy will
be successful, particularly in that the target audience (for both
physicians and patients) is very large and diverse and the patient
audience tends to be both medically and financially challenged,
requiring multiple methods and routes to access it. In the majority
of cases there is no insurance reimbursement for NovaVision’s
therapies, so patients are required to pay themselves.
The
marketing expenditures required to achieve the level of awareness
domestically and internationally may also be too high.
NovaVision’s VRT therapy usually takes 6 months to complete,
requiring patients to carry out the therapy twice a day (for an
hour total), 6 days a week. Patients have to be persuaded that this
level of intense therapy is justified for the anticipated benefit,
but there is no assurance that sufficient numbers of patients will
be convinced to enable a successful market to develop for the
therapy.
Some of our competitors are more established and better capitalized
than we are and we may be unable to establish market
share.
Some of
our competitors are well-known, more established and better
capitalized than we are. As such, they may have at their disposal
greater marketing strength and economies of scale and, as they may
have additional products which they sell to the same customers,
have greater presence with these customer. They may also have more
resources to expend on research and development to create more
innovative products in competition with ours. Competition will also
likely increase as or when the clinical and cost benefits of the
Company’s products and therapies are established and proven.
Accordingly, we may not be successful in competing with them for
market share.
Sales may not produce profits.
We may
be forced to sell our products and therapies at a lower price than
anticipated due to a variety of reasons, including without
limitation selling prices of comparable products by our competitors
and budget or financial constraints of our customers. Further, we
may sell fewer products or therapies than anticipated, and the
costs associated with each unit, including costs of manufacturing,
delivery and commissions, may be greater than anticipated. As a
result, there is a risk that costs associated with the sales of our
products and therapies may be greater than we anticipated and that
sales may fail to yield profitability.
International sales
of our VBAS product tend to vary from period-to-period and are less
predictable than domestic sales. This can cause a material impact
(either positive or negative) on VBAS revenues in a given quarter.
Although international distributors generally commit to purchases
of minimum quantities of product and we work with them to increase
sales in their markets, there is no assurance that these minimums
will be met, or that sales generated in a market in any one year
might be repeated in subsequent years. In addition, Vycor
Medical’s realized sales price for international sales tends
to be lower than in the US. This is because Vycor Medical always
partners with a distributor in international markets who will take
on the marketing and distribution costs in return for a lower sale
price. In addition, end market pricing in some international
markets is lower than in the US. Notwithstanding, international
sales are a key component of Vycor Medical’s growth strategy
and the profitability of these sales have yet to be determined. The
Company may not be able to attract suitable distribution partners
in all the markets it wishes to enter.
A key
component of NovaVision’s growth strategy has been the
development of a lower cost delivery model which significantly
lowers the price of its therapy to patients. This has also resulted
in significantly lower realized sales prices to on a per patient
basis. While management believes that cost to the patient is a key
decision factor in utilizing the product, there is no assurance
that lowered cost will automatically lead to more widespread
product adoption.
We might incur substantial expense to develop products that, once
commercialized, are never sufficiently successful.
Our
growth strategy requires the successful development and launch of
new or updated products for Vycor Medical and new or updated
therapies for NovaVision. Although management will take every
precaution to ensure that such expenditure is only on new or
updated products and therapies with a high likelihood of achieving
commercial success, there can be no assurance that this will be the
case. The causes for failure of new or updated products and
therapies once commercialized are numerous, including:
●
market demand for
the product or therapy proves to be smaller than market research
suggested;
●
competitive
products or therapies with superior performance either on the
market or commercialized at the same time or soon
after;
●
product or therapy
development turns out to be more costly than anticipated or takes
longer;
●
product or therapy
requires significant adjustment post commercialization, rendering
the project uneconomic or extending considerably the likely
investment return period;
●
additional
regulatory requirements which extend the time to launch and
increase the overall costs of the development;
●
patent conflicts or
unenforceable intellectual property rights;
●
neurosurgeons and
other physicians may be unwilling to adapt to new products and
therapies, which will slow new product adoption;
●
new products and
therapies may be dependent, to a greater or lesser extent, on the
successful outcomes of clinical studies. These may cost more, take
longer to complete, the outcomes maybe inconclusive, and it may be
difficult to achieve publication in an important journal;
and
●
other factors that
could make the product uneconomical.
We might incur substantial expense to develop products that are
never successfully developed and commercialized.
We have
incurred and may continue to incur research and development and
other expenses in developing new medical devices and therapies. The
potential products and therapies to which we devote resources might
never be successfully developed or fully commercialized by us for
numerous reasons, including:
●
inability to
develop products and therapies that address our customers’
needs;
●
competitive
products with superior performance;
●
additional
regulatory requirements which render the development uneconomic or
prevent our ability to gain regulatory approval;
●
patent conflicts or
unenforceable intellectual property rights;
●
demand for the
particular product; and
●
other factors that
could make the product uneconomical.
Incurring
significant expenses for a potential product or therapy that is not
successfully developed and/or commercialized could have a material
adverse effect on our business, financial condition, prospects and
share price.
We may not be
successful in entering into strategic relationships.
One of
the principal elements of our strategy has been to develop the
business to the point where they would be attractive for strategic
partnerships with other entities or potential acquirers of either
or both of our operating divisions. We may or may not be able to
find suitable partners for or acquirers of either or both of our
operating division, or may not be able to enter into transactions
that are on terms which are beneficial to the Company.
We cannot be certain that we will obtain and be able to maintain
patents for our devices and technology or that such patents will
protect us from competitors.
We
believe that our success and competitive position will depend in
part on our ability to obtain and maintain patents for our devices,
which is both costly and time consuming. We have 57 issued patents
covering both NovaVision, Sight Science and Vycor Medical. We still
are in the process of prosecuting 13 others. Patent Offices
typically requires 12-24 months or more to process a patent
application. There can be no assurance that the remainder of our
patent applications will be approved. However we have not waited
for the approval of all the patent applications before launching
sales of our devices and therapies. There can be no assurance
regarding how long it will take the U.S. Patent and Trademark
Office to decide whether to approve our patent applications or how
long it will take foreign patent offices to grant us patents. There
can be no assurance that any patent issued or licensed to us will
provide us with protection against competitive products and
therapies or otherwise protect our commercial viability, or that
challenges will not be instituted against the validity or
enforceability of any of our patents or, if instituted, that such
challenges will not be successful. The cost of litigation to uphold
the validity of a patent and enforce it against infringement can be
substantial and we do not have patent insurance. Even issued
patents may later be modified or revoked by the Patent and
Trademark Office or in legal proceedings. Patent applications in
the United States are maintained in secrecy until the patent issues
and, since publication of discoveries in the scientific or patent
literature tends to lag behind actual discoveries, we cannot be
certain that we were the first creator of the inventions covered by
our pending patent applications or the first to file patent
applications on such inventions.
We are in the process of finalizing a manufacturing migration for
VBAS that could result in unexpected expenses or inventory
shortages.
We are
in the process of finalizing a two-year manufacturing migration
project for VBAS which will result in all the units being
manufactured by Accent and then packaged and completed by LSO,
these suppliers being located close to each other in California.
The process of finalization could result in unexpected additional
expenses and could also result in inventory shortages for certain
models if not completed to plan.
Vycor Medical will be dependent on two key vendors to manufacture
our products, once this migration is complete.
Vycor
Medical is dependent on Life Science Outsourcing, Inc.
(“LSO”) and Accent Plastics Limited
(“Accent”) to provide engineering, contract
manufacturing and logistical support to manufacture our products.
We are dependent upon their manufacture of our products in
accordance with our specifications and delivering them on a timely
basis.
If
either supplier fails to manufacture and/or deliver our products as
specified, or decides to no longer manufacture for the Company, we
may need to locate another manufacturer. We can offer no assurances
that we will be successful in finding an alternate manufacturer and
negotiating acceptable terms with them on a timely basis without
impact on our manufacturing and delivery schedule.
Both
manufacturers are subject to regulatory requirements and
certifications. Loss of such certification would affect our ability
to deliver products.
Vycor Medical’s relatively low volumes limit the ability to
lower manufacturing costs.
Although the gross
margins for Vycor Medical’s products are acceptable,
manufacturing costs are volume-dependent. As the VBAS range
comprises 14 different sizes, costs will only reduce further once
volumes for each of the 14 sizes increase.
We will need additional distribution and marketing partners to help
us market our products.
At this
time, we have a small number of sales and marketing personnel and
limited distribution and marketing channels that we will need to
expand in the future. Vycor Medical has contracted with independent
medical device distributors and representatives that collectively
have field salespeople who call on neurosurgery departments both in
the US and internationally. To implement our growth plan we need to
expand the US and international scope of our sales and
distribution. Given the relatively small size of our company and
the fact that our products and therapies are new with currently
limited sales, there is no assurance that we will be able to
attract successful distributors to contract with us. There is also
no assurance that the contracted distributors or potential new
distributors will be successful in promoting and selling our
products and therapies.
In
addition, monitoring international distributors and interfacing
with potential international customers and other partners is made
harder given the size of our company.
We will need to increase the size of our organization, and may
experience difficulties in managing growth.
We are
a small company with minimal employees. Future growth will impose
significant added responsibilities on employees and members of
management, including the need to identify, recruit, maintain and
integrate new managers and employees. Our future financial
performance and its ability to compete effectively will depend, in
part, on its ability to manage any future growth
effectively.
The loss of our key personnel could adversely affect our business.
We may not be able to hire and retain qualified personnel to
support our growth and if we are unable to retain or hire such
personnel in the future, our ability to improve our products and
implement our business objectives could be adversely
affected.
Our
success depends to a significant extent upon the efforts of our
senior management team and other key personnel. The loss of the
services of such personnel could adversely affect our business and
our ability to implement our growth plan. We cannot assure
you that the services of the members of our management team will
continue to be available to us, or that we will be able to find a
suitable replacement for any of them. We do not have key man
insurance on any members of our management team. If any member of
our management team were to become incapacitated or die and we are
unable to replace them for a prolonged period of time, we may be
unable to carry out our long term business plan and our future
prospect for growth, and our business, may be harmed.
Also,
because of the nature of our business, our success is dependent
upon our ability to attract, train, manage and retain sales,
marketing and other qualified personnel. There is substantial
competition for qualified personnel, and an inability to recruit or
retain qualified personnel may impact our ability to implement our
strategy to grow our business and compete effectively in our
industry.
Even though our current products and therapies are approved by
regulatory authorities, if we or our suppliers fail to comply with
ongoing regulatory requirements, or if we experience unanticipated
problems with our products or therapies, these products or
therapies could be subject to restrictions or withdrawal from the
market.
Any
product or therapy which we obtain marketing approval, along with
the manufacturing processes, post-approval clinical data and
promotional activities for such product or therapy, will be subject
to continual review and periodic inspections by the FDA and other
regulatory bodies. In particular we and our suppliers are required
to comply with the Quality System Regulation, or QSR, for the
manufacture of our products and delivery of our therapies which
cover the methods and documentation of the design, testing,
production, control, quality assurance, labeling, packaging,
storage and shipping of any product or therapy for which we obtain
marketing approval. The FDA enforces the GMP and QSR through
unannounced inspections. We and our third party manufacturers and
suppliers will have to successfully complete such inspections.
Failure by us or one of our suppliers, with statutes and
regulations administered by the FDA and other regulatory bodies, or
failure to take adequate response to any observations, could result
in, among other things, any of the following enforcement
actions:
●
warning letters or
untitled letters;
●
fines and civil
penalties;
●
unanticipated
expenditures;
●
withdrawal or
suspension of approval by the FDA or other regulatory
bodies;
●
product recall or
seizure;
●
orders for
physician notification or device repair, replacement or
refund;
●
interruption of
production;
●
operating
restrictions;
If any
of these actions were to occur it would harm our reputation and
cause our product or therapy sales and profitability to suffer.
Furthermore, our key component suppliers may not currently be or
may not continue to be in compliance with applicable regulatory
requirements.
If the
FDA determines that our promotional materials, training or other
activities constitutes promotion of an unapproved use, it could
request that we cease or modify our training or promotional
materials or subject us to regulatory enforcement actions. It is
also possible that other federal, state or foreign enforcement
authorities might take action if they consider our training or
other promotional materials to constitute promotion of an
unapproved use, which could result in significant fines or
penalties under other statutory authorities, such as laws
prohibiting false claims for reimbursement.
Moreover, any
modification to a device that has received FDA approval that could
significantly affect its safety or effectiveness, or that would
constitute a major change in its intended use, design or
manufacture, requires a new approval from the FDA. If the FDA
disagrees with any determination by us that new approval is not
required, we may be required to cease marketing or to recall the
modified product until we obtain approval. In addition, we could
also be subject to significant regulatory fines or
penalties.
In
addition, we may be required to conduct costly post-market testing
and surveillance to monitor the safety or efficacy of our products,
and we will be required to report adverse events and malfunctions
related to our products. Later discovery of previously unknown
problems with our products, including unanticipated adverse events
or adverse events of unanticipated severity or frequency,
manufacturing problems, or failure to comply with regulatory
requirements such as QSR or GMP, may result in restrictions on such
products or manufacturing processes, withdrawal of the products
from the market, voluntary or mandatory recalls, fines, suspension
of regulatory approvals, product seizures, injunctions or the
imposition of civil or criminal penalties.
Further, healthcare
laws and regulations may change significantly in the future. Any
new healthcare laws or regulations may adversely affect our
business. A review of our business by courts or regulatory
authorities may result in a determination that could adversely
affect our operations. Also, the healthcare regulatory environment
may change in a way that restricts our operations.
In
Europe, the relevant European authorities could hold imports from
us and remove CE marking for violating their rules and regulations.
We could get a warning from a European Competent Authority or its
Notified Body and we would be obligated to fix the problem and
follow up with either the Notified Body or Competent
Authorities.Similarly, in other international markets for which
Vycor Medical’s products currently have full or partial
regulatory approval (Australia, Brazil, Canada, China, Japan, Korea
and Russia), the relevant regulatory body could place a hold on
imports from us and could revoke any licenses held for violations
of its rules and regulations. The relevant regulatory body could
issue a warning the first time around and we would be obligated to
fix the problem and follow up, or regulations could change
invalidating our approvals.
Because product liability is inherent in the medical devices
industry and insurance is expensive and difficult to obtain, we may
be exposed to large lawsuits.
Our
business exposes us to potential product liability risks, which are
inherent in the manufacturing, marketing and sale of medical
devices. While we will take precautions we deem to be appropriate
to avoid product liability suits against us, there can be no
assurance that we will be able to avoid significant product
liability exposure. Product liability insurance for the medical
products industry is generally expensive. While we have product
liability coverage for our Vycor Medical devices, and product
liability and professional indemnity insurance for our NovaVision
and Sight Science therapies, there can be no assurance that we will
be able to continue to obtain such coverage on acceptable terms, or
that any insurance policy will provide adequate protection against
potential claims. A successful product liability claim brought
against us may exceed any insurance coverage secured by us and
could have a material adverse effect on our results or ability to
continue marketing our products.
The
other insurances we have are Directors and Officers Liability
Insurance and certain commercial liability and personal property
insurances at present. We may have exposure in the event of loss or
damage to our properties.
We have
not established any reserve funds for potential warranty claims. If
we experience an increase in warranty claims or if our repair and
replacement costs associated with warranty claims increase
significantly, it would have a material adverse effect on our
financial condition and results of operations.
Because the healthcare industry is subject to changing policies and
procedures, we may find it difficult to continue to compete in an
uncertain environment.
The
health care industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and
operations of healthcare industry participants. During the past
several years government regulation of the healthcare industry has
changed significantly in several countries. Healthcare industry
participants may react to new policies by curtailing or deferring
use of new treatments for disease, including treatments that would
use our devices. This could substantially impair our ability to
successfully marker our products, which would have a material
adverse effect on our performance.
The market success of our products and therapies may be dependent
in part upon third-party reimbursement policies that are often
subject to change.
Our
ability to successfully penetrate the market for our products and
therapies may to some extent depend on the availability of
reimbursement to individuals for rehabilitation therapies and to
hospitals for neurosurgical procedures from third-party payers,
such as governmental programs, private insurance and private health
plans. There is no guarantee that this will not change in the
future or that applicable levels of reimbursement to individuals
and hospitals, if any, will be high enough to allow us to charge a
reasonable profit margin. Vycor Medical’s products are not
specifically reimbursed by third party payers, they are part of the
overall procedure cost and therefore some hospitals may view this
as an increase in cost. If levels of reimbursement are decreased in
the future, the demand for our products could diminish or our
ability to sell our products on a profitable basis could be
adversely affected. NovaVision’s therapies are not generally
reimbursed by third party payers, although this is sometimes
available to patients on a case-by-case basis.
We may be affected by health care reform.
The
U.S. Government, various state governments and European and Asian
governments may enact various types of health care reform in order
to control growing health care costs. We are presently uncertain as
to the effects on our business of the certain legislation which has
been previously enacted and are unable to predict what legislative
proposals will be adopted in the future, if any.
Risks Related to Share Ownership
We are subject to compliance with securities law, which exposes us
to potential liabilities, including potential rescission
rights.
We have
offered and sold our Common Stock to investors pursuant to certain
exemptions from the registration requirements of the Securities Act
of 1933, as well as those of various state securities laws. The
basis for relying on such exemptions is factual; that is, the
applicability of such exemptions depends upon our conduct and that
of those persons contacting prospective investors and making the
offering. We have not received a legal opinion to the effect that
any of our prior offerings were exempt from registration under any
federal or state law. Instead, we have relied upon the operative
facts as the basis for such exemptions, including information
provided by investors themselves.
If any
prior offering did not qualify for such exemption, an investor
would have the right to rescind its purchase of the securities if
it so desired. It is possible that if an investor should seek
rescission, such investor would succeed. A similar situation
prevails under state law in those states where the securities may
be offered without registration in reliance on the partial
preemption from the registration or qualification provisions of
such state statutes under the National Securities Markets
Improvement Act of 1996. If investors were successful in seeking
rescission, we would face severe financial demands that could
adversely affect our business and operations. Additionally, if we
did not in fact qualify for the exemptions upon which it has
relied, we may become subject to significant fines and penalties
imposed by the SEC and state securities agencies.
Fountainhead Capital Management Limited
(“Fountainhead”) is a substantial minority shareholder
and their interests may differ from other
stockholders.
As of
September 29, 2016, Fountainhead (together with parties affiliated
to Fountainhead) beneficially owned, in the aggregate,
approximately 45.7% of our Voting Share Capital, including Common
Stock and Preferred D Shares convertible into Common Stock. As a
result, they are holders of a substantial minority of the
outstanding shares (prior to the Offering) and they may be able to
influence the outcome of stockholder votes on various matters,
including the election of directors and extraordinary corporate
transactions, including business combinations. Their interests may
differ from other stockholders. Fountainhead has committed to
subscribe for its pro-rata share of the Offering and, dependent on
the take-up of the Offering by other shareholders, this may result
in Fountainhead and affiliated parties beneficially owning more
than 50% of the Voting Share Capital. Two of the Company’s
members of management and the board of directors (David Cantor and
Peter C. Zachariou) serve as investment managers of Fountainhead
and one of the Company’s members of management and board of
directors (Adrian Liddell) serves as an advisor to
Fountainhead.
Our share price could be volatile and our trading volume may
fluctuate substantially.
The
price of our common shares has been and may in the future continue
to be extremely volatile, with the sale price fluctuating from a
low of $0.20 to a high of $2.65 since September 1, 2014. Many
factors could have a significant impact on the future price of our
common shares, including:
our
inability to raise additional capital to fund our operations,
whether through the issuance of equity securities or
debt;
our
failure to successfully implement our business objectives and
strategic growth plans;
compliance with
ongoing regulatory requirements;
market
acceptance of our products;
changes
in government regulations;
general
economic and market conditions and other external
factors;
actual
or anticipated fluctuations in our quarterly financial and
operating results; and
the
degree of trading liquidity in our common shares.
The availability of a large number of authorized but unissued
shares of Common Stock may, upon their issuance, lead to dilution
of existing stockholders.
We are
authorized to issue 25,000,000 shares of Common Stock, $0.0001 par
value per share. As of September 29, 2016, 11,116,077 shares of
Common Stock were issued and outstanding and approximately 8
million shares are reserved for issuance for warrants, options,
preferred shares and deferred compensation. The remaining shares
may be issued by our board of directors without further stockholder
approval. The issuance of large numbers of shares, possibly at
below market prices, would be likely to result in substantial
dilution to the interests of other stockholders. In addition,
issuances of large numbers of shares may adversely affect the
market price of our Common Stock.
Further, our
Certificate of Incorporation authorizes 10,000,000 shares of
preferred stock, $0.0001 par value per share of which as of
September 30, 2016, 270,307 shares of preferred stock were issued
and outstanding. The board of directors is authorized to provide
for the issuance of these unissued shares of preferred stock in one
or more series, and to fix the number of shares and to determine
the rights, preferences and privileges thereof. Accordingly, the
board of directors may issue preferred stock that convert into
large numbers of shares of Common Stock and consequently lead to
further dilution of other shareholders.
There
is also a large number of warrants and options outstanding which,
if fully exercised, would increase the number of outstanding shares
by approximately 6.7 million. The weighted average issue price for
the exercise of these warrants and options is $2.32. In addition,
if fully converted, the Company’s outstanding convertible
debentures and accrued interest would increase the number of
outstanding shares by approximately 235,926. The Preferred D Shares
are convertible into approximately 1.3 million shares.
We have never paid cash dividends and do not anticipate doing so in
the foreseeable future.
We have
never declared or paid cash dividends on our common shares. We
currently plan to retain any earnings to finance the growth of our
business rather than to pay cash dividends. Payments of any cash
dividends in the future will depend on our financial condition,
results of operations and capital requirements, as well as other
factors deemed relevant by our board of directors.
Our Common Stock is subject to the "Penny Stock" rules of the SEC
and the trading market in our securities is limited, which makes
transactions in our stock cumbersome and may reduce the value of an
investment in our stock.
The
Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes
relevant to us, as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction
involving a penny stock, unless exempt, the rules
require:
That a
broker or dealer approve a person's account for transactions in
penny stocks; and
The
broker or dealer receives from the investor a written agreement to
the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
In
order to approve a person's account for transactions in penny
stocks, the broker or dealer must:
Obtain
financial information and investment experience objectives of the
person; and
Make a
reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission
relating to the penny stock market, which, in highlight
form:
Sets
forth the basis on which the broker or dealer made the suitability
determination; and
That
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
Generally,
brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our Common Stock and cause a decline in
the market value of our stock.
Disclosure
also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in
penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny
stocks.
Financial Industry Regulatory Authority, Inc. (“FINRA”)
sales practice requirements may limit a shareholder’s ability
to buy and sell our Common Stock.
In
addition to the “penny stock” rules described above,
FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities
to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer’s
financial status, tax status, investment objectives and other
information. Under interpretations of these rules, FINRA believes
that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend
that their customers buy our Common Stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the
market for our shares.
Our stock is thinly traded, so you may be unable to sell your
shares at or near the quoted bid prices if you need to sell a
significant number of your shares.
The
shares of our Common Stock are thinly-traded on the OTCQB, meaning
that the number of persons interested in purchasing our Common
Stock at or near bid prices at any given time may be relatively
small or non-existent. As a consequence, there may be
periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which
has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on
share price. We cannot give you any assurance that a broader or
more active public trading market for our Common Stock will develop
or be sustained, or that current trading levels will be sustained.
Due to these conditions, we can give you no assurance that you will
be able to sell your shares at or near bid prices or at all if you
need money or otherwise desire to liquidate your
shares.
Shares eligible for future sale may adversely affect the
market.
From
time to time, certain of our stockholders may be eligible to sell
all or some of their shares of Common Stock by means of ordinary
brokerage transactions in the open market pursuant to Rule 144
promulgated under the Securities Act, subject to certain
limitations. In general, pursuant to amended Rule 144,
non-affiliate stockholders may sell freely after six months subject
only to the current public information requirement. Affiliates may
sell after six months subject to the Rule 144 volume, manner of
sale (for equity securities), current public information and notice
requirements. Any substantial sales of our Common Stock pursuant to
Rule 144 may have a material adverse effect on the market price of
our Common Stock.
We could issue additional Common Stock, which might dilute the book
value of our Common Stock.
Our
Board of Directors has authority, without action or vote of our
shareholders, to issue all or a part of our authorized but unissued
shares. Such stock issuances could be made at a price that reflects
a discount or a premium from the then-current trading price of our
Common Stock. In addition, in order to raise capital, we may need
to issue securities that are convertible into or exchangeable for
our Common Stock. These issuances would dilute the percentage
ownership interest, which would have the effect of reducing your
influence on matters on which our shareholders vote, and might
dilute the book value of our Common Stock. You may incur additional
dilution if holders of stock warrants or options, whether currently
outstanding or subsequently granted, exercise their options, or if
warrant holders exercise their warrants to purchase shares of our
Common Stock.
Our Common Stock could be further diluted as the result of the
issuance of convertible securities, warrants or
options.
In the
past, we have issued convertible securities (such as convertible
debentures and notes), warrants and options in order to raise
capital or as compensation for services and incentive compensation
for our employees and directors. As of September 29, 2016 the
Company has outstanding (a) $300,000 of convertible debt
outstanding, which if fully converted together with accrued
interest would result in the issuance of an additional 235,926
shares of Company Common Stock and (b) warrants and options to
purchase 6.7 million shares of Company Common Stock. We have shares
of Common Stock reserved for issuance upon the exercise of certain
of these securities and may increase the shares reserved for these
purposes in the future. Our issuance of these convertible
securities, options and warrants could affect the rights of our
stockholders, could reduce the market price of our Common Stock or
could result in adjustments to exercise prices of outstanding
warrants (resulting in these securities becoming exercisable for,
as the case may be, a greater number of shares of our Common
Stock), or could obligate us to issue additional shares of Common
Stock to certain of our stockholders. All of these actions could
serve to dilute the interests of the holders of our Common
Stock
If we fail to maintain effective internal controls over financial
reporting, the price of our Common Stock may be adversely
affected.
Our
internal control over financial reporting may have weaknesses and
conditions that could require correction or remediation, the
disclosure of which may have an adverse impact on the price of our
Common Stock. We are required to establish and maintain
appropriate internal controls over financial
reporting. Failure to establish those controls, or any
failure of those controls once established, could adversely affect
our public disclosures regarding our business, prospects, financial
condition or results of operations. In addition,
management’s assessment of internal controls over financial
reporting may identify weaknesses and conditions that need to be
addressed in our internal controls over financial reporting or
other matters that may raise concerns for investors. Any
actual or perceived weaknesses and conditions that need to be
addressed in our internal control over financial reporting or
disclosure of management’s assessment of our internal
controls over financial reporting may have an adverse impact on the
price of our Common Stock.
We are required to comply with certain provisions of Section 404 of
the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely
manner, our business could be harmed and our stock price could
decline.
Rules
adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require an annual assessment of internal controls over
financial reporting, and for certain issuers an attestation of this
assessment by the issuer’s independent registered public
accounting firm. The standards that must be met for
management to assess the internal controls over financial reporting
as effective are evolving and complex, and require significant
documentation, testing, and possible remediation to meet the
detailed standards. We expect to incur expenses and to
devote resources to Section 404 compliance on an ongoing
basis. It is difficult for us to predict how long it
will take or costly it will be to complete the assessment of the
effectiveness of our internal control over financial reporting for
each year and to remediate any deficiencies in our internal control
over financial reporting. As a result, we may not be able to
complete the assessment and remediation process on a timely
basis. In addition, although attestation requirements by
our independent registered public accounting firm are not presently
applicable to us we could become subject to these requirements in
the future and we may encounter problems or delays in completing
the implementation of any resulting changes to internal controls
over financial reporting. In the event that our
President or Chief Financial Officer determine that our internal
control over financial reporting is not effective as defined under
Section 404, we cannot predict how regulators will react or how the
market prices of our shares will be affected; however, we believe
that there is a risk that investor confidence and share value may
be negatively affected.
USE
OF PROCEEDS
This
prospectus relates to the resale of our common stock that may be
offered and sold from time to time by the selling stockholders. We
will not receive any proceeds from the sale of shares of common
stock in this offering.
DETERMINATION
OF OFFERING PRICE
All
shares of our common stock being offered will be sold by the
selling stockholders without our involvement. It is our expectation
that the selling shareholders will sell their shares at the market
prices prevailing from time-to-time.
DILUTION
The
common stock to be sold by the selling shareholders is common stock
that is currently issued or will be issued to our shareholders upon
exercise of certain Warrants issued by the Company. Accordingly,
there will be no dilution to our existing shareholders from these
sales, other than from the exercise of the Warrants.
SELLING
STOCKHOLDERS
The
following table sets forth the number of shares of Company common
stock owned and issuable on the exercise of warrants beneficially
owned, as of the date of this prospectus, by the selling
stockholders prior to the offering contemplated by this prospectus,
the number of shares which are issuable on the exercise of warrants
beneficially owned by each selling stockholder which is being
offered by this prospectus and the number of shares which are
issuable on the exercise of warrants beneficially owned which each
selling stockholder would own beneficially if all such offered
shares are sold. None of the selling stockholders is known to us to
be a registered broker-dealer or an affiliate of a registered
broker-dealer. Each of the selling stockholders has acquired his,
her or its shares solely for investment and not with a view to or
for resale or distribution of such securities. Beneficial ownership
is determined in accordance with SEC rules and includes voting or
investment power with respect to the securities.
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|
|
|
|
|
|
Name
(1)
|
|
|
|
|
|
Abrams, Dennis IRA/
RBC Capital Markets Corp. F.B.O.
|
22,224
|
22,224
|
0
|
0.00
%
|
|
Altieri, Francis
IRA/ RBC Capital Markets Corp. F.B.O
|
10,000
|
10,000
|
0
|
0.00
%
|
|
Bagley, Jr.
Theodore
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Behar, Michael Roth
IRA / RBC Capital Markets Corp. F.B.O.
|
55,000
|
55,000
|
0
|
0.00
%
|
|
Bob
Bridges
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Dell'Aera,
Mario
|
178,890
|
178,890
|
0
|
0.00
%
|
|
Herbranson, Dale
E.
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Jenkins, Steven IRA
/ RBC Capital Markets Corp. LLC Cust
|
33,336
|
33,336
|
0
|
0.00
%
|
|
Mathias,
William
|
13,890
|
13,890
|
0
|
0.00
%
|
|
McLoughlin,
Mick
|
111,112
|
111,112
|
0
|
0.00
%
|
|
Moroney, Robert and
Carole R. JTTEN
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Pileggi, Kenneth W.
IRA / RBC Capital Markets Corp. FBO
|
8,000
|
8,000
|
0
|
0.00
%
|
|
Scott,
Duncan
|
16,668
|
16,668
|
0
|
0.00
%
|
|
Timothy H. Shear
DEC of Trust DTD 1/6/1994
|
8,334
|
8,334
|
0
|
0.00
%
|
|
Skutt, Glenn
Richard & Lesley Howard JTTEN
|
27,780
|
27,780
|
0
|
0.00
%
|
|
Takada,
Hideo
|
100,000
|
100,000
|
0
|
0.00
%
|
|
Teicher,
Howard
|
4,168
|
4,168
|
0
|
0.00
%
|
|
Abbott, Dennis IRA
/ RBC Capital Markets Corp. FBO
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Wallitt,
Steve
|
16,668
|
16,668
|
0
|
0.00
%
|
|
Giordano,
Nicholas
|
33,334
|
33,334
|
0
|
0.00
%
|
|
Abrams,
Mark
|
138,890
|
138,890
|
0
|
0.00
%
|
|
Richards, Donald
J.
|
50,000
|
50,000
|
0
|
0.00
%
|
|
Iacobello, Paul
& Gina
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Fountainhead
Capital Partners Limited
|
794,280
|
794,280
|
0
|
0.00
%
|
|
Steven R.
Antico
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Alan
Antokal
|
55,556
|
55,556
|
0
|
0.00
%
|
|
The Apregan Family
Trust DTD 2/11/98
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Peter
Backus
|
100,002
|
100,002
|
0
|
0.00
%
|
|
Michael G.
Cadwell
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Richard A.
Cloyd
|
60,000
|
60,000
|
0
|
0.00
%
|
|
Jason
Cohen
|
83,334
|
83,334
|
0
|
0.00
%
|
|
Chad
Critchley
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Scott
Cunningham
|
16,668
|
16,668
|
0
|
0.00
%
|
|
Duncan
Scott
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Donald P.
Favre
|
27,778
|
27,778
|
0
|
0.00
%
|
|
RBC Capital Markets
Corp. FBO Susan A Izard IRA
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Alistair Eric
Maccallum Laband
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Steven L.
Lew
|
3,890
|
3,890
|
0
|
0.00
%
|
|
James P.
Little
|
22,224
|
22,224
|
0
|
0.00
%
|
|
Raylan
Loggins
|
16,668
|
16,668
|
0
|
0.00
%
|
|
Michael
Lutze
|
70,000
|
70,000
|
0
|
0.00
%
|
|
Ulrich
Otto
|
41,668
|
41,668
|
0
|
0.00
%
|
|
David
Rush
|
111,112
|
111,112
|
0
|
0.00
%
|
|
William C.
Slater
|
5,556
|
5,556
|
0
|
0.00
%
|
|
Timothy Shear Dec
of Trust DTD 1/6/1974
|
14,000
|
14,000
|
0
|
0.00
%
|
|
Salman
Wakil
|
50,000
|
50,000
|
0
|
0.00
%
|
|
Orville A.
White
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Chris
Hayden
|
22,224
|
22,224
|
0
|
0.00
%
|
|
Hugo
Were
|
83,334
|
83,334
|
0
|
0.00
%
|
|
Stephan
Forstmann
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Altshuler,
Howard
|
13,890
|
13,890
|
0
|
0.00
%
|
|
RBC Capital Markets
LLC FBO Michael A Boulus IRA
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Brickley, Robert
J.
|
8,334
|
8,334
|
0
|
0.00
%
|
|
DiBenedetto, Robert
D.
|
5,556
|
5,556
|
0
|
0.00
%
|
|
Fogle,
Richard
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Kaspar,
Mark
|
27,778
|
27,778
|
0
|
0.00
%
|
|
MacKenzie, Kevin
M.
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Nesland,
Brett
|
15,000
|
15,000
|
0
|
0.00
%
|
|
Rey 1998 Family
Trust
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Sweeney,
David
|
2,800
|
2,800
|
0
|
0.00
%
|
|
Trafford,
John
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Ufheil, David
A.
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Simon, Michael
& Mary
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Boltz,
Willliam
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Sedberry, Erica
Pitman
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Apgar,
Christopher
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Shankara,
Srinivas
|
11,112
|
11,112
|
0
|
0.00
%
|
|
Scheuer, Ricardon
& Silvia Suarez
|
75,000
|
75,000
|
0
|
0.00
%
|
|
Barba,
Randolph
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Bell,
Stephen
|
8,500
|
8,500
|
0
|
0.00
%
|
|
Cranshire Capital
Master Fund LTD
|
41,668
|
41,668
|
0
|
0.00
%
|
|
Intracoastal
Capital, LLC
|
13,888
|
13,888
|
0
|
0.00
%
|
|
Fisher,
Patricia
|
5,556
|
5,556
|
0
|
0.00
%
|
|
Gissler,
Donald
|
27,778
|
27,778
|
0
|
0.00
%
|
|
RBC Capital Markets
LLC FBO Gregory J Carter IRA
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Hoffman, Michael
L.
|
13,890
|
13,890
|
0
|
0.00
%
|
|
Kayman,
Rob
|
27,778
|
27,778
|
0
|
0.00
%
|
|
King,
David
|
6,668
|
6,668
|
0
|
0.00
%
|
|
Koncsics,
Tom
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Kytomaa,
Harri
|
5,556
|
5,556
|
0
|
0.00
%
|
|
RBC Capital Markets
LLC Linda Friedman Roth IRA
|
2,778
|
2,778
|
0
|
0.00
%
|
|
Prayaga, Sankar and
Prayaga Gayathri JTTEN
|
3,000
|
3,000
|
0
|
0.00
%
|
|
Todd Channell
Trust
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Richard
Hoffman
|
12,500
|
12,500
|
0
|
0.00
%
|
|
Hugh
Campbell
|
5,556
|
5,556
|
0
|
0.00
%
|
|
Fraser
Campbell
|
5,556
|
5,556
|
0
|
0.00
%
|
|
Boris and Alexandra
Smirnoff
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Nadejda
Kassatkina
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Irina
Pavlova
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Apex Technology
Ventures, LLC
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Robert S.
Prag
|
44,446
|
44,446
|
0
|
0.00
%
|
|
JSL Kids
Partners
|
72,224
|
72,224
|
0
|
0.00
%
|
|
Thomas Varga TTEE
Prag Children’s Trust FBO Andrew Prag
|
15,278
|
15,278
|
0
|
0.00
%
|
|
Thomas Varga TTEE
Prag Children’s Trust FBO Robert Prag Jr.
|
15,278
|
15,278
|
0
|
0.00
%
|
|
RBC Capital Markets
LLC FBO Jane Ellis
|
55,556
|
55,556
|
0
|
0.00
%
|
|
Guri
Dauti
|
27,778
|
27,778
|
0
|
0.00
%
|
|
Total
|
3,991,202
|
3,991,202
|
-
|
-
|
(1)
All shares are
owned of record and beneficially unless otherwise indicated.
Beneficial ownership information for the selling stockholders is
provided as of September 29, 2016, based upon information provided
by the selling stockholders or otherwise known to us.
(2)
Represents shares
of common stock issuable upon exercise of Series A and Series B
Warrants.
(3)
Assumes the sale of
all shares of common stock registered pursuant to this prospectus.
The selling stockholders are under no obligation known to us to
sell any shares of common stock at this time.
PLAN
OF DISTRIBUTION
Each
Selling Stockholder (the
“Selling
Stockholders
”) of the securities and any of their
pledgees, assignees and successors-in-interest may, from time to
time, sell any or all of their securities covered hereby on the
principal Trading Market or any other stock exchange, market or
trading facility on which the securities are traded or in private
transactions. These sales may be at fixed or negotiated prices. A
Selling Stockholder may use any one or more of the following
methods when selling securities:
●
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;
●
block trades in
which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
●
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
●
an exchange
distribution in accordance with the rules of the applicable
exchange;
●
privately
negotiated transactions;
●
settlement of short
sales;
●
in transactions
through broker-dealers that agree with the Selling Stockholders to
sell a specified number of such securities at a stipulated price
per security;
●
through the writing
or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
●
a combination of
any such methods of sale; or
●
any other method
permitted pursuant to applicable law.
The
Selling Stockholders may also sell securities under Rule 144 under
the Securities Act of 1933, as amended (
the “Securities
Act
”), if available, rather than under this
prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of securities, from
the purchaser) in amounts to be negotiated, but, except as set
forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA
IM-2440.
In
connection with the sale of the securities or interests therein,
and in compliance with applicable laws and regulations, the Selling
Stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the securities in the course of hedging
the positions they assume. The Selling Stockholders may also sell
securities short and deliver these securities to close out their
short positions, or loan or pledge the securities to broker-dealers
that in turn may sell these securities. The Selling Stockholders
may also enter into option or other transactions with
broker-dealers or other financial institutions or create one or
more derivative securities which require the delivery to such
broker-dealer or other financial institution of securities offered
by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
The
Selling Stockholders and any broker-dealers or agents that are
involved in selling the securities may be deemed to be
“underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed the Company that it does not
have any written or oral agreement or understanding, directly or
indirectly, with any person to distribute the
securities.
The
Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the securities. The
Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters”
within the meaning of the Securities Act, they will be subject to
the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than
under this prospectus. The Selling Stockholders have advised us
that there is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale securities by the
Selling Stockholders.
We
agreed to keep this prospectus effective until the earlier of (i)
the date on which the securities may be resold by the Selling
Stockholders without registration and without regard to any volume
or manner-of-sale limitations by reason of Rule 144, without the
requirement for the Company to be in compliance with the current
public information under Rule 144 under the Securities Act or any
other rule of similar effect or (ii) all of the securities have
been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale
securities will be sold only through registered or licensed brokers
or dealers if required under applicable state securities laws. In
addition, in certain states, the resale securities covered hereby
may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not
simultaneously engage in market making activities with respect to
the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Stockholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of securities of the common stock by the
Selling Stockholders or any other person. We will make copies of
this prospectus available to the Selling Stockholders and have
informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Our
authorized capital stock consists of 25,000,000 shares of common
stock, par value $0.0001 per share, and 10,000,000 shares of
preferred stock, par value $0.0001 per share, the rights and
preferences of which may be established from time to time by our
board. As of September 29, 2016, there were 11,116,077 shares of
common stock and one (1) share of Series C Preferred Stock and
270,307 shares of Series D Preferred Stock issued and
outstanding.
Common Stock
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.
Between
January 2 and April 25, 2014, the Company completed the sale of
$5,000,000 in Units comprising Common Stock and Warrants (the
“Units”) to accredited investors (the
“Investors”) in a private placement (the
“Placement”). Each Unit was priced at
$1.80
and comprised one share of Company Common Stock (the
“
Shares
”), a series A
warrant (the “
Series
A Warrants
”) to purchase
0.5 shares of
common stock and a series B warrant (
the “Series B
Warrants
” and together with the Series A Warrants, the
“
Warrants
”) to purchase
0.5 shares of common stock (
the “Units
”). Each
Investor received (i) 3-year detachable Series A Warrants to
purchase a number of shares of Common Stock equal to 50% of the
number of Shares purchased by such investor and (ii) 3-year
detachable Series B Warrants to purchase a number of shares of
Common Stock equal to 50% of the number of Shares purchased by such
investor. The Series A Warrants have an exercise price per share of
$2.05 (subject to adjustment as provided therein). The Series B
Warrants have an exercise price per share of $3.08. The Warrants
are subject to adjustment for stock splits, stock dividends or
recapitalizations. In the aggregate, the Company issued 2,777,808
shares of Common Stock, Series A Warrants to purchase an aggregate
of 1,388,919 shares of Common Stock and Series B Warrants to
purchase an aggregate of 1,388,919 shares of Common
Stock.
Fountainhead
Capital Management Limited (“Fountainhead”), the
Company’s largest shareholder with approximately 40.0% of the
Common Stock as of September 29, 2016, additionally converted a
total of $1,426,542 of accrued consulting fees into an investment
in Units under the Placement, comprising 792,523 shares of Common
Stock, Series A Warrants to purchase 396,262 shares of Common Stock
and Series B Warrants to purchase 396,262 shares of Common
Stock.
Based
on the subscription terms applicable to the holders of the
Company’s previously-issued Series C Convertible Preferred
Stock, such holders were given the option of exchanging their
investment in such unconverted Series C Convertible Preferred Stock
and the related warrants into the securities which are the subject
of the Placement, based on the amount of their investment in the
Series C Convertible Preferred Stock and the related warrants. On
February 24, 2014, the holders of 15.15 shares of Series C
Convertible Preferred Stock (representing an aggregate investment
of $757,700) exchanged their Series C Convertible Preferred Stock
and related warrants for an aggregate of 420,838 shares of Common
Stock, Series A Warrants to purchase an aggregate of 210,420 shares
of Common Stock and Series B Warrants to purchase an aggregate of
210,420 shares of Common Stock.
Under
the terms of the Placement Agent agreement with Garden State
Securities, Inc., the Company issued an aggregate of 402,030
Placement Agent Warrants, on almost identical terms to the Series A
Warrants.
Preferred Stock
Our
board may, from time to time, authorize the issuance of one or more
classes or series of preferred stock without stockholder approval.
Subject to the provisions of our certificate of incorporation and
limitations prescribed by law, our board is authorized to adopt
resolutions to issue shares, establish the number of shares, change
the number of shares constituting any series, and provide or change
the voting powers, designations, preferences and relative rights,
qualifications, limitations or restrictions on shares of our
preferred stock, including dividend rights, terms of redemption,
conversion rights and liquidation preferences, in each case without
any action or vote by our stockholders. One of the effects of
undesignated preferred stock may be to enable our board to
discourage an attempt to obtain control of our company by means of
a tender offer, proxy contest, merger or otherwise. The issuance of
preferred stock may adversely affect the rights of our common
stockholders by, among other things:
●
restricting
dividends on the common stock;
●
diluting the voting
power of the common stock;
●
impairing the
liquidation rights of the common stock; or
●
delaying or
preventing a change in control without further action by the
stockholders.
Series C Convertible Preferred Stock
At this
time, there is one (1) share of Series C Convertible Preferred
Stock issued and outstanding. Each share of Series C Preferred
Convertible Stock is convertible (at the Holder’s option or
mandatorily upon the occurrence of certain events) into 14,815
shares of the Company’s Common Stock (at $3.75 per
share).
Series D Convertible Preferred Stock
At this
time, there are 270,307 shares of Series D Convertible Preferred
Stock (“Series D”) issued and outstanding. Series D
shares that are convertible into Company Common Shares at a price
of $2.15. The Series D carry a cumulative preferred dividend of 7%
per annum, payable in cash or Series D at the Company’s
option. On the second (2nd) anniversary of the date of issuance of
the Series D, the dividend rate is increased to 12% per annum. The
Company is able to redeem the Series D at par at any time, at its
sole option.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Beginning
on July 20, 2009, our Common Stock was quoted on the OTC Bulletin
Board (now the OTCQB) under the symbol
“VYCO”.
The
following table shows the high and low prices of our common shares
on the OTC Bulletin Board (now the OTCQB) for each quarter for
fiscal years 2014 and 2015 and the first two quarters of 2016. The
following quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not necessarily represent
actual transactions:
|
Period
|
|
|
|
January 1,
2014-March 31, 2014
|
$
3.06
|
$
1.76
|
|
April 1, 2014-June
30, 2014
|
$
2.80
|
$
1.80
|
|
July 1,
2014-September 30, 2014
|
$
3.12
|
$
2.06
|
|
October 1,
2014-December 31, 2014
|
$
2.37
|
$
1.46
|
|
January 1,
2015-March 31, 2015
|
$
2.10
|
$
1.46
|
|
April 1, 2015-June
30, 2015
|
$
1.91
|
$
1.32
|
|
July 1,
2015-September 30, 2015
|
$
1.70
|
$
1.06
|
|
October 1,
2015-December 31, 2015
|
$
1.50
|
$
0.61
|
|
January 1,
2016-March 31, 2016
|
$
0.96
|
$
0.51
|
|
April 1, 2016-June
31, 2016
|
$
0.70
|
$
0.34
|
The
market price of our common stock, like that of other technology
companies, is highly volatile and is subject to fluctuations in
response to variations in operating results, announcements of
technological innovations or new products, or other events or
factors. Our stock price may also be affected by broader market
trends unrelated to our performance.
Holders
As of
September 29, 2016, there were approximately 133 record holders of
our common stock and there were 11,116,077 shares of our common
stock issued and outstanding. Please see SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT for information related to
the holdings of certain beneficial owners and management of the
Company.
Transfer Agent and Registrar
Our
transfer agent is Corporate Stock Transfer, Inc., 3200 Cherry Creek
Dr. South, Suite 430, Denver, CO 80209, tel. (303)
282-4800.
Dividend Policy
We have
never paid any cash dividends on our Common Stock and do not
anticipate paying any cash dividends on our Common Stock in the
foreseeable future. We intend to retain future earnings to fund
ongoing operations and future capital requirements of our business.
Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon our
financial condition, results of operations, capital requirements
and such other factors as the Board of Directors deems
relevant.
The Securities Enforcement and Penny Stock Reform Act of
1990
The
Securities and Exchange Commission has also adopted rules that
regulate broker-dealer practices in connection with transactions in
penny stocks. Penny stocks are generally equity securities with a
price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with
respect to transactions in such securities is provided by the
exchange or system).
A
purchaser is purchasing penny stock which limits the ability to
sell the stock. The shares offered by this prospectus constitute
penny stock under the Securities and Exchange Act. The shares will
remain penny stocks for the foreseeable future. The classification
of penny stock makes it more difficult for a broker-dealer to sell
the stock into a secondary market, which makes it more difficult
for a purchaser to liquidate his/her investment. Any broker-dealer
engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the
Securities and Exchange Act. Rather than creating a need to comply
with those rules, some broker-dealers will refuse to attempt to
sell penny stock.
The
penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver
a standardized risk disclosure document prepared by the Commission,
which:
●
contains a
description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
●
contains a
description of the broker’s or dealer’s duties to the
customer and of the rights and remedies available to the customer
with respect to a violation to such duties or other requirements of
the Securities Act of 1934, as amended;
●
contains a brief,
clear, narrative description of a dealer market, including
“bid” and “ask” prices for penny stocks and
the significance of the spread between the bid and ask
price;
●
contains a
toll-free telephone number for inquiries on disciplinary
actions;
●
defines significant
terms in the disclosure document or in the conduct of trading penny
stocks; and
●
contains such other
information and is in such form (including language, type, size and
format) as the Securities and Exchange Commission shall require by
rule or regulation;
The
broker-dealer also must provide, prior to effecting any transaction
in a penny stock, to the customer:
●
the bid and offer
quotations for the penny stock;
●
the compensation of
the broker-dealer and its salesperson in the
transaction;
●
the number of
shares to which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for
such stock; and
●
monthly account
statements showing the market value of each penny stock held in the
customer’s account.
In
addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules; the
broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a
risk disclosure statement, a written agreement to transactions
involving penny stocks, and a signed and dated copy of a written
suitability statement. These disclosure requirements will have the
effect of reducing the trading activity in the secondary market for
our stock because it will be subject to these penny stock rules.
Therefore, stockholders may have difficulty selling their
securities.
Equity
Compensation Plan Information Stock Option Plan
The
Company adopted the Vycor Medical, Inc Employee, Director, and
Consultant Stock Plan (the “Plan”) as of February 13,
2008. The Plan provides for both incentive stock options and
nonqualified stock options to be granted to employees, officers,
consultants, independent contractors, directors and affiliates of
the Company. The board of directors establishes the terms and
conditions of all stock option grants, subject to the Plan and
applicable provisions of the Internal Revenue Code. Incentive stock
options must be granted at an exercise price not less than the fair
market value of the common stock on the grant date. The options
granted to participants owning more than 10% of the Company’s
outstanding voting stock must be granted at an exercise price not
less than 110% of the fair market value of the common stock on the
grant date. The options expire on the date determined by the board
of directors, but may not extend mare than 10 years from the grant
date, while incentive stock options granted to participants owning
more than 10% of the Company’s outstanding voting stock
expire five years from the grant date. The vesting period for
employees is generally over three years. The vesting Period for
non-employees is determined based on the services being provided.
The maximum number of shares of stock which may be delivered under
the plan shall automatically increase by a number sufficient to
cause the number of shares covered by the plan to equal 10% of the
total number of shares of stock then outstanding on a fully diluted
basis.
Under
ASC Topic 718, the Company estimates the fair value of option
awards on the date of grant using an option pricing model. The
grant date fair value is recognized over the option vesting period,
the period during which an employee is required to provide service
in exchange for the award. No compensation cost is recognized for
equity instruments for which employees do not render the requisite
service. Under these standards, compensation cost for employee cost
for employee stock-based awards is based on the estimated grant-
date fair value and recognized over the vesting period of the
applicable award on a straight-line basis. As of September 29,
2016, there were options outstanding under the Stock Option Plan to
purchase 6,007,048 outstanding at an average exercise price of
$2.57 per share.
Stock
appreciation rights may be granted either on a stand-alone basis or
in conjunction with all or part of any other stock options granted
under the plan. As of September 29, 2016 there were no awards of
any stock appreciation rights.
Reports
We are
subject to certain reporting requirements and will furnish annual
financial reports to our stockholders, certified by our independent
accountants, and will furnish unaudited quarterly financial reports
in our quarterly reports filed electronically with the SEC. All
reports and information filed by us can be found at the SEC
website, www.sec.gov.
INTEREST
OF NAMED EXPERT AND COUNSEL
The Law
Offices of Robert L. B. Diener, 41 Ulua Place, Haiku, HI 96708 was
retained for the purpose of preparing this Post-Effective Amendment
No. 3 to the registration statement on Form S-1, rendering the
legal opinion attached as an exhibit relative to the validity of
the common stock to be issued pursuant to this Registration
Statement and for an opinion letter to the auditor which was
required to complete the audit enclosed herein. As payment for said
service, the Law Office of Robert L. B. Diener was paid a total of
$2,500. The Law Offices of Robert L. B. Diener is not receiving any
contingent interest, fee or shares in the Company.
The Law
Office of Robert L. B. Diener may be retained for additional legal
services in the future at fees to be agreed upon.
The
financial statements of Vycor Medical, Inc., as provided herein,
have been audited by an independent registered public accounting
firm. The audit firm that has provided the audited financials is
Paritz & Co., P.A., 15 Warren St., Hackensack NJ 07601. Paritz
& Co.,
P.A. is
not receiving any contingent interest, fee or shares in the
Company.
INFORMATION
WITH RESPECT TO THE REGISTRANT
Business
Overview
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.”. 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.
Vycor
is dedicated to providing the medical community with innovative and
superior surgical and therapeutic solutions and operates two
distinct business units within the medical device industry. Vycor
Medical designs, develops and markets medical devices for use in
neurosurgery. NovaVision provides non-invasive rehabilitation
therapies for those who have vision disorders resulting from
neurological brain damage such as that caused by a stroke. Both
businesses adopt a minimally or non-invasive approach. Both
technologies have strong sales growth potential, address large
potential markets and have the requisite regulatory approvals. The
Company has 57 issued or allowed patents and a further 13 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.
Vycor Medical
Vycor
Medical designs, develops and markets medical devices for use in
neurosurgery. Vycor Medical’s ViewSite Brain Access System
(“VBAS”) is a next generation retraction and access
system that was fully commercialized in early 2010 and is the first
significant technological change to brain tissue retraction in over
50 years in contrast to significant development in most other
neuro-surgical technologies. Vycor Medical is ISO 13485:2003
compliant, 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 Australia, Brazil, Canada, China, Korea,
Japan, Russia and Taiwan.
We
believe VBAS offers several advantages over other brain retractor
systems, commonly known as ribbon or blade retractors that are
metallic, including having the potential to significantly reduce
brain tissue trauma that arises from excessive pressure at the
edges of the blade. The design of VBAS can minimize the size of the
brain entry access necessary for surgical procedures, and is
believed to significantly reduce the pressure and hence trauma on
the surrounding brain tissue.
NovaVision
NovaVision provides
non-invasive, computer-based rehabilitation targeted at a
substantial and largely un-addressed market of people who have lost
their sight as a result of stroke or other brain injury. NovaVision
addresses a significant target market, estimated at approximately
$2 billion in each of the U.S. and the EU and over $13 billion
globally.
NovaVision has a
family of therapies that both restore and compensate for lost
vision:
●
Restoration of
vision: NovaVision’s VRT and Sight Science’s Neuro-Eye
Therapy (NeET), aim to improve visual sensitivity in a
person’s blind area. VRT delivers a series of light stimuli
along the border of the patient’s visual field loss. These
programmed light sequences stimulate the border zone between the
“seeing” and “blind” visual fields,
repetitively challenging the visual cortex in the border zone with
a large number of stimuli over the course of time. NeET targets
deep within the blind area by repeated stimulation, allowing
patients to detect objects within the blind field.
●
Compensation and
re-training: Normal eye movements are also affected after brain
injury adding to the problems of blindness. NeuroEyeCoach provides
a complementary therapy to VRT and NeET, which re-trains a patient
to move their eyes, re-integrate left and right vision and to make
the most of their remaining visual field.
VRT and
NeuroEyeCoach are therefore highly complementary and are provided
in an Internet-delivered suite to ensure broad benefits to
NovaVision's patients.
NovaVision also has
models of VRT and NeuroEyeCoach for physicians and rehabilitation
clinics, as well as VIDIT, a diagnostic program that enables
therapists to perform high-resolution visual field tests in less
than ten minutes.
NovaVision’s
VRT is the only medical device aimed at the restoration of vision
lost as a result of neurological damage which has FDA 510(k)
clearance to be marketed in the U.S; and NeuroEyeCoach is
registered in the US as a Class I 510(k) exempt device. VRT, NEC
and NeET have CE Marking for the EU. NovaVision has 41 granted and
2 pending patents worldwide.
Competition
The
VBAS device is both a brain access system and a retractor and is
therefore unique with no direct competitors. Competitive
manufacturers of brain retractors include Cardinal Health (V.
Mueller line), Aesculap, Integra Life Science and Codman (Division
of Johnson & Johnson). Nico Corporation has a brain access
device specifically designed to work with its Myriad resection and
suction product.
NovaVision provides
restoration therapies (VRT and NeET) and compensation or saccadic
therapies (NeuroEyeCoach) for those suffering vision loss as a
result of neurological trauma. The other therapy type for this
condition is substitution (optical aids such as prisms) and is not
considered by NovaVision as competition.
In
restoration, competition has been reduced through
NovaVision’s acquisition of Sight Science and there are a few
very small companies or entities offering some form of vision
rehabilitation product in Germany. Within compensation there are no
real direct competitors. Other companies in the general
rehabilitation space include RevitalVision, PositScience and
Dynavision. In the professional market, NovaVision competes with
aggregator products or those that provide a range of non-specific
therapies, such a Rehacom, Sanet Vision Integrator and Bioness
BITS. NovaVision’s products are dedicated to
vision.
The
Market For the Company’s Products And Therapies
VBAS is
used for craniotomy procedures. Based on statistics from the
American Association of Neurological Surgeons (AANS), management
estimates 700,000 such procedures are performed in the US annually.
Of this, management believe approximately 225,000 (32 percent) are
addressable by the VBAS range currently, with another 100,000
(total of 325,000 or 46 percent) addressable by an expanded future
range. Management estimates, for the global market, there exists a
current addressable market of approximately 1,100,000 procedures
with another 500,000 addressable by an expanded VBAS
range.
The
market for NovaVision’s therapies comprises those suffering
from vision loss resulting from neurological trauma such as stroke
or other brain injury. The U.S. Centers for Disease Control (CDC)
estimates there are approximately 8 million Americans who have
previously had a stroke incident, with 795,000 additional strokes
occurring annually; adjusting for repeat strokes and deaths, there
are 481,000 new stroke survivors each year. Additionally,
approximately 5.3 million Americans live with the long-term effects
of a TBI, with 275,000 hospitalizations each year. The most recent
scientific research estimates that approximately 28.5% experience
some visual impediment and 20.5% of these patients experience a
permanent visual field deficit, reducing mobility and other
activities of daily living. The target market for VRT and NeET is
this 20.5% subset of patients who have suffered a permanent visual
field deficit; NeuroEyeCoach addresses all 28.5% of patients who
experience visual impediments. Management estimates that the
addressable target market for its therapies is approximately 2.9
million people in the US, approximately 2.8 million people in
Europe and approximately 12.9 million people throughout the rest of
the world.
Our
Growth Strategy
Vycor Medical
Vycor
Medical’s growth strategy includes:
1.
Increasing U.S. market penetration through broader hospital
coverage and targeted direct physician marketing. Vycor
Medical’s sales and marketing strategy is to penetrate a
well-defined target market of 4,500 neurosurgeons. Vycor markets
direct to surgeons as well as marketing and distributing through
independent distributors, with a focus both on adding new hospitals
and expanding to additional surgeons in hospitals where VBAS is
already approved, and to expand usage to a broader range of
procedures. In order to expand its direct marketing and deepening
its penetration, Vycor is exploring the creation of a Centers of
Excellence medical education campaign and to that end will be
finalizing new surgeon education and training materials including
detailed videos produced with surgeons at Weill Cornell. Vycor is
pursuing a policy of continually evaluating and upgrading its
distributors as well as adding additional distributors in regions
where it has little to no presence.
2.
Provision of more Clinical and Scientific Data supporting the
products superiority over the current standard-of-care blade
retractors and to demonstrate VBAS’ potential for cost
savings. Clinical and scientific data (in the form of peer reviewed
articles, clinical studies and other reports and case studies) are
critical in driving adoption, and in turn revenues, further and
faster by demonstrating VBAS' superiority as a minimally invasive
access system which helps VBAS move further up the hospital
cost/benefit curve. To date the Company has already had 10 Peer
Reviewed studies and 4 other clinical papers and anticipates
further studies to be published.
3.
International Market Growth
Vycor
Medical utilizes select medical device distributors with experience
in neurosurgical devices in their countries or regions. VBAS has
full regulatory approvals in Australia, Brazil, Canada, China,
Europe (EU – Class III), Korea, Japan and Taiwan and is
seeking or has partial regulatory approvals in India, Russia and
Vietnam. Vycor Medical is actively pursuing new distribution
agreements in the countries where it does not have any in
place.
4. New
Product Development
New
Product Development is targeted at both driving the use of its
existing VBAS product range through ancillary products and
modalities that will facilitate the product’s use and through
new product extensions to broaden VBAS applicability to procedures
currently not addressed by the existing product line.
Vycor
is modifying its existing VBAS product suite to make it more easy
to integrate with Image Guidance Systems (IGS) by re-engineering
VBAS so that the entire range of 12 devices, excluding the
VBASmini, will be able to more easily accommodate pointers from all
the main IGS manufacturers. Increasingly, all major neuro centers
have image guidance systems, and where this is in place over 90% of
surgeries are carried out using IGS and management strongly
believes that the existing VBAS rigid structure lends itself well
to being incorporated into this increasing trend.
NovaVision
While
speech, physical, and occupational therapies are the long-standing
treatment standards for stroke and TBI survivors, VRT is the first
and only FDA-cleared clinical component of vision restoration to
physically enhance the visual field after a stroke or brain injury.
Increasingly the healthcare community, partly driven by strong
lobbying by stroke associations worldwide, are recognizing that
vision is not only a significant issue post stroke or brain injury,
but that visual field loss can have a significant impact on the
success of other rehabilitation modalities and the quality of
life.
Our
strategic vision for NovaVision has been to develop and provide a
clinically supported, affordable and scalable visual therapy
solution offering that provides broad benefits to those suffering
visual impairment following neurological brain damage; and to offer
solutions for both patients and physicians alike. Following a
prolonged development program, aimed at broadening patient
benefits, significantly reducing cost and making our therapies
affordable and scalable, NovaVision was able to launch its
Internet-delivered therapy suite in the US in June 2015 and in
Europe in December 2015.
NovaVision has four
routes-to-market aimed at patients and professionals, comprising:
direct-to-patient; rehabilitation centers and clinics; stroke
associations and support groups; and physicians. Given the
company’s limited resources NovaVision is initially focusing
on direct-to-patient, with a website lead-driven inbound and
outbound marketing strategy targeted at prospective patients and
relatives. Website metrics – particularly for the US and more
recently Germany – are strong, showing good growth in traffic
and rankings, and have been effective in generating leads. Our
analysis of the campaign metrics in the US (including Google Ads)
over the last 6 months have highlighted some key improvements that
needed to be implemented which we are carrying out and which we
believe could have a material impact on our lead
generation.
Following the pilot
launch of our NovaVision Center Model, comprising a vision
diagnostics program and the NeuroEyeCoach training program, we are
substantially broadening the delivery and licensing model in
response to feedback from clinics. The new Center Model will have a
complete suite for the professional market, including options for
software download, CD Rom, Cloud based and Hardware delivery with
flexible and cost-effective pricing options, and will be offered in
both the US and Europe.
Manufacturing
Vycor
Medical uses a sub-contract manufacturer to manufacture, package,
label and sterilize its VBAS products. The Company is in the
process of migrating all its VBAS manufacturing to Life Science
Outsourcing, Inc. in Brea, California that is FDA-registered and
meets ISO standards and certifications.
Intellectual
Property
Patents
Vycor
Medical maintains a portfolio of patent protection on its methods
and apparatus for its Brain and Spine products and technology in
the form of issued patents and applications, both domestically and
internationally, with a total of 16 granted/allowed and 11 pending
patents.
NovaVision
maintains a portfolio of patent protection on its methods and
apparatus in the form of issued patents and applications, both
domestically and internationally, with a total of 41 granted and 2
pending patents (including Sight Science).
NovaVision’s
VRT is the only medical device aimed at the restoration of vision
lost as a result of neurological damage which has FDA 510(k)
clearance to be marketed in the U.S; and NeuroEyeCoach is
registered in the US as a Class I 510(k) exempt
device.
Trademarks
VYCOR MEDICAL
is a registered trademark
and
VIEWSITE
is a common
law trademark.
NovaVision
maintains a portfolio of registered trademarks for
NOVAVISION, NOVAVISION VRT
,
VRT VISION RESTORATION
THERAPY
and NEUROEYECOACH, amongst others, along with
relevant logos, both in the US and internationally.
OTHER
Employees
We
currently have 12 employees.
Websites
The
Company operates websites at www.vycormedical.com,
www.novavision.com and www.sightscience.com
LEGAL
PROCEEDINGS
We are
subject from time to time to litigation, claims and suits arising
in the ordinary course of business. As of October 5, 2016, we were
not a party to any material litigation, claim or suit whose outcome
could have a material effect on our financial
statements.
DESCRIPTION
OF PROPERTY
The
Company leases approximately 10,000 sq. ft. located at 6401
Congress Ave., Suite 140, Boca Raton, FL 33487 from Catexor Limited
Partnership for a gross rent of $14,260 plus sales tax per month.
The term of the lease is 5 years and 6 months terminating July
2017.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of
operation for the years ended December 31, 2015 and 2014 and the
three and six month periods ended June 30, 2016 and 2015 should be
read in conjunction with the financial statements and the notes to
those statements that are included elsewhere in this report. Our
discussion includes forward-looking statements based upon current
expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and
the timing of events could differ materially from those anticipated
in these forward-looking statements as a result of a number of
factors, including those set forth under the “Risk
Factors,” “Cautionary Notice Regarding Forward-Looking
Statements” and “Our Business” sections in this
Form S-1. We use words such as “anticipate,”
“estimate,” “plan,” “project,”
“continuing,” “ongoing,”
“expect,” “believe,” “intend,”
“may,” “will,” “should,”
“could,” and similar expressions to identify
forward-looking statements.
Critical
Accounting Policies and Estimates
Uses of estimates in the preparation of financial
statements
The
preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes.
Actual results could differ from those estimated. To the extent
management’s estimates prove to be incorrect, financial
results for future periods may be adversely affected. Significant
estimates and assumptions contained in the accompanying
consolidated financial statements include management’s
estimate of the allowance for uncollectible accounts receivable,
amortization of intangible assets, and the fair values of options
and warrant included in the determination of debt discounts and
share based compensation.
Cash and cash equivalents
The
Company maintains cash balances at various financial institutions.
Accounts at each institution are insured by the Federal Deposit
Insurance Corporation up to $250,000. Cash balances may at times
exceed the FDIC insured limits. Cash also includes a US investment
account in a money market backed by government securities up to
105% of the account balance. The Company considers all highly
liquid investments with a maturity of three months or less when
purchased to be cash equivalents. Included within cash are deposits
paid by patients, held by the Company until the patient returns the
VRT device or chinrest at the end of therapy. At December 31, 2015
and 2014 patient deposits amounted to $27,183 and $32,869,
respectively, and are included in other current
liabilities.
Fixed assets
The
Company records fixed assets at cost and calculates depreciation
using the straight-line method over the estimated useful life of
the assets, which is estimated to be between three and seven years.
Maintenance, repairs and minor renewals are charged to expense when
incurred. Replacements and major renewals are
capitalized
Derivative Liability
The
Company accounted for the 34,723 Series A Warrants issued in
connection with the 2014 Offering (all as defined in Note 10), the
holders of which had not waived their anti-dilution rights (as
detailed further in Note 10) in accordance with the guidance
contained in ASC 815-40-15-7D, whereby under that provision,
because they had anti-dilution rights, they did not meet the
criteria for equity treatment and must be recorded as a liability.
Accordingly, the Company classified the warrant instrument as a
liability at its fair value and adjusted the instrument to fair
value at each reporting period. This liability was subject to
re-measurement at each balance sheet date until exercised or until
the anti-dilution provisions contained within the warrant
agreements expired, and was classified in the balance sheet as a
current liability. Any change in fair value of the warrant
liability was recognized in the Company’s statement of
operations as other income (loss). The anti-dilution provisions
expired on June 11, 2015 and accordingly the liability has been
extinguished.
Income taxes
We use
the asset and liability method of accounting for income taxes in
accordance with ASC Topic 740, “Income Taxes.” Under
this method, income tax expense is recognized for the amount of:
(i) taxes payable or refundable for the current year and (ii)
deferred tax consequences of temporary differences resulting from
matters that have been recognized in an entity’s financial
statements or tax returns. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
the results of operations in the period that includes the enactment
date. A valuation allowance is provided to reduce the deferred tax
assets reported if based on the weight of the available positive
and negative evidence, it is more likely than not some portion or
all of the deferred tax assets will not be realized.
ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. ASC Topic
740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure,
and transition. We have no material uncertain tax positions for any
of the reporting periods presented.
Patents and Other Intangible Assets
The
Company capitalizes legal and related costs associated with the
establishment and enhancement of patents for its products once
patents have been applied for. Costs associated with the
development of the patented item or processes are charged to
research and development costs as incurred. The capitalized costs
are amortized over the life of the patent. The Company reviews
intangible assets on an annual in accordance with the authoritative
guidance. Trademarks have an indefinite life and are reviewed
annually by management for impairment in accordance with the
authoritative guidance.
Software Development Costs
The
authoritative accounting guidance
requires software development
costs to be capitalized upon completion of the preliminary project
stage. Accordingly, direct internal and external costs associated
with the development of the features and functionality of the
Company’s software, incurred during the application
development stage, are capitalized and amortized using the
straight-line method over the estimated life of five
years.
Revenue Recognition
Vycor
Medical generates revenue from the sale of its surgical access
system to hospitals and other medical professionals. Vycor Medical
records revenue when a completed contract for the sale exists,
the product is invoiced and shipped to the customer. Vycor Medical
does not provide for product returns or warranty
costs.
NovaVision
generates revenues from various programs, therapy services and
other sources such as license sales. Therapy services revenues
represent fees from 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 vision
restoration therapy consists of six modules, performed on average
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. NovaVision’s saccadic
training software is generally completed within 2-4 weeks and
revenue is therefore recognized fully at commencement.
Deferred
revenue results from patients paying for the therapy in advance of
receiving the therapy.
Accounts Receivable
The
Company’s accounts receivable are due from the hospitals and
distributors in the case of Vycor Medical, and from patients
directly for therapy or physicians for diagnostic products in the
case of NovaVision. Accounts receivable are due once products have
been delivered or at the time the therapy is initiated; however,
for NovaVision therapy patients sometimes credit is extended
through various payment plans based on individual financial
conditions, generally not to exceed the 9 or 10 month therapy
period. The outstanding balances are stated net of an allowance for
doubtful accounts. The Company determines its allowance by
considering a number of factors, including the length of time
accounts receivable are past due, and the customer’s ability
to pay its obligations. The Company writes off accounts receivable
when they become uncollectible.
Inventory
Inventories
are stated at the weighted average cost method. Net realizable
value is the estimated selling price, in the ordinary course of
business, less estimated costs to complete and dispose of the
product. If the Company identifies excess, obsolete or unsalable
items, its inventories are written down to their realizable value
in the period in which the impairment is first identified. The
provision for inventory for the years ended December 31, 2015 and
2014 was $12,633 and $2,567, respectively. Shipping and handling
costs incurred for inventory purchases and product shipments are
recorded in cost of sales.
Foreign Currency
The
Euro is the local currency of the country in which NovaVision GmbH
conducts its operations and is considered the functional currency
of this entity; the GB Pound is the local currency of the country
in which Sight Science Limited conducts its operations and is
considered the functional currency of this entity. All balance
sheet amounts are translated to U.S. dollars using the U.S.
exchange rate at the balance sheet date except for the equity
section which is translated at historical rates. Operating
statement amounts are translated using an average exchange rate for
the period of operations. Foreign currency translation effects are
accumulated as part of the accumulated other comprehensive income
(loss) and included in shareholders’ (deficit) in the
accompanying Consolidated Balance Sheet.
Educational marketing and advertising expenses
The
Company may incur costs for the education of customers on the uses
and benefits of its products. The Company will include education,
marketing and advertising expense as a component of selling,
general and administrative costs as such costs are
incurred.
Contractual Obligations
As a
“smaller reporting company” as defined by Item 10 of
Regulation S-K, the Company is not required to provide this
information.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2015 to the Year Ended
December 31, 2014
Revenue and Gross Margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Vycor
Medical
|
$
885,481
|
$
893,028
|
-1
%
|
|
NovaVision
|
$
253,153
|
$
357,264
|
-29
%
|
|
|
$
1,138,634
|
$
1,250,292
|
-9
%
|
|
Cost of
Revenue:
|
|
|
|
|
Vycor
Medical
|
$
(107,528
)
|
$
(112,604
)
|
5
%
|
|
NovaVision
|
$
(56,590
)
|
$
(43,696
)
|
-30
%
|
|
|
$
(164,118
)
|
$
(156,300
)
|
-5
%
|
|
Gross
Profit
|
|
|
|
|
Vycor
Medical
|
$
777,953
|
$
780,424
|
0
%
|
|
NovaVision
|
$
196,563
|
$
313,568
|
-37
%
|
|
|
$
974,516
|
$
1,093,992
|
-11
%
|
Vycor
Medical recorded revenue of $885,481 from the sale of its products
for the year ended December 31, 2015, a decrease of $7,548 from
2014. This reflected weak sales in particular in the US in July and
August which recovered in September. Gross margin of 88% was
achieved in 2015 versus 87% in 2014.
NovaVision
recorded revenues of $253,153 for the year ended December 31, 2015,
a decrease of $104,411from 2014, and gross margin of 86%, compared
to 88% for 2014. NovaVision's US revenues for the first six months
of 2015 were impacted by the delayed launch of the new
Internet-delivered therapy suite. Since the launch in the U.S. in
late June, NovaVision has achieved a reduction in price to patients
of 65%, from $2,500 for a six-month course of VRT alone to $900 for
VRT and NeuroEyeCoach together. Given the price reduction, the
company anticipated an initial decrease in revenues as volumes ramp
up due to the new affordable and scalable therapy suite. New
patient starts in the US for the second six months following the
launch increased by 139% over the first six months of 2015 and by
57% over the second six months of 2014. Foreign exchange
differences in Europe accounted for $25,939 of the revenue
decrease, with the remainder mainly accounted for by lower license
fees as NovaVision migrates to the new model, and lower sales of
chinrests, an activity which is being phased out. The
Internet-delivered therapy suite was launched in Europe in December
2015.
Research and Development Expense:
Research
and development expenses were $71,512 in 2015 compared to $69,114
for 2014. Capitalized software development costs in NovaVision for
the year ended December 31, 2015 and 2014 were $32,843 and
$124,660, respectively. During the year ended December 31, 2015 the
Company’s VRT 7.0 program was completed and is now being
utilized by patients.
General and Administrative Expenses:
General
and administrative expenses decreased by $854,737 to $2,533,684 in
2015 from $3,388,421 in 2014. Included within General and
Administrative Expenses are non-cash charges for share 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 2015 was $274,502, a decrease
of $102,160 from $376,662 in 2014. Also included within General and
Administrative Expenses are Sales Commissions, which decreased by
$46,771 to $167,546; which related to a change in Company policy in
2014. The remaining General and Administrative expenses decreased
by $705,806 from $2,797,442 to $2,112,440. An analysis of the
change in cash and non-cash G&A is shown in the table
below:
|
|
|
|
|
2014 offering costs
and expenses
|
(589,208
)
|
-
|
|
Payroll
|
(1,629
)
|
25,011
|
|
Investor relations
and road show costs
|
(17,004
)
|
(90,647
)
|
|
Legal, professional
and other consulting
|
(70,384
)
|
-
|
|
Sales, marketing
and travel
|
41,902
|
-
|
|
Other
|
(72,769
)
|
-
|
|
Board, financial
and scientific advisory
|
3,286
|
(36,524
)
|
|
Total
change
|
(705,806
)
|
$
(102,160
)
|
Interest Expense:
Interest
comprises expense on the Company’s debt and insurance policy
financing. Related Party Interest expense for 2015 decreased
following debt repayment or conversion to $0 from $80,093 in 2014.
Other Interest expense for 2015 decreased following debt repayment
or conversion by $2,917
to $47,710 from $50,627 for
2014.
Comparison of the Three Months Ended June 30, 2016 to the Three
Months Ended June 30, 2015
Revenue and Gross Margin:
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Vycor
Medical
|
$
333,085
|
$
221,258
|
51
%
|
|
NovaVision
|
$
46,321
|
$
64,760
|
-28
%
|
|
|
$
379,406
|
$
286,018
|
33
%
|
|
Gross
Profit
|
|
|
|
|
Vycor
Medical
|
$
288,812
|
$
193,743
|
49
%
|
|
NovaVision
|
$
42,508
|
$
58,294
|
-27
%
|
|
|
$
331,320
|
$
252,037
|
31
%
|
Vycor
Medical recorded revenue of $333,085 from the sale of its products
for the three months ended June 30, 2016, an increase of $111,827,
or 51%, over the same period in 2015. This reflected increased
sales in the US and internationally. Gross margin of 87% was
recorded for the three months ended June 30, 2016 compared to 88%
for the same period in 2015.
NovaVision
recorded revenues of $46,321 for the three months ended June 30,
2016, a decrease of $18,439 over the same period in 2015, and gross
margin of 92%, compared to 90% for the same period in 2015. The
U.S. accounted for $3,716 of the decrease with the balance in
Europe, where the Internet-delivered model was launched 6 months
later than the U.S. Since the launch in the U.S. of the
Internet-delivered model, NovaVision has achieved a reduction in
price to patients of 65%, from $2,500 for a six-month course of VRT
alone to $900 for VRT and NeuroEyeCoach together. Given the price
reduction, the company anticipated an initial decrease in revenues
as volumes ramp up due to the new affordable and scalable therapy
suite. New patient starts in the U.S. for the three months ended
June 30, 2016 increased by 64% over the same period in 2015. The
Internet-delivered therapy suite was launched in Europe in December
2015, where similar price reductions have been achieved. New
patient starts in Europe for the three months ended June 30, 2016
increased by 41% over the same period in 2015.
Research and Development Expense:
Research
and development (“R&D”) expenses were $0 for the
three months ended June 30, 2016, as compared to $15,673 for the
same period in 2015. Capitalized software development costs for the
three months ended June 30, 2016 and 2015 were $0 and $13,989,
respectively.
General
and Administrative Expenses
:
NovaVision
recorded revenues of $46,321 for the three months ended June 30,
2016, a decrease of $18,439 over the same period in 2015, and gross
margin of 92%, compared to 90% for the same period in 2015. The
U.S. accounted for $3,716 of the decrease with the balance in
Europe, where the Internet-delivered model was launched 6 months
later than the U.S. Since the launch in the U.S. of the
Internet-delivered model, NovaVision has achieved a reduction in
price to patients of 65%, from $2,500 for a six-month course of VRT
alone to $900 for VRT and NeuroEyeCoach together. Given the price
reduction, the company anticipated an initial decrease in revenues
as volumes ramp up due to the new affordable and scalable therapy
suite. New patient starts in the U.S. for the three months ended
June 30, 2016 increased by 64% over the same period in 2015. The
Internet-delivered therapy suite was launched in Europe in December
2015, where similar price reductions have been achieved. New
patient starts in Europe for the three months ended June 30, 2016
increased by 41% over the same period in 2015.
An
analysis of the change in cash and non-cash G&A is shown in the
table below:
|
|
|
|
|
Investor relations
and road show costs
|
(50,534
)
|
14,999
|
|
Other
(travel/regulatory/premises)
|
(29,721
)
|
-
|
|
Board, financial
and scientific advisory
|
(24,588
)
|
27,875
|
|
Sales, marketing
and travel
|
(21,942
)
|
-
|
|
Legal, professional
and other consulting
|
16,620
|
-
|
|
Payroll
|
10,668
|
-
|
|
Total
change
|
(99,497
)
|
42,874
|
Interest Expense:
Interest
comprises expense on the Company’s debt and insurance policy
financing. Interest expense for 2016 increased by
$1,611
to $13,453 from
$11,842
for 2015. The
increase includes interest on Related Party of $1,247.
Comparison of the Six Months Ended June 30, 2016 to the Six Months
Ended June 30, 2015
Revenue and Gross Margin:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Vycor
Medical
|
$
682,006
|
$
480,107
|
42
%
|
|
NovaVision
|
$
97,486
|
$
134,463
|
-27
%
|
|
|
$
779,492
|
$
614,570
|
27
%
|
|
Gross
Profit
|
|
|
|
|
Vycor
Medical
|
$
575,420
|
$
412,794
|
39
%
|
|
NovaVision
|
$
88,747
|
$
116,102
|
-24
%
|
|
|
$
664,167
|
$
528,896
|
26
%
|
Vycor
Medical recorded revenue of $682,006 from the sale of its products
for the six months ended June 30, 2016, an increase of $201,899, or
42%, over the same period in 2015. This reflected increased sales
in the US and internationally. Gross margin of 84% was recorded for
the three months ended June 30, 2016 compared to 86% for the same
period in 2015; the difference in margin is mainly attributed to
costs related to the migration to a new manufacturer and the
manufacturing of the VBASMini.
NovaVision
recorded revenues of $97,486 for the six months ended June 30,
2016, a decrease of $36,977 over the same period in 2015, and gross
margin of 91%, compared to 86% for the same period in 2015. The
U.S. accounted for $5,421 of the decrease with the balance in
Europe, where the Internet-delivered model was launched 6 months
later than the U.S. Since the launch in the U.S. in late June,
NovaVision has achieved a reduction in price to patients of 65%,
from $2,500 for a six-month course of VRT alone to $900 for VRT and
NeuroEyeCoach together. Given the price reduction, the company
anticipated an initial decrease in revenues as volumes ramp up due
to the new affordable and scalable therapy suite. New patient
starts in the US for the six months ended June 30, 2016 increased
by 68% over the same period in 2015. The Internet-delivered therapy
suite was launched in Europe in December 2015, where similar price
reductions have been achieved. New patient starts in Europe for the
six months ended June 30, 2016 increased by 28% over the same
period in 2015.
Research and Development Expense:
Research
and development (“R&D”) expenses were $0 for the
six months ended June 30, 2016, as compared to $38,898 for the same
period in 2015. Capitalized software development costs for the six
months ended June 30, 2016 and 2015 were $0 and $26,486,
respectively.
General
& Administrative Expense:
General
and administrative expenses decreased by $46,206 to $1,340,846 for
the six months ended June 30, 2016 from $1,387,052 for the same
period in 2015. Included within General and Administrative Expenses
are non-cash charges for share 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 six months ended June 30, 2016 was $347,950, an
increase of $209,488 over $138,462 in 2015. Also included within
General and Administrative Expenses are Sales Commissions, which
increased by $8,890 to $94,108. The remaining General and
Administrative expenses decreased by $264,584 from $1,163,372 to
$898,792.
An
analysis of the change in cash and non-cash G&A is shown in the
table below:
|
|
|
|
|
Investor relations
and road show costs
|
(80,108
)
|
(10,326
)
|
|
Payroll
|
(71,487
)
|
(20,114
)
|
|
Other
(travel/regulatory/premises)
|
(70,401
)
|
-
|
|
Board, financial
and scientific advisory
|
(64,371
)
|
239,928
|
|
Legal, professional
and other consulting
|
11,030
|
-
|
|
Sales, marketing
and travel
|
10,753
|
-
|
|
Total
change
|
(264,584
)
|
209,488
|
Interest Expense:
Interest
comprises expense on the Company’s debt and insurance policy
financing. Interest expense for 2016 increased by
$1,753
to $25,435 from
$23,682
for 2015. The
increase includes interest on Related Party of $1,247.
Liquidity and Capital Resources
Liquidity
The
following table shows cash flow and liquidity data for the periods
ended June 30, 2016 and December 31, 2015:
|
|
|
|
|
|
Cash
|
$
87,709
|
$
347,477
|
$
(259,768
)
|
|
Accounts
receivable, inventory and other current assets
|
$
551,084
|
$
511,216
|
$
39,868
|
|
Total current
liabilities
|
$
(1,024,413
)
|
$
(877,009
)
|
$
(147,404
)
|
|
Working
capital
|
$
(385,620
)
|
$
(18,316
)
|
$
(367,304
)
|
|
Cash provided by
(used in) financing activities
|
$
145,525
|
$
(85,300
)
|
$
230,825
|
Going Concern
The
Company’s financial statements have been presented on a basis
that contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business and assumes the
Company will continue as a going concern. The Company has incurred
losses since its inception, including a net loss of $921,241 for
the six months ended June 30, 2016, and the Company expects to
continue to incur additional losses in the future, including
additional development costs, costs related to marketing and
manufacturing expenses. The Company has incurred negative cash
flows from operations since inception. As of June 30, 2016 the
Company had a stockholders’ equity of $657,827 and cash and
cash equivalents of $87,709. The Company believes it would not have
enough cash to meet its various cash needs unless the Company is
able to obtain additional cash from the issuance of debt or equity
securities. There is no assurance that additional funds from the
issuance of equity will be available for the Company to finance its
operations on acceptable terms. If adequate funds are not
available, the Company may have to delay development or
commercialization of products or technologies that the Company
would otherwise seek to commercialize, or cease some or all of its
operations. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may
result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
As of
December 31, 2015 and June 30, 2016, we had no off-balance sheet
arrangements.
Seasonality
Our
operating results are not affected by seasonality.
Inflation
Our
business and operating results are not affected in any material way
by inflation.
Critical Accounting Policies
The
Securities and Exchange Commission issued Financial Reporting
Release No. 60, "Cautionary Advice Regarding Disclosure About
Critical Accounting Policies" suggesting that companies provide
additional disclosure and commentary on their most critical
accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical
accounting policies as the ones that are most important to the
portrayal of a company's financial condition and operating results,
and require management to make its most difficult and subjective
judgments, often as a result of the need to make estimates of
matters that are inherently uncertain. See “Uses of estimates
in the preparation of financial statements”
above.
CHANGES
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Since
inception until the present time, the principal independent
accounting firm for the Company has not resigned, declined to stand
for reelection or been dismissed. We have no disagreements with our
independent registered public accounting firm on any matter of
accounting principles or with any financial statement
disclosures.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
Directors and Executive Officers
Set
forth below is certain biographical information concerning our
current executive officers and directors. We currently have two
executive officers as described below.
|
Directors and Executive Officers
|
|
Position/Title
|
|
Age
|
|
Adrian
Christopher Liddell
|
|
Chairman
of the Board and a Director
|
|
58
|
|
Peter
C. Zachariou
|
|
Chief
Executive Officer and a Director
|
|
55
|
|
David
Marc Cantor
|
|
President
and a Director
|
|
50
|
|
Steven
Girgenti
|
|
Director
|
|
70
|
|
Oscar
Bronsther, M.D.
|
|
Director
|
|
64
|
|
Lowell
Rush
|
|
Director
|
|
59
|
|
Pascale
Heuberger
|
|
Director
|
|
45
|
Peter C. Zachariou,
55, was appointed a Director of the
Company in May 2010, Executive Vice President in September 2010 and
Chief Executive Officer on January 2, 2014. He is an investment
manager for Fountainhead Capital Management Limited, an investment
company based in Jersey, Channel Islands, which invests in, raises
capital for and provides strategic advice to growth companies in
healthcare and other sectors. For the past 20 years, Mr. Zachariou
has been an active investor in a variety of companies and
industries, both public and private, specializing in workouts and
capital formation. Mr. Zachariou's investments and activities have
predominantly been in U.S. emerging and growth companies across a
broad range of industry sectors. He has also been proprietor and
operator of several businesses in the U.K. and U.S. in the
manufacturing, retail and leisure industries.
David Marc Cantor,
50, has been President of the Company
since September 2010 and a Director since January 2010. He is an
investment manager of Fountainhead Capital Management Limited, an
investment company based in Jersey, Channel Islands, which invests
in, raises capital for and provides strategic advice to growth
companies across a broad range of sectors. Mr. Cantor has over 22
years experience in Investment Banking with a focus on Mergers and
Acquisitions and Equity Capital Raisings. Prior to Fountainhead
from 2001 – 2005 he was at Citigroup Capital Markets where he
was Co-head of its European Business Development Group and
subsequently European Head of its Diversified Industrials and
Aerospace activities. Prior to Citigroup he was a Managing Director
in M&A at Donaldson Lufkin & Jenrette and worked at Lehman
Brothers both in New York and London in both the Equity Capital and
M&A groups. Mr. Cantor has a BSc with Honours from City
Business School, London.
Adrian Christopher Liddell,
58, has been Chairman of the Board and
a Director of the Company since January 2010, and serves as the
Company’s CFO. He is an advisor to Fountainhead Capital
Management Limited, an investment company based in Jersey, Channel
Islands, which invests in, raises capital for and provides
strategic advice to growth companies in healthcare and other
sectors. Mr. Liddell has over 30 years of strategic, corporate and
financial advisory and company investment experience. From
2003-2006, Mr. Liddell was an investment advisor at Phoenix Equity
Partners, a European private equity fund. From 1998 to 2003, Mr.
Liddell served as Managing Director, Mergers & Acquisitions at
Donaldson Lufkin & Jenrette and then Citigroup in London. From
1984 to 1998, Mr. Liddell held various positions at Samuel Montagu
& Co, and Lehman Brothers in London. Mr. Liddell qualified as a
Chartered Accountant in 1984 and holds an MA from Christ’s
College, University of Cambridge.
Steven Girgenti
, 70,
has been a director since November 2008 and is Chairman of the
Nominating and Governance Committee and of the Compensation
Committee. He is presently the Managing Partner of Medi-Pharm
Consulting, LLC providing strategic services to a number of medical
device, pharmaceutical and diagnostic businesses. Steve was
formerly President, CEO, Director and Co-Founder of DermWorx, a
specialty pharmaceutical company dedicated to solutions for
dermatological conditions. Steve was also the Worldwide Chairman of
Ogilvy Healthworld, a leading global healthcare communications
network with 55 offices in 36 countries. The network has more than
1,000 brand assignments from nearly 200 clients worldwide,
providing strategic marketing and communications services to many
of the world's leading healthcare companies. Mr. Girgenti founded
Healthworld in 1986 and, under his leadership, the company made
numerous acquisitions to expand and diversify the business.
Healthworld went public in 1997. In 1998, and again in 1999,
Business Week named Healthworld one of the "Best Small Corporations
in America". In 1999, Forbes listed Healthworld as one of the "200
Best Small Companies". Mr. Girgenti was recognized as "Entrepreneur
of the Year" by NASDAQ in 1999, and was named Med Ad News' first
"Medical Advertising Man of the Year" in 2000. In 2010 he was
inducted into the Medical Advertising Hall of Fame. In addition to
Vycor Medical, Mr. Girgenti is a presently Executive Chairman of
BioAffinity Technologies, Inc. (formerly known as Biomoda, Inc.)
and has served as a Director of Burren Pharmaceuticals and
Pharmacon International. He is also Vice Chairman of the Board of
Governors for the Mt. Sinai Hospital Prostate Disease and Research
Center in New York City, and is on the Board of Directors for Jack
Martin Fund, a Mt. Sinai Hospital affiliated charitable
organization devoted to pediatric oncology research. He graduated
from Columbia University and has worked in the pharmaceutical
industry since 1968 for companies such as Bristol-Myers Squibb,
Carter Wallace and DuPont, as well as advertising agencies that
specialize in healthcare. During his career, Steve has held
positions in marketing research, product management, new product
planning and commercial development.
Oscar Bronsther, M.D., F.A.C.S,
64, has been a director since November
2011. Dr. Bronsther is Chief Executive Officer of MetaStat, Inc.
(OTCBB: MTST), a development stage life sciences company that
develops and commercializes diagnostic products for the early and
reliable prediction and treatment of systemic metastasisis. Dr
Bronsther is also currently Clinical Professor at George Washington
University, Washington, DC and has served in that capacity since
2002. He had previously served as an Associate Professor at the
University of Rochester, Rochester, NY (1994-2001), University of
Pittsburgh, Pittsburgh, PA (1989-1994) and University of California
San Diego (1984), and Chairman, Section of General Surgery at Inova
Fairfax Hospital. Since 2002, he has served as a Board Member,
National Board Member and Director of Transplant Services of Kaiser
Permanente Medical Group. Dr. Bronsther is a graduate of the
University of Rochester (B.A. 1973) and Downstate Medical Center,
Brooklyn, N.Y. (M.D. 1978). He did post-graduate work at Downstate
Medical Center (Research Assistant 1975; Kidney Transplant
Fellowship 1983-1984), Mount Sinai Medical Center, New York, N.Y
(Residency 1978-1983) and Children’s Hospital Medical Center,
Boston, MA (Research Fellowship 1980-1981). He resides in Potomac,
MD.
Lowell Rush
, 59, was
appointed a Director in April 2013 and is Chairman of the Audit
Committee. Mr. Rush has extensive experience in financial
management and operational development, and since December 2013 has
been Chief Financial Officer of Ft. Lauderdale-based Direct Insite
Corp. (OTCQB:DIRI), a leading provider of cloud-based e-invoicing
solutions. Previously, he was Chief Operating Officer of
Miami-based Cosmetic Dermatology, Inc., and held positions as: CFO
of Bijoux Terner, LLC (2008-2010); CFO of Little Switzerland, Inc.
(2006-2008); and VP Sales Operations of Rewards Network, Inc. He is
a CPA with an MBA in International Business, who has also held
financial management roles at multi-national companies Sunglass Hut
International, Burger King Corporation and Knight-Ridder, Inc. He
began his career with the accounting firms Ernst & Young and
Deloitte & Touche.
Pascale Heuberger
,
43, has been our director since October 2007. She is presently the
founder and President of Rougemont Management Services LLC. From
2002-2006, she was a financial officer for John R. Mangiardi, MD,
PC and from 2001 - 2002, she was the Assistant CEO at
Hirslanden-Group Management AG, Zurich. Ms. Heuberger holds a
Diploma from the Swiss Business Administration
School.
All of
our directors hold office until the next annual meeting of
stockholders and until their respective successors have been
elected or qualified. Officers serve at the discretion of the board
of directors. There are no family relationships among our directors
or executive officers. There is no arrangement or understanding
between or among our officers and directors pursuant to which any
director or officer was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to
whether non-management stockholders will exercise their voting
rights to continue to elect the current board of
directors.
None of
our directors and executive officers have during the past five
years:
●
had any bankruptcy
petition filed by or against any business of which he was a general
partner or executive officer, either at the time of the bankruptcy
or within two years prior to that time;
●
been convicted in a
criminal proceeding and is not subject to a pending criminal
proceeding;
●
been subject to any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities, futures,
commodities or banking activities;
●
or been found by a
court of competent jurisdiction (in a civil action), the Securities
Exchange Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended or
vacated.
Committees of the Board of Directors
Our
Company has three committees of its Board of Directors—(a) a
Nominating and Governance Committee (b) a Management Compensation
Committee and (c) an Audit Committee. The Board of Directors has
approved charters for each committee. Steven Girgenti is Chairman
of the Nominating and Governance Committee and the Management
Compensation Committee, and Lowell Rush is a member. Lowell Rush is
Chairman of the Audit Committee and Steven Girgenti and Adrian
Liddell are members. The Committees are intended to operate
consistent with applicable NASDAQ governance
requirements.
Compensation Committee Interlocks and Insider
Participation
None of
our executive officers serves as a member of the Board of Directors
or compensation committee of any other entity that has one or
more of its executive officers serving as a member of our Board of
Directors. There are no family relationships between our
officers and directors. Each director is elected at our
annual meeting of stockholders and holds office until the next
annual meeting of stockholders, or until his successor is elected
and qualified.At the date of this prospectus, the Company is not
engaged in any transactions, either directly or indirectly, with
any persons or organizations considered promoters.
Identification of Significant Employees
The
Company does not presently have any significant employees other
than the named officers and directors.
Corporate Code of Conduct and Ethics
On
September 25, 2007, the Company adopted a Code of Conduct and
Ethics applicable to the Board of Directors, management and all
employees of the Company.
Officers and Directors Indemnification
Under
our Certificate of Incorporation and Bylaws of the corporation, the
Company may indemnify an officer or director who is made a party to
any proceeding, including a lawsuit, because of his or her
position, if he or she acted in good faith and in a manner he or
she reasonably believed to be in the Company’s best interest.
The Company may advance expenses incurred in defending a
proceeding. To the extent that the officer or director is
successful on the merits in a proceeding as to which he or she is
to be indemnified, the Company must indemnify the officer or
director against all expenses incurred, including attorney’s
fees. With respect to a derivative action, indemnity may be made
only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, then
only by a court order. The indemnification coverage is intended to
be to the fullest extent permitted by applicable laws.
Regarding
indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to officers or directors under
applicable state law, the Company is informed that, in the opinion
of the Securities and Exchange Commission, indemnification is
against public policy, as expressed in the Act and is, therefore,
unenforceable.
Employment Agreements and Executive Compensation
Effective September 30, 2010, the Company entered into virtually
identical employment agreements with David Cantor to serve as the
Company’s President and Peter C. Zachariou to serve as the
Company’s Chief Executive Officer. Each employment agreement
continued until August 30, 2011 and was then automatically extended
unless terminated by either party, and provided that the executives
receive no compensation for services rendered under the
agreements.
Effective January 2, 2014, the Company entered into: amended
employment agreements with Peter Zachariou and David Cantor to
serve as the Company’s Chief Executive Officer and President
respectively; and an employment agreement with Adrian Liddell to
serve as the Company’s Chief Financial Officer. Each
agreement continues for a period of twelve months and is then
automatically extended unless terminated by either party. The
agreements provide for no monthly compensation to be payable, but a
deferred compensation payable of $110,000 for each individual,
subject to certain conditions and milestones being
met.
In March 2016 the Board of Directors approved the issuance of
options to purchase 220,000 shares of Company Common Stock pursuant
to the Vycor Medical, Inc. 2008 Stock Option Plan to each of Peter
C. Zachariou, David Cantor and Adrian Liddell, such options to vest
immediately upon issuance. The exercise price of the options is
based upon 110% of the closing price of the Company’s Common
Stock the day prior to issuance, and the options are exercisable
for a period of three years from issuance
Compensation of Directors
Each of
our independent directors is entitled to receive $7,000 in cash or
stock at the option of the company per quarter. No other directors
of the Company receive compensation for their service to the
Company.
Other
In
February 2010 the Company entered into a Consulting Agreement
(“
Consulting
Agreement
”) with Fountainhead Capital Management
(“
Fountainhead
”), which has
been amended on several occasions, most recently as of September
30, 2015. Under the terms of the Consulting Agreement, Fountainhead
provides a variety of strategic advisory services to the Company
related to its business and overall strategic plan. Specifically,
Fountainhead assists the Company in: the preparation of strategic
plans, the identification and evaluation of possible acquisitions
and product additions; identifying potential banks and investors,
governance, compliance and negotiations with third parties.
Fountainhead does not have the authority to bind the Company.
Pursuant to the Consulting Agreement, the Company pays Fountainhead
a monthly retainer of $10,000, of which up to $5,000 is payable in
cash and the remainder in restricted Common Stock payable
quarterly. Effective September 30, 2015 Fountainhead elected to
take all its retainer in Common Stock.
EXECUTIVE
COMPENSATION
The
following is a summary of the compensation we paid for each of the
last two years ended December 31, 2015 and 2014, respectively (i)
to the persons who acted as our principal executive officer during
our fiscal year ended December 31, 2015 and (ii) to the person who
acted as our next most highly compensated executive officer other
than our principal executive officer who was serving as an
executive officer as of the end of our last fiscal
year.
Name and
Principal
Position
|
Year
|
|
|
|
|
Non-Equity
Incentive Plan
Compensation
|
Non-Qualified Deferred
Compensation Earnings($)
|
All other
Compensation($)
|
|
|
Peter
Zachariou
|
2014
|
$
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
CEO
|
2015
|
$
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
David
Cantor
|
2014
|
$
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
President
|
2015
|
$
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
OUTSTANDING EQUITY AWARDS
Grants of Plan-Based Awards
|
Name
|
Grant Date
|
Number of Securities
Underlying Unexercised
Options (#) Exercisable
|
Equity Incentive Plan Awards:
Number of Securities
Underlying Unexercised
Unearned Options (#)
|
Number of Securities
Underlying Unexercised
Options (#) Unexercisable (1)
|
Option
|
Option
|
|
|
|
|
|
|
Exercise Price
|
Expiration Date
|
|
|
|
|
|
|
($)
|
|
|
Kenneth
T. Coviello
|
2/15/2008
|
-
|
-
|
3,334
|
20.25
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
Heather
N. Vinas
|
2/15/2008
|
-
|
-
|
2,223
|
20.25
|
2/12/2018
|
Equity
Compensation Plan Information
|
|
Plan
category
|
Number
of securitiesto be issued upon exercise of outstanding options,
warrants and rights(a)
|
Weighted-average
exercise price of outstanding options,warrants and
rights
|
Number
of securities remaining available forfuture issuance underequity
compensation plans (excluding securities reflected
in column (a)
|
|
Equity compensation
plans approved by security holders
|
6,667
|
$
20.25
|
17,676
|
|
Equity compensation
plans not approved by security holders
|
3,333
|
28.50
|
–
|
|
Total
|
7,000
|
$
20.70
|
17,676
|
(1) As
of December 31, 2015
Warrants Issued to Management
|
Name
|
|
Grant Date
|
|
Number of Securities
Underlying Unexercised
Exercisable Warrants
|
|
Number of
Securities Underlying
Unexercised Exercisable Warrants
|
|
Warrant
Exercise Price($)
|
|
Warrant
Expiration Date
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
|
|
|
Employment Agreements
Effective September
30, 2010, the Company entered into virtually identical employment
agreements with David Cantor to serve as the Company’s
Interim President and Peter C. Zachariou to serve as the
Company’s Interim Chief Executive Officer. Each employment
agreement continued until August 30, 2011 and was then
automatically extended unless terminated by either party, and
provided that the executives receive no compensation for services
rendered under the agreements.
Effective January
2, 2014, the Company entered into: amended employment agreements
with Peter Zachariou and David Cantor to serve as the
Company’s Chief Executive Officer and President respectively;
and an employment agreement with Adrian Liddell to serve as the
Company’s Chief Financial Officer. Each agreement continues
for a period of twelve months from the date of the Initial Closing
or until the appointment of a replacement (with agreed transition
periods) and is then automatically extended unless terminated by
either party. The agreements provide for no monthly compensation to
be payable, but a deferred compensation payable of $110,000 for
each individual, subject to certain conditions being met. The
compensation will be payable in cash or Restricted Shares of the
Company’s Common Stock.
Compensation of Directors
During
2015 the Company adopted a Deferred Compensation Plan for directors
whereby the directors may defer their director's compensation to
the January 15th following the termination of their service as a
director. The Deferred Compensation Plan came into effect on
January 1, 2016. During the period January 1, 2016 through
September 29, 2016, we granted Steven Girgenti, Oscar Bronsther,
M.D. and Lowell Rush a total of 30,001, 21,145 and 21,145 shares of
the Company’s Common Stock respectively for their service to
the Board of Directors under the Deferred Compensation Plan. Each
of Mr. Girgenti, Dr. Bronsther and Mr. Rush are entitled to receive
$7,000 in cash or stock at the option of the company per quarter.
No other directors of the Company receive compensation for their
service to the Company other than as disclosed under
Employment Agreements
above.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to the
beneficial ownership of our voting securities by (i) any person or
group owning more than 5% of any class of voting securities, (ii)
each director, (iii) our chief executive officer and president and
(iv) all executive officers and directors as a group as of
September 29, 2016. Unless noted, the address for the following
beneficial owners and management is 6401 Congress Ave., Suite 140,
Boca Raton, FL 33487.
|
|
|
Amount
and Nature of
|
Percent
of
|
|
Title
of Class
|
Name
and Address of Beneficial Owner
|
Beneficial
Owner
(1)
|
Class
(2)
|
|
Common
Stock
|
Steven
Girgenti
|
79,801
|
*
|
|
Common
Stock
|
Oscar
Bronsther, M.D
|
61,300
|
*
|
|
Common
Stock
|
Lowell
Rush
|
49,337
|
*
|
|
Common
Stock
|
Pascale
Mangiardi
|
-
|
0.00%
|
|
Common
Stock
|
Adrian
Liddell
|
220,000
|
1.94%
|
|
Common
Stock
|
David
Cantor
|
220,000
|
1.94%
|
|
Common
Stock
|
Peter
Zachariou
|
431,239
|
3.73%
|
|
Series
D Preferred
|
Peter
Zachariou
|
69,487
|
25.71%
|
|
Stock
|
|
|
|
|
Common
Stock
|
All
executive officers and
|
1,061,677
|
8.80%
|
|
|
directors as a
group
|
|
|
|
Series
D Preferred
|
All
executive officers and
|
69,487
|
25.71%
|
|
Stock
|
directors as a
group
|
|
|
|
Common
Stock
|
Fountainhead
Capital
|
6,497,818
|
49.36%
|
|
|
Management Limited
Portman
|
|
|
|
|
House
Hue Street, St. Helier,
|
|
|
|
|
Jersey
JB4 5RP
|
|
|
|
Series
D Preferred Stock
|
Fountainhead
Capital Management Limited Portman House Hue Street, St. Helier,
Jersey JB4 5RP
|
188,363
|
69.69%
|
|
|
|
|
|
|
* Less
than 1%
|
|
|
|
(1)
In determining
beneficial ownership of our Common Stock and Series D Preferred
Stock, the number of shares shown includes shares which the
beneficial owner may acquire upon exercise of debentures, warrants
and options which may be acquired within 60 days. In determining
the percent of Common Stock or Series D Preferred Stock owned by a
person or entity on September 29, 2016, (a) the numerator is the
number of shares of the class beneficially owned by such person or
entity, including shares which the beneficial ownership may acquire
within 60 days of exercise of debentures, warrants and options, and
(b) the denominator is the sum of (i) the total shares of that
class outstanding on September 29, 2016 (11,116,077 shares of
Common Stock, one share of Series C Preferred Stock and 270,306
shares of Series D Preferred Stock) and (ii) the total number of
shares that the beneficial owner may acquire upon exercise of the
debentures, warrants and options. Unless otherwise stated, each
beneficial owner has sole power to vote and dispose of its
shares.
(2)
In addition, in
determining the percent of common stock owned by a person or entity
on September 29, 2016, (a) the numerator is the number of shares of
the class beneficially owned by such person and includes shares
which the beneficial owner may acquire within 60 days upon
conversion or exercise of a derivative security, and (b) the
denominator is the sum of (i) the shares of that class outstanding
on September 29, 2016 (11,116,077 shares of Common Stock, one share
of Series C Preferred Stock and 270,306 shares of Series D
Preferred Stock) and (ii) the total number of shares that the
beneficial owner may acquire upon conversion or exercise of a
derivative security within such 60 day period. Unless otherwise
stated, each beneficial owner has sole power to vote and dispose of
the shares.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL
PERSONS
AND DIRECTOR INDEPENDENCE
Related Party Transactions
2014 Private Placement Offering
Under
the terms of the Offering, there were certain agreements with
Related Parties:
(a)
Debt Amendment and Repayment
.
Fountainhead and Peter Zachariou agreed to extend the maturity of
all of the Company’s debt obligations due to them as of
August 9, 2013 (aggregating $2,247,037) to January 2, 2017, subject
to the earlier repayment of such debt upon the occurrence of
certain specified conditions. Fountainhead and Peter Zachariou
further released all security interests associated with any of the
obligations and agreed to forebear declaring any event of default
under the obligations for a period of 24 months following the date
of the Initial Closing. During January and February 2014, also
under the terms of the Offering, debt obligations arising since
August 9, 2013 were repaid as follows: Fountainhead - $91,519;
Peter Zachariou - $20,000; David Cantor -
$15,000.
(b)
Employment of Chief Executive Officer
and Employment Agreements.
Effective as of January 2, 2014,
our board of directors appointed Peter C. Zachariou, our Executive
Vice President, to the additional role as the Company’s Chief
Executive Officer. Also effective as of the January 2, 2014 the
Company entered into separate, but largely identical Employment
Agreements with Mr. Zachariou, Adrian Liddell and David Cantor. Mr.
Zachariou’s Employment Agreement commences on the Effective
Date and terminates six months following the appointment of a
successor Chief Executive Officer; Mr. Liddell’s Employment
Agreement commences on the Effective Date and terminates upon the
appointment of a successor Chief Financial Officer; and Mr.
Cantor’s Employment Agreement commences on the Effective Date
and terminates upon the appointment of a successor. The
aforementioned Employment Agreements provide for annual
compensation of $110,000, payment of which is deferred for 12
months from the Effective Date and is subject to the achievement of
certain enumerated milestone conditions. Each of these Employment
Agreements supersede any prior employment agreements or
arrangements between the respective parties.
(c)
Amendment to Consulting
Agreement.
Effective as of January 2, 2014, the Company and
Fountainhead amended their Consulting Agreement to extend the term
of the Consulting Agreement to January 2, 2015. As of January 2014,
the monthly retainer payable to Fountainhead was reduced to $10,000
per month, payable $5,000 in cash and the remainder payable in
Company Common Stock at the end of each quarter until the
occurrence of specified milestones.
(d)
Conversion Agreement.
Effective
as of January 2, 2014, the Company and Fountainhead entered into a
Conversion Agreement whereby Fountainhead agreed to convert all
amounts accrued as of the date of the Initial Closing into an
investment in that amount in the Offering. Pursuant to the terms of
this agreement, Fountainhead converted $1,426,542 of accrued
consulting fees into the Units.
Other Related Party Transactions
During
the period January 2015 to September 29, 2016, in accordance with
the terms the Consulting Agreement, the Company issued 83,153
shares of Common Stock (valued at $150,000) and made cash fee
payments of $30,000 to Fountainhead.
On
August 5, 2014, the Company entered into a series of agreements
with Fountainhead, along with certain other related and non-
related parties (together, the “Fountainhead Parties”),
to exchange all of the parties’ $2,355,587 of debt into an
equivalent amount of Company preferred equity. Under the terms of
the exchange, the Fountainhead Parties received 235,590 of
newly-issued Company Series D Convertible Preferred shares
(“Series D”) that are convertible into Company Common
Shares at a price of $2.15. The Series D carry a cumulative
preferred dividend of 7% per annum, payable in cash or Series D at
the Company’s option. On the second (2nd) anniversary of the
date of issuance of the Series D, the dividend rate is increased to
12% per annum. The Company is able to redeem the Series D at par at
any time, at its sole option. The Fountainhead Parties will receive
a number of warrants equivalent to 75% of the Company Common Shares
issuable on conversion of the Series D, exercisable at $3.08 per
share for a period of three (3) years from the date of issuance. If
the Series D has not then been redeemed or converted within three
years from date of issuance, the Fountainhead Parties will receive
additional warrants equivalent to 50% of the shares of the Company
Common Shares issuable on conversion of the Series D that they then
hold, exercisable at the then market price.
At the
same time, in a transaction not related to the aforementioned
exchange of securities, Fountainhead entered into an agreement with
the Company preventing Fountainhead from selling any Company Common
Shares currently held by Fountainhead below $4.50 per share. In
return, the Company agreed to extend the life of certain of
Fountainhead’s existing warrants expiring in 2015 to the
expiration date as the warrants being issued under the
exchange.
During
the period February 2015 to August 2016 the Company paid an
aggregate of 33,146 shares of Preferred D Stock, valued at
$331,490, representing preferred stock dividends, to related
parties. The Preferred D shares are convertible on their terms at
$2.15 per share of Common Stock into 154,167 shares
During
the period ended June 30, 2016, the Company issued unsecured loan
notes to Fountainhead for a total of $140,000. The loan notes bear
interest at a rate of 10% and are due on demand or by their
one-year anniversary.
During
the period ended June 30, 2016, the Company issued unsecured loan
notes to Peter Zachariou for a total of $45,000. The loan notes
bear interest at a rate of 10% and are due on demand or by their
one-year anniversary
There
were no other related party transactions during the year ended
December 31, 2015 or the subsequent period through October 5,
2016.
Director Independence
As of
September 1, 2015, of our seven (7) directors, Steven Girgenti,
Oscar Bronsther, Lowell Rush and Pascale Mangiardi are considered
"independent" in accordance with Rule 4200(a)(15) of the NASDAQ
Marketplace Rules. The remaining three (3) directors are not
considered “independent”. Therefore a majority of the
board is independent.
EXPERTS
Our
financial statements for the fiscal years ended December 31, 2015
and December 31, 2014 along with the related consolidated
statements of operations, stockholders’ equity and cash flows
in this prospectus have been audited by Paritz & Co., P.C., of
Hackensack, New Jersey, independent registered public accounting
firm, to the extent and for the periods set forth in their report,
and are set forth in this prospectus in reliance upon such report
given upon the authority of them as experts in auditing and
accounting.
WHERE
YOU CAN FIND MORE INFORMATION
Our
filings are available to the public at the SEC’s web site at
www.sec.gov. You may also read and copy any document with the SEC
at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, D.C. 20549. Further information on the Public Reference
Room may be obtained by calling the SEC at
1-800-SEC-0330.
We have
filed a registration statement on Form S-1 with the SEC under the
Securities Act for the common stock offered by this prospectus.
This prospectus does not contain all of the information set forth
in the registration statement, certain parts of which have been
omitted in accordance with the rules and regulations of the SEC.
For further information, reference is made to the registration
statement and its exhibits. Whenever we make references in this
prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for the copies
of the actual contract, agreement or other document.
INCORPORATION
OF CERTAIN MATERIAL BY REFERENCE
The
Company does not elect to incorporate any material by
reference.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
The Securities and Exchange Commission’s Policy on
Indemnification
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling
persons of the company pursuant to any provisions contained in its
Articles of Incorporation, Bylaws, or otherwise, the registrant has
been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of registrant’s legal counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
FINANCIAL
STATEMENTS
Our
consolidated financial statements are included with this
prospectus. These financial statements have been prepared on the
basis of accounting principles generally accepted in the United
States and are expressed in US dollars.
Index to Financial Statements
Fiscal
years ended December 31, 2015 and December 31, 2014
(audited)
Three
and six months ended June 30, 2016 and June 30, 2015
(unaudited).
|
Paritz & Company, P.A.
|
15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
E-Mail: paritz @paritz.com
|
|
Certified Public Accountants
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Members of the Audit Committee and
Board of directors of Vycor Medical, Inc. and
Subsidiaries
We have audited the accompanying balance sheets of Vycor Medical,
Inc. and Subsidiaries (“the Company”) as of December
31, 2015 and 2014, and the related statements of comprehensive
loss, stockholders’ equity (deficit), and cash flows for each
of the years in the two year period ended December 31, 2015. The
Company’s management is responsible for these financial
statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The company is not required to have,
nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of
the company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Vycor
Medical, Inc. and Subsidiaries as of December 31, 2015 and 2014,
and the results of its operations and its cash flows for each of
the years in the two year period ended December 31, 2015, in
conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements referred to above have been
prepared assuming that the Company. will continue as a going
concern. The ability of the Company to continue as a going concern
is dependent upon, among other things, its successful execution of
its plan of operations and ability to raise additional financing.
There is no guarantee that the Company will be able to raise
additional capital or sell any of its products or services at a
profit. As discussed in note 2 to the financial statements, the
Company has incurred a net loss since inception, including a net
loss of $2,082,643 for the year ended December 31, 2015 and the
Company expect to continue to incur additional losses in the
future, including additional development cost, cost related to
marketing and manufacturing expenses. The Company has incurred
negative cash flows from operations since inception. As of December
31, 2015, the Company has stockholders’ equity of $1,145,722
and cash and cash equivalents of $347,477. The Company believes it
would not have enough cash to meet its needs unless the Company is
able to obtain additional cash from the issuance of debt or equity
securities. These factors, among others, raise substantial doubt
regarding the Company’s ability to continue as a going
concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of this
uncertainty
/s/Paritz & Company, P.A.
Hackensack, New Jersey
March 29, 2016
VYCOR
MEDICAL, INC.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash
|
$
347,477
|
$
1,891,658
|
|
Trade accounts
receivable, net of allowance for doubtful accounts of $2,711 and
$2,721
|
106,340
|
123,815
|
|
Inventory
|
292,538
|
336,021
|
|
Prepaid expenses
and other current assets
|
112,338
|
217,800
|
|
Total Current
Assets
|
858,693
|
2,569,294
|
|
|
|
|
|
Fixed assets,
net
|
521,105
|
582,434
|
|
|
|
|
|
Intangible and
Other assets:
|
|
|
|
Trademarks
|
251,157
|
251,157
|
|
Patents, net of
accumulated amortization
|
323,138
|
345,113
|
|
Website, net of
accumulated amortization
|
19,548
|
12,576
|
|
Security
deposits
|
49,090
|
53,169
|
|
Total Intangible
and Other assets
|
642,933
|
662,015
|
|
TOTAL
ASSETS
|
$
2,022,731
|
$
3,813,743
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
250,367
|
$
221,703
|
|
Accrued interest:
Other
|
88,634
|
40,634
|
|
Accrued
liabilities
|
222,258
|
320,927
|
|
Derivative
liability
|
-
|
19,792
|
|
Notes payable:
Other
|
315,750
|
321,785
|
|
Total Current
Liabilities
|
877,009
|
924,841
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
Preferred stock,
$0.0001 par value, 10,000,000 shares authorized, 252,336 and
235,560 issued and outstanding as at December 31, 2015 and December
31, 2014 respectively
|
$
25
|
$
24
|
|
Common Stock,
$0.0001 par value, 25,000,000 shares authorized at December 31,
2015 and 2014, 11,032,560 and 10,879,899 shares issued and
10,929,226 and 10,776,565 outstanding at December 31, 2015 and 2014
respectively
|
1,103
|
1,088
|
|
Additional Paid-in
Capital
|
24,346,057
|
23,903,793
|
|
Treasury Stock
(103,334 shares of Common Stock as at December 31, 2015 and 2014
respectively, at cost)
|
-1,033
|
-1,033
|
|
Accumulated
Deficit
|
(23,332,538
)
|
(21,082,118
)
|
|
Accumulated Other
Comprehensive Income (Loss)
|
132,108
|
67,148
|
|
Total
Stockholders’ Equity
|
1,145,722
|
2,888,902
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
$
2,022,731
|
$
3,813,743
|
See
accompanying notes to financial statements
VYCOR
MEDICAL, INC.
Consolidated
Statement of Comprehensive Loss
|
|
For
the year ended December 31,
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
1,138,634
|
$
1,250,292
|
|
Cost
of Goods Sold
|
164,118
|
156,300
|
|
Gross
Profit
|
974,516
|
1,093,992
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Research and
development
|
71,512
|
69,114
|
|
Depreciation and
Amortization
|
360,334
|
368,605
|
|
General and
administrative
|
2,533,684
|
3,388,421
|
|
Total
Operating expenses
|
2,965,530
|
3,826,140
|
|
Operating
loss
|
(1,991,014
)
|
(2,732,148
)
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
Interest expense:
Related Party
|
-
|
(80,093
)
|
|
Interest expense:
Other
|
(47,710
)
|
(50,627
)
|
|
Gain (loss) on
foreign currency exchange
|
(63,711
)
|
(105,685
)
|
|
Loss on
extinguishment of debt
|
-
|
(682,039
)
|
|
Loss on extension
of warrants
|
-
|
(146,488
)
|
|
Change in fair
value derivative liability
|
19,792
|
(252,633
)
|
|
Total
Other Income (expense)
|
(91,629
)
|
(1,317,565
)
|
|
|
|
|
|
Loss
Before Credit for Income Taxes
|
(2,082,643
)
|
(4,049,713
)
|
|
Credit
for income taxes
|
-
|
-
|
|
Net
Loss
|
(2,082,643
)
|
(4,049,713
)
|
|
Preferred
stock dividends
|
(167,777
)
|
-
|
|
Net
Loss available to common shareholders
|
(2,250,420
)
|
(4,049,713
)
|
|
Comprehensive
Loss
|
|
|
|
Foreign
Currency Translation Adjustment
|
(64,959
)
|
(112,318
)
|
|
Comprehensive
Loss
|
(2,315,379
)
|
(4,162,031
)
|
|
|
|
|
|
Net
Loss Per Share
|
|
|
|
Basic
and diluted
|
$
(0.21
)
|
$
(0.39
)
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding – Basic and
Diluted
|
10,839,335
|
10,270,657
|
See
accompanying notes to financial statements
Vycor
Medical, Inc.
Statement
of Stockholders’ Equity (Deficiency)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2014
|
6,757,225
|
$
675
|
1
|
$
1
|
0
|
$
-
|
(103,334
)
|
$
(1,033
)
|
$
13,762,689
|
$
(17,032,405
)
|
$
(45,170
)
|
$
(3,315,243
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock
for board and consulting fees
|
131,505
|
13
|
-
|
-
|
-
|
-
|
-
|
-
|
292,507
|
-
|
-
|
292,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation for consulting services
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5,522
|
-
|
-
|
5,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances of shares
and warrants pursuant to offering
|
2,777,808
|
278
|
-
|
-
|
-
|
-
|
-
|
-
|
3,387,446
|
|
|
3,387,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares
issued in exchange for debt
|
-
|
-
|
|
|
235,559
|
24
|
|
|
3,037,602
|
-
|
-
|
3,037,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of
warrants on extension
|
|
|
|
|
|
|
|
|
146,488
|
-
|
-
|
146,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issuance for conversion of preferred shares
|
420,838
|
42
|
-
|
-1
|
|
|
-
|
-
|
(162,059
)
|
|
|
(162,017
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
issuance for accrued consulting fees
|
792,523
|
79
|
-
|
-
|
-
|
-
|
-
|
-
|
1,097,566
|
|
|
1,097,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of
derivative liability to equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,336,032
|
|
|
2,336,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Comprehensive Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
112,318
|
112,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for year
ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
(4,049,713
)
|
|
(4,049,713
)
|
|
Balance
at December 31, 2014
|
10,879,899
|
$
1,088
|
1
|
$
-
|
235,559
|
$
24
|
(103,334
)
|
$
(1,033
)
|
$
23,903,793
|
$
(21,082,118
)
|
$
67,148
|
$
2,888,902
|
|
Issuance of stock
for board and consulting fees
|
152,661
|
15
|
-
|
-
|
-
|
-
|
-
|
-
|
244,985
|
-
|
-
|
245,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation for consulting service
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
4,492
|
-
|
-
|
4,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based
compensation issued to employees
|
|
|
-
|
-
|
-
|
-
|
-
|
-
|
25,011
|
-
|
-
|
25,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
-
|
-
|
|
|
16,777
|
1
|
|
|
167,776
|
-
|
-
|
167,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Comprehensive Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
64,960
|
64,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for year
ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
(2,250,420
)
|
|
(2,250,420
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2015
|
11,032,560
|
$
1,103
|
1
|
$
-
|
252,336
|
$
25
|
(103,334
)
|
$
(1,033
)
|
$
24,346,057
|
$
(23,332,538
)
|
$
132,108
|
$
1,145,722
|
See
accompanying notes to financial statements
VYCOR
MEDICAL, INC.
Statement
of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
(2,082,643
)
|
(4,049,713
)
|
|
Adjustments to
reconcile net loss to cash used in operating
activities:
|
|
|
|
Amortization of
intangible assets
|
99,291
|
128,381
|
|
Depreciation of
fixed assets
|
269,672
|
254,608
|
|
Inventory
provision
|
12,633
|
2,567
|
|
Inventory
write-off
|
20,804
|
|
|
Share based
compensation
|
274,502
|
376,662
|
|
(Gain) loss on
foreign exchange
|
63,711
|
105,685
|
|
Unrealized gain on
change in fair value of derivative liability
|
(19,792
)
|
252,633
|
|
Loss on
extinguishment of debt
|
-
|
682,039
|
|
Loss on extension
of warrants
|
-
|
146,488
|
|
|
|
|
|
Changes in assets
and liabilities:
|
|
|
|
Accounts
receivable
|
17,475
|
88,845
|
|
Inventory
|
10,046
|
(131,663
)
|
|
Prepaid
expenses
|
184,726
|
(88,356
)
|
|
Accrued interest to
related party
|
-
|
(255,034
)
|
|
Accrued interest
other
|
48,000
|
(90,617
)
|
|
Accounts
payable
|
28,665
|
(32,321
)
|
|
Accrued
liabilities
|
(98,669
)
|
(90,973
)
|
|
Security
Deposit
|
4,079
|
-
|
|
|
|
|
|
Cash used in
operating activities
|
(1,167,500
)
|
(2,700,769
)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of fixed
assets
|
(210,023
)
|
(130,845
)
|
|
Purchase of
website
|
(18,010
)
|
(13,842
)
|
|
Acquisition of
patents
|
(66,276
)
|
(26,455
)
|
|
Cash used in
investing activities
|
(294,309
)
|
(171,142
)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
issuance of Common stock and Warrants
|
-
|
5,000,000
|
|
Proceeds from
issuance of Notes Payable: Other
|
-
|
83,486
|
|
Repayment of Notes
Payable to Related Party
|
-
|
(126,519
)
|
|
Repayment of Notes
Payable - Other
|
(85,300
)
|
(231,337
)
|
|
Cash provided by
(used in) financing activities
|
(85,300
)
|
4,725,630
|
|
Effect of exchange
rate changes on cash
|
2,928
|
6,636
|
|
Net increase
(decrease) in cash
|
(1,544,181
)
|
1,860,355
|
|
Cash at beginning
of year
|
1,891,658
|
31,303
|
|
Cash at end of
year
|
347,477
|
1,891,658
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow information:
|
|
|
|
Interest
paid:
|
0
|
462,194
|
|
Non-Cash
Transactions:
|
|
|
|
Preferred stock
dividends satisfied in new preferred stock
|
$
167,777
|
$
-
|
See
accompanying notes to financial statements
1.
FORMATION
AND BUSINESS OF THE COMPANY
Business Description
Vycor
Medical, Inc. (the “Company”) designs, develops and
markets neurological medical devices and therapies through two
operating divisions: Vycor Medical and NovaVision. Vycor Medical
focuses on brain and cervical surgical access systems for sale to
hospitals and medical professionals; NovaVision focuses on
neuro-stimulation therapies and diagnostic devices for the
treatment and screening of vision field loss resulting from
neurological damage.
2.
GOING
CONCERN
The
Company’s financial statements have been presented on a basis
that contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business and assumes the
Company will continue as a going concern. The Company has incurred
losses since its inception, including a net loss of $2,082,643 for
the year ended December 31, 2015, and the Company expects to
continue to incur additional losses in the future, including
additional development costs, costs related to marketing and
manufacturing expenses. The Company has incurred negative cash
flows from operations since inception. As of December 31, 2015 the
Company had a stockholders’ equity of $1,145,722 and cash and
cash equivalents of $347,477. The Company believes it would not
have enough cash to meet its various cash needs unless the Company
is able to obtain additional cash from the issuance of debt or
equity securities. There is no assurance that additional funds from
the issuance of equity will be available for the Company to finance
its operations on acceptable terms. If adequate funds are not
available, the Company may have to delay development or
commercialization of products or technologies that the Company
would otherwise seek to commercialize, or cease some or all of its
operations. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may
result from the outcome of this uncertainty.
3.
SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The
consolidated financial statements include the accounts of Vycor
Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc.
(a Delaware corporation), NovaVision GmbH (a German corporation)
and Sight Science Limited (a UK corporation), both wholly owned
subsidiaries of NovaVision, Inc. The Company is headquartered in
Boca Raton, FL. All material inter-company accounts, transactions,
and balances have been eliminated in consolidation. Certain
reclassifications and format changes have been made to prior year
amounts to conform to the current year presentation.
Revenue Recognition
Vycor
Medical generates revenue from the sale of its surgical access
system to hospitals and other medical professionals. Vycor Medical
records revenue when a completed contract for the sale exists,
the product is invoiced and shipped to the customer. Vycor Medical
does not provide for product returns or warranty
costs.
NovaVision
generates revenues from various programs, therapy services and
other sources such as license sales. Therapy services revenues
represent fees from 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 vision
restoration therapy consists of six modules, performed on average
over 6 months in the U.S. and U.K. and 10 months in Germany. A
patient contract comprises set-up fees and monthly therapy fees.
Set-up fees are recognized at the outset of the contract and
therapy revenue is recognized ratably over the therapy period.
Patient therapy is restricted to being completed by a patient
within a specified time frame. NovaVision’s saccadic training
software is generally completed within 2-4 weeks and revenue is
therefore recognized fully at commencement.
Deferred revenue
results from patients paying for the therapy in advance of
receiving the therapy.
Cash and cash equivalents
The
Company maintains cash balances at various financial institutions.
Accounts at each institution are insured by the Federal Deposit
Insurance Corporation up to $250,000. Cash balances may at times
exceed the FDIC insured limits. Cash also includes a US investment
account in a money market backed by government securities up to
105% of the account balance. The Company considers all highly
liquid investments with a maturity of three months or less when
purchased to be cash equivalents. Included within cash are deposits
paid by patients, held by the Company until the patient returns the
VRT device or chinrest at the end of therapy. At December 31, 2015
and 2014 patient deposits amounted to $27,183 and $32,869,
respectively, and are included in Other Current
Liabilities.
Accounts Receivable and Allowance for Doubtful Accounts
Receivable
We have
a policy of reserving for uncollectible accounts based on our best
estimate of the amount of probable credit losses in our existing
accounts receivable. We extend credit to our customers based on an
evaluation of their financial condition and other factors. We
generally do not require collateral or other security to support
accounts receivable. We perform ongoing credit evaluations of our
customers and maintain an allowance for potential bad debts if
required. We determine whether an allowance for doubtful
accounts is required by evaluating specific accounts where
information indicates the customers may have an inability to meet
financial obligations. In these cases, we use assumptions and
judgment, based on the best available facts and circumstances, to
record a specific allowance for those customers against amounts due
to reduce the receivable to the amount expected to be collected.
These specific allowances are re-evaluated and adjusted as
additional information is received. The amounts calculated are
analyzed to determine the total amount of the allowance. We may
also record a general allowance as necessary. Direct
write-offs are taken in the period when we have exhausted our
efforts to collect overdue and unpaid receivables or otherwise
evaluate other circumstances that indicate that we should abandon
such efforts.
Inventories
Inventories are
stated at the lower of cost determined using the weighted average
cost method or market. Net realizable value is the estimated
selling price, in the ordinary course of business, less estimated
costs to complete and dispose of the product. If the Company
identifies excess, obsolete or unsalable items, its inventories are
written down to their realizable value in the period in which the
impairment is first identified. The provision for inventory
obsolescence for the years ended December 31, 2015 and 2014 was
$12,633 and $2,567, respectively. Shipping and handling costs
incurred for inventory purchases and product shipments are recorded
in cost of sales in the Company's consolidated statements of
operations.
Foreign Currency
The
Euro is the local currency of the country in which NovaVision GmbH
conducts its operations and is considered the functional currency
of this entity; the GB Pound is the local currency of the country
in which Sight Science Limited conducts its operations and is
considered the functional currency of this entity. All balance
sheet amounts are translated to U.S. dollars using the U.S.
exchange rate at the balance sheet date except for the equity
section which is translated at historical rates. Operating
statement amounts are translated using an average exchange rate for
the period of operations. Foreign currency translation effects are
accumulated as part of the accumulated other comprehensive income
(loss) and included in stockholders’ equity in the
accompanying Consolidated Balance Sheet.
Educational marketing and advertising expenses
The
Company may incur costs for the education of customers on the uses
and benefits of its products. The Company will include education,
marketing and advertising expense as a component of selling,
general and administrative costs as such costs are
incurred.
Income taxes
We use
the asset and liability method of accounting for income taxes in
accordance with ASC Topic 740, “Income Taxes.” Under
this method, income tax expense is recognized for the amount of:
(i) taxes payable or refundable for the current year and (ii)
deferred tax consequences of temporary differences resulting from
matters that have been recognized in an entity’s financial
statements or tax returns. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
the results of operations in the period that includes the enactment
date. A valuation allowance is provided to reduce the deferred tax
assets reported if based on the weight of the available positive
and negative evidence, it is more likely than not some portion or
all of the deferred tax assets will not be realized.
ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. ASC Topic
740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure,
and transition. We have no material uncertain tax positions for any
of the reporting periods presented.
Fixed assets
Fixed
assets are stated at cost less accumulated depreciation.
Depreciation is provided for on a straight-line basis over the
useful lives of the assets. Expenditures for additions and
improvements are capitalized; repairs and maintenance are expensed
as incurred.
Derivative Liability
The
Company has accounted for the 34,723 Series A Warrants issued in
connection with the 2014 Offering (all as defined in Note 10), the
holders of which had not waived their anti-dilution rights (as
detailed further in Note 10) in accordance with the guidance
contained in ASC 815-40-15-7D, whereby under that provision,
because they had anti-dilution rights, they did not meet the
criteria for equity treatment and must be recorded as a liability.
Accordingly, the Company classified the warrant instrument as a
liability at its fair value and adjusted the instrument to fair
value at each reporting period. This liability was subject to
re-measurement at each balance sheet date until exercised or until
the anti-dilution provisions contained within the warrant
agreements expired, and was classified in the balance sheet as a
current liability. Any change in fair value of the warrant
liability was recognized in the Company’s statement of
operations as other income (loss). The anti-dilution provisions
expired on June 11, 2015 and accordingly the liability has been
extinguished.
Impairment of long-lived assets
Long-lived assets
are reviewed for impairment when circumstances indicate the
carrying value of an asset may not be recoverable. For assets that
are to be held and used, impairment is recognized when the
estimated undiscounted cash flows associated with the asset or
group of assets is less than their carrying value. If impairment
exists, an adjustment is made to write the asset down to its fair
value, and a loss is recorded as the difference between the
carrying value and fair value. Fair values are determined based on
quoted market values, discounted cash flows or internal and
external appraisals, as applicable. Assets to be disposed of are
carried at the lower of carrying value or estimated net realizable
value.
Research and Development
The
Company expenses all research and development costs as incurred.
For the years ended December 31, 2015 and 2014, the amounts charged
to research and development expenses were $71,512 and $69,114,
respectively.
Software Development Costs
The
Company accounts for software development costs in accordance with
ASC 350-40, whereby all costs incurred during the preliminary stage
of a development project should be charged to expense as incurred.
Capitalization of costs begins after the preliminary stage has been
completed, management commits to funding the project, it is
probable that the project will be completed, and the software will
be used for its intended function. All post-implementation costs
are charged to expense as incurred. Accordingly, direct internal
and external costs associated with the development of the features
and functionality of the Company’s software, incurred during
the application development stage, are capitalized and amortized
using the straight-line method of the estimated life of five years.
The Company acquired internally developed software valued at
$540,000 as part of the acquisition of the assets of NovaVision,
Inc. on November 30, 2010 and $363,472 as part of the acquisition
of the assets of Sight Science Limited on January 4, 2012. For the
years ended December 31, 2015 and 2014, the amounts capitalized for
software development were $32,843 and $124,660 respectively, for
the Company’s VRT 7.0 and NeuroEyeCoach
programs.
Uses of estimates in the preparation of financial
statements
The
preparation of consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from
those estimated. To the extent management’s estimates prove
to be incorrect, financial results for future periods may be
adversely affected. Significant estimates and assumptions contained
in the accompanying consolidated financial statements include
management’s estimate of the allowance for uncollectible
accounts receivable, amortization of intangible assets, and the
fair values of options and warrants included in the determination
of debt discounts and share based compensation.
Stock Compensation
The
Company recognizes the cost of all share-based payments under the
relevant authoritative accounting guidance. Share-based payments
include any remuneration paid by the Company in shares of the
Company’s common stock or financial instruments that grant
the recipient the right to acquire shares of the Company’s
common stock. For share-based payments to employees, which consist
only of awards made under the stock option plan described below,
the Company accounts for the payments in accordance with the
provisions of ASC Topic 718, “Stock Compensation”.
Share-based payments to consultants, service providers and other
non-employees are accounted for under in accordance with ASC Topic
718, ASC Topic 505, “Equity Payments to Non-Employees”
or other applicable authoritative guidance.
Convertible Instruments
We
evaluate and account for conversion options embedded in convertible
instruments in accordance with ASC 815 “Derivatives and
Hedging Activities”.
Applicable GAAP
requires companies to bifurcate conversion options from their host
instruments and account for them as free standing derivative
financial instruments according to certain criteria. The criteria
include circumstances in which (a) the economic characteristics and
risks of the embedded derivative instrument are not clearly and
closely related to the economic characteristics and risks of the
host contract, (b) the hybrid instrument that embodies both the
embedded derivative instrument and the host contract is
not
re-measured at fair
value under other GAAP with changes in fair value reported in
earningsas they occur and (c) a separate instrument with the same
terms as the embedded derivative instrument would be considered a
derivative instrument.
We
account for convertible instruments (when we have determined that
the embedded conversion options should not be bifurcated from their
host instruments) as follows: We record when necessary, discounts
to convertible notes for the intrinsic value of conversion options
embedded in debt instruments based upon the differences between the
fair value of the underlying common stock at the commitment date of
the note transaction and the effective conversion price embedded in
the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their stated date of
redemption. The embedded conversion option in connection with our
convertible debt could not be exercised unless and until we
completed a Qualifying Financing transaction. Accordingly, we
determined based on authoritative guidance that the embedded
conversion option is deemed to be a contingent conversion rather
than active conversion option that did not require accounting
recognition at the commitment dates of the issuances of
the Notes.
Common Stock Purchase Warrants and Other Derivative Financial
Instruments
We
classify as equity any contracts that require physical settlement
or net-share settlement or provide us a choice of net-cash
settlement or settlement in our own shares (physical settlement or
net-share settlement) provided that such contracts are indexed to
our own stock as defined in ASC 815-40 ("Contracts in Entity's Own
Equity"). We classify as assets or liabilities any contracts that
require net-cash settlement (including a requirement to net cash
settle the contract if an event occurs and if that event is outside
our control) or give the counterparty a choice of net-cash
settlement or settlement in shares (physical settlement or
net-share settlement). We assess classification of our common stock
purchase warrants and other free standing derivatives at each
reporting date to determine whether a change in classification
between assets and liabilities is required.
Fair Value Measurements
We
adopted the provisions of ASC Topic 820, “Fair Value
Measurements and Disclosures”, which defines fair value as
used in numerous accounting pronouncements, establishes a framework
for measuring fair value and expands disclosure of fair value
measurements.
The
estimated fair value of certain financial instruments, including
cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost basis, which
approximates their fair values because of the short-term nature of
these instruments. The carrying amounts of our short and long term
credit obligations approximate fair value because the effective
yields on these obligations, which include contractual interest
rates taken together with other features such as concurrent
issuances of warrants and/or embedded conversion options, are
comparable to rates of returns for instruments of similar credit
risk.
ASC 820
defines fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the
measurement date. ASC 820 also establishes a fair value hierarchy,
which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair
value. ASC 820 describes three levels of inputs that may be used to
measure fair value:
Level 1
— quoted prices in active markets for identical assets or
liabilities
Level 2
— quoted prices for similar assets and liabilities in active
markets or inputs that are observable
Level 3
— inputs that are unobservable (for example cash flow
modeling inputs based on assumptions)
Net Loss Per Share
Basic
net loss per share is computed by dividing net loss by the
weighted-average number of common shares outstanding during the
period. Diluted net loss per share is computed giving effect to all
dilutive potential common shares that were outstanding during the
period. Dilutive potential common shares consist of incremental
shares issuable upon exercise of stock options and warrants and
conversion of preferred stock and convertible debt. Such
potentially dilutive shares are excluded when the effect would be
to reduce a net loss per share. No dilution adjustment has been
made to the weighted average outstanding common shares in the
periods presented because the assumed exercise of outstanding
options and warrants and the conversion of preferred stock and debt
would be anti-dilutive.
The
following table sets forth the potential shares of common stock
that are not included in the calculation of diluted net loss per
share:
|
|
|
|
|
|
|
|
|
Stock options
outstanding
|
25,557
|
25,557
|
|
Warrants to
purchase common stock
|
6,007,048
|
5,911,715
|
|
Debentures
convertible into common stock
|
215,908
|
171,138
|
|
Preferred shares
convertible into common stock
|
1,188,471
|
1,110,438
|
|
Total
|
7,436,983
|
7,218,848
|
Recent Accounting Pronouncements
From
time to time new accounting pronouncements are issued by the
Financial Accounting Standards Board or other standard setting
bodies that may have an impact on the Company’s accounting
and reporting. The Company believes that such recently issued
accounting pronouncements and other authoritative guidance for
which the effective date is in the future will not have an impact
on its accounting or reporting or that such impact will not be
material to its financial position, results of operations and cash
flows when implemented.
4.
NOTES
PAYABLE
As of
December 31, 2015 and 2014 Other Notes Payable consists
of:
|
|
|
|
|
On March 25, 2011
the Company issued a term note for $300,000 to EuroAmerican
Investment Corp. (“EuroAmerican”). The term note bears
interest at 16% per annum and was due June 25, 2011. In connection
with the loan the Company also issued EuroAmerican warrants to
purchase 400,000 shares of the Company’s common stock at an
exercise price of $4.50 per share for a period of three (3) years.
On June 25, 2011 the due date for this note was extended to
September 25, 2011 and the Holder was granted the right to convert
all or any amount of the principal face amount of the debenture
then outstanding and accrued interest into shares of common stock
of the Company an adjusted conversion price of $1.80 per share,
subject to adjustment and does not require bifurcation. The due
date for this note has been extended to December 31,
2016.
|
300,000
|
300,000
|
|
Insurance policy
finance agreements. During the period ended December 31, 2015 the
Company made payments of $85,800. The notes are due over the next
twelve months.
|
15,750
|
21,786
|
|
Total Other Notes
Payable
|
315,750
|
321,786
|
|
|
|
|
5.
SEGMENT
REPORTING, GEOGRAPHICAL INFORMATION
(a)
Business segments
The
Company operates in two business segments: Vycor Medical, which
focuses on devices for neurosurgery; and NovaVision, which focuses
on neuro stimulation therapies and diagnostic devices for the
treatment and screening of vision field loss. Set out below are the
revenues, gross profits and total assets for each
segment.
|
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Vycor
Medical
|
$
333,085
|
$
221,258
|
$
682,006
|
$
480,107
|
|
NovaVision
|
$
46,321
|
$
64,760
|
$
97,486
|
$
134,463
|
|
|
$
379,406
|
$
286,018
|
$
779,492
|
$
614,570
|
|
Gross
Profit
|
|
|
|
|
|
Vycor
Medical
|
$
288,812
|
$
193,743
|
$
575,420
|
$
412,794
|
|
NovaVision
|
$
42,508
|
$
58,294
|
$
88,747
|
$
116,102
|
|
|
$
331,320
|
$
252,037
|
$
664,167
|
$
528,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets:
|
|
|
|
|
|
Vycor
Medical
|
$
911,025
|
$
1,150,291
|
|
|
|
NovaVision
|
771,214
|
872,440
|
|
|
|
Total
Assets
|
$
1,682,239
|
$
2,022,731
|
|
|
|
|
|
|
|
|
(b)
Geographic information. The Company operates in two geographic
segments, the United States and Europe. Set out below are the
revenues, gross profits and total assets for each
segment.
|
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
United
States
|
$
356,170
|
$
248,059
|
$
728,476
|
$
531,998
|
|
Europe
|
$
23,236
|
$
37,959
|
$
51,016
|
$
82,572
|
|
|
$
379,406
|
$
286,018
|
$
779,492
|
$
614,570
|
|
Gross
Profit
|
|
|
|
|
|
United
States
|
$
309,318
|
$
217,977
|
$
616,556
|
$
456,328
|
|
Europe
|
$
22,002
|
$
34,060
|
$
47,611
|
$
72,568
|
|
|
$
331,320
|
$
252,037
|
$
664,167
|
$
528,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets:
|
|
|
|
|
|
United
States
|
$
1,399,124
|
$
1,699,589
|
|
|
|
Europe
|
283,115
|
323,142
|
|
|
|
Total
Assets
|
$
1,682,239
|
$
2,022,731
|
|
|
|
|
|
|
|
|
6.
FIXED
ASSETS
As of
December 31, 2015 and 2014, Fixed Assets and the estimated lives
used in the computation of depreciation are as
follows:
Depreciation
expense for the years ended December 31, 2015 and 2014 was $269,672
and $254,608 respectively, including $8,629 and $14,383
respectively for Therapy Devices which is allocated to Cost of
Sales.
|
|
|
|
|
|
|
Estimated
Useful Lives
|
|
|
|
|
|
|
|
|
Machinery and
equipment
|
3
years
|
$
132,452
|
$
136,356
|
|
Leasehold
Improvements
|
5
years
|
6,206
|
6,206
|
|
Purchased
Software
|
3
years
|
27,706
|
24,993
|
|
Molds and
Tooling
|
5
years
|
381,397
|
234,230
|
|
Furniture and
fixtures
|
7
years
|
26,028
|
20,079
|
|
Therapy
Devices
|
3
years
|
99,324
|
86,286
|
|
Internally
Developed Software
|
5
years
|
1,174,912
|
1,143,918
|
|
|
1,848,025
|
1,652,068
|
|
Less: Accumulated
depreciation and amortization
|
|
(1,326,920
)
|
(1,069,634
)
|
|
Property and
Equipment, net
|
|
$
521,105
|
$
582,434
|
7.
INTANGIBLE
ASSETS
As of
December 31, 2015 and 2014, Intangible Assets consists
of:
|
|
|
|
|
|
|
|
Amortized
intangible assets: Patent (8 years useful life)
|
|
|
|
Gross
carrying Amount
|
$
865,639
|
$
799,362
|
|
Accumulated
Amortization
|
(542,501
)
|
(454,249
)
|
|
|
$
323,138
|
$
345,113
|
|
Amortized
intangible assets: Website (5 years useful life)
|
|
|
|
Gross
carrying Amount
|
$
50,760
|
$
32,750
|
|
Accumulated
Amortization
|
$
(31,212
)
|
$
(20,174
)
|
|
|
$
19,548
|
$
12,576
|
|
Intangible assets
not subject to amortization
|
|
|
|
Trademarks
|
$
251,157
|
$
251,157
|
Intangible asset
amortization expense for the periods ended December 31, 2015 and
2014 was $99,291and $128,381, respectively.
8.
EQUITY
Equity Transactions
During
January to December 2015, the Company issued: 12,180 shares of
Common Stock (valued at $20,000) to Steven Girgenti, 15,145 shares
of Common Stock (valued at $20,000) to Oscar Bronsther and 15,145
shares of Common Stock (valued at $20,000) to Lowell Rush in
consideration for services provided to the Board of Directors; and
5,023 shares of Common Stock (valued at $7,500) to Alvaro
Pasual-Leone, 8,270 shares of Common Stock (valued at $12,500) to
Josef Zihl and 6,153 shares of Common Stock (valued at $7,500) to
each of Jason Barton and Jose Romano in respect of their roles as
members of the NovaVision, Inc. Scientific Advisory
Board.
During
January to December 2015, in accordance with the terms the
Consulting Agreement, the Company issued 49,819 shares of Common
Stock (valued at $90,000) to Fountainhead.
During
2015, in accordance with the terms of investor relations advisory
agreements, the Company issued 27,779 shares of Common Stock
(valued at $50,000) to Acorn Partners, LLC and 6,994 shares of
Common Stock (valued at $10,000) to Liolios Group Inc.
During
2015, Series D Preferred Stock, convertible into shares of Common
Stock at $2.15, was issued in respect of Preferred Dividends as
follows: 11,691 shares of Series D Preferred Stock (valued at
$116,915), convertible into 54,377 shares of Common Stock to
Fountainhead; 4,313 shares of Series D Preferred Stock (valued at
$43,130), convertible into 20,060 shares of Common Stock to Peter
Zachariou; and 773 shares of Series D Preferred Stock (valued at
$7,731), convertible into 3,595 shares of Common Stock to Craig
Kirsch.
Outstanding Warrants and Options
The
details of the outstanding rights, options and warrants and value
of such rights, options and warrants are as
follows:
|
STOCK
WARRANTS:
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at
December 31, 2013
|
1,404,599
|
$
3.39
|
|
Granted
|
5,226,120
|
$
2.61
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
(719,004
)
|
$
4.46
|
|
Outstanding at
December 31, 2014
|
5,911,715
|
$
2.57
|
|
Granted
|
100,000
|
$
2.56
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
(4,667
)
|
-
|
|
Outstanding at
December 31, 2015
|
6,007,048
|
$
2.57
|
|
STOCK
OPTIONS:
|
|
|
|
|
|
|
|
|
|
per share
|
|
Outstanding at
December 31, 2013
|
5,557
|
$
20.25
|
|
Granted
|
20,000
|
$
2.00
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
-
|
-
|
|
Outstanding at
December 31, 2014
|
5,557
|
$
20.25
|
|
Granted
|
-
|
-
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
-
|
-
|
|
Outstanding at
December 31, 2015
|
25,557
|
$
5.97
|
As of
December 31, 2015, the weighted-average remaining contractual life
of outstanding warrants and options is 1.25 and 2.18 years,
respectively.
9.
SHARE-BASED
COMPENSATION
Stock
Option Plan
Under
ASC Topic 718, the Company estimates the fair value of option
awards on the date of grant using an option pricing model. The
grant date fair value is recognized over the option vesting period,
the period during which an employee is required to provide service
in exchange for the award. No compensation cost is recognized for
equity instruments for which employees do not render the requisite
service. Under these standards, compensation cost for employee cost
for employee stock-based awards is based on the estimated
grant-date fair value and recognized over the vesting period of the
applicable award on a straight-line basis.
For the
years ended December 31, 2015 and 2014, the Company recognized
share-based compensation of $25,011 and $0, respectively for the
issuance of stock options.
Stock
appreciation rights may be granted either on a stand alone basis or
in conjunction with all or part of any other stock options granted
under the plan. As of December 31, 2015 there were no
awards of any stock appreciation rights.
The
Company from time to time issues common stock, stock options or
common stock warrants to acquire services or goods from
non-employees. Common stock, stock options and common stock
warrants issued to other than employees or directors are recorded
on the basis of their fair value, which is measured as of the
“measurement date” using an option pricing model. The
“measurement date” for options and warrants related to
contracts that have substantial disincentives to non-performance is
the date of the contract, and for all other contracts is the
vesting date. Expense related to the options and warrants is
recognized on a straight-line basis over the shorter of the period
over which services are to be received or the life of the option or
warrant.
Non-Employee
Stock Compensation
Aggregate
stock-based compensation expense charged to operations for stock
and warrants granted to the above non-employees for the year ended
December 31, 2015 was $249,492. As of December 31, 2015, there was
$0 of total unrecognized compensation costs related to warrant and
stock awards and non-vested options.
Stock-based
Compensation Valuation Methodology
Stock-based
compensation resulting from the issuance of Common Stock is
calculated by reference to the valuation of the Stock on the date
of issuance, the expense being recognized as the compensation is
earned. Stock-based compensation expenses related to employee
options and warrants granted to non-employees are recognized as the
stock options and warrants are earned. The fair value of the stock
options or warrants granted is estimated at the grant date, using
the Black-Scholes option pricing model, and the expense is
recognized on a straight-line basis over the shorter of the period
over which services are to be received or the life of the option or
warrant. The grant date fair value of employee share
options and similar instruments is estimated using the
Black-Scholes option pricing model on the basis of the fair value
of the underlying common stock on the measurement date, adjusted
for the unique characteristics of those equity instruments, using
the assumptions noted in the table below. The fair value of the
common stock is determined by the then-prevailing private placement
purchase price. Expected volatility was based on the historical
volatility of a peer group of publicly traded companies. The
expected term of options and warrants was based upon the life of
the option, and the risk-free rate used was based on the U.S.
Treasury Constant Maturity rate.
The
stock compensation expensed during the year ended December 31, 2015
resulted only from the issuance of Common Stock valued on the date
of issuance. The following assumptions were used in calculations of
the Black-Scholes option pricing model for warrant-based stock
compensation in year ended December 31, 2015:
|
|
|
|
|
|
|
|
Risk-free interest
rates
|
1.07
%
|
0.78
%
|
|
Expected
life
|
3 years
|
|
|
Expected
dividends
|
0
%
|
0
%
|
|
Expected
volatility
|
101
%
|
75
%
|
|
Vycor Common Stock
fair value
|
$
2.00
|
$
2.05
|
10
.
FAIR
VALUE MEASUREMENTS
The
Company has adopted ASC 820 for its financial assets and
liabilities that are re-measured and reported at fair value at each
reporting period. The adoption of ASC 820 did not have an impact on
the Company’s financial position or results of
operations.
Under
the terms of the Offering, during the period January 2 to April 25,
2014, in five separate closings, a total of 2,397,631 Series A
Warrants and Placement Agent Warrants were issued as part of the
Offering, which carried anti-dilution rights. Effective May 15,
2014 these anti-dilution rights were waived for all but 34,723 of
the Series A Warrants and for all of the Placement Agent Warrants.
The Company accounts for the Series A Warrants in accordance with
the guidance contained in ASC 815-40-15-7D, whereby under that
provision, because they have anti-dilution rights, they do not meet
the criteria for equity treatment and must be recorded as a
liability. Accordingly, the Company classifies the warrant
instrument as a liability at its fair value and adjusts the
instrument to fair value at each reporting period.
The anti-dilution provisions
expired on June 11, 2015 and accordingly the liability has been
extinguished.
The
following table presents information about the Company’s
liabilities that are measured at fair value on a recurring basis
(the Series A Warrants described above) as of September 30, 2014
and indicates the fair value hierarchy of the valuation inputs the
Company utilized to determine such fair value. In general, fair
values determined by Level 1 inputs utilize quoted prices
(unadjusted) in active markets for identical liabilities. Fair
values determined by Level 2 inputs utilize data points that are
observable such as quoted prices, interest rates and yield curves.
Fair values determined by Level 3 inputs are unobservable data
points for the liability, and includes situations where there is
little, if any, market activity for the liability:
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
Liability
|
$
-
|
$
-
|
$
-
|
$
-
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
Liability
|
$
19,792
|
$
-
|
$
-
|
$
19,792
|
The
table below provides a reconciliation of the beginning and ending
balances for the liabilities measured using fair significant
unobservable inputs (Level 3):
|
Balance at January
1, 2014
|
$
-
|
|
Issuance of Series
A Warrants and Placement Agent Warrants as part of Offering Units
on January 2, January 31, February 24, February 28 and March 31,
April 25, 2014
|
2,103,195
|
|
Change in fair
value during period
|
252,633
|
|
Reclassification to
equity from waiver of anti-dilution on May 15, 2014
|
(2,336,036
)
|
|
Balance at December
31, 2014
|
$
19,792
|
|
Change in fair
value during period
|
(19,792
)
|
|
Balance at December
31, 2015
|
$
-
|
The
following assumptions were used in calculations of the Monte Carlo
Simulation model for the year ended December 31, 2015 and
2014:
|
|
|
|
|
|
|
|
Risk-free interest
rates
|
0.56 -.73
%
|
0.58 -.93
%
|
|
Expected
life
|
1.65
years
|
|
|
Expected
dividends
|
0
%
|
0
%
|
|
Expected
volatility
|
90 -93
%
|
71 -97
%
|
|
Vycor Common Stock
fair value
|
$
1.59 -1.84
|
$
1.79 -2.70
|
11.
INCOME
TAXES
Loss Before Taxes
|
|
|
|
|
|
|
|
Domestic
|
$
1,706,722
|
$
3,646,424
|
|
Foreign
|
375,921
|
403,289
|
|
|
$
2,082,643
|
$
4,049,713
|
The
reconciliation of income tax expense at the U.S. statutory rate of
35% in 2015 and 2014, to the Company's effective tax rate is as
follows:
|
|
|
|
|
|
|
|
US statutory
rate
|
$
(728,925
)
|
$
(1,417,399
)
|
|
Tax difference
between foreign and U.S.
|
28,528
|
28,909
|
|
Change in Valuation
Allowance
|
$
(700,397
)
|
$
(1,388,490
)
|
|
Tax
Provision
|
$
-
|
$
-
|
Deferred Income Taxes
The
Company has incurred net operating losses since inception. The
Company has not reflected any tax benefit related to such net
operating losses in the financial statements. Prior to
August 15, 2007 the Company was a limited liability company and
losses were passed through to the individual members, therefore the
Company only has potential tax benefits from the date it became a
‘C’ corporation.
Deferred income
taxes reflect the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company and its subsidiaries’
deferred tax assets at December 31, 2015 and December 31, 2014 are
as follows:
|
|
|
|
|
|
|
|
|
Operating loss
carry-forward
|
$
5,600,000
|
$
4,800,000
|
|
Deferred tax asset
before Valuation allowance
|
$
5,600,000
|
$
4,800,000
|
|
Valuation
allowance
|
$
(5,600,000
)
|
$
(4,800,000
)
|
|
Net deferred tax
asset
|
-
|
-
|
In
assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation
of future taxable income.
The
authoritative guidance requires a valuation allowance to reduce the
deferred tax assets reported if, based on the weight of the
evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Based on the level of
historical taxable losses and projections of future taxable income
(losses) over the periods in which the deferred tax assets can be
realized, management currently believes that it is more likely than
not that the Company will not realize the benefits of these
deductible differences. Accordingly, management has determined that
a 100% valuation allowance is appropriate at December 31, 2015 and
December 31, 2014.
Net Operating Loss Carry-Forwards
As of
December 31, 2015 and 2014, the Company had U.S. accumulated losses
for tax purposes of approximately $16,000,000 and $13,800,000
respectively, which may be carried forward and offset against U.S.
taxable income, and which expire during the tax years 2027 through
2032.
Federal
tax laws impose significant restrictions on the utilization of net
operating loss carry-forwards and in the event of a change in
ownership of the Company, as defined by the Internal Revenue Code
Section 382. The Company’s net operating loss
carry-forwards may be subject to the above
limitations.
As of
December 31, 2015 and 2014, the Company had German accumulated
losses for tax purposes of approximately $688,000 and $740,000
respectively, which may be carried forward and offset against
German taxable income subject to certain restrictions and
limitations. Such carry-forwards are subject to certain
restrictions and limitations in the event of changes in the
NovaVision GmbH’s ownership.
As of
December 31, 2015 and 2014, the Company had UK accumulated losses
for tax purposes of approximately $199,000 and $180,000
respectively, which may be carried forward and offset against UK
taxable income subject to certain restrictions and
limitations.
Tax Rates
The
applicable US income tax rate for the Company for both of the years
ended December 31, 2015 and 2014 was 35%. Non-US subsidiaries are
taxed according to the tax laws in their respective country of
residence. The German applicable rate for both of the years ended
December 31, 2015 and 2014 was 31.58%; the UK applicable rate for
both the years ended December 31, 2015 and 2014 was
20%.
US
income taxes and foreign withholding taxes were not provided for on
undistributed earnings of the Company’s foreign subsidiaries.
The Company intends to reinvest these earnings indefinitely in its
foreign subsidiaries. If these earnings were distributed to US in
the form of dividends or otherwise, after the repayment of
intercompany debt, the Company would be subject to additional US
income taxes (subject to an adjustment for foreign tax credits) and
foreign withholding taxes.
Uncertain Tax Position
The
Company has recorded no liability for income taxes associated with
unrecognized tax benefits at the date of adoption and has not
recorded any liability associated with unrecognized tax benefits
during 2015 and 2014. Accordingly, the Company has not recorded any
interest or penalty in regard to any unrecognized
benefit.
12.
COMMITMENTS
AND CONTINGENCIES
Lease
The
Company leases approximately 10,000 sq. ft. located at 6401
Congress Ave., Suite 140, Boca Raton, FL 33487 from Catexor Limited
Partnership for a gross rent of $14,260 plus sales tax per month.
The term of the lease is 5 years and 6 months terminating July,
2017. The Company’s subsidiaries in Germany and the UK occupy
properties on short term lease agreements. Rent expense for the
year ended December 31, 2015 and 2014 was $204,445 and $202,083
respectively
Potential German tax liability
In June
2012 the Company's German subsidiary received a preliminary
assessment for Magdeburg City trade tax of approximately
€75,000 (approximately $94,000). This assessment is for the
2010 fiscal year and relates to the Company's acquisition of the
assets of the former NovaVision, Inc. An initial assessment for
corporate tax for the same period has been preliminarily reduced to
zero. The Company has not accepted this trade tax assessment and is
in discussion with the relevant tax authorities with a view to its
reduction. The tax authorities have agreed to suspend the
assessment pending the outcome of certain court hearings, and the
Company has agreed to make limited monthly payments on account. To
the extent that this assessment (either a higher or a reduced
amount) is ultimately confirmed by the tax authorities, the Company
believes it has a very strong claim against certain professional
advisors which would offset the liability in full. Accordingly, the
Company has made no provision for this liability years ended
December 31 2015 and 2014 respectively, other than recording the
monthly payments as an expense.
Potential China Patent Infringement
The
Company was made aware in 2012 that a competitor had been granted a
patent for related technology, and appeared to be
entering the
market with products that infringe the Company’s own issued
patent. Following investigation, the Company initiated an
invalidation of the competitor’s patent; in March 2014 the
Patent Re-examination Board issued an Examination Decision
invalidating all the claims of the competitor’s patent. The
competitor appealed the decision, but the Company has contested the
appeal. A final decision on the appeal is pending. The
Company has, in the interim, also prepared to enforce its own
patent against this competitor, however this competitor appears to
have abandoned its product offering, making an enforcement action
moot for the time being. The Company has also been made
aware that a second competitor has filed a patent application for
related technology and also may be producing a product that
potentially infringes the Company’s patent, and has filed
documents with the State Intellectual Property Office opposing
grant of the patent application. As a general rule the Company
intends to take all necessary action to protect its patent
portfolio. As with all patent infringement actions, there is some
risk that the accused infringer will not be found to infringe the
claims, and an additional risk that the accused infringer will
successfully challenge the validity of the asserted
claims.
13.
CONSULTING
AND OTHER AGREEMENTS
The
following agreements were entered into or remained in force during
the year ended December 31, 2015:
Consulting Agreement with Fountainhead
Effective as of
January 2, 2014, the Company and Fountainhead amended their
Consulting Agreement to extend the term of the Consulting Agreement
to January 2, 2015, such Agreement being automatically extended on
the same terms unless terminated by either party. During fiscal
year 2015, a monthly fee was payable to Fountainhead in the amount
of $10,000 per month, payable $5,000 in cash and the remainder
payable in Company Common Stock deliverable at the end of each
fiscal quarter. Effective September 2015, Fountainhead agreed to
receive all of the fees in Common Stock.
Investor Relations Agreements
In
January 2015, as amended in May 2015, the Company entered into a
twelve month agreement, subject to early termination, to provide
financial advisory, strategic business planning and professional
relations services, with Acorn Management Partners
(“Acorn”). Under the terms of the Agreement, as amended
in May and July 2015, Acorn received a total of $53,000 in cash and
$50,000 in shares of Restricted Common Stock during the period. The
Acorn Agreement was terminated in October 2015.
In
August 2015, the Company entered into a three month agreement to
provide investor relations advisory and consulting services, with
Liolios Group, Inc. (“Liolios”). Under the terms of the
Liolios Agreement, Liolios received $15,000 in cash and $10,000 in
Restricted Common Stock. The Liolios agreement was terminated at
the end of the three month period.
14.
RELATED
PARTY TRANSACTIONS
Peter
Zachariou, director and David Cantor, director are investment
managers of Fountainhead Capital Management which is a related
party due to the size of its shareholding. Adrian Liddell, Chairman
is a consultant for Fountainhead Capital Management.
During
2015, in accordance with the terms the Consulting Agreement, the
Company issued 49,819 shares of Common Stock (valued at $90,000) to
Fountainhead.
During
2015 Preferred D Stock, convertible into shares of Common Stock,
was issued in respect of Preferred Dividends as follows: 11,691
shares of Preferred D Stock (valued at $116,915), convertible into
54,377 shares of Common Stock to Fountainhead; and 4,313 shares of
Preferred D Stock (valued at $43,130), convertible into 20,060
shares of Common Stock to Peter Zachariou.
There
were no other related party transactions during the year ended
December 31, 2015.
15.
SUBSEQUENT
EVENTS
There
are no material subsequent events.
VYCOR MEDICAL, INC.
Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash
|
$
87,709
|
$
347,477
|
|
Trade accounts
receivable, net of allowance for doubtful accounts of $2,711 and
$2,711
|
222,636
|
106,340
|
|
Inventory
|
239,696
|
292,538
|
|
Prepaid expenses
and other current assets
|
88,748
|
112,338
|
|
Total Current
Assets
|
638,789
|
858,693
|
|
Fixed assets,
net
|
457,693
|
521,105
|
|
Intangible and
Other assets:
|
|
|
|
Trademarks
|
251,157
|
251,157
|
|
Patents, net of
accumulated amortization
|
274,506
|
323,138
|
|
Website, net of
accumulated amortization
|
17,253
|
19,548
|
|
Security
deposits
|
42,841
|
49,090
|
|
Total Intangible
and Other assets
|
585,757
|
642,933
|
|
TOTAL
ASSETS
|
$
1,682,239
|
$
2,022,731
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
155,181
|
$
250,367
|
|
Accrued interest:
Other
|
113,814
|
88,634
|
|
Accrued
liabilities
|
258,264
|
222,258
|
|
Notes payable:
Related Party
|
185,000
|
-
|
|
Notes payable:
Other
|
312,153
|
315,750
|
|
Total Current
Liabilities
|
1,024,412
|
877,009
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
Preferred stock,
$0.0001 par value, 10,000,000 shares authorized, 261,168 and
252,336 issued and outstanding as at June 30, 2016 and December 31,
2015 respectively
|
$
26
|
$
25
|
|
Common Stock,
$0.0001 par value, 25,000,000 shares authorized at June 30, 2016
and December 31, 2015, 11,158,069 and 11,032,560 shares issued and
11,054,735 and 10,929,226 outstanding at June 30, 2016 and December
31, 2015 respectively
|
1,116
|
1,103
|
|
Additional Paid-in
Capital
|
24,782,310
|
24,346,057
|
|
Treasury Stock
(103,334 shares of Common Stock as at June 30, 2016 and December
31, 2015 respectively, at cost)
|
(1,033
)
|
(1,033
)
|
|
Accumulated
Deficit
|
(24,253,779
)
|
(23,332,538
)
|
|
Accumulated Other
Comprehensive Income (Loss)
|
129,187
|
132,108
|
|
Total
Stockholders’ Equity
|
657,827
|
1,145,722
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
$
1,682,239
|
$
2,022,731
|
See
accompanying notes to financial statements
VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Loss
(unaudited)
|
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
379,406
|
$
286,018
|
$
779,492
|
$
614,570
|
|
Cost
of Goods Sold
|
48,086
|
33,981
|
115,325
|
85,674
|
|
Gross
Profit
|
331,320
|
252,037
|
664,167
|
528,896
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
-
|
15,672
|
-
|
38,898
|
|
Depreciation and
Amortization
|
66,310
|
86,708
|
129,595
|
169,357
|
|
General and
administrative
|
556,512
|
607,750
|
1,340,846
|
1,387,052
|
|
Total
Operating expenses
|
622,822
|
710,130
|
1,470,441
|
1,595,307
|
|
Operating
loss
|
(291,502
)
|
(458,093
)
|
(806,274
)
|
(1,066,411
)
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
Interest expense:
Other
|
(12,206
)
|
(11,842
)
|
(24,188
)
|
(23,682
)
|
|
Interest expense:
Related Party
|
(1,247
)
|
-
|
(1,247
)
|
-
|
|
Gain (loss) on
foreign currency exchange
|
(408
)
|
17,723
|
(1,214
)
|
(74,147
)
|
|
Change in fair
value derivative liability
|
-
|
31,945
|
-
|
19,792
|
|
Total
Other Income (expense)
|
(13,861
)
|
37,826
|
(26,649
)
|
(78,037
)
|
|
|
|
|
|
|
|
Loss
Before Credit for Income Taxes
|
(305,363
)
|
(420,267
)
|
(832,923
)
|
(1,144,448
)
|
|
Credit
for income taxes
|
-
|
-
|
-
|
-
|
|
Net
Loss
|
(305,363
)
|
(420,267
)
|
(832,923
)
|
(1,144,448
)
|
|
Preferred
stock dividends
|
-
|
-
|
(88,318
)
|
(82,446
)
|
|
Net
Loss available to common shareholders
|
(305,363
)
|
(420,267
)
|
(921,241
)
|
(1,226,894
)
|
|
Comprehensive
Loss
|
|
|
|
|
|
Net
Loss
|
(305,363
)
|
(420,267
)
|
(832,923
)
|
(1,144,448
)
|
|
Foreign
Currency Translation Adjustment
|
2,921
|
19,076
|
2,921
|
(80,577
)
|
|
Comprehensive
Loss
|
(302,442
)
|
(401,191
)
|
(830,002
)
|
(1,225,025
)
|
|
|
|
|
|
|
|
Net
Loss Per Share
|
|
|
|
|
|
Basic
and diluted
|
$
(0.03
)
|
$
(0.04
)
|
$
(0.08
)
|
$
(0.11
)
|
|
|
|
|
|
|
|
Weighted
Average Number of Shares Outstanding – Basic and
Diluted
|
11,007,522
|
10,819,691
|
10,971,203
|
10,806,338
|
See
accompanying notes to financial statements
VYCOR MEDICAL, INC.
Consolidated Statement of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
(832,923
)
|
(1,144,448
)
|
|
Adjustments to
reconcile net loss to cash used in operating
activities:
|
|
|
|
Amortization of
intangible assets
|
50,927
|
41,700
|
|
Depreciation of
fixed assets
|
83,395
|
132,418
|
|
Inventory
provision
|
2,544
|
15,162
|
|
Share based
compensation
|
347,950
|
138,460
|
|
(Gain) loss on
foreign exchange
|
1,214
|
74,147
|
|
Unrealized gain on
change in fair value of derivative liability
|
-
|
(19,792
)
|
|
|
|
|
|
Changes in assets
and liabilities:
|
|
|
|
Accounts
receivable
|
(116,299
)
|
10,342
|
|
Inventory
|
50,299
|
35,570
|
|
Prepaid
expenses
|
59,468
|
65,259
|
|
Accrued interest
related party
|
1,247
|
-
|
|
Accrued interest
other
|
23,934
|
23,803
|
|
Accounts
payable
|
(95,186
)
|
(97,137
)
|
|
Accrued
liabilities
|
34,298
|
(33,638
)
|
|
Security
Deposit
|
6,250
|
6,250
|
|
Cash used in
operating activities
|
(382,882
)
|
(751,904
)
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of fixed
assets
|
(20,231
)
|
(26,486
)
|
|
Purchase of
website
|
-
|
(3,250
)
|
|
Acquisition of
patents
|
-
|
(66,276
)
|
|
Cash used in
investing activities
|
(20,231
)
|
(96,012
)
|
|
Cash flows from
financing activities:
|
|
|
|
Net proceeds from
issuance of Notes Payable - Related Party
|
185,000
|
0
|
|
Repayment of Notes
Payable - Other
|
(39,475
)
|
(40,280
)
|
|
Cash provided by
(used in) financing activities
|
145,525
|
(40,280
)
|
|
Effect of exchange
rate changes on cash
|
(2,180
)
|
7,256
|
|
Net increase
(decrease) in cash
|
(259,768
)
|
(880,940
)
|
|
Cash at beginning
of period
|
347,477
|
1,891,658
|
|
Cash at end of
period
|
87,709
|
1,010,718
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow information:
|
|
|
|
Non-Cash
Transactions:
|
|
|
|
Preferred stock
dividends satisfied in new preferred stock
|
$
88,318
|
$
82,446
|
See
Accompanying Notes to Financial Statements
VYCOR MEDICAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2016
(unaudited)
1. BASIS
OF PRESENTATION
The
consolidated financial statements of the Company present the
financial position, results of operations, and cash flows of Vycor
Medical, Inc. and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The
accompanying unaudited consolidated financial statements 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 10 of Regulation S-X of the Securities Exchange Commission.
In accordance with those rules and regulations certain information
and footnote disclosures normally included in comprehensive
financial statements have been omitted pursuant to such rules and
regulations. The consolidated balance sheet as of December 31, 2015
derives from the audited financial statements at that date, but
does not include all the information and footnotes required by
GAAP. These 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, 2015.
The
consolidated financial statements for the three and six months
ended June 30, 2016 and 2015, 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 and results of operations. The results of operations for
the three and six months ended June 30, 2016 and 2015 are not
necessarily indicative of the results to be expected for any other
interim period or for the entire year. Certain prior period amounts
have been reclassified to conform to the current
presentation.
2. GOING
CONCERN
The
Company’s financial statements have been presented on a basis
that contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business and assumes the
Company will continue as a going concern. The Company has incurred
losses since its inception, including a net loss of $832,923 for
the six months ended June 30, 2016, and the Company expects to
continue to incur additional losses in the future, including
additional development costs, costs related to marketing and
manufacturing expenses. The Company has incurred negative cash
flows from operations since inception. As of June 30, 2016 the
Company had a stockholders’ equity of $657,827 and cash and
cash equivalents of $87,709. The Company believes it would not have
enough cash to meet its various cash needs unless the Company is
able to obtain additional cash from the issuance of debt or equity
securities. There is no assurance that additional funds from the
issuance of equity will be available for the Company to finance its
operations on acceptable terms or at all. If adequate funds are not
available, the Company may have to delay development or
commercialization of products or technologies that the Company
would otherwise seek to commercialize, or cease some or all of its
operations. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The
financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may
result from the outcome of this uncertainty.
3. SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The
consolidated financial statements include the accounts of Vycor
Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc.
(a Delaware corporation), NovaVision GmbH (a German corporation)
and Sight Science Limited (a UK corporation), both wholly owned
subsidiaries of NovaVision, Inc. The Company is headquartered in
Boca Raton, FL. All material inter-company accounts, transactions,
and profits have been eliminated in consolidation. Certain
reclassifications and format changes have been made to prior year
amounts to conform to the current year presentation.
Recent Accounting Pronouncements
From
time to time new accounting pronouncements are issued by the
Financial Accounting Standards Board or other standard setting
bodies that may have an impact on the Company’s accounting
and reporting. The Company believes that such recently issued
accounting pronouncements and other authoritative guidance for
which the effective date is in the future will not have an impact
on its accounting or reporting or that such impact will not be
material to its financial position, results of operations and cash
flows when implemented.
Net Loss Per Share
Basic
net loss per share is computed by dividing net loss by the
weighted-average number of common shares outstanding during the
period. Diluted net loss per share is computed giving effect to all
dilutive potential common shares that were outstanding during the
period. Dilutive potential common shares consist of incremental
shares issuable upon exercise of stock options and warrants and
conversion of preferred stock and convertible debt. Such
potentially dilutive shares are excluded when the effect would be
to reduce a net loss per share. No dilution adjustment has been
made to the weighted average
outstanding
common shares in the periods presented because the assumed exercise
of outstanding options and warrants and the conversion of preferred
stock and debt would be anti-dilutive.
The
following table sets forth the potential shares of common stock
that are not included in the calculation of diluted net loss per
share:
|
|
|
|
|
|
|
|
|
Stock options
outstanding
|
705,557
|
25,557
|
|
Warrants to
purchase common stock
|
6,007,048
|
6,007,048
|
|
Debentures
convertible into common stock
|
229,204
|
215,908
|
|
Preferred shares
convertible into common stock
|
2,444,275
|
1,188,471
|
|
Directors Deferred
Compensation Plan
|
59,083
|
-
|
|
Total
|
9,445,167
|
7,436,984
|
4. NOTES
PAYABLE
Related Party Notes Payable
As of
June 30, 2016 and December 31, 2015 Related Party Notes Payable
consists of:
|
|
|
|
|
In the period the
Company issued promissory notes to Fountainhead Capital Management
Limited and Peter Zachariou for $185,000. The notes bear interest
at 10% per annum and are payable on the earlier of one year or five
days following the delivery of written demand for payment by the
Payee.
|
185,000
|
-
|
|
|
|
|
|
Total Related Party
Notes Payable
|
185,000
|
-
|
Other Notes Payable
As of
June 30, 2016 and December 31, 2015, Other Notes Payable consists
of:
|
|
|
|
|
On March 25, 2011
the Company issued a term note for $300,000 to EuroAmerican
Investment Corp. (“EuroAmerican”). The term note bears
interest at 16% per annum and was due June 25, 2011. In connection
with the loan the Company also issued EuroAmerican warrants to
purchase 400,000 shares of the Company’s common stock at an
exercise price of $4.50 per share for a period of three (3) years.
On June 25, 2011 the due date for this note was extended to
September 25, 2011 and the Holder was granted the right to convert
all or any amount of the principal face amount of the debenture
then outstanding and accrued interest into shares of common stock
of the Company an adjusted conversion price of $1.80 per share,
subject to adjustment and does not require bifurcation. The due
date for this note has been extended to December 31,
2017.
|
300,000
|
300,000
|
|
Insurance policy
finance agreements. During the period ended June 30, 2016 the
Company made payments of $41,066. The notes are due over the next
twelve months.
|
12,153
|
15,750
|
|
Total Other Notes
Payable:
|
312,153
|
315,750
|
The
company assesses the value of the beneficial conversion feature of
its convertible debt by determining the intrinsic value of such
conversion, under ASC 470, at the time of issuance. At the time of
issuance of the convertible debt instruments set out above, the
fair value of the stock was either the same or less than the
conversion price, and so there was no value attributable to any
beneficial conversion feature.
5. 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. Set out below are the revenues, gross profits and
total assets for each segment.
|
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Vycor
Medical
|
$
333,085
|
$
221,258
|
$
682,006
|
$
480,107
|
|
NovaVision
|
$
46,321
|
$
64,760
|
$
97,486
|
$
134,463
|
|
|
$
379,406
|
$
286,018
|
$
779,492
|
$
614,570
|
|
Gross
Profit
|
|
|
|
|
|
Vycor
Medical
|
$
288,812
|
$
193,743
|
$
575,420
|
$
412,794
|
|
NovaVision
|
$
42,508
|
$
58,294
|
$
88,747
|
$
116,102
|
|
|
$
331,320
|
$
252,037
|
$
664,167
|
$
528,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets:
|
|
|
|
|
|
Vycor
Medical
|
$
911,025
|
$
1,150,291
|
|
|
|
NovaVision
|
771,214
|
872,440
|
|
|
|
Total
Assets
|
$
1,682,239
|
$
2,022,731
|
|
|
(b)
Geographic information
The
Company operates in two geographic segments, the United States and
Europe. Set out below are the revenues, gross profits and total
assets for each segment.
|
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
United
States
|
$
356,170
|
$
248,059
|
$
728,476
|
$
531,998
|
|
Europe
|
$
23,236
|
$
37,959
|
$
51,016
|
$
82,572
|
|
|
$
379,406
|
$
286,018
|
$
779,492
|
$
614,570
|
|
Gross
Profit
|
|
|
|
|
|
United
States
|
$
309,318
|
$
217,977
|
$
616,556
|
$
456,328
|
|
Europe
|
$
22,002
|
$
34,060
|
$
47,611
|
$
72,568
|
|
|
$
331,320
|
$
252,037
|
$
664,167
|
$
528,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets:
|
|
|
|
|
|
United
States
|
$
1,399,124
|
$
1,699,589
|
|
|
|
Europe
|
283,115
|
323,142
|
|
|
|
Total
Assets
|
$
1,682,239
|
$
2,022,731
|
|
|
6. EQUITY
Preferred Stock
During
the six months ended June 30, 2016, the Company paid an aggregate
of 8,831 shares of Preferred D Stock, valued at $88,318,
representing preferred stock dividends. The Preferred D shares are
convertible on their terms at $2.15 per share of Common Stock into
41,074 shares. An aggregate of 8,424 shares of Preferred D Stock
dividends were in respect of related parties (See Note
11).
Common Stock and Stock Grants
During
January to June 2016, the Company granted 59,083 shares of Common
Stock (valued at $36,000) to non-employee Directors. Under the
terms of the Directors Deferred Compensation Plan, the receipt of
these shares is deferred until the January 15
th
following the
termination of their services as a director.
During
January to June 2016, the Company issued 32,254 shares of Common
Stock (valued at $20,000) to members of the NovaVision, Inc.
Scientific Advisory Board in respect of their
services.
During
January to June 2016, in accordance with the terms the Consulting
Agreement, the Company issued 33,333 shares of Common Stock (valued
at $60,000) to Fountainhead.
In
April 2016, the Company entered into a Consulting Agreement with
Techmed Inc. and issued 9,921 share of Common Stock (valued at
$6,250) under the agreement.
In May
2016, the Company entered into a Consulting Agreement with Valeo
Consulting and issued 50,000 share of Common Stock (valued at
$27,500) under the agreement.
Warrants and Options
The
details of the outstanding warrants and options are as
follows:
|
STOCK
WARRANTS:
|
|
|
|
|
|
|
|
Outstanding at
December 31, 2014
|
5,911,715
|
$
2.57
|
|
Granted
|
100,000
|
$
2.56
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
(4,667
)
|
-
|
|
Outstanding at
December 31, 2015
|
6,007,048
|
$
2.57
|
|
Granted
|
-
|
-
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
-
|
-
|
|
Outstanding at
June 30, 2016
|
6,007,048
|
$
2.57
|
|
|
|
|
|
STOCK
OPTIONS:
|
|
|
|
|
|
|
|
Outstanding at
December 31, 2014
|
5,557
|
$
20.25
|
|
Granted
|
20,000
|
$
2.00
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
-
|
-
|
|
Outstanding at
December 31, 2015
|
25,557
|
$
20.25
|
|
Granted
|
680,000
|
$
0.79
|
|
Exercised
|
-
|
-
|
|
Cancelled or
expired
|
-
|
-
|
|
Outstanding at
June 30, 2016
|
705,557
|
$
0.97
|
As of
June 30, 2016, the weighted-average remaining contractual life of
outstanding warrants and options is 0.76 and 3.89 years,
respectively.
7. SHARE-BASED
COMPENSATION
Stock Option Plan
Under
ASC Topic 718, the Company estimates the fair value of option
awards on the date of grant using an option pricing model. The
grant date fair value is recognized over the option vesting period,
the period during which an employee is required to provide service
in exchange for the award. No compensation cost is recognized for
equity instruments for which employees do not render the requisite
service. Under these standards, compensation cost for employee cost
for employee stock-based awards is based on the estimated
grant-date fair value and recognized over the vesting period of the
applicable award on a straight-line basis.
For the
six months ended June 30, 2016 and 2015, the Company recognized
share-based compensation of $198,200 and $25,011, respectively, for
employee stock options.
Stock
appreciation rights may be granted either on a stand alone basis or
in conjunction with all or part of any other stock options granted
under the plan. As of June 30, 2016 there were no awards
of any stock appreciation rights.
Non-Employee Stock Compensation
The
Company from time to time issues common stock, stock options or
common stock warrants to acquire services or goods from
non-employees. Common stock, stock options and common stock
warrants issued to other than employees or directors are recorded
on the basis of their fair value, which is measured as of the
“measurement date” using an option pricing model. The
“measurement date” for options and warrants related to
contracts that have substantial disincentives to non-performance is
the date of the contract, and for all other contracts is the
vesting date. Expense related to the options and warrants is
recognized on a straight-line basis over the shorter of the period
over which services are to be received or the life of the option or
warrant.
Aggregate
stock-based compensation expense charged to operations for stock
and warrants granted to non-employees for the six months ended June
30, 2016 was $149,750.
Stock-based Compensation Valuation Methodology
Stock-based
compensation resulting from the issuance of Common Stock is
calculated by reference to the valuation of the Stock on the date
of issuance, the expense being recognized as the compensation is
earned. Stock-based compensation expenses related to employee
options and warrants granted to non-employees are recognized as the
stock options and warrants are earned. The fair value of the stock
options or warrants granted is estimated at the grant date, using
the Black-Scholes option pricing model, and the expense is
recognized on a straight-line basis over the shorter of the period
over which services are to be received or the life of the option or
warrant. The grant date fair value of employee share options and
similar instruments is estimated using the Black-Scholes option
pricing model on the basis of the fair value of the underlying
common stock on the measurement date, adjusted for the unique
characteristics of those equity instruments, using the assumptions
noted in the table below. Expected volatility is based on the
historical volatility of a peer group of publicly traded companies.
The expected term of options and warrants was based upon the
expected life of the option or warrant, and the risk-free rate is
based on the U.S. Treasury Constant Maturity rate.
The
following assumptions were used in calculations of the
Black-Scholes option pricing model for the six months ended June
30, 2016 and 2015:
|
|
Six
Months Ended June 30,
|
|
|
|
|
|
Risk-free interest
rates
|
0.91
%
|
1.07
%
|
|
Expected
life
|
1.5
years
|
|
|
Expected
dividends
|
0
%
|
0
%
|
|
Expected
volatility
|
95
%
|
101
%
|
|
Vycor Common Stock
fair value
|
$
0.71
|
$
2.00
|
8. FAIR
VALUE MEASUREMENTS
The
Company has adopted ASC 820 for its financial assets and
liabilities that are re-measured and reported at fair value at each
reporting period. The adoption of ASC 820 did not have an impact on
the Company’s financial position or results of
operations.
Under
the terms of the Offering during the period January 2 to April 25,
2014, in five separate closings, a total of 2,397,631 Series A
Warrants and Placement Agent Warrants were issued, which carried
anti-dilution rights. Effective May 15, 2014 these anti-dilution
rights were waived for all but 34,723 of the Series A Warrants and
for all of the Placement Agent Warrants. The Company accounted for
the Series A Warrants in accordance with the guidance contained in
ASC 815-40-15-7D, whereby under that provision, because they had
anti-dilution rights, they did not meet the criteria for equity
treatment and needed to be recorded as a liability. Accordingly,
the Company classified the warrant instrument as a liability at its
fair value and adjusted the instrument to fair value at each
reporting period.
The
anti-dilution provisions expired on June 11, 2015 and accordingly
the liability was extinguished at that date.
The
following table presents information about the Company’s
liabilities that are measured at fair value on a recurring basis
(the 34,723 Series A Warrants above) as of June 30, 2016 and
December 31, 2015 and indicates the fair value hierarchy of the
valuation inputs the Company utilized to determine such fair value.
In general, fair values determined by Level 1 inputs utilize quoted
prices (unadjusted) in active markets for identical liabilities.
Fair values determined by Level 2 inputs utilize data points that
are observable such as quoted prices, interest rates and yield
curves. Fair values determined by Level 3 inputs are unobservable
data points for the liability, and includes situations where there
is little, if any, market activity for the liability:
|
Description
|
June 30, 2016 and December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
Warrant
Liability
|
$
0
|
$
-
|
$
-
|
$
0
|
The
table below provides a reconciliation of the beginning and ending
balances for the liabilities measured using fair significant
unobservable inputs (Level 3):
|
|
Six
months ended June 30,
|
|
|
|
|
|
Balance at start of
period
|
$
-
|
$
19,792
|
|
|
|
|
|
Change in fair
value to June 11, 2015
|
-
|
485
|
|
Extinguishment of
liability June 11, 2015
|
|
(20,277
)
|
|
|
|
|
|
Balance at end of
period
|
$
-
|
$
-
|
The
fair value of the Series A Warrants Warrants was determined using a
Monte Carlo Simulation. This model requires the input of highly
subjective assumptions, including the expected price volatility,
which is based on the historical volatility of a peer group of
publicly traded companies. Changes in the subjective input
assumptions can materially affect the estimate of fair value of the
warrants and the Company’s results of operations could be
impacted.
The
following assumptions were used in calculations of the Monte Carlo
Simulation model for the six months ended June 30, 2016 and
2015:
|
|
Six Months Ended June 30,
|
|
|
2016
|
2015
|
|
Risk-free
interest rates
|
-
|
0.56-.73%
|
|
Expected
life
|
-
|
1.65
years
|
|
Expected
dividends
|
-
|
0%
|
|
Expected
volatility
|
-
|
90-93%
|
|
Vycor
Common Stock fair value
|
-
|
$1.59-1.84
|
9. COMMITMENTS
AND CONTINGENCIES
Lease
The
Company leases approximately 10,000 sq. ft located at 6401 Congress
Ave., Suite 140, Boca Raton, FL 33487 from Catexor Limited
Partnership for a gross rent of $15,439 plus sales tax per month.
The term of the lease is 5 years and 6 months terminating July,
2017. The Company’s subsidiaries in Germany and the UK occupy
properties on short term lease agreements. Rent expense for the six
months ended June 30, 2016 and 2015 was $53,654 and $47,211
respectively.
Potential German tax liability
In June
2012 the Company's German subsidiary received a preliminary
assessment for Magdeburg City trade tax of approximately
€75,000 (approximately $85,000). This assessment is for the
2010 fiscal year and relates to the Company's acquisition of the
assets of the former NovaVision, Inc. An initial assessment for
corporate tax for the same period has been preliminarily reduced to
zero. The Company has not accepted this trade tax assessment and is
in discussion with the relevant tax authorities with a view to its
reduction. The tax authorities have agreed to suspend the
assessment pending the outcome of certain court hearings, and the
Company has agreed to make limited monthly payments on account. To
the extent that this assessment (either a higher or a reduced
amount) is ultimately confirmed by the tax authorities, the Company
believes it has a very strong claim against certain professional
advisors which would offset the liability in full. Accordingly, the
Company has made no provision for this liability in the six months
ended June 30, 2016 and the year ended December 31, 2015
respectively, other than recording the monthly payments as an
expense.
Potential Patent Infringement
The
Company was made aware in 2012 that a competitor had been granted a
patent for related technology, and appeared to be
entering the
market with products that infringe the Company’s own issued
patent. Following investigation, the Company initiated an
invalidation of the competitor’s patent; in March 2014 the
Patent Re-examination Board issued an Examination Decision
invalidating all the claims of the competitor’s patent. The
competitor appealed the decision, but the Company has contested the
appeal. A final decision on the appeal is pending. The Company has,
in the interim, also prepared to enforce its own patent against
this competitor, however this competitor appears to have abandoned
its product offering, making an enforcement action moot for the
time being. The Company has also been made aware that a second
competitor has filed a patent application for related technology
and also may be producing a product that potentially infringes the
Company’s patent, and has filed documents with the State
Intellectual Property Office opposing grant of the patent
application. As a general rule the Company intends to take all
necessary action to protect its patent portfolio. As with all
patent infringement actions, there is some risk that the accused
infringer will not be found to infringe the claims, and an
additional risk that the accused infringer will successfully
challenge the validity of the asserted claims.
10. CONSULTING
AND OTHER AGREEMENTS
The
following agreements were entered into or remained in force during
the six months ended June 30, 2016:
Under
the terms of an amended Consulting Agreement between the Company
and Fountainhead, Fountainhead is paid a monthly retainer of
$10,000 per month, payable $5,000 in cash and $5,000 payable in
Company Common Stock at the end of each quarter. Effective
September 2015, Fountainhead agreed to receive all of the fees in
Common Stock.
In January 2015, as amended in May 2015, the Company entered into a
twelve month agreement, subject to early termination, to provide
financial advisory, strategic business planning and professional
relations services, with Acorn Management Partners
(“Acorn”). Under the terms of the Agreement, as amended
in May and July 2015, Acorn received a total of $53,000 in cash and
$50,000 in shares of Restricted Common Stock during the period. The
Acorn Agreement was terminated in October 2015.
In May 2016 the Company entered into a Consultancy agreement with
Valeo Consulting LLC to assist in the raising of capital and
related financial matters by dealing with potential investors,
banks and brokers on behalf of the Company. Under the agreement the
Company issued 50,000 shares of Vycor Common Stock on execution and
50,000 on August 1, 2016.
11. RELATED
PARTY TRANSACTIONS
Peter Zachariou, director and David Cantor, director are investment
managers of Fountainhead Capital Management which is a related
party due to the size of its shareholding. Adrian Liddell, Chairman
is a consultant for Fountainhead Capital Management.
During
the period ended June 30, 2016, in accordance with the terms of the
Consulting Agreement, the Company issued 33,333 shares of Common
Stock (valued at $60,000) to Fountainhead.
During
the six months ended June 30, 2016, the Company paid an aggregate
of 8,424 shares of Preferred D Stock, valued at $84,248
representing preferred stock dividends to related parties. The
Preferred D shares are convertible on their terms at $2.15 per
share of Common Stock into 39,181 shares.
During
the period ended June 30, 2016, the Company issued unsecured loan
notes to Fountainhead for a total of $140,000. The loan notes bear
interest at a rate of 10% and are due on demand or by their
one-year anniversary.
During
the period ended June 30, 2016, the Company issued unsecured loan
notes to Peter Zachariou for a total of $45,000. The loan notes
bear interest at a rate of 10% and are due on demand or by their
one-year anniversary
12.
SUBSEQUENT EVENTS
The
Company evaluated subsequent events through the date the financial
statements were issued and filed with this Form 10Q:
In
August 2016 the Company issued 50,000 shares of Vycor Common Stock
(valued at $13,200) to Valeo Consulting LLC under the terms of the
Consultancy Agreement.
In
August 2016 the Company paid an aggregate of 9,140 shares of
Preferred D Stock, valued at $91,409, representing preferred stock
dividends. The Preferred D shares are convertible on their terms at
$2.15 per share of Common Stock into 42,512 shares. An aggregate of
8,718 shares of Preferred D Stock dividends were in respect of
related parties.
This
prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations
provided in or incorporated by reference into this prospectus. We
have not authorized anyone else to provide you with different
information. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than
the date on the front of those documents.
No
dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those
contained in or incorporated by reference in this prospectus in
connection with the offer made by this prospectus, and, if given or
made, such information or representations must not be relied upon
as having been authorized by us. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy
any security other than the securities offered hereby, nor does it
constitute an offer to sell or a solicitation of any offer to buy
any of the shares offered by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or in which the
person making such offer or solicitation is not qualified to do so,
or to any person to whom it is unlawful to make such offer or
solicitation.
Neither
the delivery of this prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent
to the date hereof.
The
date of this prospectus is October , 2016.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Although
we will receive no proceeds from the sale of shares pursuant to
this prospectus, we have agreed to bear the costs and expenses of
the registration of the shares. Our expenses in connection with the
issuance and distribution of the securities being registered are
estimated as follows:
|
Nature
of expense
|
|
|
SEC Registration
fee
|
$
1,186.51
*
|
|
Accounting fees and
expenses
|
$
2,500.00
|
|
Legal fees and
expenses
|
$
2,500.00
|
|
Printing
expenses
|
$
3,000.00
|
|
Total
|
$
9,186.51
|
* Paid
with filing of original registration statement on Form
S-1
All
amounts are estimates other than the Securities and Exchange
Commission’s registration fee. We are paying all expenses of
the offering listed above through advances to the Company by the
Company’s founding shareholders. No portion of these expenses
will be borne by the selling shareholders. The selling
shareholders, however, will pay any other expenses incurred in
selling their common stock, including any brokerage commissions or
costs of sale.
Item 14. Indemnification of Directors and Officers
Pursuant
to our Certificate of Incorporation and By-Laws, we may indemnify
an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good
faith and in a manner he reasonably believed to be in our best
interest. In certain cases, we may advance expenses incurred in
defending any such proceeding. To the extent that the officer or
director is successful on the merits in any such proceeding as to
which such person is to be indemnified, we must indemnify him
against all expenses incurred, including attorney’s fees.
With respect to a derivative action, indemnity may be made only for
expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only
by a court order. The prior discussion of indemnification in this
paragraph is intended to be to the fullest extent permitted by the
laws of the State of Delaware.
Indemnification
for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to directors or officers pursuant to the
foregoing provisions. However, we are informed that, in the opinion
of the Commission, such indemnification is against public policy,
as expressed in the Act and is, therefore,
unenforceable.
Item 15. Recent Sales of Unregistered Securities
Below
is a list of securities sold by us from January 1, 2015 through
September 29, 2016 which were not registered under the Securities
Act.
Common Stock
:
|
Name of Purchaser
|
Issue Date
|
Security
|
Shares
|
Consideration
|
|
STEVE
GIRGENTI
|
1/1/2015
|
Common
|
2,717
|
Board
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
2/1/2015
|
Common
|
919
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
2/5/2015
|
Series
D. Pref.
|
5,745
|
Series
D Dividend
|
|
PETER
C. ZACHARIOU
|
2/5/2015
|
Series
D. Pref.
|
2,119
|
Series
D Dividend
|
|
CRAIG
KIRSCH
|
2/5/2015
|
Series
D. Pref.
|
380
|
Series
D Dividend
|
|
JOSEF
ZIHL
|
2/1/2015
|
Common
|
1,838
|
Consulting
Fees
|
|
ACORN
MANAGEMENT PTS
|
3/6/2015
|
Common
|
13,889
|
Consulting
Fees
|
|
STEVE
GIRGENTI
|
4/1/2015
|
Common
|
2,660
|
Board
Fees
|
|
OSCAR
BRONSTHER
|
3/31/2015
|
Common
|
2,660
|
Board
Fees
|
|
LOWELL
RUSH
|
3/31/2015
|
Common
|
2,660
|
Board
Fees
|
|
JASON
BARTON
|
3/31/2015
|
Common
|
831
|
Consulting
Fees
|
|
JOSE
ROMANO
|
3/31/2015
|
Common
|
831
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
3/31/2015
|
Common
|
8,152
|
Consulting
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
4/30/2015
|
Common
|
925
|
Consulting
Fees
|
|
JOSEF
ZIHL
|
4/30/2015
|
Common
|
1,849
|
Consulting
Fees
|
|
ACORN
MANAGEMENT PTS
|
4/15/2015
|
Common
|
4,630
|
Consulting
Fees
|
|
JASON
BARTON
|
3/31/2015
|
Common
|
1,070
|
Consulting
Fees
|
|
JOSE
ROMANO
|
6/30/2015
|
Common
|
1,070
|
Consulting
Fees
|
|
OSCAR
BRONSTHER
|
6/30/2015
|
Common
|
3,425
|
Board
Fees
|
|
LOWELL
RUSH
|
6/30/2015
|
Common
|
3,425
|
Board
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
6/30/2015
|
Common
|
8,333
|
Consulting
Fees
|
|
STEVE
GIRGENTI
|
7/1/2015
|
Common
|
3,425
|
Board
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
7/31/2015
|
Common
|
1,184
|
Consulting
Fees
|
|
JOSEF
ZIHL
|
7/31/2015
|
Common
|
2,367
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
8/5/2015
|
Series
D. Pref.
|
5,946
|
Series
D Dividend
|
|
PETER
C. ZACHARIOU
|
8/5/2015
|
Series
D. Pref.
|
2,194
|
Series
D Dividend
|
|
CRAIG
KIRSCH
|
8/5/2015
|
Series
D. Pref.
|
393
|
Series
D Dividend
|
|
LIOLIOS
GROUP, INC.
|
8/6/2015
|
Common
|
2,646
|
Consulting
Fees
|
|
ACORN
MANAGEMENT PTS
|
8/15/2015
|
Common
|
4,630
|
Consulting
Fees
|
|
LIOLIOS
GROUP, INC.
|
9/4/2015
|
Common
|
2,096
|
Consulting
Fees
|
|
ACORN
MANAGEMENT PTS
|
9/15/2015
|
Common
|
4,630
|
Consulting
Fees
|
|
JASON
BARTON
|
9/30/2015
|
Common
|
1,056
|
Consulting
Fees
|
|
JOSE
ROMANO
|
9/30/2015
|
Common
|
1,056
|
Consulting
Fees
|
|
OSCAR
BRONSTHER
|
9/30/2015
|
Common
|
3,378
|
Board
Fees
|
|
LOWELL
RUSH
|
9/30/2015
|
Common
|
3,378
|
Board
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
9/30/2015
|
Common
|
16,667
|
Consulting
Fees
|
|
STEVE
GIRGENTI
|
10/1/2015
|
Common
|
3,378
|
Board
Fees
|
|
LIOLIOS
GROUP, INC.
|
10/4/2015
|
Common
|
2,252
|
Consulting
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
1/31/2015
|
Common
|
1,995
|
Consulting
Fees
|
|
JOSEF
ZIHL
|
1/31/2015
|
Common
|
2,216
|
Consulting
Fees
|
|
JASON
BARTON
|
12/31/2015
|
Common
|
3,196
|
Consulting
Fees
|
|
JOSE
ROMANO
|
12/31/2015
|
Common
|
3,196
|
Consulting
Fees
|
|
OSCAR
BRONSTHER
|
12/31/2015
|
Common
|
5,682
|
Board
Fees
|
|
LOWELL
RUSH
|
12/31/2015
|
Common
|
5,682
|
Board
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
1/31/2016
|
Common
|
3,801
|
Consulting
Fees
|
|
JOSEF
ZIHL
|
1/31/2016
|
Common
|
4,223
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
2/5/2016
|
Series
D. Pref.
|
6,154
|
Series
D Dividend
|
|
PETER
C. ZACHARIOU
|
2/5/2016
|
Series
D. Pref.
|
2,720
|
Series
D Dividend
|
|
CRAIG
KIRSCH
|
2/5/2016
|
Series
D. Pref.
|
407
|
Series
D Dividend
|
|
JASON
BARTON
|
3/31/2016
|
Common
|
4,464
|
Consulting
Fees
|
|
JOSE
ROMANO
|
3/31/2016
|
Common
|
4,464
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
3/31/2016
|
Common
|
16,667
|
Consulting
Fees
|
|
TECHMED,
INC.
|
4/2/2016
|
Common
|
9,921
|
Consulting
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
4/30/2016
|
Common
|
4,688
|
Consulting
Fees
|
|
VALEO
CONSULTING
|
5/6/2016
|
Common
|
50,000
|
Consulting
Fees
|
|
JASON
BARTON
|
6/30/2016
|
Common
|
5,307
|
Consulting
Fees
|
|
JOSE
ROMANO
|
6/30/2016
|
Common
|
5,307
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
6/30/2016
|
Common
|
16,667
|
Consulting
Fees
|
|
ALVARO
PASCUAL-LEONE M.D.
|
7/31/2016
|
Common
|
5,859
|
Consulting
Fees
|
|
VALEO
CONSULTING
|
8/1/2016
|
Common
|
50,000
|
Consulting
Fees
|
|
FOUNTAINHEAD
CAPITAL MANAGEMENT LIMITED
|
8/5/2016
|
Series
D. Pref.
|
6,369
|
Series
D Dividend
|
|
PETER
C. ZACHARIOU
|
8/5/2016
|
Series
D. Pref.
|
2,349
|
Series
D Dividend
|
|
CRAIG
KIRSCH
|
8/5/2016
|
Series
D. Pref.
|
421
|
Series
D Dividend
|
|
VALEO
CONSULTING
|
8/1/2016
|
Common
|
50,000
|
Consulting
Fees
|
|
TECHMED,
INC.
|
9/1/2016
|
Common
|
5,483
|
Consulting
Fees
|
The
securities issued in the abovementioned transactions were issued in
connection with private placements exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as
amended, pursuant to the terms of Section 4(2) of that Act and Rule
506 of Regulation D.
Item 16. Exhibits
|
Exhibit
No.
|
Description
|
|
|
|
|
3.1
(a)
|
Certificate
of Incorporation of Vycor Medical, Inc. (previously
filed)
|
|
|
|
|
3.1(b)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated as of January 11, 2010 (previously filed)
|
|
|
|
|
3.1(c)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated July 20, 02010 (previously filed)
|
|
|
|
|
3.1(d)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated as of January 11, 2013 (previously filed)
|
|
|
|
|
3.2
|
Bylaws
of Vycor Medical, Inc. (previously filed)
|
|
|
|
|
5.1
|
Legal
Opinion of Legal Robert Diener, Esq.
|
|
|
|
|
23.1
|
Legal
Opinion of Legal Robert Diener, Esq. (included with Exhibit
5.1)
|
|
|
|
|
23.2
|
Consent
of Independent Auditors
|
|
|
|
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
i.
To include any
prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii.
To reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the
effective registration statement.
iii.
To
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; Provided however, That:
A.
Paragraphs
(a)(1)(i) and (a)(1)(ii) of this section do not apply if the
registration statement is on Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement; and
B.
Paragraphs
(a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply
if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished
to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
2.
That, for the
purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3.
To remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
4.
If the registrant
is a foreign private issuer, to file a post-effective amendment to
the registration statement to include any financial statements
required by Item 8.A. of Form 20-F at the start of any delayed
offering or throughout a continuous offering. Financial statements
and information otherwise required by Section 10(a)(3) of the Act
need not be furnished,
provided
that the registrant includes
in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect
to registration statements on Form F-3, a post- effective amendment
need not be filed to include financial statements and information
required by Section 10(a)(3) of the Act or Rule 3-19 of this
chapter if such financial statements and information are contained
in periodic reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
5.
That, for the
purpose of determining liability under the Securities Act of 1933
to any purchaser:
i.
If the registrant
is relying on Rule 430B:
A.
Each prospectus
filed by the registrant pursuant to Rule 424(b)(3)shall be deemed
to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration
statement; and
B.
Each prospectus
required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii),
or (x) for the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed to be
part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided
in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to
be a new effective date of the registration statement relating to
the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date;
or
ii.
If the registrant
is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other
than prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the
date it is first used after effectiveness. Provided, however, that
no statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such date of first use.
6.
That, for the
purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution
of the securities: The undersigned registrant undertakes that in a
primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer
or sell such securities to such purchaser:
i.
Any preliminary
prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule
424;
ii.
Any free writing
prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
iii.
The
portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv.
Any other
communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of
Boca Raton in the State of Florida on the 5th day of October,
2016.
|
|
Vycor
Medical, Inc
(Registrant)
|
|
|
|
|
|
|
|
Date October 5,
2016
|
By:
|
/s/
Peter C. Zachariou
|
|
|
|
|
Peter C.
Zachariou
|
|
|
|
|
Chief Executive
Officer and Director (Principal Executive
Officer)
|
|
|
|
|
|
|
|
Date October 5,
2016
|
By:
|
/s/
Adrian Liddell
|
|
|
|
|
Adrian
Liddell
|
|
|
|
|
Chairman of the
Board and Director (Principal Financial and Accounting
Officer)
|
|
Pursuant to the
requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the
registrant and in the capacity and on the date
indicated.
|
|
|
|
|
|
Date
October
5, 2016
|
By:
|
/s/
David Cantor
|
|
|
|
|
David Cantor
President and Director
|
|
|
|
|
|
|
|
Date
October
5, 2016
|
By:
|
|
|
|
|
|
Pascale Heuberger
Director
|
|
|
|
|
|
|
|
Date
October
5, 2016
|
By:
|
/s/
Steven Girgenti
|
|
|
|
|
Steven Girgenti
Director
|
|
|
|
|
|
|
|
Date
October
5, 2016
|
By:
|
/s/
Lowell Rush
|
|
|
|
|
Lowell Rush
Director
|
|
|
|
|
|
|
|
Date
October
5, 2016
|
By:
|
/s/
O
s
car Bronsther,
M.D.
|
|
|
|
|
Oscar Bronsther,
M.D. Director
|
|
EXHIBIT
LIST
|
Exhibit
No.
|
Description
|
|
|
|
|
3.1
(a)
|
Certificate
of Incorporation of Vycor Medical, Inc. (previously
filed)
|
|
|
|
|
3.1(b)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated as of January 11, 2010 (previously filed)
|
|
|
|
|
3.1(c)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated July 20, 02010 (previously filed)
|
|
|
|
|
3.1(d)
|
Certificate
of Amendment to Certificate of Incorporation of Vycor Medical, Inc.
dated as of January 11, 2013 (previously filed)
|
|
|
|
|
3.2
|
Bylaws
of Vycor Medical, Inc. (previously filed)
|
|
|
|
|
5.1
|
Legal
Opinion of Legal Robert Diener, Esq.
|
|
|
|
|
23.1
|
Legal
Opinion of Legal Robert Diener, Esq. (included with Exhibit
5.1)
|
|
|
|
|
23.2
|
Consent
of Independent Auditors
|
Grafico Azioni Vycor Medical (QB) (USOTC:VYCO)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Vycor Medical (QB) (USOTC:VYCO)
Storico
Da Giu 2023 a Giu 2024
