UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission File Number: 0-51475
 VICOR TECHNOLOGIES, INC.
  Delaware
    
    20-2903491(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2300 NW Corporate Boulevard, Suite 123, Boca Raton, Florida
    
    33431(Address of principal executive office)
    
    (Zip Code)
 (561) 995-7313
 þ o
 o o
  Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS
  o þ




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##### 



VICOR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q for the Period Ended June 30, 2010
  TABLE OF CONTENTS 
 PagePART I  Financial InformationItem 1. Condensed Consolidated Financial Statements:Condensed Consolidated Balance Sheets as of December 31, 2009 and June 30, 2010 (unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the three and six months ended June
30, 2009 and 2010 and the period from August 4, 2000 (inception) through June 30, 2010
(unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended June
30, 2009 and 2010 and the period from August 4, 2000 (inception) through June 30, 2010
(unaudited)
    
    
    6Condensed Consolidated Statement of Changes in Net Capital Deficiency for the six months
ended June 30, 2010 (unaudited)
    
    
    8Notes to Condensed Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4T. Controls and Procedures
    
    
    30PART II  Other Information
    
    
    31Item 1. Legal Proceedings
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 4. Removed and Reserved
    
    
    31Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    32Signatures
    
    
    32
  2




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##### 



Vicor
Technologies, Inc.
(A Development Stage Company)


Condensed Consolidated Balance Sheets
As of December 31, 2009 and June 30, 2010
(Unaudited)
 June 30,December 31, 2009
    
    
    2010ASSETSCurrent assets:Cash
    
    $
    544,000
    
    
    $
    1,257,000Accounts receivable
    
    
    
    
    
    
    61,000Inventory
    
    
    
    
    
    
    141,000Prepaid expenses
    
    
    74,000
    
    
    
    69,000Total current assets
    
    
    618,000
    
    
    
    1,528,000Property and equipment:Equipment
    
    
    35,000
    
    
    
    142,000Furniture and fixtures
    
    
    24,000
    
    
    
    24,000Less accumulated depreciation
    
    
    (38,000
    )
    
    
    (52,000
    )Net property and equipment
    
    
    21,000
    
    
    
    114,000Other assetsDeposits
    
    
    12,000
    
    
    
    16,000Deferred charges
    
    
    168,000
    
    
    
    731,000Intellectual property, net of accumulated amortization of $223,000 and
$243,000 at December 31, 2009 and June 30, 2010, respectively
    
    
    229,000
    
    
    
    209,000$
    1,048,000
    
    
    $
    2,598,000LIABILITIES AND NET CAPITAL DEFICIENCYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    600,000
    
    
    $
    994,000Current debt
    
    
    460,000
    
    
    
    660,000Due to related parties
    
    
    100,000
    
    
    
    90,000Total current liabilities
    
    
    1,160,000
    
    
    
    1,744,000Long-term liabilities:Long-term debt
    
    
    1,251,000
    
    
    
    1,662,000Accrued dividends
    
    
    833,000
    
    
    
    1,073,000Derivative financial instruments payable in shares of common stock
    
    
    4,414,000
    
    
    
    6,611,000Total long-term liabilities
    
    
    6,498,000
    
    
    
    9,346,000Commitments and contingenciesNet capital deficiency:Preferred stock, $.0001 par value; 10,000,000 shares authorized:Series A Convertible Cumulative, 157,592 shares issued and outstanding
at December 31, 2009 and June 30, 2010, respectively; preference in liquidation
of $751,000 and $786,000 at December 31, 2009 and June 30, 2010, respectively
    
    
    
    
    
    
    Series B Voting Junior Convertible Cumulative, 5,210,101 shares issued and outstanding
at December 31, 2009 and June 30, 2010, respectively; preference in liquidation
of $5,386,000 and $5,594,000 at December 31, 2009 and June 30, 2010, respectively
    
    
    
    
    
    
    Common stock, $.0001 par value; 100,000,000 shares authorized;
41,813,959 and 45,403,976 shares issued and outstanding at
December 31, 2009 and June 30, 2010, respectively
    
    
    4,000
    
    
    
    5,000Additional paid-in capital
    
    
    46,848,000
    
    
    
    49,556,000Deficit accumulated during the development stage
    
    
    (53,462,000
    )
    
    
    (58,053,000
    )Net capital deficiency
    
    
    (6,610,000
    )
    
    
    (8,492,000
    )$
    1,048,000
    
    
    $
    2,598,000
  3




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##### 



Vicor
Technologies, Inc.
(A Development Stage Company)


Condensed Consolidated Statements of Operations
For the three months ended June 30, 2009 and 2010
(Unaudited)
 Three months ended
    
    
    Three months endedJune 30,
    
    
    June 30,2009
    
    
    2010Revenues
    
    $
    
    
    
    $
    8,000Operating expenses:Cost of sales
    
    
    
    
    
    
    2,000Research and development
    
    
    271,000
    
    
    
    193,000Selling, general and administrative expenses
    
    
    599,000
    
    
    
    1,400,000Interest expense
    
    
    338,000
    
    
    
    646,000Total operating expenses
    
    
    1,208,000
    
    
    
    2,241,000Gain (loss) on derivative financial instruments
    
    
    (88,000
    )
    
    
    454,000Net loss
    
    
    (1,296,000
    )
    
    
    (1,779,000
    )Dividends for the benefit of preferred stockholders:Payable on Series A and Series B preferred stock
    
    
    (103,000
    )
    
    
    (114,000
    )Amortization of derivative discount on Series B
preferred stock
    
    
    (93,000
    )
    
    
    (250,000
    )Total dividends for the benefit of
preferred stockholders
    
    
    (196,000
    )
    
    
    (364,000
    )Net loss applicable to common stock
    
    $
    (1,492,000
    )
    
    $
    (2,143,000
    )Net loss per common share  basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.05
    )Weighted average number of shares of common shares
    
    
    36,289,671
    
    
    
    44,603,885
  4




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##### 



Vicor
Technologies, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Operations
For the six months ended June 30, 2009 and 2010 and
For the period from August 4, 2000 (inception) to June 30, 2010
(Unaudited)
 Period fromAugust 4, 2000Six months ended
    
    
    Six months ended
    
    
    (Inception) toJune 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2010
    
    
    2010Revenues
    
    $
    
    
    
    $
    108,000
    
    
    $
    952,000Operating expenses:Cost of sales
    
    
    
    
    
    
    87,000
    
    
    
    87,000Research and development
    
    
    470,000
    
    
    
    350,000
    
    
    
    15,377,000Selling, general and administrative expenses
    
    
    1,189,000
    
    
    
    2,857,000
    
    
    
    32,659,000Interest expense
    
    
    401,000
    
    
    
    1,003,000
    
    
    
    9,689,000Loss from
extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    1,266,000Total operating expenses
    
    
    2,060,000
    
    
    
    4,297,000
    
    
    
    57,812,000Gain (loss) on derivative financial instruments
    
    
    (382,000
    )
    
    
    337,000
    
    
    
    2,494,000Net loss
    
    
    (2,442,000
    )
    
    
    (3,852,000
    )
    
    
    (54,366,000
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    480,000Dividends for the benefit of preferred stockholders:Payable on Series A and Series B preferred stock
    
    
    (204,000
    )
    
    
    (240,000
    )
    
    
    (1,153,000
    )Amortization of derivative discount on Series B
preferred stock
    
    
    (321,000
    )
    
    
    (499,000
    )
    
    
    (1,478,000
    )Value of warrants issued in connection with sales of
Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    (1,536,000
    )Total dividends for the benefit of preferred stockholders
    
    
    (525,000
    )
    
    
    (739,000
    )
    
    
    (4,167,000
    )Net loss applicable to common stock
    
    $
    (2,967,000
    )
    
    $
    (4,591,000
    )
    
    $
    (58,053,000
    )Net loss per common share  basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.11
    )Weighted average number of shares of common shares outstanding
    
    
    35,649,907
    
    
    
    43,524,192
  5




---



##### 



Vicor
Technologies, Inc.
(A Development Stage Company)


Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2009 and 2010 and
For the period from August 4, 2000 (inception) to June 30, 2010
(Unaudited)
 Period fromSix months
    
    
    Six months
    
    
    August 4, 2000ended
    
    
    ended
    
    
    (Inception) toJune 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2010
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (2,442,000
    )
    
    $
    (3,852,000
    )
    
    $
    (54,366,000
    )Adjustment to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    22,000
    
    
    
    35,000
    
    
    
    358,000Noncash interest imputed upon conversion of debt
to equity
    
    
    165,000
    
    
    
    
    
    
    
    5,620,000Noncash interest from deferred financing costs and
debt-based derivative liabilities
    
    
    146,000
    
    
    
    824,000
    
    
    
    3,145,000Loss (gain) on derivative financial instruments
    
    
    382,000
    
    
    
    (337,000
    )
    
    
    (2,494,000
    )Loss (gain) from sale of assets
    
    
    
    
    
    
    
    
    
    
    48,000Securities issued for services
    
    
    13,000
    
    
    
    35,000
    
    
    
    1,176,000Beneficial conversion feature of notes payable
    
    
    
    
    
    
    33,000
    
    
    
    234,000Contributed research and development services
    
    
    
    
    
    
    
    
    
    
    95,000Merger-related costs
    
    
    
    
    
    
    
    
    
    
    523,000Shares in lieu of interest payments
    
    
    19,000
    
    
    
    2,000
    
    
    
    382,000Equity-based compensation
    
    
    220,000
    
    
    
    409,000
    
    
    
    19,074,000Changes in assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (61,000
    )
    
    
    (61,000
    )Inventory
    
    
    
    
    
    
    (141,000
    )
    
    
    (141,000
    )Prepaid expenses and other assets
    
    
    (166,000
    )
    
    
    (731,000
    )
    
    
    (1,154,000
    )Accounts payable and accrued expenses
    
    
    (101,000
    )
    
    
    937,000
    
    
    
    2,510,000Net cash used in operating activities
    
    
    (1,742,000
    )
    
    
    (2,847,000
    )
    
    
    (25,051,000
    )Cash flows from investing activities:Purchase of intellectual property
    
    
    
    
    
    
    
    
    
    
    (237,000
    )Net proceeds from sale of equipment
    
    
    
    
    
    
    
    
    
    
    59,000Purchase of property and equipment
    
    
    
    
    
    
    (107,000
    )
    
    
    (284,000
    )Net cash used in investing activities
    
    
    
    
    
    
    (107,000
    )
    
    
    (462,000
    )Cash flows from financing activities:Due to related parties
    
    
    
    
    
    
    
    
    
    
    100,000Proceeds from bank loans
    
    
    
    
    
    
    
    
    
    
    300,000Proceeds from sale of preferred stock
    
    
    351,000
    
    
    
    
    
    
    
    2,915,000Proceeds from sale of common stock
    
    
    128,000
    
    
    
    
    
    
    
    11,268,000Repayment of notes
    
    
    (200,000
    )
    
    
    
    
    
    
    (905,000
    )Proceeds from bridge loan
    
    
    300,000
    
    
    
    
    
    
    
    300,000Proceeds from sale of notes
    
    
    1,190,000
    
    
    
    3,667,000
    
    
    
    12,598,000Proceeds for stock to be issued
    
    
    
    
    
    
    
    
    
    
    16,000Contributed capital
    
    
    
    
    
    
    
    
    
    
    178,000Net cash provided by financing activities
    
    
    1,769,000
    
    
    
    3,667,000
    
    
    
    26,770,000Net increase (decrease) in cash
    
    
    27,000
    
    
    
    713,000
    
    
    
    1,257,000Cash at beginning of period
    
    
    182,000
    
    
    
    544,000
    
    
    
    Cash at end of period
    
    $
    209,000
    
    
    $
    1,257,000
    
    
    $
    1,257,000
  6




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##### 



Vicor
Technologies, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
For the Six months ended June 30, 2009 and 2010 and
From August 4, 2000 (inception) to March 31, 2010
(Unaudited)
 Period fromSix months
    
    
    Six months
    
    
    August 4, 2000ended
    
    
    ended
    
    
    (Inception) toJune 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2010
    
    
    2010Supplemental cash flow information:Issuance of previously-subscribed common stock
    
    $
    16,000
    
    
    $
    
    
    
    $
    16,000Conversion of accounts payable to note payable
    
    
    
    
    
    
    
    
    
    
    100,000Repurchase of common stock for cancellation of subscription note
receivable
    
    
    
    
    
    
    
    
    
    
    750,000Contributed research and development
    
    
    
    
    
    
    
    
    
    
    95,000Acquisition of intellectual property from related party
    
    
    
    
    
    
    
    
    
    
    200,000Beneficial conversion features for promissory notes
    
    
    
    
    
    
    
    
    
    
    912,000Warrants issued in connection with 15% promissory notes
    
    
    
    
    
    
    
    
    
    
    261,000Warrants issued in connection with 8% Subordinated Convertible
Notes
    
    
    
    
    
    
    557,000
    
    
    
    674,000Cash paid for interest expense
    
    
    47,000
    
    
    
    36,000
    
    
    
    995,000Accrued equity-based compensation
    
    
    
    
    
    
    
    
    
    
    41,000Accrued dividends
    
    
    204,000
    
    
    
    240,000
    
    
    
    2,623,000Interest on promissory notes paid in common stock
    
    
    
    
    
    
    
    
    
    
    520,000Related-party accrual converted to common stock
    
    
    
    
    
    
    
    
    
    
    561,000Conversion of debt to Series B Preferred Stock
    
    
    
    
    
    
    
    
    
    
    1,567,000Conversion of notes to common stock
    
    
    190,000
    
    
    
    1,206,000
    
    
    
    5,815,000Accrued expenses paid with preferred stock
    
    
    
    
    
    
    
    
    
    
    108,000Accrued expenses paid with common stock
    
    
    
    
    
    
    
    
    
    
    772,000Fair value of equity-based derivative financial instruments issued
    
    
    454,000
    
    
    
    
    
    
    
    816,000Fair value of debt-based derivative financial instruments issued
    
    
    
    
    
    
    2,535,000
    
    
    
    3,581,000Deferred costs paid with common stock
    
    
    193,000
    
    
    
    
    
    
    
    358,000Amortization of derivative discounts
    
    
    93,000
    
    
    
    499,000
    
    
    
    840,000Conversion of Series B preferred stock and accrued dividends to
common stock
    
    
    
    
    
    
    
    
    
    
    82,000
  7




---



##### 



Vicor Technologies, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Changes in Net Capital Deficiency
For the six months ended June 30, 2010
(Unaudited)
 Preferred Stock
    
    
    AdditionalCommon Stock
    
    
    Class A
    
    
    Class B
    
    
    Paid-In
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance at December 31, 2009
    
    
    41,813,959
    
    
    $
    4,000
    
    
    
    157,592
    
    
    $
    
    
    
    
    5,210,101
    
    
    $
    
    
    
    $
    46,848,000
    
    
    $
    (53,462,000
    )
    
    $
    (6,610,000
    )Accrued dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (240,000
    )
    
    
    (240,000
    )Issuance of stock for interest payments
    
    
    2,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    2,000Issuance of stock for services
    
    
    244,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172,000
    
    
    
    
    
    
    
    172,000Issuance of stock options for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272,000
    
    
    
    
    
    
    
    272,000Issuance of stock for conversion of notes payable
    
    
    3,318,515
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,206,000
    
    
    
    
    
    
    
    1,207,000Warrants issued related to notes payable
transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    557,000
    
    
    
    
    
    
    
    557,000Exercise of warrants
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of discounts related to derivative
financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    499,000
    
    
    
    (499,000
    )
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,852,000
    )
    
    
    (3,852,000
    )Balance at June 30, 2010
    
    
    45,403,976
    
    
    $
    5,000
    
    
    
    157,592
    
    
    $
    
    
    
    
    5,210,101
    
    
    $
    
    
    
    $
    49,556,000
    
    
    $
    (58,053,000
    )
    
    $
    (8,492,000
    )
  8




---



##### 



NOTE 1 ORGANIZATION AND NATURE OF BUSINESS
 Organization
   Nature of the business
 ® ® ® ® ®
   Risks
  9




---



##### 



NOTE 1 ORGANIZATION AND NATURE OF BUSINESS, CONTINUED
   NOTE 2 LIQUIDITY
    NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
 Basis of Presentation
   10




---



##### 



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION, CONTINUED
  Cumulative Effect of a Change in Accounting Principle
   Concentration of Credit Risk
   Accounts receivable
  Inventory
  Property and Equipment
  11




---



##### 



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION, CONTINUED
 Research and Development Costs
  Revenue Recognition
         Cash and Cash Equivalents
  Intellectual Property
  December 31,
    
    
    June 30,2009
    
    
    2010Patents
    
    $
    252,000
    
    
    $
    252,000Purchased software
    
    
    200,000
    
    
    
    200,000452,000
    
    
    
    452,000Less accumulated amortization
    
    
    (223,000
    )
    
    
    (243,000
    )Net intellectual property
    
    $
    229,000
    
    
    $
    209,000
 12




---



##### 



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION, CONTINUED
  Use of Estimates
  Accounting for Stock-Based Compensation
   Financial Instruments
        13




---



##### 



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION, CONTINUED
 Long-Lived Assets
  Reclassifications
  Recent Accounting Pronouncements
  NOTE 4 CURRENT DEBT
  December 31,
    
    
    June 30,2009
    
    
    20102004 Notes
    
    $
    250,000
    
    
    $
    250,00012% Convertible Promissory Notes
    
    
    110,000
    
    
    
    110,000Bank loans
    
    
    100,000
    
    
    
    300,000$
    460,000
    
    
    $
    660,000
 2004 Notes
  12% Convertible Promissory Notes
  Bank Loans
  14




---



##### 



NOTE 5 LONG-TERM DEBT
  December 31,
    
    
    June 30,2009
    
    
    20108% Convertible Notes
    
    $
    773,000
    
    
    $
    8% Subordinated Convertible Promissory Notes
    
    
    278,000
    
    
    
    1,662,000Bank loans
    
    
    200,000
    
    
    
    Balance
    
    $
    1,251,000
    
    
    $
    1,662,000
 8% Convertible Notes
   December 31,
    
    
    June 30,2009
    
    
    20108% Notes sold
    
    $
    2,671,000
    
    
    $
    2,671,0008% Notes converted
    
    
    (1,574,000
    )
    
    
    (2,671,000
    )1,097,000
    
    
    
    Unamortized discount
    
    
    (324,000
    )
    
    
    Balance
    
    $
    773,000
    
    
    $
    
  8% Subordinated Convertible Notes
  15




---



##### 



NOTE 5 LONG-TERM DEBT, CONTINUED
    December 31,
    
    
    June 30,2009
    
    
    20108% Subordinated Notes sold
    
    $
    903,000
    
    
    $
    4,570,000Unamortized discount
    
    
    (625,000
    )
    
    
    (2,908,000
    )Balance
    
    $
    278,000
    
    
    $
    1,662,000
  NOTE 6  PREFERRED STOCK
      16




---



##### 



NOTE 6  PREFERRED STOCK, CONTINUED
    NOTE 7  STOCKHOLDERS EQUITY
     17




---



##### 



NOTE 7  STOCKHOLDERS EQUITY, CONTINUED
 Shares Under
    
    
    Weighted-AverageWarrants
    
    
    Exercise PriceBalance at inception
    
    
    
    
    
    $
    Granted in connection with stock sold
    
    
    148,000
    
    
    
    1.00Exercised
    
    
    
    
    
    
    Outstanding at December 31, 2000
    
    
    148,000
    
    
    
    1.00Granted to employees and others
    
    
    900,000
    
    
    
    0.67Exercised
    
    
    
    
    
    
    Exercisable at December 31, 2001
    
    
    1,048,000
    
    
    
    0.72Granted to employees and others
    
    
    1,270,252
    
    
    
    1.09Exercised
    
    
    (750
    )
    
    
    Exercisable at December 31, 2002
    
    
    2,317,502
    
    
    
    0.92Granted to employees and others
    
    
    1,520,332
    
    
    
    1.14Exercised
    
    
    (750
    )
    
    
    Exercisable at December 31, 2003
    
    
    3,837,084
    
    
    
    1.01Granted to employees and others
    
    
    126,200
    
    
    
    0.93Exercised
    
    
    
    
    
    
    Exercisable at December 31, 2004
    
    
    3,963,284
    
    
    
    1.01Granted to employees and others
    
    
    595,180
    
    
    
    1.21Exercised
    
    
    (101,750
    )
    
    
    Exercisable at December 31, 2005
    
    
    4,456,714
    
    
    
    1.06Granted to employees and others
    
    
    70,000
    
    
    
    2.50Exercised
    
    
    (398,000
    )
    
    
    Exercisable at December 31, 2006
    
    
    4,128,714
    
    
    
    1.09Granted to employees and others
    
    
    470,500
    
    
    
    1.00Exercised
    
    
    (3,469,908
    )
    
    
    Exercisable at December 31, 2007
    
    
    1,129,306
    
    
    
    1.96Granted to employees and others
    
    
    9,976,707
    
    
    
    0.85Exercised
    
    
    
    
    
    
    Exercisable at December 31, 2008
    
    
    11,106,013
    
    
    
    0.96Granted to employees and others
    
    
    1,941,823
    
    
    
    0.90Exercised
    
    
    (624,494
    )
    
    
    0.09Exercisable at December 31, 2009
    
    
    12,423,342
    
    
    
    0.98Granted to employees and others
    
    
    5,868,252
    
    
    
    1.00Exercised
    
    
    (25,000
    )
    
    
    0.01Exercisable at June 30, 2010
    
    
    18,266,594
    
    
    
    0.99
  18




---



##### 



NOTE 7  STOCKHOLDERS EQUITY, CONTINUED
  AverageYear of
    
    
    
    
    
    
    
    exerciseexpiration
    
    
    
    Quantity
    
    price2010
    
    
    
    
    
    62,492
    
    
    $
    2.502011
    
    
    
    
    
    580,414
    
    
    $
    2.442013
    
    
    
    
    
    9,128,463
    
    
    $
    0.952014
    
    
    
    
    
    2,991,973
    
    
    $
    0.952015
    
    
    
    
    
    4,140,000
    
    
    $
    1.002016
    
    
    
    
    
    10,000
    
    
    $
    1.252017
    
    
    
    
    
    375,000
    
    
    $
    1.00
 NOTE 8  STOCK OPTION PLANS
    19




---



##### 



NOTE 8  STOCK OPTION PLANS, CONTINUED
  Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageNumber
    
    Exercise
    
    Options
    
    Exerciseof Shares
    
    Price
    
    Exercisable
    
    PriceOptions outstanding at inception
    
    
    Granted
    
    
    50,000
    
    
    $
    3.00Outstanding at December 31, 2002
    
    
    50,000
    
    
    $
    3.00
    
    
    
    10,000
    
    
    $
    3.00Granted
    
    
    Outstanding at December 31, 2003
    
    
    50,000
    
    
    $
    3.00
    
    
    
    30,000
    
    
    $
    3.00Granted
    
    
    1,000
    
    
    $
    3.25Outstanding at December 31, 2004
    
    
    51,000
    
    
    $
    3.01
    
    
    
    51,000
    
    
    $
    3.01Granted
    
    
    269,000
    
    
    $
    2.50Cancelled
    
    
    (25,000
    )
    
    $
    2.50Outstanding at December 31, 2005
    
    
    295,000
    
    
    
    
    
    
    
    295,000
    
    
    $
    2.59Granted
    
    
    80,000
    
    
    $
    2.50Cancelled
    
    
    (35,000
    )Outstanding at December 31, 2006
    
    
    340,000
    
    
    
    
    
    
    
    340,000
    
    
    $
    2.58Granted
    
    
    122,500
    
    
    
    
    
    
    
    
    
    
    $
    0.78Exercised in cashless exercise March 30, 2007
    
    
    (340,000
    )
    
    $
    2.58
    
    
    
    Outstanding
at June 30, 2010
    
    
    122,500
    
    
    
    
    
    
    
    122,500
    
    
    $
    0.78Reserved for future option grants at June 30, 2010
    
    
    477,500
  20




---



##### 



NOTE 8  STOCK OPTION PLANS, CONTINUED
  Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageNumber of
    
    Exercise
    
    Options
    
    ExerciseShares
    
    Price
    
    Exercisable
    
    PriceOptions outstanding at inception
    
    
    Granted
    
    
    417,500
    
    
    $
    0.72
    
    
    
    417,500
    
    
    $
    0.72Outstanding at December 31, 2008
    
    
    417,500
    
    
    
    
    
    
    
    
    
    
    $
    0.72Granted
    
    
    2,150,000
    
    
    $
    0.78
    
    
    
    2,150,000
    
    
    $
    0.78Outstanding at December 31, 2009
    
    
    2,567,500
    
    
    
    
    
    
    
    
    
    
    $
    0.77Granted
    
    
    625,000
    
    
    $
    0.70
    
    
    
    412,500
    
    
    $
    0.70Outstanding at June 30, 2010
    
    
    3,192,500
    
    
    
    
    
    
    
    
    
    
    $
    0.75Reserved for future option grants at June 30, 2010
    
    
    1,807,500
    NOTE 9  FAIR VALUE OF FINANCIAL INSTRUMENTS
   
    
    Level 1  Valuations for assets and liabilities traded in active exchange markets, or
interest in open-end mutual funds that allow a company to sell its ownership interest back
at net asset value (NAV) on a daily basis. Valuations are obtained from readily
available pricing sources for market transactions involving identical assets, liabilities
or funds.
    
    Level 2  Valuations for assets and liabilities traded in less active dealer, or
broker markets, such as quoted prices for similar assets or liabilities or quoted prices
in markets that are not active.
    
    Level 3  Valuations for assets and liabilities that are derived from other valuation
methodologies, such as option pricing models, discounted cash flow models and similar
techniques, and not based on market exchange, dealer, or broker traded transactions. Level
3 valuations incorporate certain assumptions and projections in determining the fair value
assigned to such assets or liabilities.
  21




---



##### 



NOTE 9  FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
  Recurring Fair Value Measurement Valuation Techniques
  Derivative Financial Instruments
  December 31, 2009
    
    June 30, 2010Beneficial Conversion:Risk-free interest rate
    
    
    1.4% - 3.0
    %
    
    
    1.00% - 1.79
    %Expected volatility
    
    
    63
    %
    
    
    63
    %Expected life (in years)
    
    
    1.50 - 4.50
    
    
    
    2.25 - 4.25Expected dividend yield
    
    
    0
    %
    
    
    0
    %Warrants:Risk-free interest rate
    
    
    1.4% - 3.0
    %
    
    
    1.79
    %Expected volatility
    
    
    63
    %
    
    
    63
    %Expected life (in years)
    
    
    5
    
    
    
    5Expected dividend yield
    
    
    0
    %
    
    
    0
    %Fair value:Conversion feature
    
    $
    2,550,000
    
    
    $
    4,625,000Warrants
    
    $
    1,864,000
    
    
    $
    1,986,000
  Level 3 Assets and Liabilities
  22




---



##### 



NOTE 9  FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
  Quoted prices inactive markets for
    
    
    Significant other
    
    
    Significantidentical liabilities
    
    
    observable
    
    
    unobservableFair Value
    
    
    (Level 1)
    
    
    inputs (Level 2)
    
    
    inputs (Level 3)Liabilities:Derivative financial instruments  December 31,
2009
    
    $
    4,414,000
    
    
    $
    
    
    
    $
    
    
    
    $
    4,414,000Derivative financial instruments  June 30, 2010
    
    $
    6,611,000
    
    
    $
    
    
    
    $
    
    
    
    $
    6,611,000
  Beneficial
    
    
    BeneficialConversion -
    
    
    Conversion -Preferred
    
    
    ConvertibleWarrants
    
    
    Stock
    
    
    Notes
    
    
    TotalBalance, January 1, 2009
    
    $
    1,905,000
    
    
    $
    1,664,000
    
    
    $
    
    
    
    $
    3,569,000Included in earnings (1):Realized gain (loss)
    
    
    
    
    
    
    
    
    
    
    (36,000
    )
    
    
    (36,000
    )Unrealized gain (loss) (2)
    
    
    211,000
    
    
    
    189,000
    
    
    
    18,000
    
    
    
    418,000Purchases, sales and other
    
    
    207,000
    
    
    
    229,000
    
    
    
    779,000
    
    
    
    1,215,000Settlements and issuances  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net transfers in and/or out of
Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2009
    
    $
    2,323,000
    
    
    $
    2,082,000
    
    
    $
    761,000
    
    
    $
    5,166,000Balance, January 1, 2010
    
    $
    1,871,000
    
    
    $
    1,698,000
    
    
    $
    845,000
    
    
    $
    4,414,000Included in earnings (1):Realized gain (loss)
    
    
    
    
    
    
    
    
    
    
    (311,000
    )
    
    
    (311,000
    )Unrealized gain (loss) (2)
    
    
    115,000
    
    
    
    66,000
    
    
    
    (207,000
    )
    
    
    (26,000
    )Purchases, sales and other
    
    
    
    
    
    
    
    
    
    
    2,534,000
    
    
    
    2,534,000Settlements and issuances  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net transfers in and/or out of
Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2010
    
    $
    1,986,000
    
    
    $
    1,764,000
    
    
    $
    2,861,000
    
    
    $
    6,611,000
 
 (1)
    
    Gain included in earnings is reported as gain on derivative financial instruments.(2)
    
    Unrealized gain (loss) related to Level 3 instruments held at June 30, 2009 or June 30, 2010, respectively. NOTE 10  RELATED PARTY TRANSACTIONS
  23




---



##### 



NOTE 10  RELATED PARTY TRANSACTIONS, CONTINUED
   NOTE 11  COMMITMENTS AND CONTINGENCIES
  NOTE 12  SUBSEQUENT EVENTS
   
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Forward-Looking Statements
  Plan of Operations
    24




---



##### 



1.
    
    Increasing sales of the PD2i Analyzer to physicians and health care facilities in the
United States through the use of independent distributors and direct sales personnel.2.
    
    Raising additional capital with which to expand the sales and administrative
infrastructure and fund ongoing operations until our operations generate positive cash
flow.3.
    
    Completing various clinical trials and 510(k) submissions to secure additional
marketing claims for the PD2i Analyzer to enhance and accelerate marketing efforts.4.
    
    Initiating international sales of the PD2i Analyzer and PD2i-VS (Vital Sign),
including securing CE Mark Clearance, if required.
  Critical Accounting Estimates
  Research and Development Costs
 25




---



##### 



Intellectual Property
  Revenue Recognition
  Accounting for Stock-Based Compensation
  Accounting for Derivative Financial Instruments
  Fair Value of Financial Instruments
   26




---



##### 



Results of Operations
  Three months ended June 30,2009
    
    
    
    
    
    
    2010(UNAUDITED)Revenues
    
    $
    
    
    
    
    0.0
    %
    
    $
    8,000
    
    
    
    -0.4
    %Operating expenses:Cost of sales
    
    
    
    
    
    
    0.0
    %
    
    
    2,000
    
    
    
    0.1
    %Research and development
    
    
    271,000
    
    
    
    22.4
    %
    
    
    193,000
    
    
    
    8.6
    %General and administrative expenses
    
    
    599,000
    
    
    
    49.6
    %
    
    
    1,400,000
    
    
    
    62.5
    %Interest expense
    
    
    338,000
    
    
    
    28.0
    %
    
    
    646,000
    
    
    
    28.8
    %Total operating expenses
    
    
    1,208,000
    
    
    
    100.0
    %
    
    
    2,241,000
    
    
    
    100.0
    %Unrealized gain/(loss) on derivative financial instrument
    
    
    (88,000
    )
    
    
    7.3
    %
    
    
    454,000
    
    
    
    -20.3
    %Net loss
    
    
    (1,296,000
    )
    
    
    107.3
    %
    
    
    (1,779,000
    )
    
    
    79.4
    %Dividends for the benefit of preferred stockholders:Payable on Series A and Series B preferred stock
    
    
    (103,000
    )
    
    
    8.5
    %
    
    
    (114,000
    )
    
    
    5.1
    %Amortization of derivative discount on Series B
preferred stock
    
    
    (93,000
    )
    
    
    7.7
    %
    
    
    (250,000
    )
    
    
    11.2
    %Total dividends for the benefit of preferred stock
    
    
    (196,000
    )
    
    
    16.2
    %
    
    
    (364,000
    )
    
    
    16.3
    %Net loss applicable to common stock
    
    $
    (1,492,000
    )
    
    
    123.5
    %
    
    $
    (2,143,000
    )
    
    
    95.7
    %Net loss per common share  basic and dilluted
    
    $
    (0.04
    )
    
    
    
    
    
    $
    (0.05
    )Weighted average number of shares of common shares o
    
    
    36,389,671
    
    
    
    
    
    
    
    44,603,885
 Six months ended June 30,2009
    
    
    
    
    
    
    2010(UNAUDITED)Revenues
    
    $
    
    
    
    
    0.0
    %
    
    $
    108,000
    
    
    
    -2.5
    %Operating expenses:Cost of sales
    
    
    
    
    
    
    0.0
    %
    
    
    87,000
    
    
    
    2.0
    %Research and development
    
    
    470,000
    
    
    
    22.8
    %
    
    
    350,000
    
    
    
    8.2
    %General and administrative expenses
    
    
    1,189,000
    
    
    
    57.7
    %
    
    
    2,857,000
    
    
    
    66.5
    %Interest expense
    
    
    401,000
    
    
    
    19.5
    %
    
    
    1,003,000
    
    
    
    23.3
    %Total operating expenses
    
    
    2,060,000
    
    
    
    100.0
    %
    
    
    4,297,000
    
    
    
    100.0
    %Unrealized gain/(loss) on derivative financial instrument
    
    
    (382,000
    )
    
    
    18.5
    %
    
    
    337,000
    
    
    
    -7.8
    %Net loss
    
    
    (2,442,000
    )
    
    
    118.5
    %
    
    
    (3,852,000
    )
    
    
    89.6
    %Dividends for the benefit of preferred stockholders:Payable on Series A and Series B preferred stock
    
    
    (204,000
    )
    
    
    9.9
    %
    
    
    (240,000
    )
    
    
    5.6
    %Amortization of derivative discount on Series B
preferred stock
    
    
    (321,000
    )
    
    
    15.6
    %
    
    
    (499,000
    )
    
    
    11.6
    %Total dividends for the benefit of preferred stock
    
    
    (525,000
    )
    
    
    25.5
    %
    
    
    (739,000
    )
    
    
    17.2
    %Net loss applicable to common stock
    
    $
    (2,967,000
    )
    
    
    144.0
    %
    
    $
    (4,591,000
    )
    
    
    106.9
    %Net loss per common share  basic and dilluted
    
    $
    (0.08
    )
    
    
    
    
    
    $
    (0.11
    )Weighted average number of shares of common shares o
    
    
    35,649,907
    
    
    
    
    
    
    
    43,524,192
 27




---



##### 



Three months ended June 30, 2010 compared to the three months ended June 30, 2009
 Revenues
    Cost of Sales
  Research and Development
 ®
 Selling, General and Administrative Expenses
  Interest Expense
  Six months ended June 30, 2010 compared to the six months ended June 30, 2009
 Revenues
  28




---



##### 



Cost of Sales
  Research and Development
  Selling, General and Administrative Expenses
  Interest Expense
  Liquidity and Capital Resources
     29




---



##### 



Going Concern
    Off-Balance Sheet Arrangements
  
    
    A retained or contingent interest in assets transferred to the unconsolidated entity
or similar arrangement that serves as credit;
    
    Liquidity or market risk support to such entity for such assets; or
    
    An obligation, including a contingent obligation, arising out of a variable interest
in an unconsolidated entity that is held by, and material to us, where such entity
provides financing, liquidity, market risk or credit risk support to, or engages in
leasing, hedging, or research and development services with us.
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
  
 Item 4T. Controls and Procedures.
    30




---



##### 



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
    
    Issued 51,412 shares of common stock to employees and consultants for services rendered.
    
    Issued 200,000 options to a director at an exercise price of $0.80 per share pursuant to
the 2008 Stock Option Plan.
    
    Issued 2,418,591 shares of common stock through the conversion of $802,439 principal
amount of 8% Notes.
    
    Sold 2,697,000 units consisting of $2,697,000 principal amount of 8% Subordinated Notes
with 3,527,500 warrants to purchase common stock. The warrants are immediately exercisable
at $1.00 per share and have a five-year term.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Removed and Reserved.
  31




---



##### 



Item 5. Other Information.
  
 Item 6. Exhibits
 Exhibit No.
    
    Description31.1
    
    Certification of David H. Fater, Chief Executive Officer, President and Chief Financial
Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*31.2
    
    Certification of Thomas J. Bohannon, Chief Accounting Officer, pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.*32.1
    
    Certification of David H. Fater, Chief Executive Officer, President and Chief Financial
Officer and Thomas J. Bohannon, Chief Accounting Officer, of Vicor Technologies, Inc.,
pursuant to 18 U.S.C. 1350.*
 
 *
    
    Filed herewith 
 SIGNATURES
  Dated: August 16, 2010
    Vicor Technologies, Inc.By:
    /s/ David H. FaterDavid H. FaterChief Executive Officer, President and
Chief Financial OfficerBy:
    /s/ Thomas J. BohannonName:
    Thomas J. BohannonTitle:
    Chief Accounting Officer 32