U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C.  20549  FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934  For the fiscal quarter ended_________March 31, 2009_______________  [   ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from                                         to  VYCOR MEDICAL, INC. (Exact name of small business issuer as specified in its charter)  Delaware333-14978220-3369218(State of Incorporation)(Commission File Number)(IRS Employer Identification No.)  80 Orville Drive, Suite 100, Bohemia, New York 11716 
(Address of principal executive offices) (Zip code)  Issuers telephone number: (631) 244 1435 Securities registered under Section 12(g) of the Exchange Act:  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No o  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o   
No o  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.  Large accelerated filer oAccelerated filer oNon-accelerated filer o   (Do not check if a smaller reporting company)Smaller reporting company þ  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No þ  There were 26,356,638 shares outstanding of registrant’s common stock, par value $.001 per share, as of April 30, 2009.  Transitional Small Business Disclosure Format (check one):     Yes o   No þ


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TABLE OF CONTENTS  Page  PART IItem 1.Financial StatementsConsolidated Balance Sheets as of March 31, 2009 (unaudited) and December 31, 20081Unaudited Consolidated Statements of Operations for the three months ended March 31, 2009 and March 31, 20082Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 20083Notes to Unaudited Consolidated Financial Statements4Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operation16Item 3Quantitative and Qualitative Disclosures About Market Risk24Item 4Controls and Procedures24PART IIItem 1.Legal Proceedings24Item 2Unregistered Sales of Equity Securities and Use of Proceeds24Item 3Defaults Upon Senior Securities24Item 4.Submission of Matters to a Vote of Security Holders24Item 5.Other Information24Item 6.Exhibits24SIGNATURES25


PART I

ITEM 1.  FINANCIAL STATEMENTS


VYCOR MEDICAL, INC. Balance Sheet March 31,
2009


March 31, 2009 (unaudited)
     
     December 31, 2008 (audited)ASSETSCurrent
AssetsCash
     
     
     
     $
     92,542
     
     
     $
     196,138Accounts
receivable
     
     
     
     
     46,143
     
     
     
     89,765Inventory
     
     
     
     
     56,101
     
     
     
     71,527Prepaid
expenses
     
     
     
     
     16,678
     
     
     
     7,040211,464
     
     
     
     364,470Fixed assets,
net
     
     
     
     
     208,221
     
     
     
     213,958Other
assets:Patents, net
of accumulated amortization
     
     
     
     
     40,165
     
     
     
     42,507Website, net
of accumulated amortization
     
     
     
     
     9,374
     
     
     
     10,152Security
deposits
     
     
     
     
     2,350
     
     
     
     2,35051,889
     
     
     
     55,009TOTAL
ASSETS
     
     
     
     $
     471,574
     
     
     $
     633,437LIABILITIES AND STOCKHOLDERS DEFICITCurrent
LiabilitiesAccounts
payable
     
     
     
     $
     312,539
     
     
     $
     313,611Accrued
interest
     
     
     
     
     101,501
     
     
     
     88,588Accrued
liabilities
     
     
     
     
     131,003
     
     
     
     75,468Current
portion of long-term debt
     
     
     
     
     1,096,399
     
     
     
     1,077,1971,641,442
     
     
     
     1,554,864Long-term
debt less current portion
     
     
     
     
     
     
     
     
     TOTAL
LIABILITIES
     
     
     
     
     1,641,442
     
     
     
     1,554,864STOCKHOLDERS DEFICITPreferred
stock, $1.00 par value, 10,000,000 shares authorized, none issued and outstanding
     
     
     
     
     
     
     
     
     Common Stock,
$0.001 par value, 100,000,000 shares authorized,  26,356,638 and 25,463,455 shares issued and outstanding at March 31, 2009 and December
31, 2008, respectively
     
     
     
     
     26,357
     
     
     
     25,463Additional
Paid-in Capital
     
     
     
     
     2,959,214
     
     
     
     2,788,415Accumulated
Deficit
     
     
     
     
     (4,155,439
     )
     
     
     (3,735,305
     )(1,169,868
     )
     
     
     (921,427
     )TOTAL
LIABILITIES AND STOCKHOLDERS DEFICIT
     
     
     
     $
     471,574
     
     
     $
     633,437

See accompanying notes to financial statements

1







VYCOR MEDICAL, INC. Statement of
Operations






For the three months ended March 31,2009 (unaudited)
     
     2008 (unaudited)Revenue
     
     
     
     $
     70,088
     
     
     $
     Cost of
Goods SoldBeginning
Inventory
     
     
     
     
     71,527
     
     
     
     Cost of goods
purchased
     
     
     
     
     
     
     
     
     Goods
available for sale
     
     
     
     
     71,527
     
     
     
     Less: Clinical
samples
     
     
     
     
     (5,923
     )
     
     
     Less: Ending
inventory
     
     
     
     
     (56,101
     )
     
     
     Total Cost
of Goods Sold
     
     
     
     
     9,503
     
     
     
     Gross
Profit
     
     
     
     
     60,585
     
     
     
     Operating
expenses:Research and
development
     
     
     
     
     
     
     
     
     6,333General and
administrative
     
     
     
     
     341,965
     
     
     
     478,628Total
Operating expenses
     
     
     
     
     341,965
     
     
     
     484,961Operating
loss
     
     
     
     
     (281,380
     )
     
     
     (484,961
     )Interest
expense
     
     
     
     
     138,754
     
     
     
     93,499Net Loss
     
     
     
     $
     (420,134
     )
     
     $
     (578,460
     )Loss Per
ShareBasic and
diluted
     
     
     
     $
     (0.02
     )
     
     $
     (0.03
     )Weighted
Average Number of Shares Outstanding
     
     
     
     
     26,058,910
     
     
     
     20,062,100

See accompanying notes to financial statements

2


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VYCOR MEDICAL, INC. Statement of Cash
Flows







|                                                                        |  |  |  | For the three months ended March 31, |         
|----------------------------------------------------------------------- |  |  |  | ------------------------------------ | --------
|                                                                        |  |  |  | 2009 (unaudited)                     |         
|                                                                        |  |  |  |                                      |         
|Cash flows
from operating activities:                                   |  |  |  |                                      |         
|                                                                        |  |  |  |                                      |         
|Net
loss                                                                |  |  |  | $                                    | (420,134
|                                                                        |  |  |  |                                      |         
|Adjustments to
reconcile net loss to cash used in operating activities: |  |  |  |                                      |         
|Amortization
of intangible assets                                       |  |  |  |                                      | 3,120   
|Depreciation
of fixed assets                                            |  |  |  |                                      | 5,737   
|Amortization
of debt discount expense                                   |  |  |  |                                      | 119,201 
|Share based
compensation                                                |  |  |  |                                      | 60,069  
|Shares issued
for consulting services                                   |  |  |  |                                      | 5,000   
|Interest
satisifed with stock conversion                                |  |  |  |                                      | 6,625   
|                                                                        |  |  |  |                                      |         
|Changes in
assets and liabilities:                                      |  |  |  |                                      |         
|Accounts
receivable                                                     |  |  |  |                                      | 43,622  
|Inventory                                                               |  |  |  |                                      | 15,426  
|Prepaid
expenses                                                        |  |  |  |                                      | (9,638  
|Security
deposit                                                        |  |  |  |                                      |        
|Accounts
payable                                                        |  |  |  |                                      | (1,072  
|Accrued
interest                                                        |  |  |  |                                      | 12,913  
|Accrued
liabilities                                                     |  |  |  |                                      | 55,535  
|                                                                        |  |  |  |                                      |         
|Cash used in
operating activities                                       |  |  |  |                                      | (103,596
|                                                                        |  |  |  |                                      |         
|Cash flows
used in investing activities:                                |  |  |  |                                      |         
|Acquisition of
patents                                                  |  |  |  |                                      |        
|Cash used in
investing activities                                       |  |  |  |                                      |        
|                                                                        |  |  |  |                                      |         
|Cash flows
from financing activities:                                   |  |  |  |                                      |         
|Proceeds from
sale of equity                                            |  |  |  |                                      |        
|Payment on
Notes Payable-GC Advisors                                    |  |  |  |                                      |        
|Proceeds from
Fountainhead Convertible Note Payable                     |  |  |  |                                      |        
|Proceeds from
Regent Convertible Note Payable                           |  |  |  |                                      |        
|Payment on
Optimum Health Services Loan Payable                         |  |  |  |                                      |        
|Cash provided
by financing activities                                   |  |  |  |                                      |        
|                                                                        |  |  |  |                                      |         
|Net increase
(decrease) in cash                                         |  |  |  |                                      | (103,596
|                                                                        |  |  |  |                                      |         
|Cash at
beginning of period                                             |  |  |  |                                      | 196,138 
|                                                                        |  |  |  |                                      |         
|Cash at end of
period                                                   |  |  |  | $                                    | 92,542  
|                                                                        |  |  |  |                                      |         
|Supplemental
Disclosures of Cash Flow information:                      |  |  |  |                                      |         
|Interest
paid:                                                          |  |  |  | $                                    |        
|Taxes
paid                                                              |  |  |  | $                                    |        
|Non-Cash
Tranactions:                                                   |  |  |  |                                      |         
|Warrants,
options and stock issued for debt financing                   |  |  |  | $                                    | 100,000 





See accompanying notes to financial statements



3



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VYCOR MEDICAL, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2009   1.  BASIS OF PRESENTATION  The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included.  Operating results for the three months ended March 31, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.  For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 2008.  2.          FORMATION AND BUSINESS OF THE COMPANY  Business description  Vycor Medical, LLC, (the Company) was formed in June 17, 2005 under the laws of the State of New York. The Company converted its entity form on August 14, 2007 from a New York Limited Liability Company to a Delaware Corporation with 16,048 of common stock exchange for each partnership unit with 1122 units outstanding at date of conversion. The assets, liabilities and operations of the Company did not change pursuant to this reorganization, and the accompanying financial statements are presented as if the change occurred on the first day of the earliest period presented; thus all are references to number of shares prior to the date of conversion are based upon the common stock equivalent of the units. The Companys business plan is to develop and market a commercially feasible surgical access system for sale to hospitals and medical professionals.  3.          ACCOUNTING POLICIES  Research and Development  The Company expenses all research and development costs as incurred. For the three months ended March 31, 2009 and 2008, the amounts charged to research and development expenses were $0 and $6,333, respectively.  Concentration of Credit Risk  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. The Company's accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.  Fair Values of Financial Instruments  At March 31, 2009, fair values of cash, accounts receivable, accounts payable, and accrued expenses short term promissory notes, approximate their carrying amount due to the short period of time to maturity. The fair value of the Companys long term debt is based on the present value using a discount rate comparable with borrowing rates available to the Company along with various fair value model calculations used to value certain debt related securities.  Property and equipment  The Company records property and equipment 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 ten years.    4   VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


3.          ACCOUNTING POLICIES (continued)

Income taxes

The Company accounts for income taxes in accordance with SFAS 109, Accounting for Income Taxes. This statement prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The Company has provided a full valuation allowance against the gross deferred tax asset as of March 31, 2009 as it is more likely than not that this deferred tax asset may not be realized.

Uses of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Critical estimates include depreciation, amortization of intangible assets, and the fair values of options and warrant included in the determination of debt discounts and share based compensation.

Patents

The Company capitalizes legal and related costs associated with the establishment of patents for its products. Costs associated with the development of the patented item or processes are charged to research and development costs as incurred. The costs associated with the establishment of the patents are amortized over the life of the patent.

The Company reviews existing patents as well as those in the approval process for impairment on an annual basis using a present value, cash flow method pursuant to Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets. Since the Companys patents are either very new or still in the process of approval, the Company does not believe that any impairment of these amounts exists.

Revenue Recognition

The Company records revenue, pursuant to Staff Accounting Bulletin Topic 13(a) when a completed contract for the sale exists, title transfers to the buyer and the product is invoiced and shipped to the customer. The Company sells a surgical access system which has already cleared the U.S. FDA 510(k) review process. It has been granted a 510(k) number for marketing the system to hospitals and other medical professionals. The Company does not expect the need to provide for product returns or warrantee costs but will review such potential costs after the commencement of sales.

Educational and marketing expenses

The Company may incur costs for the education of customers on the uses and benefits of its products. The Company will expense such costs as a component of selling, general and administrative costs as such costs are incurred.

Website Costs

The Company capitalizes the costs associated with the acquisition of hardware and development tools as well as the creation of database tools in connection with the Companys website pursuant to Statement of Position 98-1 and Emerging Issues Task Force 00-20. Other costs including the development of functionality and identification of software tools are expensed as incurred.



5




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


3.           ACCOUNTING POLICIES (continued)

Stock-Based Compensation

Prior to January 1, 2006, the Company accounted for stock-based compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees,and related interpretations, and followed the minimum value disclosure provisions of Statement of Financial Accounting Standards NO. 123 (SFAS 123), Accounting for Stock-Based Compensation.  Under APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Companys stock and the exercise price. Stock-based compensation determined under APB 25 is recognized over the option vesting period.

Prior to the adoption of a stock option plan adopted on February 13, 2008, the Company only issued share based compensation to consultants for goods or services. The Company accounted for these transactions under guidance for Emerging Issues Task Force Abstract No. 96-18, Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services. Under EITF 96-18, options, warrants, and stock are recorded at their fair value on the measurement date. The Company remeasured the fair value of such instruments granted at each reporting period until performance under the consulting arrangements were completed and the measurement date was reached. The Company records the expense of such services on the estimate fair value of the equity instrument using the Black-Sholes pricing model. The initial expense is recognized over the term of the service agreement.

For future awards to employees, the Company will adopt the fair value provisions of the Statement of Financial Accounting Standards No. 123(R) (SFAS 123R), Share-Based Payment,which supersedes its previous accounting under APB 25. SFAS 123(R) requires the recognition of compensation expense for future stock-based compensation awards to employees. Using a fair-value-based method, for costs related to all share-based payments including stock options.  SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. All option grants valued after January 1, 2006 will be expensed on a straight-line basis over the vesting period.

Fair Values of Assets and Liabilities

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which provides a framework for measuring fair value under GAAP. SFAS 157 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. SFAS 157 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS 157 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

There are three general valuation techniques that may be used to measure fair value, as described below:

a)Market approach  Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

b)Cost approach  Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

c)Income approach  Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.



6




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


3.           ACCOUNTING POLICIES (continued)

Financial assets and liabilities are valued using either level 1 inputs based on unadjusted quoted market prices within active markets or using level 2 inputs based primarily on quoted prices for similar assets or liabilities in active or inactive markets.  For certain long-term debt, fair value is based on present value techniques using inputs derived principally or corroborated from market data. Using level 3 inputs using managements assumptions about the assumptions market participants would utilize in pricing the asset or liability. In the Companys case this entailed assumptions used in pricing models for attached warrant calculations. Valuation techniques utilized to determine fair value are consistently applied.

The Companys long-term debt is the only item that is subject to SFAS 157 as of March 31, 2009 as follows:

Other observable inputs (level 1)$923,899Unobservable inputs (level 3)$172,500
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 based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method.  Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. The Companys potential dilutive shares, which include outstanding common stock options, convertible notes payable and warrants, have not been included in the computation of diluted net loss per share for all periods as the result 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 because to do so would be anti-dilutive as of the end of each period presented:

March 31,2009December 31,2008Stock options outstanding1,050,0001,707,894Warrants to purchase common stock5,610,4526,460,920
Recently Issued Accounting Standards

In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, Interests in Consolidated Financial Statements - an amendment of ARB No. 51,(SFAS 160), that establishes and expands accounting and reporting standards for the non-controlling interest in a subsidiary. SFAS 160 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This Statement is required to be adopted by us in the first quarter of the Company's fiscal year 2009. The effect the adoption of SFAS 160 will have on the Company's financial statements will depend on the nature and size of any acquisitions the Company completes in the future.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations, (SFAS 141R), which impacts the accounting for business combinations. The statement requires changes in the measurement of assets and liabilities required in favor of a fair value method consistent with the guidance provided in SFAS 157. Additionally, the statement requires a change in accounting for certain acquisition related expenses and business adjustments which no longer are considered part of the purchase price. Adoption of this standard is required for fiscal years beginning after December 15, 2008. Early adoption of this standard is not permitted. The statement requires prospective application for all acquisitions after the date of adoption. The effect the adoption of SFAS 141R will have on the Company's financial statements will depend on the nature and size of any acquisitions the Company completes in the future.

In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and Hedging Activities, (SFAS 161), which requires enhanced disclosures about an entitys derivative and hedging activities in order to improve the transparency of financial reporting. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not anticipate the adoption of this statement to have a material effect on its consolidated financial position and results of operations.


7




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


3.           ACCOUNTING POLICIES (continued)

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, (SFAS No. 162), which identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board (PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company does not anticipate the adoption of this statement to have a material effect on its consolidated financial position and results of operations.

In May 2008, the FASB issued FASB Staff Position (FSP) No. 14-1, Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement), (FSP 14-1) which specifies
that issuers of these instruments should separately account for the liability
and equity components in a manner that reflects the entitys nonconvertible
debt borrowing rate when interest cost is recognized in subsequent periods. FSP
14-1 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. FSP 14-1
is also to be applied retrospectively to all periods presented except if these
instruments were not outstanding during any of the periods that are presented in
the annual financial statements for the period of adoption but were outstanding
during an earlier period. The Company does not anticipate the adoption of this
statement to have a material effect on its consolidated financial position and
results of operations.



In June 2008, the FASB ratified EITF Issue 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys
Own Stock, (EITF 07-5). Paragraph 11(a) of SFAS No 133, Accounting for Derivatives and Hedging Activities, (SFAS 133) specifies that a contract that would otherwise
meet the definition of a derivative but is both (a) indexed to the Companys own stock and (b) classified in stockholders equity in the statement of financial position would not be considered a
derivative financial instrument. EITF 07-5 provides a new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuers own stock and thus
able to qualify for the SFAS 133 paragraph 11(a) scope exception. EITF 07-5 will be effective for the first annual reporting period beginning after December 15, 2008, and early adoption is prohibited. While the Company
is currently still evaluating the effects of adoption of EITF 07-5, it is expected that adoption may result in the reclassification of the Companys warrants from equity to liabilities recorded at fair value and
additionally could result in bifurcation and fair value accounting for the conversion rights embedded in the Companys Series A preferred stock.





In June 2008, the FASB issued FASB Staff Position Emerging Issues Task Force (EITF) No. 03-6-1, Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities (FSP EITF No. 03-6-1).  Under FSP EITF No. 03-6-1, unvested share-based payment awards that contain rights to receive
nonforfeitable dividends (paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. FSP EITF No. 03-6-1 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years, and is not expected to have a significant impact on the Companys financial statements.



The Company does not believe that any other recently issued, but not yet effective accounting standards will have a material effect on the
Companys consolidated financial position, results of operations or cash flows.














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 $420,134 for the three months ended March 31, 2009, and the Company
expects to continue to incur substantial additional losses in the future,
including additional development costs, costs related to clinical trials and
manufacturing expenses. The Company has incurred negative cash flows from
operations since inception. As of March 31, 2009, the Company had a
stockholders deficiency of $1,169,868 and cash and cash equivalents
balance of $92,542. The Company also has certain debt obligations that were
not paid by their respective due dates. In these circumstances the Company
believes it may not have enough cash to meet its various cash needs through June
2009 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 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.





8




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


4.           LONG-TERM DEBT

As of March 31, 2009 and December 31, 2008, long-term debt consists of:

March 31,  2009December 31, 2008On December 15, 2006 the Company entered into a Convertible debenture, in the amount of $172,500 payable to Fountainhead Capital Partners Limited (FCPL), with interest at the Applicable Federal Rate as defined in sec. 1274 (d) of the Internal Revenue Code, initially due June 21, 2007. The Debenture may be transferred or exchanged only in compliance with the Security Act of 1933, as amended and applicable state securities laws. The Holder is entitled at its option to convert debenture into a number of shares of common stock calculated to be equal to be ten percent of the issued and outstanding aggregate shares of the Company on the date of issuance of the Debenture. The following discloses the calculation the conversion price and the 1,979,456 conversion shares:Number of membership units outstanding at 12/21/20061,110.11UnitsThe note was for 10% of Units post-money (1,110.11/90%):1233.46UnitsFountainhead is entitled to 10% of the units equal to123.346UnitsEach unit converted into 16,048 shares1,979,456Shares
The conversion feature is subject to standard anti-dilution provisions. The
Company has computed a beneficial conversion feature of $111,099 which resulted
in a debt discount of such amount which is being amortized over the life of the
loan to interest expense. The Company had used $0.19 per share in the
computation of the beneficial conversion feature as it represents sales of
private placements of the Companys securities at the time of entering into
the debenture. The Holder has the sole option to extend the due date of this
debenture and has extended principal and interest payments until February 15,
2009. Currently, this debt remains unpaid.  In conjunction with the
convertible debenture the Company issued a warrant to Fountainhead Capital
Partners Limited to purchase 50.22 Membership Units of the Company (805,931
shares of common stock) at $.50 per share for five years. The warrants
fair value of $0.13 per share was calculated using the Black-Scholes Valuation
Model, using the following assumptions: volatility of 99%, dividend rate of 0%,
approximate risk free interest rate of 4.5% and a five year warrant life. The
warrant resulted in an additional debt discount of $61,401 which is being
amortized over the term of the debt. In conjunction with this debt the Company
also entered into an agreement with Fountain Capital Partners Limited (FCPL)
which granted to FCPL an option to invest up to $1,850,000 for three years in
exchange for issuing new convertible debentures due two years from the issuance
of these new notes and included with the exercise of this option would be a
warrant to purchase up to 3,017,409 shares at a price of $0.44 per share. The
debenture is convertible up to 5,652,954 shares of common stock.  No
value was assigned to the options as there was no acquired beneficial conversion
feature or acquisition of the warrants. The note reflects an unamortized
discount of $0 and $3,450 as of March 31, 2009 and December 31, 2008,
respectively.172,500169,050


9




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009






March 31, 2009
     
     
     
     December 31, 2008On February 15,
2008 the Company entered into a $150,000 Convertible Debenture payable to Fountainhead Capital Partners Limited, with interest at 6% per annum, due but
not paid, on or before February 15, 2009. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then
outstanding into shares of common stock of the Company at the conversion price of $0.1230 per share, subject to adjustment and does not require
bifurcation. The Company has computed a beneficial conversion feature debt discount of $81,707, which is being amortized over the life of the loan. The
note reflects an unamortized discount of $0 and $10,213 as of March 31, 2009 and December 31, 2008, respectively.
     
     
     
     
     150,000
     
     
     
     
     
     
     
     139,787On February 15,
2008 the Company entered into a $500,000 Convertible Debenture, payable to Regent Private Capital, LLC, with Interest at 6% per annum, due but not
paid, on or before February 15, 2009. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then
outstanding into shares of common stock of the Company at the Conversion price of $0.1230 per share, subject to adjustment and does not require
bifurcation. The Company has computed a beneficial conversion feature debt discount of $272,358, which is being amortized over the life of the loan.
Subsequently, Regent assigned the principal amount of each note to Altcar Investments and Derek Johansen. On December 15, 2008, Johansen converted
$250,000 of the debenture into 2,032,520 shares of common stock. This resulted in the recognition of unamortized beneficial conversion feature debt
discount attributable to the debenture of $17,023. Further, on March 23, 2009, Altcar Investments converted $100,000 of the debenture plus accrued
interest into 866,867 shares of common stock. The unamortized discount on the $150,000 debt as of March 31, 2009 and $250,000 debt as of December 31,
2008 is $0 and $17,023, respectively.
     
     
     
     
     150,000
     
     
     
     
     
     
     
     232,977On April 15,
2008 the Company entered into a $150,000 Convertible Debenture payable to Fountainhead Capital Partners Limited, with interest at 6% per annum, due but
not paid, on or before February 15, 2009. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then
outstanding into shares of common stock of the Company at the conversion price of $0.1230 per share, subject to adjustment and does not require
bifurcation. The Company has computed a beneficial conversion feature debt discount of $81,707 which is being amortized over the life of the loan. The
unamortized discount as of March 31, 2009 and December 31, 2008 is $3,404 and $23,831, respectively.
     
     
     
     
     146,596
     
     
     
     
     
     
     
     126,169On April 22,
2008 the Company entered into a $500,000 Convertible Debenture, payable to Regent Private Capital, LLC, with interest at 6% per annum, due on or before
April 22, 2009. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of
common stock of the Company at the Conversion price of $0.1230 per share, subject to adjustment and does not require bifurcation. The Company has
computed a beneficial conversion feature debt discount of $272,358, which is being amortized over the life of the loan. The unamortized discount as of
March 31, 2009 and December 31, 2008 is $22,697 and $90,786, respectively.
     
     
     
     
     477,303
     
     
     
     
     
     
     
     409,214All discounts
are being amortized on a straight line basis that approximates effective yield method under EITF 98-5.Total long-term
debt:
     
     
     
     
     1,096,399
     
     
     
     
     
     
     
     1,077,197Less current
portion of debt
     
     
     
     
     1,096,399
     
     
     
     
     
     
     
     1,077,197Long-term
portion of debt
     
     
     
     $
     
     
     

     $
     
 The following is a schedule of future minimum loan
payments:


Twelve months
ending March 31,
     
     
     
     
     Amount2010
     
     
     
     $
     1,122,5002011
     
     
     
     
     2012
     
     
     
     
     2013
     
     
     
     
     2014
     
     
     
     
     Thereafter
     
     
     
     
     Total
     
     
     
     $
     1,122,500Less debt
discount
     
     
     
     
     26,101$
     1,096,399
 The Companys long-term debt is all secured by a first
security interest in all of the assets of the Company.



10




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


5.           EQUITY

Certain Equity Transactions

As prescribed in a previous agreement, in consideration for services provided to the Board of Directors, the Company issued 26,318 shares of its common stock to Steven Girgenti on March 23, 2009.
6.           SHARE-BASED COMPENSATION

The Company accounts for the following transactions under the guidance of Emerging Issues Task Force Abstract No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.Under EIFT 96-18, options are recorded at their fair value on the measurement date. The Company remeasured the fair value of the options or warrants granted at each reporting period until performance under the consulting agreement was completed and the measurement date was reached. The Company expensed the fair value of the instrument granted over the requisite service period which was the term of the consulting agreement, or one year.

For employee based awards which consist only of awards made under the Stock Option Plan described below, the company follows the provisions of Statement of Financial Accounting Standards No. 123R (SFAS 123 R),  Share Based Payment which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. Under SFAS 123 R, 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.  There were no employee stock options granted for the three months ended March 31, 2009.

Stock Option Plan

The Company has adopted the Vycor Medical, Inc Employee, Director, and
Consultant Stock Plan as of February 13, 2008, that includes both incentive
stock options and nonqualified stock options to be granted to employees,
officers, and consultants, independent contractors, directors and affiliates of
the Company.   The board of directors establishes the terms and
conditions of all stock options 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 nonemployees is determined based on the
services being provided.

Initial grants totaling 500,000 shares each were issued on February 13, 2008 to Kenneth T. Coviello, Chief Executive Officer and Heather N. Jensen, President at an exercise price of $.135 per share.  The options vest 33 1/3 % on each of the first, second, and third anniversary of the grant and expire February 12, 2018.  Accordingly, for the three months ended March 31, 2009, the Company recognized share-based compensation amounts of $28,920 and $28,920, for each of the respective grants.

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.

Stock appreciation rights may be granted either on a standalone basis or in conjunction with all or part of any other stock options granted under the plan.  As of March 31, 2009 there were no awards of any stock appreciation rights.



11




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


6.           SHARE-BASED COMPENSATION (continued)

Consulting Agreements

The Company entered into no new consulting agreements during the three months ended March 31, 2009.  The details of the outstanding rights, options and warrants and value of such rights, options and warrants are as follows:


STOCK WARRANTS:Number of sharesWeighted average price per shareBalance, January 1, 2006Granted4,144,300$0.43ExercisedCancelled or expiredOutstanding at December 31, 20064,144,3000.43Granted1,143,4080.32ExercisedCancelled or expiredOutstanding at December 31, 20075,287,7080.41Granted
1,365,788
0.31ExercisedCancelled or expired
(192,576)
0.24Outstanding at December 31, 20086,460,920$0.39GrantedExercisedCancelled or expired(850,468)0.26Outstanding at March 31, 20095,610,452$0.39








STOCK OPTIONS:





Weighted averageNumber of shares


exercise price per shareBalance, January 1, 2006Granted


-


$
-ExercisedCancelled or expiredOutstanding at December 31, 2006


-



-GrantedExercisedCancelled or expiredOutstanding at December 31, 2007


-



-Granted


1,050,000



0.14ExercisedCancelled or expiredOutstanding at December 31, 2008


1,050,000


$
0.14GrantedExercisedCancelled or expiredOutstanding at March 31, 2009


1,050,000


$
0.14

12





VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


6.           SHARE-BASED COMPENSATION (continued)

In consideration for providing consulting services, the Company granted to GC Advisors LLC three warrants, each to purchase of 192,576 shares of the Company's common stock for a purchase price of $.24, .389, and .549 per share, respectively.  The warrants expire on January 9, 2008, 2009, and 2010, respectively and were fair valued under the Black-Scholes Model.

In consideration for being the Company's strategic business advisor, in 2007 the Company issued  a warrant to Martin Magida  to purchase up to 160,480 shares of the Company's common stock at $.24 per share. The warrant is valid from September 1, 2007 for a period of five years. This warrant was fair valued under the Black-Scholes Model and amortized over the life of the agreement.  For the three months ended March 31, 2009, $1,114 was recognized as share-based compensation in connection with this agreement.

In consideration for providing advisory services in 2007, the Company issued a warrant to Robert Guinta to purchase up to 160,480 shares of the Company's common stock at $.24 per share. The warrant is valid from September 1, 2007 for a period of five years. This warrant was fair valued under the Black-Scholes Model and amortized over the life of the agreement.  For the three months ended March 31, 2009, $1,114 was recognized as share-based compensation in connection with this agreement.

As of March 31, 2009, there was approximately $148,000 of total unrecognized compensation costs related to non-vested stock options awards, which are expected to be recognized over a weighted average period of 2 years.

Stock-based compensation expenses related to stock options granted to non-employees is recognized as the stock options are earned. The Company believes that the fair value of the stock options is more reliably measured than the fair value of the services received.  The fair value of the stock options granted is calculated at each reporting date, using the Black-Scholes option-pricing model, until the award vests or there is substantial disincentive for the non-employee not to perform the required services.  The following assumptions were used in calculations of the Black Scholes option pricing model:

Risk-free interest rates4 - 5 %Expected life3 yearsExpected dividends0%Expected volatility99%
Stock-based compensation expense charged to operations on options and warrants granted to the above non-employees for the three months ended March 31, 2009 is $2,229.

Expected Life.  The expected life is based on the simplified method described in the SEC Staff Accounting Bulletin, Topic 14: Share-Based Payment.

Volatility.Since the Company was a private entity for most of 2007 with no historical data regarding the volatility of its common stock, the expected volatility used for 2006 and 2007 is based on volatility of similar entities, referred to as guidelinecompanies. In evaluation similarity, the Company considered factors such as industry, stage of life cycle and size.

Risk-Free Interest Rate.The risk-free rate is based on rates approximating U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Dividend Yield.The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation method.

Forfeitures.SFAS No. 123R also requires the Company to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from those estimates.  The Company uses historical data, however limited to date, to estimate pre-vesting options forfeitures and record stock-based compensation expense only for those awards that are expected to vest.  All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of awards, which are generally the vesting periods.  If the Companys actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

The weighted-average remaining contractual life of outstanding warrants and options is two and two years, respectively.  All of the warrants outstanding are currently exercisable.


13




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


7.           INCOME TAXES

The Company has incurred net operating losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the financial statements.  Prior to August 15, 2007 the Company was a limited liability company and losses were flowed through to the individual members, therefore the Company only has potential tax benefits from the date it became a C corporation.

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.

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, the Company has provided a valuation allowance against the gross deferred tax assets as follows:






March 31,2009December 31,2008Gross deferred tax assets1,052,000904,750Valuation allowance(1,052,000)(904,750)Net deferred tax asset0
As of March 31, 2009 and December 31, 2008, the Company has estimated U.S. federal net operating loss carryforwards of approximately $3,005,000 and $2,585,000.  The federal net operating loss carryforwards expire in the years 2027 and 2028.

Federal tax laws impose significant restrictions on the utilization of net operating loss carryforwards and research and development credits 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 carryforwards and research and development credits may be subject to the above limitations.

The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes,on January 1, 2007.  Implementation of FIN 48 resulted in no adjustments to the Companys liability for unrecognized tax benefits. As of both the date of adoption and as of December 31, 2008 there were no unrecognizable tax benefits. Accordingly, a tabular reconciliation from beginning to ending periods is not provided. The Company will classify any future interest and penalties as a component of income tax expense if incurred. To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits.

The Company is subject to federal and state examinations for the year 2006 forward. There are no tax examinations currently in progress.

8.           COMMITMENTS AND CONTINGENCIES

Employment and Consulting Agreements

There were no new employment or consulting agreements executed during the three months ended March 31, 2009

8.           COMMITMENTS AND CONTINGENCIES (continued)

Lease

The Company leases its office space on a short-term basis.  The current lease period expires June 30, 2009.  Typically, this venue has the availability for four to six month extensions for existing tenants in good standing.  Rental expense for the three months ended March 31, 2009 and 2008 were $7,653 and $5,227, respectively.



14




VYCOR MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009


9.
SUBSEQUENT EVENTS

On April 27, 2009, the company entered into an agreement with Concordia Financial Group (Concordia), who will provide consulting services to the company in its efforts to raise capital.  Under this agreement, the company agrees to pay Concordia $5,000 per month plus stipulated out-of-pocket expenses until terminated by either party, with ten business days written notice.

On April 1, 2009, the Company executed an amendment to a convertible debenture in the amount of $172,500 payable to Fountainhead Capital Partners Limited, (FCPC). Under the amendment FCPC agrees to extend the maturity date
of the debenture from February 15, 2009 to August 15, 2009. In consideration for the extension, the Company agrees to the modification of the conversion price from $0.08715 to $0.07545 per share, and other anti-dilution adjustments in favor of FCPC.



15


---

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Forward Looking Statements  This Form 10-Q contains some forward-looking statements. Forward-looking
statements give our current expectations or forecasts of future events. You can
identify these statements by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements involve risks and
uncertainties. Forward-looking statements include statements regarding, among
other things, (a) our projected sales, profitability, and cash flows, (b) our
growth strategies, (c) anticipated trends in our industries, (d) our future
financing plans and (e) our anticipated needs for working capital. They are
generally identifiable by use of the words may, will,
should, anticipate, estimate,
plans, potential, projects,
continuing, ongoing, expects,
management believes, we believe, we intend
or the negative of these words or other variations on these words or comparable
terminology. These statements may be found under Management's Discussion
and Analysis of Financial Condition and Results of Operations and
Description of Business, as well as in this Form 10-Q generally. In
particular, these include statements relating to future actions, prospective
products or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of contingencies such
as legal proceedings, and financial results.  Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under Risk Factors and matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.  The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise.  Organizational History  We were 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. (Delaware Corporation). Our sole reason for
conversion to the Delaware Corporation was to facilitate the raising of
additional capital, as prospective investors had expressed resistance to
investing in the Company as the NY LLC. At August 14, 2007, we had approximately
1,122 membership units of the NY LLC issued and outstanding. The managing
members of the NY LLC determined, in their reasonable business judgment, that
such units, in the aggregate, should convert to an aggregate of 17,999,999
shares of common stock of the Delaware Corporation. On this basis, we adopted a
conversion ratio of 16,048 shares of common stock of the Delaware Corporation
for each former unit of the NY LLC. Likewise, all conversion rights, options,
warrants and any other rights to acquire units of the NY LLC (including but not
limited to units issuable pursuant to the terms of the Fountainhead Bridge Loan
Debenture, Fountainhead Warrant to purchase 50.22 units of the NY LLC, the
Companys Option Agreement with Fountainhead dated December 14, 2006), were
converted to conversion rights, options, warrants and rights to acquire common
shares of the Delaware Corporation, based on the same conversion ratio. The
action authorizing the conversion was adopted by the unanimous consent of the
Managing Members of the NY LLC pursuant to the terms of the NY LLC Operating
Agreement.  Overview of Business  We are a developer of neurosurgical medical devices.  We have been conducting research, developing, prototyping, and producing mold development work for the Brain Access System. This product is designed to assist the neurosurgeon with brain surgery. It allows the surgeon to gain access to various regions in the brain through a working channel.  We are in the process of marketing our first series of products to the marketplace.  Our first product line that we introduced to the market is a new type of self retaining brain retractor called the ViewSite Brain Access System.  We started marketing the Brain Access System in September 2008 and started shipping all sizes in November 2008.  The product line consists of various port sizes and lengths to allow the surgeon to use the device for various regions of the brain and different procedures.   16   The second product in our pipeline is the Cervical Access System, which, pending receipt of additional funding and successful market testing, is planned for launch during 2010 pending funding. Like the Brain Access System, this product is designed to assist the surgeon in cervical surgeries, allowing the surgeon to gain access to the anterior cervical surgery site.

We have received FDA 510(k) clearance for both our Brain Access System and Cervical Access System products. Section 510(k) of the United States Food, Drug and Cosmetic Act requires medical device manufacturers to register with the U.S. Food and Drug Administration of their intent to market a medical device at least 90 days in advance. The 510(k) submission allows the U.S. Food and Drug Administration to determine whether a device is generally equivalent to any similar product already on the market. With the FDA 510(k) clearance, we are authorized to take our products to market in the U.S. without further approvals.

We have also received CE Marking for our products in September 2006 and are able to sell them in member countries of the European Union. The European Medical Device Directive makes it mandatory to fulfill CE certification requirements in order to export medical devices of Class I, IIa, IIb, and III to any country within the European community.

We believe that our Brain Access System and Cervical Access System products will replace standard retraction devices to establish a new standard of care in neurosurgery, leading to a broad and rapid adoption of our products.

Our Products

Our initial product applications for the retractor technology will be in neurological surgeries involving brain and spinal access.

We believe our Brain Access System offers several advantages over the brain retractor systems, commonly known as ribbon or blade retractors that are metallic and non transparent. When designing the products, we felt that if we can incorporate certain features into our products, the surgeon reaction and acceptance would be favorable. We attempted to incorporate the following features:

·gently separate delicate tissue;·improve surgical outcomes (reducing potential surgeon and hospital liability), for example, decreased insertion tissue trauma, less need for readjustment during surgery and minimum interface surface pressures;·increase surgical site access;·provide superior field of vision and lighting;·minimal invasive surgery;
The Brain Access System and Cervical Access System were invented by Dr. John Mangiardi. Dr. Mangiardi assigned the rights to the Brain Access System and Cervical Access System to Sawmill Trust on September 17, 2005 pursuant to an assignment agreement on the same date. Sawmill Trust then, in turn, assigned the same rights to us on September 17, 2005 pursuant to another assignment agreement dated the same date.

Brain Access System Products

The Brain Access System series of disposable products are used by the neurosurgeon to access the surgical site. This is done by inserting the Brain Access System through the brain tissue and then removing the Brain Access System introducer, leaving the remaining hollow working channel in place to provide the surgeon with access to the precise location desired for surgery.

The Brain Access System is available in multiple sizes and is a single-use product. We have designed multiple sizes and intend to add additional sizes in the future. During our design process we listed what product benefits would be of value to the neurosurgeons when using a retractor system. We then designed our product with the following intent:

To minimize brain disruption during surgery by utilizing a tapered forward edge;To minimize venous pressure in the brain;To reduce target shift to allow the surgeon to reach the site accurately;To minimize off site healthy tissue damage;To allow for accurate neuronavigational image guidance systems (IGS) performance;To integrate with the leading surgical IGS systems such as Medtronics® and BrainLab®;To allow for easier positioning during surgery;To reduce damage to healthy brain tissue leading to shorter post-op recovery and reduced hospital stay; andTo allow direct surgical visualization of brain tissue via optically transparent construction;
17





The extent to which we are successful in achieving the above objectives will be judged by the acceptance of the devices in the market.

The Brain Access System products have the potential to significantly reduce brain tissue trauma resulting from the currently used retractors and standard access procedures. First, the unique design of the product minimizes the size of the brain entry access necessary for surgical procedures, and in turn the amount of brain tissue exposed. For instance, a typical brain procedure involving the removal of a 7cm cystic astrocyctoma would result in an access site (corticotomy) of approximately 20mm. However, the same procedure that was performed utilizing the Companys Brain Access System product required a corticotomy of only 2mm.

Furthermore, retractors that are currently in use are metallic and non-transparent. This requires the surgical team to maintain the retracted surface, typically by packing gauze around the access edges increasing movement and pressures over a greater portion of the brain and extending overall elapsed surgery times. We believe that the Brain Access System product eliminates this process, while providing better visibility for the surgeon and lower pressures on the retracted brain tissue.

Product shortcomings

Our products have a few shortcomings:

One of the shortcomings of our products as compared to existing blade retractors is that our device diameter is fixed as opposed to variable. This gives the surgeon less flexibility once he is at the location unless he knows where he needs to go in the brain first.Another shortcoming is that the diameters and lengths of our devices are set to specific measurements, which limits the surgeon to these specific sizes.Depending on the case, usage of a disposable product may be viewed as costing more over time and may not be accepted by our potential customers.
IGS Opportunity for the Brain Access System

The VBAS product has the potential to significantly improve surgical acceptance and use of IGS (Image Guidance Systems) used in many surgeries, by addressing the two substantial IGS-related problems of target shifting and the lack of real-time retractor positioning data during procedures:

Target Shifting
The normal surgical procedure utilizing standard retractors in brain surgery require pulling away the healthy tissue to expose the targeted region of the brain located underneath. However, in many cases, the amount of pulling required causes the targeted area to shift away from what is shown on the IGS system. This target shifting then requires the surgeon to cause additional trauma to healthy tissue and spend additional time as the shifted target area is located and the retractor is repositioned. The VBAS system is designed to minimize or eliminate target shift, as the elliptical shape of the product distributes relatively uniform pressure on the surrounding brain tissue.

Real-Time Retractor Positioning Data
Current retractor technology (commonly known as ribbon or blade retractors) is not well integrated with IGS systems. During insertion, the surgeon typically does not have real-time data to allow visualization of retractor insertion on the IGS monitor. The VBAS product line has been designed to adapt entirely to IGS systems, such that the use of a Brain Access System unit will allow the surgeon to see on the surgical monitor, in real-time, exactly where the retractor is in relation to critical brain structures and underlying pathologies. With the IGS enabled unit, the tip of the introducer is literally the pointer on the IGS system.

We plan on offering a version of all Brain Access System models that are IGS-friendly.

Brain Access System Product Models

The Brain Access System products consists of two models initially, namely, TC-VBAS and EC-VBAS and any additional models in the future, each designed to allow the surgeon the choice for specific brain surgeries for various procedures. Each of these models will be manufactured in various lengths to accommodate different depths for surgical access.


18




TC-VBAS
The series consist of twelve disposable products, offered in four different port diameters of 12mm, 17mm, 21mm, and 28mm and a choice of three lengths for each of 3, 5, and 7cm.

EC-VBAS
At present, this is available only in one size  34mm x 5cm.

Cervical Access Products

The Cervical Access System products are to be used by the neurological surgeon to access the anterior cervical surgical site (the uppermost vertebrae located in the neck). This type of surgery is near very critical and delicate structures such as the larynx, esophagus and carotid artery. The shape of the Cervical Access System with the introducer lets the surgeon carefully place the device and the unique anchor screws then safely hold the access channel in place during the procedure. The clear body of the retractor allows the surgeon to see the entire field both during the insertion process as well as throughout the surgical procedure.

We have designed the Cervical Access System to:

reduce the possibility of surrounding anatomic tissue damage, which include the trachea, esophagus, carotid artery, recurrent laryngeal and sympathetic nerve;minimize skin disruption with the utilization of tapered outward edges;eliminate retractor induced electrocautery burn injuries because it is made with surgical grade plastic materials;enable stable fixation (directly to the spinal column) in order to avoid accidental displacement and surrounding tissue creep; andallow for direct visualization of underlying anatomic structures using optically clear plastic.
Because our products have not been brought to market yet, there is no guarantee that any of the abovementioned features would prove effective and even so, be welcomed by the consumer.

Cervical Access System Product Models

The plan for the Cervical Access System series will consist of disposable products. The widths are able to accommodate from one to three levels of the cervical spine, from 26mm to 54mm. We are also evaluating a telescoping design that would reduce the number of sizes necessary and a version that incorporates a distractor. Further research and development is needed for a market-ready product.

Brain Retractors

Future plans include developing additional Brain Access System retractors to allow for access to various regions of the brain. This allows us to target more diverse neurosurgical specialties. We anticipate research and developing work starting in 2009 and estimate a research and development budget of $1,000,000 for 2009 and 2010, pending future funding.

Our plans are to eventually include retractor lines that are designed for the requirements of specific surgical applications like aneurisms, tumors and endoscopic work.


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Intellectual Property

Patent Applications

Below is a table setting out the status and particulars of our patent applications:










Filing DateApplication No.CountryTitleStatusJune 22, 200560/692,959US  provisionalSurgical Access
Instruments for Use
with Spinal or Orthopedic
Surgery (Cervical)Converted to PCTJune 22, 2006PCT/US06/24243PCTSurgical Access
Instruments for Use with
Spinal or Orthopedic
Surgery (Cervical)Entered National PhaseJune 22, 200511/155,175US  utilitySurgical Access
Instruments for Use with
Delicate Tissues (Brain)PendingNovember 27, 2006PCT/US06/61246PCTSurgical Access
Instruments for Use with
Delicate Tissues (Brain)Pending  National Phase Entry on May 27, 2009June 22, 2006CanadaSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPendingJune 22, 200606785312.7EuropeSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPendingJune 22, 2006IndiaSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPendingJune 22, 2006IsraelSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPendingJune 22, 2006JapanSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPendingDecember 20, 200711/993,280USSurgical Access
Instruments for Use with
Spinal or Orthopedic
SurgeryPending
The above-indicated patent applications were invented by Dr. John Mangiardi, who
assigned the rights to the Sawmill Trust on September 17, 2005 under the terms
of an assignment agreement between the parties. The Sawmill Trust then, in turn,
assigned the same rights to us on September 17, 2005 pursuant to an assignment
agreement between the Sawmill Trust and the Company dated the same date. The
consideration for such assignment was the issuance of one-third of the initial
equity of our predecessor (Vycor Medical, LLC) and the inclusion of certain
rights in favor or the Sawmill Trust, including but not limited to certain
supermajority voting rights and the right to appoint members of the board of
managers, which were incorporated in the Operating Agreement of such entity. Dr.
Mangiardis wife, Pascale Mangiardi, who is a director of the Company, was
the Settlor of the Sawmill Trust and Dr and Mrs. Mangiardi are both
beneficiaries of the Sawmilll Trust. The Sawmill Trust is an irrevocable trust
and A. Mitchell Green is the sole Trustee and has sole voting power and
investment power with respect to the assets of the trust.



Trademarks

VYCOR MEDICAL is a registered trademark and VYCOR VIEWSITE is both pending registration as a trademark with the United States Patent Office

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Results of Operations

The following table presents the dollar amount changes from period to period of the line-items included in our Statements of Operations for the three months ended March 31, 2009 and 2008:







Three months ended:20092008Increase/
(Decrease)Revenue:Sales$70,088$-$70,088Cost of Goods Sold9,503-9,503Gross Profit60,585-60,585Operating expenses:Research and development-6,333(6,333)General and administrative341,965478,628(136,663)Operating loss(281,380)(484,961)203,581Interest Expense138,75493,49945,255Net loss$(420,134)$(578,460)$158,326Comparison of the Three Months Ended March 31, 2009 to the Three Months Ended March 31, 2008

Revenue:

The company recorded revenue of $70,088, after posting no revenue from the sale of our products in the three months ended March 31, 2009. The company has acquired sufficient inventory, affected a
meaningful product launch, and has sold various quantities of each of the twelve sizes of its Brain Access System product to both domestic and international customers.

Research and Development Expenses:

Research and development expenses decreased from $6,333 to $0 for the three months ended March 31, 2009.  This decrease can be attributed to the ceasing of research and development activities on the existing product line.

General and Administrative Expenses:

General and administrative expenses decreased by 28.55%, or $136,663 from $478,628 for the three months ended March 31, 2009 to $341,965 for the three months ended March 31, 2009. The decrease was attributable to the elimination of certain nonrecurring legal and consulting costs related to the companys capital transactions in 2008.

Interest Expense (Income):

The company recorded interest expense of $138,754 and $93,499 for the three months ended March 31, 2009 and 2008, respectively. The increase is related to the companys increased principal balances on convertible debt agreements, generating both increased accrued interest and increased recognition of debt discounts.  For the three months ended March 31, 2009 and 2008, interest expense was offset with interest income of $201 and $1,704, respectively.

Liquidity and Capital Resources

Liquidity

On February 15, 2008, the company entered into a transaction with Regent Private
Capital, LLC, whereby Regent Private Capital, LLC agreed to invest $1,000,000 in
the purchase of the companys Convertible Debenturessuch investment
to be made in two tranches of $500,000 each.  These Convertible Debentures
have a term of one year and are convertible into shares of the our common stock
at a price of approximately $.123 per share. If fully converted, the Convertible
Debentures would result in the issuance of 8,129,529 shares to Regent Private
Capital, LLC.  On April 22, 2008 Regent Private Capital assigned $250,000
of the principal amount of the Convertible Debentures representing the first
tranche to Derek Johannson and $100,000 of the principal amount of the
Convertible Debentures to Altcar Investments Ltd.  On December 2, 2008
Derek Johannson converted $250,000 of his debenture to 2,032,520 shares of
common stock of the company. On March 23, 2009, Altcar Investments converted
$100,000 of the debenture plus accrued interest of $6,625 into 866,867 shares of
common stock.



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For the three months ended March 31, 2009, the Company issued common stock valued at $5,000 for consulting services.  During the same period, share-based compensation of $60,069 was recognized relating to previously executed consulting agreements and the vesting of employee-held options.

For the three months ended March 31, 2009, the Company realized a reduction in cash and cash equivalents of $103,596.  This amount was entirely attributable to cash used in operating activities, as there was no cash used in or provided by either investing or financing transactions during the period.

The company believes that its existing cash, cash equivalents and available
borrowings will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for approximately 2 months. No assurances can
be made that this will be the case or that assumptions regarding sales and
expenses underlying this belief will be accurate. The company will need to seek
additional funding through public or private financings or other arrangements
during this period and thereafter. Adequate funds may not be available when
needed or may not be available on terms favorable to us. If additional funds are
raised by issuing equity securities, dilution to existing stockholders may
result. If the company raises additional funds by obtaining loans from third
parties, the terms of those financing arrangements may include negative
covenants or other restrictions on our business that could impair our
operational flexibility, and would also require us to fund additional interest
expense. If funding is insufficient at any time in the future, the company may
be unable to develop or enhance our products, take advantage of business
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on our business, financial condition and results of
operations.



Going Concern

Our independent auditors have added an explanatory paragraph to their audit
issued in connection with the financial statements for the period ended December
31, 2008, relative to our ability to continue as a going concern. This means
that there is substantial doubt that the company can continue as an ongoing
business for the next 12 months. The financial statements do not include any
adjustments that might result from the uncertainty about our ability to continue
our business. The company has incurred losses since inception, including net
losses of $2,381,295 for the year ended December 31, 2008 and $420,134 for the
three months ended march 31, 2009, and expects to incur substantial additional
losses, including additional development costs, costs related to clinical trials
and manufacturing expenses. The company has incurred negative cash flows from
operations since inception. As of March 31, 2009 and December 31, 2008, the
company had stockholders deficiencies of $1,169,868 and $921,427,
respectively, and cash and cash equivalents balance of $92,592 and $196,138 at
March 31, 2009 and December 31, 2008, respectively. The Company also has certain
debt obligations that were not paid by their respective due dates. Since there
is no record of profitable operations, there is high a possibility that you may
suffer a complete loss of your investment.  Because our auditors have
issued a going concern opinion, there is substantial uncertainty we will
continue operations in which case you could lose your investment.  In
these circumstances the Company believes it may not have enough cash to meet its
various cash needs through June 2009 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. 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.



Recently Issued Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

Critical Accounting Policies and Estimates

Uses of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Currently, the Company estimates depreciation, amortization of intangible assets, and the fair values of options and warrants.


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The most critical estimates that impact the financial position and results of operation of the company have to do with the methodologies and assumptions used in determining the fair value of various debt estimates. These include assumptions associated with warrants, options and stock issued in conjunction with such debt. Additionally, the Black-Scholes option pricing model and its related assumptions of volatility, risk free interest, stock price also significantly impacted share based compensation and the results of operations.

Research and Development

The Company expenses all research and development costs as incurred. For the three months ended March 31, 2009 and 2008, the amounts charged to research and development expenses were $ 0 and $6,333, respectively.

Cash and cash equivalents

The Company considers all highly liquid debt investments with original maturities of three months or less when purchased to be cash equivalents. The carrying amounts approximate fair market value because of the short maturity. 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. The Company's accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.

Fair Values of Financial Instruments

At March 31, 2009 and 2008, fair values of cash and cash equivalents, accounts payable, convertible promissory notes, and options and warrants approximate their carrying amount due to the short period of time to maturity and various fair value model calculations.

Property and equipment

The Company records property and equipment 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 ten years.

Income taxes

The Company accounts for income taxes in accordance with SFAS 109, Accounting for Income Taxes.  This statement prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.

Patents

The Company capitalizes legal and related costs associated with the establishment of patents for its products. Costs associated with the development of the patented item or process are charged to research and development costs as incurred. The costs associated with the establishment of the patents are amortized over the life of the patent.

The Company reviews existing patents as well as those in the approval process for impairment on an annual basis using a present value, cash flow method pursuant to Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets. Since the Companys patents are either very new or still in the process of approval, the Company does not believe that any impairment of these amounts exists.

Revenue Recognition

The Company records revenue at the time, pursuant to Staff Accounting Bulletin Topic 13(a), that a completed contract for the sale exists, title transfers to the buyer and the product is invoiced and shipped to the customer. The Company intends to sell a surgical access system which has already cleared the U.S. FDA 510(k) review process.  It has been granted a 510(k) number to market to hospitals and other medical professionals.  The Company does not expect the need to provide for product returns or warrantee costs but will review such potential costs after the commencement of sales.

Educational and marketing expenses

The Company may incur costs for the education of customers on the uses and benefits of its products. The Company will expense such costs as a component of selling, general and administrative costs as such costs are incurred.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

(a)          Disclosure Controls and Procedures

The Companys management, with the participation of its principal executive officer and principal financial officer, has evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Companys principal executive officer and principal financial officer have concluded that, as of the end of such period, the Companys disclosure controls and procedures were adequate and effective.

(b)         Changes in Internal Controls

There have not been any changes in the Companys internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

PART II
ITEM 1. LEGAL PROCEEDINGS
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of March 31, 2009, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.
ITEM 2UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


ITEM 3 DEFAULTS UPON SENIOR SECURITIES

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
Not Applicable.

ITEM 6. EXHIBITS

Index to Exhibits

31.1Certification of Chief Executive Officer under Rule 13(a) - 14(a) of the Exchange Act.31.2Certification of Chief Financial Officer under Rule 13(a) - 14(a) of the Exchange Act.32Certification of CEO and CFO under 18 U.S.C. Section 1350
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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 15, 2009.

VYCOR MEDICAL, INC.By:/s/ Kenneth T. CovielloKenneth T. CovielloChief Executive Officer and Director (Principal Financial Officer)By:/s/ Heather N. JensenHeather N. JensenPresident, Founder and Director (Principal Executive Officer)
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