EDGAR 10-K Filing

Company CIK: 1424768
Filing Year: 2023
Filename: 1424768_10-K_2023_0001493152-23-012257.json

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ITEM 1. BUSINESS
ITEM 1. DESCRIPTION OF BUSINESS.
1. Organizational History
The Company was formed as a limited liability company under the laws of the State of New York on June 17, 2005 as “Vycor Medical LLC”. On August 14, 2007, we converted into a Delaware corporation and changed our name to “Vycor Medical, Inc.” (“Vycor”). The Company’s listing went effective on February 2009 and on November 29, 2010 Vycor completed the acquisition of substantially all of the assets of NovaVision, Inc. (“NovaVision”) and on January 4, 2012 Vycor, through its wholly-owned NovaVision subsidiary, completed the acquisition of all the shares of Sight Science Limited (“Sight Science”), a previous competitor to NovaVision.
2. Overview of Business
Vycor is dedicated to providing the medical community with innovative and superior surgical and therapeutic solutions and operates two distinct business units within the medical device industry. Vycor Medical designs, develops and markets medical devices for use in neurosurgery. NovaVision provides non-invasive rehabilitation therapies for those who have vision disorders resulting from neurological brain damage such as that caused by a stroke. Both businesses adopt a minimally or non-invasive approach. The Company has 61 issued or allowed patents and a further 11 pending. The Company leverages joint resources across the divisions to operate in a cost-efficient manner.
The Company periodically engages in discussions with potential strategic partners for or purchasers of each or both of our operating divisions. In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model, entering into a license agreement with HelferApp GmbH, a cognitive therapy specialist. Under the agreement, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals. The NovaVision German office was closed effective June 30, 2020.
Vycor Medical
Vycor Medical designs, develops and markets medical devices for use in neurosurgery. Vycor Medical’s ViewSite Brain Access System (“VBAS”) is a next generation retraction and access system. Vycor Medical is ISO 13485:2016 and MDSAP (Medical Device Single Audit Program) certified, and VBAS has U.S. FDA 510(k) clearance and CE Marking for Europe (Class III) for brain and spine surgeries, and regulatory approvals in a number of other international markets. Vycor Medical has 30 granted and 11 pending patents.
NovaVision
NovaVision provides non-invasive, computer-based rehabilitation therapies targeted at people who have impaired vision as a result of stroke or other brain injury and has 31 granted patents.
Strategy
The Company is continuing to execute on a plan to achieve revenue growth and a reduction in annual cash operating losses1. For Vycor Medical this plan includes: increasing market penetration in the US; increasing international growth in territories where we are not represented or under-represented and continued new product development in response to market demands and demonstrating applicability in a broader range of pathologies. In the US the Company is focused on increasing market penetration through targeting neurosurgeons systematically, both through its distribution network and also directly by leveraging existing key opinion leader (“KOL”) neurosurgeon VBAS supporters to access new neurosurgeon users.
The Company continues to target key international territories including Europe where it intends to drive adoption of its VBAS product through selected key KOL neurosurgeon VBAS users in each territory to identify both new potential users and also high-quality distribution partners to bolster our existing network.
The Company has for some time been working to better integrate its VBAS with neuronavigation. The first phase of the modification of the existing VBAS product range was completed in September 2017 and was well received by surgeons. The second phase involves the introduction of an optional Alignment Clip accessory that snaps onto the VBAS and allows for a neuronavigation pointer to be fully integrated into the body of the VBAS; this new model range, known as the VBAS AC, was launched in September 2022. The Company will continue to work with neuronavigation companies to seek ways to further integrate the VBAS with neuronavigation and with other companies with complementary technologies used in neurosurgery. We will also be exploring with neurosurgeons and focus groups additional selected development work targeted at increasing the ease and applicability of our products to additional common procedures.
For NovaVision, given the company’s resources, and the large size and diversity of its end markets, we believe that the most efficient way to tackle the distribution of its broad range of patient and professional products is by partnering with entities in selected geographies that have either direct access to the end users or a desire and financial wherewithal to leverage the NovaVision therapy platform, including into new areas. As a result, the Company closed the NovaVision German office and entered into a license agreement with HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland. Management is also open to a broad range of alternatives for NovaVision as a whole, which could comprise distribution and marketing partnerships, licensing, merger or sale.
Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
3. Other Matters
Product Liability Insurance
We presently have Product Liability insurance for Vycor Medical and Professional Liability insurance for NovaVision.
Government Regulations
We are committed to an integrated total quality management system. We believe that we have completed the necessary procedures and Vycor Medical is certified to the ISO standards expected of medical device manufacturers as follows:
ISO 13485:2016 Medical Devices - Quality Management Systems
The certification of a quality management system to ISO 1348:2016, specifically for medical devices, is advantageous and often essential for medical companies to export their products to the global market, as well as maintain and enter into certain agreements and business growth opportunities within the U.S. For example, Canada requires that medical device manufacturers marketing their products in Canada must have a quality system certified to ISO 13485:2016 and from January 1, 2019 also be certified to MDSAP. The certification is also required for placement of branded devices into the European Union.
Vycor Medical has the following certification/licensing:
● ISO 13485.2016
● MDSAP (Medical Device Single Audit Program)
● Fully Quality Assurance System Directive 93/42/EEC for Medical Devices, Annex II (3)
● EC Design-Examination Certificate Directive 93/42/EEC for Medical Devices, Annex II (4)
Vycor Medical’s VBAS and VBAS AC have been classified as Class II products by the FDA and cleared for marketing through the 510(k) process. NovaVision’s VRT product has been cleared as a Class U product through the 510(k) while its NeuroEyeCoach is registered as an exempt Class 1 device.
Vycor Medical has CE marking approval to allow for distribution of its VBAS products in Europe as a Class III device and has a Health Canada Medical Device License (MDL) for distribution in Canada as a Class II device. VBAS also has regulatory approvals in a number of other international markets. NovaVison’s VRT, NeuroEyeCoach and Sight Science’s NeET have CE mark registrations as Class I devices in Europe.
Employees
We currently have 6 employees.
Website.
The Company operates websites at www.vycormedical.com, www.vycorvbas.com, www.novavision.com and www.sightscience.com. NovaVision’s German partner, HelferApp, maintains the www.novavision.de website.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide the information required by this item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
N/A

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company leases office space located at 951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487 from WPT Land 2 L.P., for a gross rent of approximately $4,000 per month, plus other charges of approximately $2,500 per month. The lease terminated September 30, 2020 and was extended for a further three years to August 31, 2023.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of the date of this Annual Report, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Beginning on July 20, 2009, our Common Stock was quoted on the OTC Bulletin Board under the symbol “VYCO”.
The market price of our common stock, like that of other early-stage medical device companies, is highly volatile and is subject illiquidity and to fluctuations in response to variations in operating results, announcements of technological innovations or new products, or other events or factors.
Holders
As of April 14, 2023 and April 12, 2022 there were 32,628,835 and 31,455,744 shares of common stock issued and outstanding, respectively, and approximately 129 stockholders of record.
Transfer Agent and Registrar
Our transfer agent is EQ by Equiniti, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MV 55120
Dividend Policy
We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant. The Company’s Series D Convertible Preferred Stock bears a 12% per annum dividend payable in cash or Series D Preferred Stock at the option of the Company.
RECENT SALES OF UNREGISTERED SECURITIES
Below is a list of securities sold by us from January 1, 2022 through April 14, 2023 which were not registered under the Securities Act
Common Stock:
Issuance Type Security Security
FHC Management Fees (1) Common 1,607,142
Ricardo Komotar (2) Common 203,326
1) Per Agreement between the Company and Fountainhead Capital Management Limited
2) Consulting fees paid in connection with a Consulting Agreement between the Company and the holder
The securities issued in the above-mentioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act and Rule 506 of Regulation D.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
Not applicable

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021
Revenue and Gross Margin:
Vycor Medical recorded revenue of $1,130,915 from the sale of its products for the year ended December 31, 2022, a decrease of $142,687 (or 11%) over 2021. The 2021 period had an unusually high level of activity as Vycor’s markets, particularly the US, recovered from Covid and hospitals re-stocked their inventories and recommenced surgeries and procedures that had been deferred or postponed, particularly during the 2nd and 3rd quarters of 2021.Gross margin of 88% was recorded for the year ended December 31, 2022 compared to 90% in 2021.
NovaVision recorded revenues of $92,074 for the year ended December 31, 2022, a decrease of $27,311 from 2021, and gross margin of 92%, compared to 93% for 2021.
Research & Development:
Research & Development expenses were $0 for the year ended December 31, 2022 compared to $15,159 for the year ended December 31, 2021, reflecting early-stage product development for the Vycor division.
Selling, General and Administrative Expenses:
Selling, General and Administrative expenses decreased by $282,357 to $1,330,627 in 2022 from $1,612,984 in 2021. Included within Selling, General and Administrative Expenses are non-cash charges for stock-based compensation as the result of amortizing employee and non-employee shares and options which have been issued by the Company over various periods. The charge for 2022 was $185,610, a decrease of $155,488 from $341,098 in 2021, following an amendment to the Fountainhead Consulting Agreement and the departure from the Board of Messrs. Girgenti and Rush. Also included within Selling, General and Administrative Expenses are Sales Commissions, which decreased by $47,599 to $212,910 reflecting decreased level of sales in the US.
The remaining Selling, General and Administrative expenses decreased by $79,270 from $1,011,378 to $932,106. Patent costs decreased by $44,137 due to lower patent activity during the period and lower costs of NovaVision patents; software development and associated scientific and clinical costs related to additional development in NovaVision decreased by $57,218; marketing costs increased by $19,358 primarily from the launch of the VBAS AC product and payroll costs increased by $31,137 due to the addition of employees.
An analysis of the change in cash and non-cash G&A is shown in the table below:
G&A Change Cash G&A Non-Cash G&A
Board and financial - (155,488 )
Scientific, clinical and software development (57,218 ) -
Legal, patent, audit/accounting and regulatory (48,195 ) -
Commissions (47,599 ) -
Premises, insurances, other (24,552 ) -
Sales and marketing 19,558 -
Payroll 31,137 -
Total change (126,869 ) (155,488 )
Interest Expense:
Interest comprises expense on the Company’s debt and insurance policy financing. Related Party Interest expense for 2022 increased $7,722 following the issuance of related party notes during 2022 and 2021 to $39,563 from $31,841 for 2021. Other Interest expense for 2022 decreased by $3,306 to $52,664 from $55,970 for 2021.
Other Income:
Other Income of $117,200 was recorded during the year ended December 31, 2021 from the forgiveness of Paycheck Protection Program loans
Operating loss from Discontinued Operations:
Operating loss from Discontinued Operations decreased by $22,201 to $5,212 in 2022 from $27,413 in 2021 as the business is wound down.
Liquidity and Capital Resources
Liquidity
The following table shows cash flow and liquidity data for the years ended December 31, 2022 and December 31, 2021:
December 31, 2022 December 31, 2021 $ Change
Cash $ 37,035 $ 90,941 $ (53,906 )
Accounts receivable, inventory and other current assets $ 480,728 $ 396,470 $ 84,258
Total current liabilities $ (3,654,796 ) $ (3,149,997 ) $ (504,799 )
Working capital $ (3,137,033 ) $ (2,662,586 ) $ (474,447 )
Cash provided by financing activities $ 165,889 $ 61,945 $ 103,944
Operating Activities. Cash provided by (used in) operating activities comprises net loss adjusted for non-cash items and the effect of changes in working capital and other activities. The net repayment of normal insurance financing should also be taken into account when considering cash provided by (used in) operating activities.
The following table shows the principal components of cash provided by (used in) operating activities during the years ended December 31, 2022 and 2021, with a commentary of changes during the years and known or anticipated changes:
December 31, 2022 December 31, 2021 $ Change
Net loss $ (404,917 ) $ (435,662 ) $ 30,745
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Amortization and depreciation of assets $ 61,403 $ 68,418 $ (7,015 )
Stock based compensation $ 185,610 $ 341,098 $ (155,488 )
Forgiveness of PPP loan $ - $ (117,200 ) $ 117,200
Other $ 15,515 $ 12,360 $ 3,155
$ 262,528 $ 304,676 $ (42,148 )
Net loss adjusted for non-cash items $ (142,389 ) $ (130,986 ) $ (11,403 )
Changes in working capital
Accounts receivable $ (30,108 ) $ 33,142 $ (63,250 )
Accounts payable and accrued liabilities $ (63,283 ) $ 58,521 $ (121,804 )
Inventory $ (56,868 ) $ (38,785 ) $ (18,083 )
Prepaid expenses and net insurance financing repayments $ (21,547 ) $ 13,379 $ (34,926 )
Accrued interest (not paid in cash) $ 92,227 $ 83,423 $ 8,804
Changes in discontinued operations, net $ (1,659 ) $ (3,980 ) $ 2,321
$ (81,238 ) $ 145,700 $ (226,938 )
Cash provided by (used in) operating activities, adjusted for net insurance repayments $ (223,627 ) $ 14,714 $ (238,341 )
The adjustments to reconcile net loss to cash of $262,528 in the period have no impact on liquidity. The change in accounts payable and accrued liabilities of $121,804 between the 2022 and 2021 periods was mainly due to the settlement of expenses during the 2021 period incurred during the final quarter of 2020.
Additional inventory of $162,750 was purchased during the year ended December 31, 2022 as part of normal production and for the launch of the VBAS AC, and the Company anticipates purchasing additional new inventory of approximately $75,000 during the next twelve months for VBAS and VBAS AC.
Investing Activities. Cash used in investing activities of continuing operations for the year ended December 31, 2022 was $2,780 compared to $38,375 in 2021, which primarily reflected the expenditure on the VBAS AC during 2021.
Financing Activities. During the year ended December 31, 2022 the Company received funds of $172,500 in respect of loans from Fountainhead. The Company had received a second loan of $58,600 during 2021 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act. Both loans received under the Paycheck Protection Program were forgiven in August 2021 and resulted in an extinguishment of debt for $117,200, during 2021, which is included in the adjustment to reconcile net loss to cash provided by (used in) operating activities section on the cash flow statement.
Liquidity and Plan of Operations, Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $404,917 and $435,662 for the years ending December 31, 2022 and 2021 respectively and has not generated sufficient cash flows from operations. As at December 31, 2022 the Company had a working capital deficiency of $551,433 excluding related party liabilities of $2,585,600. As a result these conditions, among others, raise substantial doubt regarding our ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
As described earlier in this ITEM 1 “Strategy”, the Company is executing on a plan to achieve a reduction in cash operating losses2. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $424,897, which has a maturity date of December 31, 2023, having been extended on a number of occasions from its initial due date of June 11, 2011. At this time, it is not known whether any further extension of the note beyond December 31, 2023 will be available. However, the Company believes it may not have sufficient cash to meet its various cash needs through March 31, 2024 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. Fountainhead, the Company’s largest shareholder, has provided working capital funding to the Company on an as-needed basis, although there is no guarantee that this will continue to be the case. The Company may consider seeking additional equity or debt funding, although there is no assurance that this would be available on acceptable terms or at all. If adequate funds are not available, the Company may have to delay or curtail development or commercialization of products or cease some of its operations.
Operating Income or Loss before Depreciation, Amortization and non-cash Stock Compensation
Off-Balance Sheet Arrangements
As of December 31, 2022, we had no off-balance sheet arrangements.
Seasonality
Our operating results are not affected by seasonality.
Inflation
Our business and operating results are not affected in any material way by inflation, although rising raw material and labor costs will result in an increase in the cost of sales.
Critical Accounting Policies and Estimates
Uses of estimates in the preparation of financial statements
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated. To the extent management’s estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant estimates and assumptions contained in the accompanying consolidated financial statements include management’s estimate of the allowance for uncollectible accounts receivable, provision for inventory obsolescence, useful life of intangible assets, and the fair values of options and warrant included in the determination of debt discounts and stock based compensation.
Revenue Recognition
On January 1, 2018, the Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers and all the related amendments (new revenue standard) to all contracts. The adoption of the new accounting standard had no impact on company’s consolidated financial statements.
Vycor Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue from product sales when obligations under the terms of a contract with customers are satisfied. Generally, this occurs with the transfer of control of the goods to customers. Vycor Medical does not provide for product returns or warranty costs.
Vycor determines revenue recognition through the following steps:
● Identification of the contract, or contracts, with a customer
● Identification of the performance obligations in the contract
● Determination of the transaction price
● Allocation of the transaction price to the performance obligations in the contract
● Recognition of revenue when Vycor satisfy a performance obligation
NovaVision generates revenues from various programs, therapy services and other sources such as software license sales. Therapy services revenues represent fees from NovaVision’s vision restoration therapy software, eye movement training software, diagnostic software, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision provides vision restoration therapy directly to patients. The typical therapy program consists of NeuroEyeCoach, performed over 2-4 weeks, and six modules of Vision Restoration Therapy, performed over 6 months. A patient contract comprises set-up fees and monthly therapy fees. Set-up fees are recognized at the outset of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being completed by a patient within a specified time frame.
Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.
Inventory
Inventories are stated at the weighted average cost method. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. The provision charge for inventory for the years ended December 31, 2022 and 2021 was $13,160 and $12,360, respectively. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales.
Discontinued Operations
In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations (which we presented as operations to be disposed and operations disposed), less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.
Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Set forth below are the audited consolidated financial statements for the Company for the fiscal years ended December 31, 2022 and 2021 and the report thereon of Prager Metis CPAs, LLC (PCAOB ID No. 273),
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Vycor Medical, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vycor Medical, Inc. (“the Company”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive loss, stockholders’ deficiency, and cash flows for the years ended December 31, 2022 and 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years ended December 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred net losses since inception, including a net loss of $404,917 and $435,662 for the years ended December 31, 2022 and 2021 respectively, and has not generated sufficient cash flows from its operations. As of December 31, 2022, the Company had working capital deficiency of $551,433, excluding related party liabilities of $2,585,600. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are described in Note 1 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there is no critical audit matters for the current audit period.
/s/ Prager Metis CPAs, LLC
We have served as the Company’s auditor since 2018.
Hackensack, New Jersey
April 14, 2023
VYCOR MEDICAL, INC.
Consolidated Balance Sheets
December 31, December 31,
ASSETS
Current Assets
Cash $ 37,035 $ 90,941
Trade accounts receivable 156,204 126,096
Inventory 248,874 207,521
Prepaid expenses and other current assets 74,438 62,473
Current assets of discontinued operations 1,212
Total Current Assets 517,763 487,411
Fixed assets, net 303,770 362,393
Intangible and Other assets:
Security deposits 6,000 6,000
Operating lease - right of use assets 32,645 79,560
Total Intangible and Other assets 38,645 85,560
TOTAL ASSETS $ 860,178 $ 935,364
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Accounts payable $ 200,044 $ 227,720
Accrued interest: Other 424,897 380,479
Accrued interest: Related party 146,007 106,444
Accrued liabilities - Other 91,352 126,959
Accrued liabilities - Related Party 1,946,220 1,621,850
Notes payable: Other 324,711 319,329
Notes payable: Related Party 493,373 320,873
Current operating lease liabilities 29,591 46,915
Current liabilities of discontinued operations (1,399 ) (572 )
Total Current Liabilities 3,654,796 3,149,997
Loan Payable - SBA EIDL 146,253 150,000
Operating lease liability - Long term - 30,580
Total Long-term Liabilities 146,253 180,580
Total Liabilities 3,801,049 3,330,577
STOCKHOLDERS’ DEFICIENCY
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 270,307 and 270,307 issued and outstanding as at December 31, 2022 and December 31, 2021 respectively
Common Stock, $0.0001 par value, 55,000,000 shares authorized at December 31, 2022 and December 31, 2021, 32,630,506 and 30,921,701 shares issued and 32,527,172 and 30,818,367 outstanding at December. 31, 2022 and December 31, 2021 respectively 3,263 3,092
Additional Paid-in Capital 29,355,626 29,172,169
Treasury Stock (103,334 shares of Common Stock as at December 31, 2022 and December 31, 2021 respectively, at cost) (1,033 ) (1,033 )
Accumulated Deficit (32,426,429 ) (31,697,142 )
Accumulated Other Comprehensive Income (Loss) 127,675 127,674
Total Stockholders’ Deficiency (2,940,871 ) (2,395,213 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY $ 860,178 $ 935,364
See accompanying notes to consolidated financial statements
VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Loss
For the year ended December 31,
Revenue $ 1,222,989 $ 1,392,987
Cost of Goods Sold 140,644 134,728
Gross Profit 1,082,345 1,258,259
Operating Expenses:
Research and development - 15,159
Depreciation and amortization 58,232 66,070
Selling, general and administrative 1,330,627 1,612,984
Total Operating Expenses 1,388,859 1,694,213
Operating loss (306,514 ) (435,954 )
Other Income (Expense)
Interest expense: Related Party (39,563 ) (31,841 )
Interest expense: Other (52,664 ) (55,970 )
Loss on foreign currency exchange (964 ) (1,684 )
Forgiveness of debt: Paycheck Protection Program - 117,200
Total Other Income (Expense) (93,191 ) 27,705
Loss Before Provision for Income Taxes (399,705 ) (408,249 )
Provision for income taxes - -
Net Loss from continuing operations (399,705 ) (408,249 )
Loss from discontinued operations (5,212 ) (27,413 )
Net Loss (404,917 ) (435,662 )
Preferred stock dividends (324,370 ) (324,370 )
Net Loss Available to Common Stockholders $ (729,287 ) $ (760,032 )
Other Comprehensive Income (Loss)
Foreign Currency Translation Adjustment
Comprehensive Loss $ (404,916 ) $ (435,657 )
Net Loss Per Share - basic and diluted
Net Loss from continuing operations $ (0.01 ) $ (0.01 )
Loss from discontinued operations $ (0.00 ) $ (0.00 )
Net Loss available to common stockholders $ (0.02 ) $ (0.03 )
Weighted Average Number of Shares Outstanding - Basic and Diluted 31,708,076 29,627,527
See accompanying notes to consolidated financial statements
VYCOR MEDICAL, INC.
Consolidated Statement of Stockholders’ Deficiency
Additional
Accum
Common Stock Preferred C Preferred D Treasury Stock Paid-in Accumulated OCI
Number Amount Number Amount Number Amount Number Amount Capital Deficit (Loss) Total
Accumulated Comprehensive Loss 27,534,740 $ 2,753 $ 0 270,306 $ 27 (103,334 ) $ (1,033 ) $ 28,826,378 $ (30,937,110 ) $ 127,669 $ (1,981,316 )
Issuance of stock for board and consulting fees 3,386,961 - -
324,791
325,131
Directors deferred compensation granted -
-
-
- 21,000
21,000
Comprehensive Income -
-
-
-
Net loss for year ended December 31, 2021
(760,032 )
(760,032 )
Balance at December 31, 2021 30,921,701 3,092 270,306 (103,334 ) (1,033 ) 29,172,169 (31,697,142 ) 127,674 (2,395,213 )
Balance
30,921,701 3,092 270,306 (103,334 ) (1,033) 29,172,169 (31,697,142 ) 127,674 (2,395,213 )
Issuance of stock for board and consulting fees 1,708,805 - -
-
- 183,457
183,628
Comprehensive Income -
-
-
-
Net loss for year ended December 31, 2022
(729,287 )
(729,287 )
Net loss for period
(729,287 )
(729,287 )
Balance at December 31, 2022 32,630,506 $ 3,263 $ 0 270,306 $ 27 (103,334 ) $ (1,033 ) $ 29,355,626 $ (32,426,429 ) $ 127,675 $ (2,940,871 )
Balance
32,630,506 $ 3,263 $ 0 270,306 $ 27 (103,334 ) $ (1,033 ) $ 29,355,626 $ (32,426,429 ) $ 127,675 $ (2,940,871 )
See accompanying notes to consolidated financial statements
VYCOR MEDICAL, INC.
Consolidated Statements of Cash Flows
For the twelve months ended
December 31, December 31,
Cash flows from operating activities:
Net loss $ (404,917 ) $ (435,662 )
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Amortization of intangible assets - 11,349
Depreciation of fixed assets 61,403 57,069
Inventory provision 15,515 12,360
Stock based compensation 185,610 341,098
Forgiveness of debt Paycheck Protection Program - (117,200 )
Changes in assets and liabilities:
Accounts receivable (30,108 ) 33,142
Inventory (56,868 ) (38,785 )
Prepaid expenses (14,936 ) 20,034
Accrued interest - Related Party 39,563 31,841
Accrued interest - Other 52,664 51,582
Accounts payable (27,676 ) 48,611
Accrued liabilities - Other (35,607 ) 9,911
Changes in discontinued operations, net (1,659 ) (3,980 )
Cash provided by (used in) operating activities (217,016 ) 21,369
Cash flows from investing activities:
Purchase of fixed assets (2,780 ) (38,375 )
Cash used in investing activities (2,780 ) (38,375 )
Cash flows from financing activities:
Proceeds from Notes Payable - Related Party 172,500 10,000
Proceeds from Paycheck Protection Program and EIDL - 58,600
Repayments net of Proceeds - Notes Payable - Other (6,611 ) (6,655 )
Cash provided by financing activities 165,889 61,945
Effect of exchange rate changes on cash -
Net increase (decrease) in cash (53,906 ) 44,939
Cash at beginning of year 90,941 46,002
Cash at end of year $ 37,035 $ 90,941
Supplemental Disclosures of Cash Flow information:
Cash paid for interest $ 8,246 $ 4,386
Cash paid for income tax $ 0 $ 0
Non-cash activities:
Unamortized stock compensation
$ 3,050
$ 5,032
See accompanying notes to consolidated financial statements
VYCOR MEDICAL, INC.
Notes to Consolidated Financial Statements
1. BUSINESS OF THE COMPANY AND GOING CONCERN
Business Description
Vycor Medical, Inc. (the “Company”) designs, develops and markets neurological medical devices and therapies through two operating divisions: Vycor Medical and NovaVision. Vycor Medical focuses on brain and cervical surgical access systems for sale to hospitals and medical professionals; NovaVision focuses on neuro-stimulation therapies and diagnostic devices for the treatment and screening of vision field loss resulting from neurological damage.
Ability to continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $404,917 and $435,662 for the years ending December 31, 2022 and 2021 respectively and has not generated sufficient cash flows from operations. As at December 31, 2022 the Company had a working capital deficiency of $551,433 excluding related party liabilities of $2,585,600. As a result these conditions, among others, raise substantial doubt regarding our ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty
The Company is executing on a plan to achieve a reduction in cash operating losses. Included within the working capital deficiency above is a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”), together with accrued interest of $424,897, which has a maturity date of December 31, 2023, having been extended on a number of occasions from its initial due date of June 11, 2011. At this time, it is not known whether any further extension of the note beyond December 31, 2023 will be available. However, the Company believes it may not have sufficient cash to meet its various cash needs through March 31, 2024 unless the Company is able to obtain additional cash from the issuance of debt or equity securities. Fountainhead, the Company’s largest shareholder, has provided working capital funding to the Company on an as-needed basis, although there is no guarantee that this will continue to be the case. The Company may consider seeking additional equity or debt funding, although there is no assurance that this would be available on acceptable terms or at all. If adequate funds are not available, the Company may have to delay or curtail development or commercialization of products or cease some of its operations.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a Delaware corporation), NovaVision GmbH (a German corporation) and Sight Science Limited (a UK corporation), both wholly owned subsidiaries of NovaVision, Inc. The Company is headquartered in Boca Raton, FL. All material inter-company accounts, transactions, and balances have been eliminated in consolidation. Following the decision in April 2020 to close the German office of NovaVision, the activities of NovaVision GmbH have been accounted for as discontinued operations.
Revenue Recognition
On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers and all the related amendments (new revenue standard) to all contracts. The adoption of the new accounting standard had no impact on company’s consolidated financial statements.
Vycor Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue from product sales when obligations under the terms of a contract with customers are satisfied. Generally, this occurs with the transfer of control of the goods to customers. Vycor Medical does not provide for product returns or warranty costs.
Vycor determines revenue recognition through the following steps:
● Identification of the contract, or contracts, with a customer
● Identification of the performance obligations in the contract
● Determination of the transaction price
● Allocation of the transaction price to the performance obligations in the contract
● Recognition of revenue when Vycor satisfy a performance obligation
NovaVision generates revenues from various programs, therapy services and other sources such as software license sales. Therapy services revenues represent fees from NovaVision’s vision restoration therapy software, eye movement training software, diagnostic software, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision provides vision restoration therapy directly to patients. The typical therapy program consists of NeuroEyeCoach, performed over 2-4 weeks, and six modules of Vision Restoration Therapy, performed over 6 months. A patient contract comprises set-up fees and monthly therapy fees. Set-up fees are recognized at the outset of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being completed by a patient within a specified time frame.
Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.
As part of the adoption of ASC 606, see Note 7 to the Consolidated Financial Statements for further disaggregation of revenue.
Cash and cash equivalents
The Company maintains cash balances at various financial institutions. Accounts at each institution in the U.S. are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash balances may at times exceed the FDIC insured limits. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Included within cash are deposits paid by patients, held by the Company until the patient returns the VRT device or chinrest at the end of therapy. At December 31, 2022 and 2021 patient deposits amounted to $19,154 and $30,944, respectively, and are included in Accrued Liabilities.
Accounts Receivable and Allowance for Doubtful Accounts Receivable
The Company’s accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly for therapy or physicians for diagnostic products in the case of NovaVision. Accounts receivable are due once products have been delivered or at the time the therapy is initiated; however, for NovaVision therapy patients sometimes credit is extended through various payment plans based on individual financial conditions, generally not to exceed the therapy period. The outstanding balances are stated net of an allowance for doubtful accounts.
We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We extend credit to our customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for potential bad debts if required. We determine whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. We may also record a general allowance as necessary. Direct write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that we should abandon such efforts.
Inventories
Inventories consist of raw materials, work in process and finished goods that are stated at the lower of cost determined using the weighted average cost method, or net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. The charge provision for inventory obsolescence for the years ended December 31, 2022 and 2021 was $13,160 and $12,360, respectively. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s consolidated statements of comprehensive loss.
Leases
The Company has one leased building in Boca Raton, Florida that is classified as operating lease right-of use (“ROU”) assets and operating lease liabilities in the Company’s consolidated balance sheet as per ASC 842. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of Selling, General and Administrative expenses.
The standard was effective for us beginning January 1, 2019. The Company elected the available practical expedients on adoption. The adoption had a material impact on our consolidated balance sheets but did not have a material impact on our consolidated statements of comprehensive loss. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.
Discontinued Operations
In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations (which we presented as operations to be disposed and operations disposed), less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.
Foreign Currency
The Euro is the local currency of the country in which the discontinued operations of NovaVision GmbH conducts its operations and is considered the functional currency of this entity; the GB Pound is the local currency of the country in which Sight Science Limited conducts its operations and is considered the functional currency of this entity. All balance sheet amounts are translated to U.S. dollars using the U.S. exchange rate at the balance sheet date except for the equity section which is translated at historical rates. Operating statement amounts are translated using an average exchange rate for the period of operations. Foreign currency translation effects are accumulated as part of the accumulated other comprehensive income (loss) and included in stockholders’ deficiency in the accompanying Consolidated Balance Sheets.
Educational marketing and advertising expenses
The Company may incur costs for the education of customers on the uses and benefits of its products. The Company will include education, marketing and advertising expense as a component of selling, general and administrative costs as such costs are incurred. There were no such expenses for the years ended December 31, 2022 and 2021.
Income taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Accounting for forgivable loan received under the Small Business Administration Paycheck Protection Program
During the year ended December 31, 2020, the Company received a loan of $58,600 (“First Draw Loan”), pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act. During the year ended December 31, 2021, the Company received an additional PPP loan of $58,600 (“Second Draw Loan”). Under the terms of the PPP, both the First Draw Loan and Second Draw Loan were forgiven during the year ended 2021 as they were used for qualifying expenses as described in the CARES Act.
The Company accounted for the loans as a financial liability in accordance with FASB ASC 470 and accrued interest in accordance with the interest method under FASB ASC 835-30. For purposes of derecognition of the liability, FASB ASC 470-50-15-4 refers to guidance in FASB ASC 405-20. Based on this guidance, the proceeds of the loans were recorded as a liability until either (1) the loans are, in part or wholly, forgiven and the Company has been “legally released”, or (2) the Company pays off the loans. The Company has accordingly reduced the liability by the amount forgiven and recorded a gain on the extinguishment.
Fixed assets
Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.
Patents and Other Intangible Assets
The Company capitalizes legal and related costs associated with the establishment and enhancement of patents for its products once patents have been applied for. Costs associated with the development of the patented item or processes are charged to research and development costs as incurred. The capitalized costs are amortized over the life of the patent. The Company reviews intangible assets on an annual in accordance with the authoritative guidance. Trademarks have an indefinite life and are reviewed annually by management for impairment in accordance with the authoritative guidance.
Impairment of long-lived assets
Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.
Research and Development
The Company expenses all research and development costs as incurred. For the years ended December 31, 2022 and 2021, the amounts charged to research and development expenses were $0 and $15,159, respectively.
Software Development Costs
The Company accounts for software development costs in accordance with ASC 350-40, whereby all costs incurred during the preliminary stage of a development project should be charged to expense as incurred. Capitalization of costs begins after the preliminary stage has been completed, management commits to funding the project, it is probable that the project will be completed, and the software will be used for its intended function. All post-implementation costs are charged to expense as incurred. Accordingly, direct internal and external costs associated with the development of the features and functionality of the Company’s software, incurred during the application development stage, are capitalized and amortized using the straight-line method of the estimated life of five years. There was no capitalized for software development during the years ended December 31, 2022 and 2021.
Uses of estimates in the preparation of financial statements
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated. To the extent management’s estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant estimates and assumptions contained in the accompanying consolidated financial statements include management’s estimate of the allowance for uncollectible accounts receivable and provision for inventory obsolescence.
Stock Option Plan
Under ASC Topic 718, the Company estimates the fair value of option awards on the date of grant using an option-pricing model. The grant date fair value is recognized over the option-vesting period, the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Under these standards, compensation cost for employee cost for employee stock-based awards is based on the estimated grant-date fair value and recognized over the vesting period of the applicable award on a straight-line basis.
Stock Compensation
The Company recognizes the cost of all stock -based payments under the relevant authoritative accounting guidance. Stock-based payments include any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient the right to acquire shares of the Company’s common stock. For stock-based payments to employees, which consist only of awards made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic 718, “Stock Compensation”. Stock-based payments to consultants, service providers and other non-employees are accounted for in accordance with ASC Topic 718, ASC Topic 505, “Equity Payments to Non-Employees” or other applicable authoritative guidance.
Convertible Instruments
We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.
Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The embedded conversion option in connection with our convertible debt could not be exercised unless and until we completed a Qualifying Financing transaction. Accordingly, we determined based on authoritative guidance that the embedded conversion option is deemed to be a contingent conversion rather than active conversion option that did not require accounting recognition at the commitment dates of the issuances of the Notes.
Common Stock Purchase Warrants and Other Derivative Financial Instruments
We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 (“Contracts in Entity’s Own Equity”). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.
Fair Value Measurements
We adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - quoted prices in active markets for identical assets or liabilities
Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The Company has no financial instruments measured at fair value on a recurring basis.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock and convertible debt. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. No dilution adjustment has been made to the weighted average outstanding common shares in the periods presented because the assumed exercise of outstanding options and warrants and the conversion of preferred stock and debt would be anti-dilutive.
The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share:
SCHEDULE OF COMMON STOCK NOT INCLUDED IN CALCULATION OF DILUTED NET LOSS PER SHARE
December 31, 2022 December 31, 2021
Debentures convertible into common stock 3,451,889 3,223,317
Preferred shares convertible into common stock 1,272,052 1,272,052
Total 4,723,941 4,495,369
Recent Accounting Pronouncements
From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
3. DISCONTINUED OPERATIONS
In April 2020, the board of Vycor took the decision to close the German operations of NovaVision, including the German office and NovaVision GmbH, and instead migrate to a licensed business model; effective July 1, 2020 Vycor entered into a license agreement and transition agreement (the “Agreements”) with HelferApp GmbH, a cognitive therapy specialist. Under the Agreements, HelferApp is licensed to provide NovaVision’s products and therapies in Germany, Austria and Switzerland to patients and professionals; and assumed responsibility for the current patients of NovaVision in the territory. The NovaVision German office was closed effective June 30, 2020. The Company will continue to fund the remaining expenses of the German operations, which are non-material, until such a time as NovaVision GmbH will be formally wound up.
Reconciliation of the major line items from discontinued operations that are presented in the consolidated balance sheets and consolidated statements of comprehensive loss are as follows:
SCHEDULE OF DISCONTINUED OPERATIONS
Major line items constituting assets and liabilities in the consolidated balance sheets
December 31, December 31,
ASSETS
Current Assets
Cash $ 1,212 $ 380
Total Current Assets 1,212
TOTAL ASSETS $ 1,212 $ 380
LIABILITIES
Current Liabilities
Accounts payable $ 693 $ 4
Other current liabilities (2,092 ) (576
Total Current Liabilities $ (1,399 ) $ (572
Major line items constituting loss from discontinued operations
For years ended December 31,
Revenue $ - $ -
Cost of Goods Sold - -
Gross Profit - -
Operating Expenses:
Selling, general and administrative 5,062 26,545
Total Operating Expenses 5,062 26,545
Operating Loss (5,062 ) (26,545 )
Other Income (Expense)
Loss on foreign currency exchange (150 ) (868 )
Total Other Income (Expense) (150 ) (868 )
Loss Before Provision for Income Taxes (5,212 ) (27,413 )
Provision for income taxes - -
Loss from discontinued operations, net of tax $ (5,212 ) $ (27,413 )
4. INVENTORY
SCHEDULE OF INVENTORY
December 31,
December 31,
Raw materials and work in process $ 109,894 $ 77,166
Finished goods 138,980 130,355
Total Inventory $ 248,874 $ 207,521
5. LEASE
The Company recognized the following related to a lease in its consolidated balance sheets:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
Year Ended December 31,
Operating Lease ROU Assets $ 32,645 $ 79,560
Operating Lease Liabilities
Current portion $ 29,591 $ 46,915
Long- term portion - 30,580
Operating Lease Liabilities $ 29,591 $ 77,495
6. NOTES PAYABLE
Related Party Notes Payable consists of:
SUMMARY OF NOTES PAYABLE
December 31, 2022 December 31, 2021
On June 25, 2018 the Company issued promissory notes to Peter Zachariou for $30,000. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. The note was extended for another twelve months on its due date to June 25, 2022 or on demand by the Payee. $ 30,000 $ 30,000
On June 25, 2018 the Company issued promissory notes to Peter Zachariou for $30,000. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. The note was extended for another twelve months on its due date to June 25, 2023 or on demand by the Payee. $ 30,000 $ 30,000
Between March 26, 2018 and November 17, 2022 the Company issued fifteen promissory notes to Fountainhead Capital Management Limited for $463,873. The notes bear interest at 10% per annum and are payable on the earlier of one year or five days following the delivery of written demand for payment by the Payee. Twelve of the notes were extended on their due dates for another twelve months. The Notes will be due between April 2023 and March 2024 or on demand by the Payee. 463,373 290,873
Total Related Party Notes Payable $ 493,373 $ 320,873
Other Notes Payable consists of:
December 31, 2022 December 31, 2021
On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. (“EuroAmerican”). The term note bears interest at 16% per annum and was due June 25, 2011, and has been extended on a number of occasions. On the note’s most recent due date, the note was amended and extended to December 31, 2023. See further note below. $ 300,000 $ 300,000
Insurance policy finance agreements and current portion of EIDL Loan (see Long-Term Notes Payable below) 24,711 19,329
Total Notes Payable: $ 324,711 $ 319,329
Long-Term Notes Payable consists of:
December 31, 2022 December 31, 2021
On July 7, 2020, the Company was granted a $150,000 loan under the Economic Injury Disaster Loan Program pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act (“Loan”). The Loan, evidenced by a promissory note dated July 7, 2020, has a term of thirty (30) years, bears interest at a fixed rate of three and three-quarters percent (3.75%) per annum, with monthly payments in the amount of $731.00 per month commencing July 7, 2021 and is secured by essentially all of the assets of the Company. The proceeds of the Loan have been used for general working capital purposes to alleviate economic injury caused by disaster occurring in the month of January 2020 and continuing thereafter. $ 146,253 $ 150,000
Total Long-term Notes Payable: $ 146,253 $ 150,000
On January 24, 2018 the Company entered into an amendment agreement (the “Amendment”) with EuroAmerican Investments (“EuroAmerican”) regarding its $300,000 loan note (the “Note”). Under the Amendment, the Note was extended and the conversion terms of the Note reduced to $0.21, the same as the offering price of the 2018 Offering. Conversion of the Note and accrued interest would result in the issuance of 3,451,890 shares of Common Stock. Notwithstanding, EuroAmerican agreed that the Note could not be converted without first offering the Company the right to redeem the Note at principal and accrued interest, and secondly Fountainhead the right to purchase the Note, which cannot be converted prior to such offer and the failure of the Company and Fountainhead to exercise such option in accordance with the amendment terms. The amendment was recognized as a modification, based on the guidance in ASC 470-50. No other term was amended on the Note.
The Company routinely finances all their insurance policies through a third-party finance company which requires a down payment and subsequent monthly payments, the time periods vary from 10 months to 12 equal monthly payments.
7. SEGMENT REPORTING, GEOGRAPHICAL INFORMATION
(a) Business segments
The Company operates in two business segments: Vycor Medical, which focuses on devices for neurosurgery; and NovaVision, which focuses on neuro stimulation therapies and diagnostic devices for the treatment and screening of vision field loss. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment.
SCHEDULE OF BUSINESS SEGMENTS INFORMATION
Year Ended December 31,
Revenue:
Vycor Medical $ 1,130,915 $ 1,273,602
NovaVision $ 92,074 $ 119,385
Revenue $ 1,222,989 $ 1,392,987
Gross Profit
Vycor Medical $ 997,667 $ 1,147,574
NovaVision $ 84,678 $ 110,685
Gross Profit $ 1,082,345 $ 1,258,259
December 31, December 31,
Total Assets:
Vycor Medical $ 822,174 $ 901,930
NovaVision 36,792 33,054
Discontinued operations 1,212
Total Assets $ 860,178 $ 935,364
(b) Geographic information. The Company operates in two geographic segments, the United States and Europe. Discontinued operations were part of NovaVision and revenues and assets were in Europe; see Note 3. Set out below are the revenues, gross profits and total assets for each segment.
SUMMARY OF GEOGRAPHIC INFORMATION
Year Ended December 31,
Revenue:
United States $ 1,214,723 $ 1,374,770
Europe $ 8,266 $ 18,217
Revenue $ 1,222,989 $ 1,392,987
Gross Profit
United States $ 1,074,143 $ 1,240,305
Europe $ 8,202 $ 17,954
Gross Profit $ 1,082,345 $ 1,258,259
December 31, December 31,
Total Assets:
United States $ 854,236 $ 928,761
Europe 4,730 6,223
Discontinued operations 1,212
Total Assets $ 860,178 $ 935,364
8. FIXED ASSETS
Fixed Assets and the estimated lives used in the computation of depreciation are as follows:
SCHEDULE OF FIXED ASSETS
Estimated December 31, December 31,
Useful Lives
Machinery and equipment years $ 64,762 $ 64,762
Leasehold Improvements years 8,881 8,881
Purchased Software years 27,706 27,706
Molds and Tooling years 808,611 808,545
Furniture and fixtures years 11,152 11,152
Therapy Devices years 104,627 101,913
Internally Developed Software years 363,472 363,472
Property, and Equipment, Gross
1,389,211 1,386,431
Less: Accumulated depreciation and amortization
(1,085,441 ) (1,024,038 )
Property and Equipment, net
$ 303,770 $ 362,393
Depreciation expense for the years ended December 31, 2022 and 2021 was $61,403 and $57,069 respectively, including $3,171 and $2,348 respectively for Therapy Devices which is allocated to Cost of Sales.
9. INTANGIBLE ASSETS
Intangible Assets consists of:
SCHEDULE OF INTANGIBLE ASSETS
December 31,
Gross carrying Amount $ 865,639 $ 865,639
Amortized intangible assets: Patent (8 years useful life)
Gross carrying Amount $ 865,639 $ 865,639
Accumulated Amortization (865,639 ) (865,639 )
Finite lived intangible assets net $ - $ -
Amortized intangible assets: Website (5 years useful life)
Gross carrying Amount $ 20,382 $ 20,382
Accumulated Amortization (20,382 ) (20,382 )
Finite lived intangible assets net $ - $ -
Intangible asset amortization expense for the years ended December 31, 2022 and 2021 was $0 and $11,349, respectively.
10. EQUITY
Equity Transactions
On April 1, 2022 and 2021 the Company issued 101,663 shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement (see Note 14).
During each of the years ended December 31, 2022 and 2021, under the terms of the Consultancy Agreement referred to in Note 14, the Company issued 1,607,142 and 2,142,856 shares of Common Stock to Fountainhead for fees of $171,428 and $305,001, respectively.
During the year ended December 31, 2021, the Company granted 99,999 shares of Common Stock (valued at $21,000) to non-employee Directors. Under the terms of the Directors Deferred Compensation Plan, the receipt of these shares was deferred until the January 15th following the termination of their services as a director or following the termination of the Plan. The Plan was terminated on April 1, 2021 and the Company issued 575,649 and 566,793 shares of common stock to Steve Girgenti and Lowell Rush, respectively, for their Deferred Compensation shares following their resignations from the board.
Preferred Stock
During each of the years ended December 31, 2022 and 2021, the Company accrued an aggregate of $324,370 of dividends in respect of Company Series D Convertible Preferred shares (“Preferred D Stock”). The Preferred D Stock carry a cumulative preferred dividend of 12% per annum. The Preferred D Stock is convertible into Company Common Shares at a price of $2.15 and the Company is able to redeem the Preferred D Stock at par at any time, at its sole option.
Stock Options
The details of the outstanding stock options are as follows:
SCHEDULE OF STOCK OPTIONS
Weighted average
exercise price
Number of shares per share
Outstanding at December 31, 2020 680,000 $ 0.28
Granted - -
Exercised - -
Cancelled or expired (680,000 ) 0.28
Outstanding at December 31, 2021 - $ -
Granted - -
Exercised - -
Cancelled or expired - -
Outstanding at December 31, 2022 - $ -
11. STOCK-BASED COMPENSATION
The Company from time-to-time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the “measurement date” using an option pricing model, or their contractual value if different in the case of common stock. The “measurement date” for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant.
Non-Employee Stock Compensation
Aggregate stock-based compensation for shares of common stock granted to non-employees for the years ended December 31, 2022 and 2021 was $185,610 and $341,098. $171,428 was in respect of the Fountainhead Consulting Agreement (see Notes 14 and 15). As of December 31, 2022, there was $0 of total unrecognized compensation costs related to warrant and stock awards and non-vested options.
12. INCOME TAXES
Loss Before Taxes
SUMMARY OF LOSS BEFORE TAXES
December 31, 2022 December 31, 2021
Domestic $ 382,553 $ 398,536
Foreign 22,364 37,126
Loss Before Taxes $ 404,917 $ 435,662
The reconciliation of income tax expense (credit) at the U.S. statutory rate of 21%, to the Company’s effective tax rate is as follows:
SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE STATUTORY RATE
Year Ended December 31,
US statutory rate $ (85,033 ) $ (91,489 )
Tax difference between foreign and U.S. (204 ) (2,684 )
Change in Valuation Allowance (85,237 ) (94,173 )
Tax Provision $ - $ -
Deferred Income Taxes
The Company has operations in the US, Germany and the UK and incurred net operating losses since inception. The Company has not reflected any tax benefit related to such net operating losses in the financial statements. Prior to August 15, 2007 the Company’s US operating entity was a limited liability company and losses were passed through to the individual members, therefore the Company only has potential tax benefits from the date it became a ‘C’ corporation.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company and its subsidiaries’ deferred tax assets at December 31, 2022 and December 31, 2021 are as follows:
SCHEDULE OF DEFERRED TAX ASSETS
December 31,
December 31,
Operating loss carry-forward - US $ 19,881,000 $ 19,058,000
Operating loss carry-forward - Foreign $ 1,656,000 $ 1,710,000
Operating loss carry-forward
Deferred tax asset before Valuation allowance - US 4,175,000 4,002,000
Deferred tax asset before Valuation allowance - Foreign 497,000 509,000
Deferred tax asset before Valuation allowance
Valuation allowance (4,672,000 ) (4,511,000 )
Net deferred tax asset $ - $ -
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.
The authoritative guidance requires a valuation allowance to reduce the deferred tax assets recorded if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Furthermore, in circumstances in which management has determined that existing conditions or events raise substantial doubt about its ability to continue as a going concern the authoritative guidance requires that a valuation allowance should be recorded for all deferred tax assets. Accordingly, management has determined that a 100% valuation allowance is appropriate at December 31, 2022 and December 31, 2021.
The U.S. Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively. The Tax Act requires us to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. Since the Company’s foreign subsidiaries have not generated taxable income and have no accumulated earnings, the Company believes that the Tax Act will not have a significant impact on the Company’s consolidated financial statements.
Net Operating Loss Carry-Forwards
As of December 31, 2022 and 2021, the Company had U.S. accumulated losses for tax purposes of approximately $19,881,000 and $19,058,000 respectively, which may be carried forward and offset against U.S. taxable income, and expire during the tax years 2029 through 2041.
Federal tax laws impose significant restrictions on the utilization of net operating loss carry-forwards and in the event of a change in ownership of the Company, as defined by the Internal Revenue Code Section 382. The Company’s net operating loss carry-forwards may be subject to the above limitations.
As of December 31, 2022 and 2021, the Company had German accumulated losses for tax purposes of approximately $1,450,000 and $1,498,000 respectively, which may be carried forward and offset against German taxable income subject to certain restrictions and limitations in the event of changes in the NovaVision GmbH’s ownership. As disclosed in Note 3, the Company is in the process of winding down the entity, following which these tax losses will no longer be available.
As of December 31, 2022 and 2021, the Company had UK accumulated losses for tax purposes of approximately $206,000 and $212,000 respectively, which may be carried forward and offset against UK taxable income subject to certain restrictions and limitations.
Tax Rates
The applicable US income tax rate for the Company for both of the years ended December 31, 2022 and 2021 was 21%. Non-US subsidiaries are taxed according to the tax laws in their respective country of residence. The German applicable rate for both of the years ended December 31, 2022 and 2021 was 31.58%; the UK applicable rate for both the years ended December 31, 2022 and 2021 was 19%.
If any earnings were distributed to US in the form of dividends or otherwise, after the repayment of intercompany debt, the Company would be subject to additional US income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes.
Uncertain Tax Position
The Company has recorded no liability for income taxes associated with unrecognized tax benefits at the date of adoption and has not recorded any liability associated with unrecognized tax benefits during 2022 and 2021. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit.
13. COMMITMENTS AND CONTINGENCIES
Lease
Effective August 1, 2017 the Company leased office space located at 951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487 from WPT Land 2L.P., for a rent of approximately $4,000 per month, plus other charges of approximately $2,500 per month. The lease was renewed in September 2020 for an additional 3 years. Rent expense for the year ended December 31, 2022 and 2021 was $79,314 and $79,663 respectively.
The table below provides the future lease payments each year until the lease expiration date:
SCHEDULE OF FUTURE LEASE PAYMENTS
Future Lease Payments
Year Liability
$ 34,384
Potential German tax liability
In June 2012 the Company’s NovaVision German subsidiary received a preliminary assessment for Magdeburg City trade tax of €75,000 (approximately $82,000), with an additional interest charge of €12,000 (approximately $13,200). This assessment is for the 2010 fiscal year and relates to the Company’s acquisition of the assets of the former NovaVision, Inc. An initial assessment for corporate tax for the same period was preliminarily reduced to zero. The Company did not accept this trade tax assessment and appealed against it to the relevant tax authorities with a view to its reduction. The relevant tax authorities agreed to suspend the assessment pending the outcome of certain court hearings and proposed tax legislation, and the Company agreed to make monthly payments on account totaling €75,000 (approximately $82,000) which were completed in October 2016 and fully expensed. At that time the Company appealed against the interest charge of €12,000 (approximately $13,200) which the tax authorities did not accept but also agreed to suspend pending the outcome of the hearings and proposed legislation outlined above. Accordingly, the Company has made no provision for this liability in the year ended December 31, 2022 and 2021 respectively. The Company is in the process of winding down the entity, as disclosed in Note 3.
14. CONSULTING AND OTHER AGREEMENTS
The following agreements remained in force during the years ended December 31, 2022 and 2021:
Consulting Agreement with Fountainhead
In March 2017 and effective April 1, 2017, the Company amended the Fountainhead Consulting Agreement. Under the Amended Agreement, fees of $450,000 are payable to Fountainhead, with an option to receive $5,000 per month in cash and the remainder payable in Company Common Stock issued at the higher of $0.21 and the average price for the 30 days prior to issuance, and deliverable at the end of each fiscal quarter. This was amended slightly effective January 1, 2021 (“the Amended Agreement”). Under the Amended Agreement, fees are payable to Fountainhead in Company Common Stock (“Shares”) as follows: 1) 535,714 Shares on the last day of each quarter; or 2) if the average closing price of the Shares for the 30 trading days prior to issuance is above $0.21, a number of Shares calculated by dividing $112,500 by the average closing price of the Shares for the 30 trading days prior to issuance. Under the terms of the Amended Agreement, Fountainhead continued to provide the executive management team of the Company, including the positions of CEO, President and CFO, whose employment agreements with the Company stipulate they receive no remuneration from the Company.
Effective October 1, 2022 the Amended Agreement was terminated by Fountainhead and the Company by mutual agreement. Effective the same date the Company entered into revised employment agreements with Peter Zachariou, David Cantor and Adrian Liddell under which they would continue as CEO, President and CFO respectively as individuals and not as representatives of Fountainhead; there is no compensation payable under the employment agreements.
During each of the years ended December 31, 2022 and 2021 the Company issued 1,607,142 and 2,142,856 shares of Common Stock to Fountainhead for fees of $171,428 and $305,001, respectively.
Other Agreements
On March 30, 2021, Vycor entered into a Consulting Agreement with Ricardo J. Komotar, M.D. (the “Agreement”) to provide certain specified services over the three-year term of the Agreement. Under the Agreement, Dr. Komotar will provide general scientific advisory consultancy services, and will also provide scientific advisory services based around certain specific pre-determined milestones. In consideration of the Consultant’s services, the Company agreed to deliver to the Consultant over the course of the three-year term, a total of 304,989 shares of Company Common Stock in respect of the general consultancy, and up to 1,219,957 shares of Company Common Stock in respect of the milestones, the actual number of shares to be delivered being determined by the achievement of the pre-determined milestones. On April 1, 2022 and 2021 101,663 shares of Company Common Stock (valued at $12,200 and $20,129, respectively) were issued under the terms of the Agreement, which is being amortized over twelve months.
15. RELATED PARTY TRANSACTIONS AND BALANCES
Peter Zachariou and David Cantor, directors of the Company, are investment managers of Fountainhead which owned, at December 31, 2022, 62.5% of the Company’s Common Stock and 69.7% of the Company’s Series D Preferred Stock. Adrian Liddell, Chairman, is a consultant to Fountainhead. Peter Zachariou owns 0.15% of the Company’s Common Stock and 25.7% of the Company’s Series D Preferred Stock.
During each of the years ended December 31, 2022 and 2021, under the terms of the Consultancy Agreement referred to in Note 14, the Company issued 1,607,142 and 2,142,856 shares of Common Stock to Fountainhead for fees of $171,428 and $305,001, respectively.
During the years ended December 31, 2022 and 2021, respectively, the Company issued unsecured loan notes to Fountainhead for a total of $172,500 and $10,000, respectively. The loan notes bear interest at a rate of 10% and are due on demand or by their one-year anniversary (see Note 6).
During the years ended December 31, 2022 and 2021, respectively, the Company accrued interest on related party loans of $39,563 and $31,841, respectively.
During each of the years ended December 31, 2022 and 2021, the Company accrued an aggregate of $324,370 of Preferred D Stock dividends, of which $226,037 was regarding Fountainhead and $83,386 was regarding Peter Zachariou. Total accrued Preferred D Stock dividends at December 31, 2022 and 2021 was $1,946,220 and $1,621,850, respectively, of which $1,356,224 and $1,130,186, respectively, was regarding Fountainhead and $500,315 and $416,930, respectively, was regarding Peter Zachariou.
16. CONCENTRATION
Vycor Medical sells its neurosurgical devices in the US primarily direct to hospitals, and internationally through distributors who in turn sell to hospitals.
SCHEDULE OF CONCENTRATION
Sales Concentration Year ended December 31,
Number of customers over 10%
Percentage of sales 0 % 0 %
Accounts Receivable Concentration
At December 31,
Number of customers over 10%
Percentage of accounts receivable 13 % 11 %
We have two sub-contract manufacturers who each represent over 10% of purchases on an annual basis.
17. SUBSEQUENT EVENTS
On April 1, 2023 the Company issued 101,663 shares of Common Stock to Ricardo Komotar (RJK Consulting), a consultant, in accordance with the terms of a consulting agreement (see Note 14).
The Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the consolidated financial statements were issued and has determined that, other than that disclosed above, there were no significant subsequent events or transactions that would require recognition or disclosure in the financial statements.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
a) Disclosure Controls and Procedures
We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company’s management, including the Company’s Chief Executive Officer (“CEO”) (the Company’s principal executive officer) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our CEO and our CFO have concluded that a material weakness occurred as of April 1, 2021 with the resignation of the independent members of the Company’s Audit Committee as of that date. Effective that date, our disclosure and controls were no longer effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO and its CFO, as appropriate, to allow timely decisions regarding required disclosure.
The matter involving internal controls and procedures that our management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was a lack of a functioning audit committee with independent members, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. This weakness occurred as of April 1, 2021 due to the resignation of the independent members of the Audit Committee from the Board of Directors effective as of April 1, 2021.
Management believes that the material weakness set forth did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors, results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
We carried out an assessment, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our internal controls over financial reporting, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on that assessment and on those criteria, our CEO and CFO concluded that our internal control over financial reporting was not effective as of December 31, 2022 due to the a lack of a functioning audit committee with independent members, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management’s report in this annual report.
c) Changes in Internal Controls
Effective April 1, 2021, the independent members of the Audit Committee resigned from the Board of Directors. There have been no other changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company’s management, including the Company’s CEO and CFO, do not expect that the Company’s internal control over financial reporting will prevent all errors and all fraud. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Directors and Executive Officers
Set forth below is certain biographical information concerning our current executive officers and directors. We currently have two executive officers as described below.
Directors and Executive Officers
Position/Title
Age
Peter C. Zachariou
Chief Executive Officer and a Director
David Marc Cantor
President and a Director
Adrian Christopher Liddell
Chairman of the Board, Chief Financial Officer and a Director
Peter C. Zachariou was appointed a Director of the Company in May 2010, Executive Vice President in September 2010 and Chief Executive Officer on January 2, 2014. As CEO, he has responsibility for the sales, marketing and customer functions of both the Vycor and NovaVision divisions. For the past 30 years, Mr. Zachariou has been an active investor in and proprietor of a variety of companies and industries, predominantly in U.S. emerging and growth companies across a broad range of industry sectors. He is an investment manager for Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands.
David Marc Cantor has been President of the Company since September 2010 and a Director since January 2010. As President he has responsibility for the clinical, program and product development and manufacturing functions of both the Vycor and NovaVision divisions, as well as their patent and trademark portfolios. Mr. Cantor has over 22 years of experience in Investment Banking with a focus on Mergers and Acquisitions and Equity Capital Raisings. From 2001 - 2005 he was at Citigroup Capital Markets where he was Co-head of its M&A European Business Development Group and subsequently European Head of its Diversified Industrials and Aerospace activities. Prior to Citigroup he was a Managing Director in M&A at Donaldson Lufkin & Jenrette and worked at Lehman Brothers both in New York and London in both the Equity Capital and M&A groups. He is an investment manager of Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands. Mr. Cantor has a BSc with Honours from City Business School, London
Adrian Christopher Liddell has been Chairman of the Board and a Director of the Company since January 2010, and serves as the Company’s CFO. As CFO he is responsible for the financial operation of the company, as well as regulatory and legal matters. Mr. Liddell has over 35 years of strategic, corporate and financial advisory and company investment experience. From 2003 to 2006, Mr. Liddell was an investment advisor at Phoenix Equity Partners, a European private equity fund. From 1998 to 2003 Mr. Liddell served as Managing Director, Mergers & Acquisitions, at Donaldson Lufkin & Jenrette and then Citigroup in London. From 1984 to 1998 Mr. Liddell held various positions in corporate finance and mergers & acquisitions at Lehman Brothers and Samuel Montagu & Co, in London. He is also an advisor to Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands, Mr. Liddell qualified as a Chartered Accountant in 1984 with Arthur Young (now Ernst & Young) and holds an MA, Hons. from Christ’s College, University of Cambridge.
All of our directors hold office until the next annual meeting of stockholders and until their respective successors have been elected or qualified. Officers serve at the discretion of the board of directors. There are no family relationships among our directors or executive officers. There is no arrangement or understanding between or among our officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current board of directors.
None of our directors and executive officers have during the past five years:
● had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;
● been convicted in a criminal proceeding and is not subject to a pending criminal proceeding;
● been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;
● or been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Board Committees
Given that the Company has only three incumbent directors, none of whom are independent, the Board of Directors does not maintain any Board Committees as of this date, with the Audit Committee comprising the whole Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act and the rules thereunder, the Company’s executive officers and directors and persons who own more than 10% of a registered class of the Company’s equity securities are required to file with the SEC reports of their ownership of, and transactions in, the Company’s common stock.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
The following is a summary of the compensation we paid for each of the last two years ended December 31, 2022 and 2021, respectively (i) to the persons who acted as our principal executive officer during our fiscal year ended December 31, 2022 and (ii) to the person who acted as our next most highly compensated executive officer other than our principal executive officer who was serving as an executive officer as of the end of our last fiscal year.
Name
and
Principal
Position
Year
Salary($)
Bonus($)
Stock Awards($) Option Awards($) Non-
Equity Incentive
Plan Compensation
Non-
Qualified Deferred Compensation Earnings
($)
All
other Compensation($)
Total($)
Peter Zachariou $ - - - - - - - -
CEO $ - - - - - - - -
David Cantor $ - - - - - - - -
President $ - - - - - - - -
OUTSTANDING EQUITY AWARDS
Grants of Plan-Based Awards
Equity Compensation Plan Information
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (1)
Equity compensation plans approved by security holders 3,380,000 $ - 3,380,000
Equity compensation plans not approved by security holders - - -
Total 3,380,000 $ - 3,380,000
(1) As of December 31, 2022.
Warrants Issued to Management
Name Grant
Date
Number of Securities
Underlying
Unexercised
Exercisable Warrants Number of Securities
Underlying
Unexercised
Exercisable Warrants Warrant Exercise
Price($) Warrant Expiration
Date
None
Total
Employment Agreements
Effective January 2, 2014, the Company entered into amended employment agreements with Peter Zachariou and David Cantor to serve as the Company’s Chief Executive Officer and President respectively as appointees of Fountainhead; and an employment agreement with Adrian Liddell to serve as the Company’s Chief Financial Officer as appointee of Fountainhead; these agreements were further amended in March 2017. Each agreement continues for a period of twelve months and is then automatically extended unless terminated by either party. As appointees of Fountainhead under the Fountainhead Consulting Agreement no compensation is payable under the employment agreements. Effective October 1, 2022, the Fountainhead Consulting Agreement was terminated by Fountainhead and the Company by mutual agreement and the Company entered into revised employment agreements with Peter Zachariou, David Cantor and Adrian Liddell under which they would continue as CEO, President and CFO respectively as individuals and not as representatives of Fountainhead; there continues to be no compensation payable under the employment agreements.
Compensation of Directors
Not applicable

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and president and (iv) all executive officers and directors as a group as of April 14, 2023. Unless noted, the address for the following beneficial owners and management is 951 Broken Sound Parkway, Suite 320, Boca Raton, FL 33487.
Title of Class Name and Address of Beneficial Owner Amount and Nature of
Beneficial Owner (1) Percent of
Class (2)
Common Stock Peter C. Zachariou 48,856 0.15 %
Series D Preferred Stock Peter C. Zachariou 69,487 25.71 %
Common Stock All executive officers and directors as a group 48,856 0.15 %
Series D Preferred Stock All executive officers and directors as a group 69,487 25.71 %
Common Stock Fountainhead Capital Management Limited 13 Castle Street, St. Helier, Jersey JE2 3BT 20,340,520 62.34 %
Series D Preferred Stock Fountainhead Capital Management Limited 13 Castle Street, St. Helier, Jersey JE2 3BT 188,363 69.69 %
(1) In determining beneficial ownership of our Common Stock and Series D Preferred Stock, the number of shares shown includes shares which the beneficial owner may acquire upon exercise of debentures, warrants and options which may be acquired within 60 days. In the case of directors, the number of shares includes shares granted but not issued under the director’s Deferred Compensation Plan. In determining the percent of Common Stock or Series D Preferred Stock owned by a person or entity on March 30, 2023, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which the beneficial ownership may acquire within 60 days of exercise of debentures, warrants and options, and the issuance of shares granted but not issued under the director’s Deferred Compensation Plan; and (b) the denominator is the sum of (i) the total shares of that class outstanding on April 14, 2023 (32,628,835 shares of Common Stock and 270,306 shares of Series D Preferred Stock) and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the debentures, warrants and options or that can be issued under the director’s Deferred Compensation Plan. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Party Transactions
During each of the years ended December 31, 2022 and 2021, under the terms of the Consultancy Agreement referred to in Note 14, the Company issued 1,607,142 and 2,142,856 shares of Common Stock to Fountainhead for fees of $171,428 and $305,001, respectively.
During the years ended December 31, 2022 and 2021, respectively, the Company issued unsecured loan notes to Fountainhead for a total of $172,500 and $10,000, respectively. The loan notes bear interest at a rate of 10% and are due on demand or by their one-year anniversary (see Note 6).
During the years ended December 31, 2022 and 2021, respectively, the Company accrued interest on related party loans of $39,563 and $31,841, respectively.
During each of the years ended December 31, 2022 and 2021, the Company accrued an aggregate of $324,370 of Preferred D Stock dividends, of which $226,037 was regarding Fountainhead and $83,386 was regarding Peter Zachariou. Total accrued Preferred D Stock dividends at December 31, 2022 and 2021 was $1,946,220 and $1,621,850, respectively, of which $1,356,224 and $1,130,130, respectively, was regarding Fountainhead and $500,315 and $416,929, respectively, was regarding Peter Zachariou.
Director Independence
As of April 14, 2023, our three (3) directors are not considered “independent”.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
The aggregate fees billed by our principal accountant for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2022 and December 31, 2021, respectively, were approximately $65,000 and $59,000.
Tax Fees
The fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning for the fiscal years ended December 31, 2022 and 2021 were $4,000 and $3,500 respectively.
All Other Fees
There were no fees billed for other products or services provided by our principal accountant for 2022 or 2021.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this 10-K:
1. FINANCIAL STATEMENTS
The following documents are filed in Part II, Item 8 of this annual report on Form 10-K:
● Reports of Prager Metis CPAs, LLC., Independent Registered Certified Public Accounting Firm (PCAOB ID: 273)
● Consolidated Balance Sheets as of December 31, 2022 and 2021
● Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022 and 2021
● Consolidated Statements of Stockholders’ Deficiency from January 1, 2021 to December 31, 2022
● Consolidated Statement of Cash Flows for the years ended December 31, 2022 and 2021
● Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included.
3. EXHIBITS
The exhibits listed below are filed as part of or incorporated by reference in this report.
Exhibit No.
Identification of Exhibit
31.1
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS#
Inline XBRL Instance Document.
101.SCH#
Inline XBRL Taxonomy Extension Schema Document.
101.CAL#
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF#
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB#
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE#
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (embedded within the Inline XBRL document)