UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
November 13, 2015
 
Vycor Medical, Inc.
(Exact name of registrant)
 
Delaware
  
333-149782
  
20-3369218
(State of Incorporation)
  
(Commission File Number)
  
(I.R.S. Employer Identification Number)
 
6401 Congress Avenue, Suite 140
Boca Raton, FL 33487
(Address of principal executive offices and zip code)
 
561-558-2020
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
Item 2.02. Results of Operations and Financial Conditions

The information in this report and the exhibit attached hereto are being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

On November 13, 2015, we issued a press release regarding our financial results for the three and nine months ended September 30, 2015 A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

We make reference to non-GAAP financial information in the press release. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release. Specifically, among other non-GAAP financial measures, we have provided non-GAAP operating expenses, non-GAAP operating loss and non-GAAP net loss measures that exclude non-cash amortization of acquired intangible assets, non-cash stock-based expenses, change in value of derivative warrant liability and loss on foreign currency exchange.

We believe that these non-GAAP financial measures provide investors with insight into what is used by management to conduct a more meaningful and consistent comparison of our ongoing operating results and trends, compared with historical results. This presentation is also consistent with the measures management uses to measure the performance of ongoing operating results against prior periods and against our internally developed targets. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP and the reconciliation of non-GAAP financial measures in the attached press release.
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit No.   Description
     
99.1   Vycor Medical, Inc. Press Release dated November 13, 2015.
 
 
 
2
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
VYCOR MEDICAL, INC.
  
       
Dated: November 13, 2015
By:
/s/ Peter Zachariou  
   
Peter Zachariou
  
   
Chief Executive Officer
  
       
 
 
 
 
3
 


Exhibit 99.1
 
 
Vycor Medical Reports Third Quarter 2015 Results

BOCA RATON, FL (November 13, 2015) – Vycor Medical, Inc. (Vycor) (OTCQB: VYCO), a provider of innovative and superior surgical and therapeutic solutions, reported financial results for the third quarter and first nine months ended September 30, 2015.
 
Operational Highlights

NovaVision
 
  ● Novavision’s VRT has hitherto been, in effect, a prototype with a delivery and service model too costly to be affordable and scalable. NovaVision’s development strategy has been to reduce the cost of therapy delivery and make it more efficient and therefore scalable, migrating therapy delivery from provided-hardware to Internet-delivered onto patients' computers; and to broaden patient benefits by adding its new NeuroEyeCoach compensation therapy to complement the VRT restoration therapy in a suite.
     
  ● Since the launch of the company’s new Internet-delivered therapy suite in the U.S. in late June, NovaVision has achieved a reduced in price to patients by 65%, from $2,500 for a six-month course of VRT alone to $900 for VRT and NeuroEyeCoach together. Given the price reduction, the company anticipated an initial decrease in revenues as volumes ramp up due to the new affordable and scalable therapy suite. In fact, new U.S. patient starts increased by 100% in the third quarter versus the second quarter while revenues decreased by only 15% in the U.S. in the third quarter versus the second quarter.
     
  ● In August, NovaVision launched a new website, www.novavision.com, as the core of a lead-driven inbound and outbound marketing strategy. Since the launch, US lead volume has increased more than 20% month-over-month with the Company achieving an approximate 15% conversion of leads into patients.
     
  ● NovaVision has four key marketing strategy channels, and initiated with the direct-to-patient strategy. Campaigns for the other three key channels – stroke groups and associations, physicians and stroke rehabilitation centers and clinics – have commenced during the fourth quarter.
     
  ● NovaVision’s therapy suite and portal are in the final stages of preparation before their European launch in the current quarter, and has started marketing to and taking on patients from its offices in the UK and Germany.
 
ViewSite Brain Access System (VBAS)
 
  ●
A new study was published in the prestigious Japanese Journal of Neurosurgery in September, bringing the total number of studies published to six in 2015. The study emphasizes the usefulness of VBAS in combination with Karl Storz’s VITOM® telescope, an exoscope visualization device, for biopsy or removal of deep-seated tumors, including thalamic gliomas and malignant lymphomas.
     
  ●
VBAS has continued to gain traction through product approvals in 8 new U.S. hospitals during the quarter. VBAS is approved in 210 U.S. hospitals to-date.
 
Management Commentary
 
“The launch of NovaVision’s new Internet-delivered therapies in the U.S. has shown positive results,” said Peter Zachariou, CEO of Vycor Medical. “The direct-to-patient marketing, using the website as a key driver, is generating strong leads and new patient starts. It takes an average of 10 weeks from contact to signing up a patient so the benefit of the new model was not fully reflected in the third quarter. We expect all of our offices, including the UK and Germany, to be operating on the Internet-delivered model by the end of 2015.

“We are disappointed by Vycor’s performance during the quarter particularly against the backdrop of continued high-quality clinical data that has been published this year.  We believe clinical data is a key driver of surgeon and hospital adoption for VBAS, which in-turn drives revenues. Since August, we have seen demand return to more normalized levels. Vycor will commence marketing its two new smaller-sized VBAS models during the fourth quarter for which we anticipate strong surgeon interest.”

Third Quarter 2015 Financial Results
 
Revenue totaled $243,000 in the quarter, as compared to $334,000 in the same year-ago quarter. Vycor Medical revenue was $183,000 in the third quarter of 2015, a decrease of $60,000 over the same year-ago quarter. The decrease is due to weak sales in the U.S. in July and August, which recovered in September and the recovery has continued through October.
 
NovaVision revenue was $60,000 in the third quarter of 2015, a decrease of $31,000 from the same year-ago quarter. Following extensive development, NovaVision launched its new Internet-delivered therapy suite in the U.S. at the end of June 2015, comprising its VRT restoration therapy and NeuroEyeCoach compensation therapy. This therapy suite is at a greatly reduced price to patients, making it affordable, and is highly scalable. New patient starts in the U.S. for the third quarter increased by 27% over the same period in 2014; however, the lower price and policy to recognize revenues over six months resulted in a decrease in revenue of $21,000. The growth in new lead generation and patient pipeline since the launch of the new therapy suite is also encouraging. Revenues in Europe were largely impacted by foreign exchange differences; on a local currency basis revenues decreased by $3,000.
 
 
1
 
 
Non-GAAP operating expenses in the third quarter of 2015 were $591,000, as compared to $606,000 in the same period of 2014.

Non-GAAP net operating loss in the third quarter of 2015 was $374,000, as compared to $320,000 in the same period of 2014.

Non-GAAP net loss in the third quarter of 2015 was $386,000, as compared to $345,000 in the same period of 2014.

The non-GAAP operating loss before depreciation and amortization (or “Cash Burn”) in the third quarter of 2015 was $341,000, as compared to $284,000 in the same period of 2014.
 
First Nine Months of 2015 Financial Results
 
Revenue totaled $0.9 million in the first nine months of 2015, as compared to $1.0 million in the same year-ago period. Vycor Medical revenue in the first nine months of 2015 was $663,000, a decrease of $48,000 over the same year-ago period. This reflected weak sales in particular in the U.S. in July and August, which recovered in September and this recovery has continued through October.

NovaVision revenues in the first nine months of 2015 were $194,000, a decrease of $86,000. NovaVision revenues for the first half of the year were impacted by the delayed launch of the new Internet-delivered therapy suite. However, new patient starts in the U.S. increased by 100% in the third quarter over the second quarter of 2015. For the first nine months of 2015, new patient starts in the U.S. increased by 6% over the same year-ago period. Foreign exchange differences in Europe accounted for $22,000 of the revenue decrease.

Non-GAAP operating expenses in the first nine months of 2015 totaled $1.9 million, unchanged from $1.9 million in the same period of 2014.

Non-GAAP net operating loss in the first nine months of 2015 was $1.2 million, as compared to $1.1 million in the same period of 2014.

Non-GAAP net loss in the first nine months of 2015 was $1.2 million, unchanged from $1.2 million in the same period of 2014.

Non-GAAP operating loss before depreciation and amortization (or “Cash Burn”) in the first nine months of 2015 was $1.1 million, as compared to $946,000 in the same period of 2014.

Cash and cash equivalents were $0.6 million at September 30, 2015 and shareholders’ equity was $1.5 million.
 
 
2
 
VYCOR MEDICAL, INC.
Segment Information
(unaudited)
 
   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2015
    
2014
    
2015
    
2014
  
Revenue
                        
Vycor Medical
   $ 182,889     $ 243,841     $ 662,996     $ 710,743  
NovaVision
     59,974       90,498       194,437       280,258  
                                 
Total Revenue
   $ 242,863     $ 334,339     $ 857,433     $ 991,001  
                                 
Gross Profit
                                
Vycor Medical
   $ 167,187     $ 207,827     $ 579,980     $ 618,952  
NovaVision
     49,421       79,172       165,523       246,069  
                                 
Total Gross Profit
   $ 216,608     $ 286,999     $ 745,503     $ 865,021  
 
Reconciliation of Non-GAAP Information and Pro Forma Balance Sheet

Non-GAAP Reconciliation

Management uses certain non-GAAP financial measures (including non-GAAP operating expenses and non-GAAP net loss and loss per share), which exclude non-cash amortization of acquired intangible assets, non-cash stock-based compensation, one-time Offering costs and the change in value of derivative warrant liability. Management does not consider these costs in evaluating the continuing operations of the Company. Therefore, management calculates the non-GAAP financial measures provided in this earnings release excluding these costs and uses these non-GAAP financial measures to enable it to analyze further, and more consistently, the period-to-period financial performance of its core business operations. Management believes that providing investors with these non-GAAP measures gives them additional important information to enable them to assess, in the same way management assesses, the Company’s current and future continuing operations. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Set forth below are reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures.
 
On a GAAP basis the Company reported Operating Expenses for the third quarter of 2015 of $725,779, a net operating loss of $509,171 and a net loss of $506,790. For the first nine months the Company reported Operating Expenses of $2,321,104, a net operating loss of $1,575,602 and a net loss of $1,651,239.

Vycor’s GAAP operating costs for the three months ended September 30, 2015 include non-cash amortization of acquired intangible assets ($58,617) and non-cash stock compensation charges ($76,146). Vycor’s other expense was a gain on foreign currency exchange ($14,315).  Vycor’s GAAP operating costs for the nine months ended September 30, 2015 include non-cash amortization of acquired intangible assets ($175,851) and non-cash stock compensation charges ($214,607). Vycor’s other expenses included a change in derivative liability (19,792) and a loss on foreign currency exchange ($59,813).

The Company is providing additional non-GAAP financial measures that exclude these charges and expenses, and reconciliation of GAAP to non-GAAP results is provided in the tables included in this release.

On a non-GAAP basis, taking into account these adjustments, Operating Expenses for the three months ended September 30, 2015 were $591,016, non-GAAP net operating loss was $374,408, and non-GAAP net loss was $386,343. Operating Expenses for the nine months ended September 30, 2015 were $1,930,347, non-GAAP net operating loss was $1,185,144, and non-GAAP net loss was $1,220,760.

About Vycor Medical, Inc.
 
Vycor Medical (OTCQB: VYCO) is dedicated to providing the medical community with innovative and superior surgical and therapeutic solutions. The company has a portfolio of FDA cleared medical solutions that are changing and improving lives every day. The company operates two business units: Vycor Medical and NovaVision, both of which adopt a minimally or non-invasive approach.

For the latest information on the company, including media and other coverage, and to learn more, please go online at www.vycormedical.com, www.vycorvbas.com or www.novavision.com.

Safe Harbor Statement
 
Information in this document constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast", "anticipate", "estimate", "project", "intend", "expect", "should", "believe", and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve, and are subject to known and unknown risks, uncertainties and other factors which could cause Vycor Medical's actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The risks, uncertainties and other factors are more fully discussed in Vycor Medical’s filings with the U.S. Securities and Exchange Commission. All forward-looking statements attributable to Vycor Medical herein are expressly qualified in their entirety by the above-mentioned cautionary statement. Vycor Medical disclaims any obligation to update forward-looking statements contained in this estimate, except as may be required by law.
 
 
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VYCOR MEDICAL, INC.
Consolidated Statements of Comprehensive Loss
(unaudited)
 
   
For the three months ended
September 30,
    
For the nine months ended
September 30,
  
   
2015
    
2014
    
2015
    
2014
  
                         
Revenue
   $ 242,863     $ 334,339     $ 857,432     $ 991,001  
                                 
Cost of Goods Sold
     26,255       47,340       111,930       125,980  
                                 
Gross Profit
     216,608       286,999       745,502       865,021  
                                 
Operating expenses:
                                
Research and development
     29,346       6,933       68,244       59,684  
Depreciation and Amortization
     91,778       93,860       261,134       286,955  
General and administrative
     604,655       623,993       1,991,726       2,652,393  
                                 
Total Operating expenses
     725,779       724,786       2,321,104       2,999,032  
                                 
Operating loss
     (509,171 )     (437,787 )     (1,575,602 )     (2,134,011 )
                                 
Other Income (Expense)
                                
Interest expense – Related Party
     -       (13,706 )     -       (80,093 )
Interest expense -  Other
     (11,934 )     (11,169 )     (35,616 )     (38,844 )
Gain (loss) on foreign currency exchange
     14,315       (62,273 )     (59,813 )     (68,390 )
Change in fair value derivative liability
     -       8,332       19,792       (261,661 )
Loss on extinguishment of debt
     -       (682,039 )     -       (682,039 )
Loss on extension of warrants
     -       (146,488 )     -       (146,488 )
       Total Other expense
     2,381       (907,343 )     (75,637 )     (1,277,515 )
                                 
Loss before Provision for Income Taxes
   $ (506,790 )   $ (1,345,130 )   $ (1,651,239 )   $ (3,411,526 )
                                 
         Provision for Income Taxes
                                
                                 
Net Loss
   $ (506,790 )   $ (1,345,130 )   $ (1,651,239 )   $ (3,411,526 )
                                 
         Preferred Dividends
     (85,331 )     -       (167,777 )     -  
                                 
Net Loss available to common shareholders
   $ (592,121 )   $ (1,345,130 )   $ (1,819,016 )   $ (3,411,526 )
                                 
Comprehensive Loss                                
       Foreign Currency Translation    Adjustment
     16,356       67,268       (64,222 )     73,695  
Net Comprehensive Loss
   $ (575,765 )   $ (1,277,862 )   $ (1,883,238 )   $ (3,337,831 )
Loss Per Share
                                
Basic and diluted
   $ (0.05 )   $ (0.12 )   $ (0.17 )   $ (0.33 )
                                 
Weighted Average Number of Shares Outstanding
     10,849,903       10,735,884       10,821,019       10,106,903  
 
 
 
4
 
 
VYCOR MEDICAL, INC.
Non-GAAP Reconciliation of Operating Loss and Net Loss
 
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2015
    
2014
    
2015
    
2014
  
                         
GAAP Operating Expenses
   $ 725,779     $ 724,786     $ 2,321,104     $ 2,999,032  
                                 
Non-cash amortization of acquired intangible assets
     (58,617 )     (58,617 )     (175,851 )     (175,851 )
Non-cash stock-based compensation
     (76,146 )     (59,323 )     (214,607 )     (319,050 )
Offering Costs
     -       -       -       (581,702 )
                                 
Total Non-GAAP Operating Expense Adjustments
     (134,763 )     (117,940 )     (390,458 )     (1,076,603 )
                                 
                                 
Non-GAAP Operating Expenses
   $ 591,016     $ 606,846     $ 1,930,646     $ 1,922,429  
                                 
GAAP Operating Loss
   $ (509,171 )   $ (437,787 )   $ (1,575,602 )   $ (2,134,011 )
                                 
Non-GAAP Operating Expense Adjustments, as above
     134,763       117,940       390,458       1,076,603  
                                 
                                 
Non-GAAP Operating Loss
   $ (374,408 )   $ (319,847 )   $ (1,185,144 )   $ (1,057,408 )
                                 
GAAP Net Loss
   $ (506,790 )   $ (1,345,130 )   $ (1,651,239 )   $ (3,411,526 )
                                 
Non-GAAP Operating Expense Adjustments, as above
     134,763       117,940       390,459       1,076,603  
Change in value of derivative liability
     -       (8,332 )     (19,792 )     261,661  
Gain (loss) on foreign currency exchange
     (14,315 )     62,272       59,813       68,390  
Loss on extinguishment of debt
     -       682,039       -       682,039  
Loss on extension of warrants
     -       146,488       -       146,488  
                                 
Non-GAAP Net Loss
   $ (386,342 )   $ (344,723 )   $ (1,220,759 )   $ (1,176,345 )
                                 
Non-GAAP Loss Per Share
                                
Basic and diluted
   $ (0.04 )   $ (0.03 )   $ (0.11 )   $ (0.12 )
                                 
Weighted Average Number of Shares Outstanding
     10,849,903       10,735,884       10,821,019       10,106,903  
                                 
Non-GAAP Operating Loss Before Depreciation And Amortization
   $ (341,247 )   $ (284,603 )   $ (1,099,861 )   $ (946,303 )
 
Investor Relations:
Liolios
Ronald A. Both, Senior Managing Director
Tel 1-949-574-3860
vyco@liolios.com
 
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