VYCOR MEDICAL INC - FORM 10-K

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EX-32.1 - EX-32.1 - VYCOR MEDICAL INC	d29286_ex32-1.htm
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EX-31.1 - EX-31.1 - VYCOR MEDICAL INC	d29286_ex31-1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 333-149782

VYCOR MEDICAL, INC.

(Exact name of registrant as specified in charter)


	Delaware			20-3369218
	(State or other jurisdiction of			(I.R.S. Employer
	incorporation or organization)			Identification No.)

6401 Congress Ave., Suite 140, Boca Raton, FL 33487
(Address of principal executive offices) (Zip Code)

Registrant's telephone Number: (561) 558-2000

Securities registered pursuant to section 12(g) of the Act:

Common Stock par value $.0001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


	Large Accelerated Filer o						Accelerated Filer o
	Non-accelerated Filer o (Do not check if a smaller reporting company)						Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $11,716,930 (assuming $0.04 per share)

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 837,472,111 shares of common stock par value $0.0001 as of March 23, 2012.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

TABLE OF CONTENTS


		Page
	PART I
Item 1.	Business	4
Item 1A	Risk Factors	11
Item 1B	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	[Removed and Reserved]	11

	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	11
Item 6	Selected Financial Data	14
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	14
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	18
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	F-21
Item 9A.	Controls and Procedures	F-21
Item 9B.	Other Information	F-21

	PART III
Item 10.	Directors, Executive Officers, Promoters and Corporate Governance	F-22
Item 11.	Executive Compensation	F-25
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	F-26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	F-27
Item 14.	Principal Accountant Fees and Services	F-28

	PART IV
Item 15.	Exhibits, Financial Statement Schedules	F-28

SIGNATURES		F-29

PART I

This Form 10-K contains some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as in this Form 10-K generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise.

ITEM 1. DESCRIPTION OF BUSINESS.

1. Organizational History

We were formed as a limited liability company under the laws of the State of New York on June 17, 2005 as "Vycor Medical LLC". On August 14, 2007, we converted into a Delaware corporation and changed our name to "Vycor Medical, Inc." ("Vycor" or the "Company"). The Company's listing went effective on February 2009 and on November 29, 2010, Vycor completed an acquisition of substantially all of the assets of NovaVision, Inc., a company that had been in the business of researching, developing and providing medical technologies to restore the vision of patients with neurological visual loss predominantly resulting from Stroke or Traumatic Brain Injury.

2. Overview of Business

Vycor operates two distinct business units--Vycor Medical Inc. ("Vycor Medical") and NovaVision, Inc ("NovaVision"). Vycor Medical is a medical device company that designs, develops and markets medical devices for use in neurosurgery. NovaVision develops non-invasive, computer-based visual neuro-stimulation therapy called VRT for those suffering from vision loss resulting from neurological trauma. In addition to our existing products and products in development, we actively seek acquisition, joint venture and in-licensing opportunities in the medical device field which we believe will add shareholder value.

Vycor Medical, Inc.

Introduction

Vycor Medical is a medical device company that designs, develops and markets medical devices for use in neurosurgery. Vycor Medical is ISO 13485:2003 compliant, has U.S. FDA 510(k) clearance for brain and spine surgeries, CE Marking for Europe and Canadian HPB licensing for sale in Canada of its brain access system. Vycor Medical's first product, the ViewSite Brain Access System (VBAS), is a next generation access system which was commercially launched in November 2008. The VBAS addresses a market that has not changed materially in over 50 years in contrast to development in most other neuro-surgical technologies.

The second product in Vycor Medical's pipeline is the Cervical Access System (VCAS), which requires further prototyping and successful market testing prior to commercialization launch. Like the VBAS, this product is designed to assist the surgeon in cervical surgeries, allowing the surgeon to gain access to the anterior cervical surgery site.

Vycor Medical has received FDA 510(k) clearance for its products, with which we are authorized to take market our products in the U.S. without further approvals.

Vycor Medical's Products

Viewsite Brain Access System (VBAS)

To access a surgical site in the brain, the surgeon needs to remove part of the skull (crainiotomy) and then part (retract) the soft brain tissue to access the target site. The current standard of care utilizes a metal blade retractor to force the tissue apart; to maintain the opening the blades are attached to a head frame and tension is applied to the tissue

The VBAS series is used by neurosurgeons to access the surgical site in the brain. This is done by inserting the VBAS into the brain tissue and then removing the VBAS introducer, leaving the remaining hollow working channel in place to provide the surgeon with access to the precise location desired for surgery.

The VBAS is available in multiple sizes and is a single-use product. The series consists of twelve disposable products, offered in four different port diameters of 17mm and 21mm, 12mm and 28 mm and a choice of three lengths for each of 3, 5, and 7cm. We intend to add additional models in the future.

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



	•			Gently separate delicate tissue by utilizing a tapered forward edge;
	•			Minimize venous pressure caused by pulling tissue in one direction in the brain;
	•			To allow direct surgical visualization of the brain tissue via optically transparent construction;
	•			Reduce "target shift" to allow the surgeon to reach the site accurately;
	•			Minimize healthy tissue damage while reaching the target site;
	•			Allow for accurate neuronavigational image guidance systems ("IGS") performance;
	•			Integrate in due course with the leading surgical IGS systems such as Medtronic® and BrainLab®, Stryker and GE;
	•			Improve surgical outcomes (reducing potential surgeon and hospital liability), for example, decreased insertion tissue trauma, less need for readjustment during surgery and minimum interface surface pressures;
	•			Reduce damage to healthy brain tissue potentially leading to shorter post-op recovery and reduced hospital stay

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

Because our products are relatively new to the market, there is no guarantee that any of the above mentioned features would prove effective and be useful to the end user.

IGS Opportunity for the Brain Access System

The VBAS product has the potential to improve accuracy in targeting the surgical site when used with Image Guidance Systems (IGS), by addressing two substantial IGS-related problems of target shifting and the lack of real-time retractor positioning data during procedures:

• Target Shifting

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

• Real-Time Retractor Positioning Data

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

Vycor Medical Product Pipeline

Brain Access and Related Products

The Company's future plans include developing additional Brain Access Systems that are designed for the requirements of specific surgical applications like aneurisms, tumors and endoscopic work and identifying other products that can be used in conjunction with our VBAS product.

Cervical Access Products

The Company will continue its preliminary work to design Cervical Access System products which would be used by the surgeon to access the anterior cervical surgical site (the uppermost vertebrae located in the neck). While the Company has filed certain intellectual property applications with respect to this technology, such development is in an early stage.

Sales and Marketing

Domestic Sales Strategy

VBAS was launched in November 2008 with a strategy of driving sales through leading neurosurgeons. In this regard, the Company has adopted a dual strategy of targeting both the leading neurosurgeons and the leading neurosurgery hospitals. The Company believes that out of the 4,500 neurosurgeons in the US approximately 1,500 focus predominantly on craniotomies or cranial procedures that could potentially benefit from the VBAS product.

We are currently using independent distributors who have existing relationships with neurosurgeons and target hospitals to drive our sales. The Company's distributors have approximately 50 sales representatives who cover approximately 75% of the U.S. population.

International Sales

The Company utilizes select medical device distributors with experience in neurosurgical devices in select countries. In Europe, the company has agreements with distributors for Spain, Italy, Belgium, Scandinavia, Switzerland and the U.K. who are all focused in neurosurgery. In China, Vycor Medical has an exclusive distribution agreement for VBAS, which received SFDA approval in December 2011 when the first shipments were made. Vycor also has regulatory approval in Japan and Australia with distribution agreements in place or being put into place, and has filed for regulatory approval in Russia and Korea.

Reference Hospitals Program

The Company has developed a Reference Hospital Program to identify centers of excellence and to provide neurosurgeons with evidence of support for our products.

VBAS Market and the Hospital Adoption Process

The market for VBAS in the US is relatively concentrated, with approximately 1,500 neurosurgeons focusing on the relevant procedures. Teaching hospitals not only carry out more relevant procedures but also provide a natural way to drive adoption through the conversion of new surgeons. We focus our efforts initially on surgeons as the principle proponent within the hospital. Vycor has found that the learning curve is only 1-2 cases for surgeons, who like the simplicity of design and ease of use after trialing the product. Hospital Administration is required to approve the purchase of a new product and sometimes even a trial or evaluation product. The focus for Hospital Administration is the potential hard and soft cost savings and benefits of VBAS versus the cost compared to existing practice. We use clinical studies, papers and other peer reviews evidencing the clinical benefits of the products as well as surgery time in the operating room.

Experience has been that the approval process can take up to six months for each hospital, and in some cases may even be longer. However, this time reduces as more leading hospitals become approved and as more clinical paper/studies and other peer reviews are published. Management is assembling a body of clinical evidence to speed up the adoption process.

Peer Review and Other Clinical Studies

The publication of clinical papers in neurosurgery journals by surgeon-users of VBAS regarding their experiences with the products (peer review papers), and the publication of other clinical data, is important for the Company as it continues to evidence the clinical superiority of VBAS. During 2011 the following papers were published:

•"Usage of a Minimally Invasive Tubular Retraction System for Deep-Seated Tumors in Pediatric Patients" in Journal of Neurosurgery in May 2011: Pediatrics. Co-authors Pablo Recinos, M.D., of the Cleveland Clinic and George Jallo, M.D., of Johns Hopkins University conclude that while access to deep-seated, intra-axial tumors is challenging, the ViewSite™ tubular retractor and frameless neuro navigation facilitated the surgical approach and the combination of these technologies adds to the surgeon's armamentarium to safely approach tumors in deep locations.

•"Vycor Viewsite TC: Endoscope-guided Intraparenchimal Brain Tumor Resection," by Daniel Prevedello, M.D., Director of the Minimally Invasive Cranial Surgery Program at the Ohio State University. Dr Prevedello reported on a case with a patient taking Avastin®, which delays surgical wound healing. He said the Viewsite TC was essential to the surgery; otherwise, no procedure could have been performed on the patient.

•"Minimally Invasive Trans-Portal Resection of Deep Intracranial Lesions" in Minimally Invasive Neurosurgery, February 2011 a Johns Hopkins University paper by lead author A. Quinones Hinojosa. The authors reported a case series of 9 adult and pediatric patients with a variety of pathologies, including colloid cyst, DNET, papillary pineal tumor, anaplastic astrocytoma, toxoplasmosis and lymphoma. The locations of the lesions approached included: lateral ventricle, basal ganglia, pulvinar/posterior thalamus and insular cortex. Post-operative imaging was assessed to determine extent of resection and extent of white matter damage along the surgical trajectory. Satisfactory resection or biopsy was obtained in all patients. "VBAS lends itself well to minimally invasive microsurgical approaches and can be used in combination with modern navigational systems. The use of navigation permits not only the creation of a smaller craniotomy but also facilitates the creation of a trajectory that provides efficient and safe means for splitting white fiber tracts," said the authors.

A comparative clinical animal study is currently being conducted at a leading university hospital, in which procedures will be performed using VBAS and blade retractors at the same time. Time and ease of surgery, and white matter damage will be comparatively measured during surgery and by post-operative MRI.

Manufacturing

Vycor Medical has executed agreements with Lacey Manufacturing Company of Bridgeport, Connecticut ("Lacey") and C&J Industries, Meadville PA ("C&J") to provide a full range of engineering, contract manufacturing and logistical support for our products.

Lacey and C&J are recognized leaders in the medical contract manufacturing sector, providing vertically integrated full services. They are U.S. Food and Drug Administration registered and meet ISO standards and certifications. Lacey and C&J have shipped orders to Vycor Medical and have made production runs of all 12 sizes.

Market

The market for our Brain Access System product lines is the neurosurgical community. The Company has analyzed and estimated the market for its products from an analysis of available statistics, discussion with surgeons, distributors and other market participants. Vycor Medical is currently focusing its attention for VBAS on the US, China and Europe.

Competition

Competitive manufacturers of brain retractors include:


	•			Cardinal Health (V. Mueller line)
	•			Aesculap
	•			Integra Life Science
	•			Codman (Division of Johnson & Johnson)

Cervical Access System competitors include Medtronic, Asculap/B. Braun, Cardinal and Nuvasive, Cloward Instruments, among others. In addition to the standard "blade retractors" distributed by the aforementioned companies. In addition companies such as Endius and EBI have announced cervical retractor systems.

Customers

Vycor Medical sells to stocking regional distributors and direct to hospitals through independent representatives. The Company believes that its products currently are being evaluated or utilized in approximately 80 hospitals in the United States. In addition, in year ended December 31, 2011 and 2010 international sales accounted for approximately 39% and 20% of revenues, respectively.

Intellectual Property

Patent Applications

Vycor Medical has the following issued, patents:

•Russia (2009124446) - Surgical Access Instruments for use with Delicate Tissues (Brain)

•China (200680056889.9) - Surgical Access Instruments for use with Delicate Tissues (Brain)

Additionally, Vycor has 13 patents pending for its Brain and Spine technology and products in: the U.S. (3), Canada (2), Europe (2), India (2), Japan (2), and Hong Kong (2).

Trademarks

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

NovaVision, Inc.

Introduction

NovaVision develops non-invasive, computer-based visual neuro-stimulation therapy called VRT for those suffering from vision loss resulting from neurological trauma. VRT is a patient-specific diagnostic and therapeutic platform that improves patient's vision and enables them to experience significant functional improvements. VRT is currently focused on visual deficits resulting from stroke, traumatic brain injury, or other acquired brain injuries. NovaVision operates in the US and in Germany through a wholly-owned subsidiary.

VRT is successful in treating vision loss because people look with their eyes and see with their brain. VRT is based on NovaVision's platform technology which management believes induces neuroplasticity, the brain's natural ability to repair or remap broken neural connections that cause vision loss. Before VRT, such patients were informed that their vision loss would likely be permanent and they were prescribed therapy or aids to merely compensate for their lost vision.

VRT is a patient-specific diagnostic and therapeutic platform. The VRT diagnostic program maps the area of lost visual field. Proprietary algorithms help generate a customized therapy which delivers light-based stimuli to neurologically stimulate the visual cortex of the brain and restore the lost visual field. VRT is generally performed over a six month period, twice a day for an hour total, six days a week. The Company maintains broad IP protection. NovaVision has collected significant amounts of data from clinical studies and peer reviewed papers that support the Company's claims about the benefits of its platform technology for vision restoration and other indications. NovaVision has received 510(k) clearance and CE Marking for VRT.

Platform Technology

The management of NovaVision believes that the underlying basis for the visual field recovery it has witnessed, and the functional outcome improvements it has noted with its patients is largely due to neuroplasticity of the visual field which is the brain's ability to remap or repair itself in response to a pre-programmed and deliberate stimulation. Neuroplasticity has been discussed over the last 20 years or so and as far back as 1990 Gilbert & Weisel talked about the cortex not having a fixed functional architecture.. The platform technology is comprised of proprietary algorithms that generate patient-specific therapies which enable NovaVision's products to be used as both diagnostic and therapeutic tools. The platform technology generates light-based, or photic, stimulus programs consisting of a fixation point on a display screen. As the patient focuses on this fixation point, a series of photic stimuli are delivered on the screen that are specific to the patient's neurological requirements, and relayed directly to the brain using the eye as a conduit.

Management believes that it is this programmed light sequences that stimulate the border zone between the "seeing" and "blind" visual fields and which induces neuroplasticity. The diagnostic algorithm in the VRT product first maps the visual field and defines the areas of defect in patients suffering vision loss. The therapeutic algorithm in the VRT product is then specifically designed for each patient based upon the results of the diagnostic program and it repetitively challenges the visual cortex with thousands of stimuli over the course of time. While neuroplasticity for explaining VRT has never been conclusively demonstrated, Randy Mashall's study using MRI did demonstrate that VRT results in increased neural activity in the visual cortex. Management is also aware of other studies which should be published during the course of 2011 which will shed further light on this. Irrespective of mechanism, patient studies point to significantly improved functional outcomes for patients who have done VRT treatment. This improvement manifests itself in greater confidence to move around and an average shift of 4.9 degrees in the border between seeing and blind visual fields. The visual field is the portion of space surrounding an individual which is visible at any given time by that individual while their gaze is held stationary. To humans, the central 10° of visual field holds the greatest functional importance for focal and cognitive tasks.

Clinical Data Relating to VRT

NovaVision has accumulated significant amounts of clinical data as a result of company-sponsored trials as well as studies conducted by independent third parties.

•A large retrospective VRT study indicated that 88% of patients experience an improvement in at least one of their daily life activities

•75% of patients experience and improvement in their mobility which is regarded as the most important functional task

•Time since injury does not seem to matter so historical backlog of patients can be treated

•Results do not appear to be not age or gender dependent

Pipeline Products Utilizing NovaVision's Platform Technology

Management is looking to further develop its product range leveraging its existing technology platform. To this end it is in the process of launching a second generation of portable visual field screening device called head mounted perimeter (HMP). The Company has registration to sell the HMP as a Class 1 device as a screening tool for physicians. Physicians would use this novel portable HMP as a low-cost screening tool providing automated perimetry for visual field screenings performed more efficiently in the clinician's office, waiting room, nursing homes or within the hospital setting by Ophthalmologists, Optometrists and even the Primary Care Physician. The visual field test qualifies for reimbursement under CPT code 92082 (ranging from $60 - $70). While entirely focused on just screening and as such not as complex as an Oculus or Humphreys its screening ability is actually more resolute as it tests every 4 degrees compared to every 6 degrees. Its greatest advantage is its portability which enables it to be utilized in a number of situations where patients with a Visual Field Deficit may otherwise not be able to take a table mounted test.

Regulatory Matters

In the U.S., NovaVision's products are regulated by the Food and Drug Administration ("FDA") as Class U medical devices subject to 510(k) clearances, and in Europe NovaVision has CE Marking for VRT as a Class I device. NovaVision received its 510(k) clearance for VRT specific to Stroke and TBI indications in 2003.

Intellectual Property

Patents

NovaVision maintains a portfolio of patent protection on its methods and apparatus in the form of issued patents and applications, both domestically and internationally, with a total of 23 granted and 15 pending patents.

The Company's 23 granted patents are in the U.S. (11), Canada (2), Europe (4), Australia (1), China (2), Hong Kong (1), India (1) and Japan (1).

The Company's 15 pending patents are in the U.S. and Canada (5), Europe (5), Australia (2), and Japan (3).

Trademarks

NovaVision maintains a portfolio of registered trademarks for NOVAVISION, NOVAVISION VRT and VISION RESTORATION THERAPY amongst others, both in the US and internationally.

Manufacturing and Operations

NovaVision is based at the Vycor Medical, Inc. group headquarters at a 10,000 square foot leased facility in Boca Raton, Florida. NovaVision purchases electronics and custom fabricated hardware from third party vendors and assembles and tests all of its medical devices within the facility. NovaVision has an FDA Establishment Registration and the Company does not have any long-term contractual obligations with its vendors to purchase products from them, nor are suppliers contractually obligated to sell products to NovaVision.

Acquisition of Sight Science, Ltd.

On January 4, 2012, NovaVision, entered into various agreements with Professor Arash Sahraie ("Prof. Sahraie") and the University of Aberdeen (Scotland) (the "University"), relating to the acquisition of all of the shares of Sight Science, Ltd. ("Sight Science") by NovaVision. In consideration of the Share Purchase Agreement and other transaction agreements, the Company agreed to pay the Sight Science shareholders £200,000 (US$ 310,660) cash, of which £100,000 (US$155,330) was paid at the Closing and an additional £100,000 (US$155,330) cash to be paid to the Sight Science shareholders on the one-year anniversary of the Closing. In addition, the Sight Science shareholders received at Closing further consideration in the form of an aggregate of 14,350,000 restricted shares of the Company, which are the subject of lock-up agreements between the Parties and which at Closing were valued at £184,768 (US$287,000).

Sight Science was established in 2009 based on the research of Professor Arash Sahraie at the University of Aberdeen. Sight Science, which is owned jointly by Prof. Sahraie and the University of Aberdeen, provides an interactive computer-based therapy called Neuro-Eye Therapy ("NeET"), which patients administer at home. To date, over 100 patients have utilized NeET. The Company has 5 patents granted in the UK, France, Germany, Switzerland and Singapore and 2 patents pending in the U.S. and Canada. Prof. Sahraie has conducted extensive research on blindsight and residual visual processing after brain injury, and is highly regarded in the field.

As part of the transaction, Prof. Sahraie agreed to join NovaVision as its Chief Scientific Officer on a part-time secondment basis from the University for a minimum of 5 years. Prof. Sahraie is responsible for driving NovaVision's scientific effort to develop and validate technologies in vision rehabilitation for visual field defects resulting from brain injury. The acquisition also created a long-term relationship between the Company, NovaVision and the University, which is a leading medical research center. In connection with the transaction, the University entered into an Option Agreement with Sight Science whereby Sight Science is granted an option over certain related developments created by Prof. Sahraie and his laboratory. The University also entered into a Patent Agreement and Assignation Agreement with Sight Science where all of the intellectual property held by the University and which was related to Sight Science's business was assigned to Sight Science.

Both NovaVision's VRT and Sight Science's NeET work on the basis that repeated stimulation of the blind areas by either bright patches of light (VRT) or the specific spatial patterns (NeET) and can lead to increases in sensitivity of the blind areas. Patients progress after VRT appears to be initiated at the blind and sighted borders whereas NeET results in changes deep within the field damage. Both therapies are able to demonstrate improvements in both visual sensitivity and activities of daily living. The Company believes that these therapies are highly complementary.

3. Other Matters

Product Liability Insurance

We presently have Product Liability insurance for both Vycor Medical and NovaVision.

Government Regulations

We are committed to an integrated total quality management system. We believe that we have completed the necessary procedures and are certified to the ISO standards expected of medical device manufacturers as follows:

ISO 13485:2003 Medical Devices — Quality Management Systems

The certification of a quality management system to ISO 13485, 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 13485:2003. The certification is also required for placement of branded devices into the European Union.

Vycor Medical has the following certification/licensing:

•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)

•ISO 13485.2003

Employees

We currently have 21 full-time employees.

ITEM 1A. RISK FACTORS

Smaller reporting companies are not required to provide the information required by this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

N/A

ITEM 2. PROPERTIES

The Company leases approximately 10,000 sq. ft located at 6401 Congress Ave., Suite 140, Boca Raton, FL 33487 from Catexor Limited Partnership for a gross rent of $14,260 plus sales tax per month. The term of the lease is 5 years and 6 months months terminating July, 2017

ITEM 3. LEGAL PROCEEDINGS

We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.

ITEM 4. [REMOVED AND RESERVED]

PART II

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 following table shows the high and low prices of our common shares on the OTC Bulletin Board for each quarter since our common stock began to trade on the OTC Bulletin Board in July 2009. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:


Period	High	Low
July 20, 2009-September 30, 2009	$0.04	$0.02
October 1, 2009-December 31, 2009	$0.07	$0.01
January 1, 2010-March 31, 2010	$0.15	$0.04
April 1, 2010-June 30, 2010	$0.06	$0.01
July 1, 2010-September 30, 2010	$0.03	$0.01
October 1, 2010-December 31, 2010	$0.04	$0.01
January 1, 2011-March 31, 2011	$0.03	$0.015
April 1, 2011-June 30, 2011	$0.045	$0.02
July 1, 2011-September 30, 2011	$0.05	$0.025
October 1, 2011-December 31, 2011	$0.04	$0.015

The market price of our common stock, like that of other technology companies, is highly volatile and is subject to fluctuations in response to variations in operating results, announcements of technological innovations or new products, or other events or factors. Our stock price may also be affected by broader market trends unrelated to our performance.

Holders

As of March 23, 2012 there were 837,472,111 shares of common stock outstanding and approximately 91 stockholders of record.

Transfer Agent and Registrar

Our transfer agent is Computershare, 350 Indiana Street, Suite 800, Golden, CO 80401; telephone (303) 262-0600.

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.

RECENT SALES OF UNREGISTERED SECURITIES

Below is a list of securities sold by us from January 1, 2011 through March 24, 2012 which were not registered under the Securities Act.

Common Stock:

Name of Purchaser

Issue Date

Security

Shares

Consideration

Stephen M. Rathkopf

Feb. 1, 2011

Common Stock

1,000,000

19,000

Steven Girgenti

Feb. 4, 2011

Common Stock

250,000

Director's Services

Datavision Computer Video,
Inc.

Mar. 1, 2011

Common Stock

1,315,789

25,000

Wayne Fleischacker

Mar. 14, 2011

Common Stock

5,263,158

100,000

ILEX Investments, LP

April 19, 2011

Common Stock

8,888,888

200,000

Stephen Nicholas Bunzl

May 16, 2011

Common Stock

2,222,222

50,000

Robert Crames

May 16, 2011

Common Stock

2,222,222

50,000

Sal DeMarco & Kathryn
DeMarco JTTEN

May 16, 2011

Common Stock

1,111,111

25,000

Steven Girgenti

May 16, 2011

Common Stock

222,222

Director's Services

Jack Lens

May 16, 2011

Common Stock

2,222,222

50,000

Duane John Renfro

May 16, 2011

Common Stock

2,222,222

50,000

Carol Tambor

May 16, 2011

Common Stock

2,222,222

50,000

Neil Weiss

May 16, 2011

Common Stock

4,444,000

100,000

Myles F. Wittenstein

May 16, 2011

Common Stock

2,222,222

50,000

Jerrald Ginder

May 17, 2011

Common Stock

18,000,000

Consulting Services

Maurice Reissman

May 24, 2011

Common Stock

4,444,444

100,000

Daksha Solanky

June 30, 2011

Common Stock

888,888

20,000

Berardino Investment Group

July 7, 2011

Common Stock

2,167,902

Debenture Conversion

Greenbridge Capital Partners
IV, LLC

July 13, 2011

Common Stock

15,500,000

Consulting Services

Jerrald Ginder

July 22, 2011

Common Stock

2,666,667

Consulting Services

Jason Adelman

Aug. 9, 2011

Common Stock

200,000

Consulting Services

Matthew Balk

Aug. 9, 2011

Common Stock

700,000

Consulting Services

Daniel Schneiderman

Aug. 9, 2011

Common Stock

100,000

Consulting Services

Steven Girgenti

Aug. 25, 2011

Common Stock

154,600

Director's Services

McCombie Group, LLC

Aug. 25, 2011

Common Stock

428,571

Consulting Services

Name of Purchaser

Issue Date

Security

Shares

Consideration

Alvaro Pascual Leone

Aug. 25, 2011

Common Stock

78,300

Advisory Comm. Fee

Steven Girgenti

Nov. 7, 2011

Common Stock

166,667

Director's Services

Alvaro Pascual Leone

Nov. 7, 2011

Common Stock

104,167

Advisory Comm. Fee

Joseph Simone

Nov. 16, 2011

Common Stock

510,000

15,300

Fountainhead Capital Management Limited

Jan. 1, 2012

Common Stock

402,965

Stock option exercise

Chase Family Trust

Jan. 17, 2012

Common Stock

4,444,444

Conv. Preferred Stock

Professor Arash Sahraie

Jan. 19, 2012

Common Stock

9,901,500

Purch. Sight Science

University of Aberdeen

Jan. 19, 2012

Common Stock

4,448,500

Purch. Sight Science

Jason J S Barton

Jan. 23, 2012

Common Stock

138,890

Director's Services

Oscar Bronsther

Jan. 23, 2012

Common Stock

96,620

Director's Services

Steven Girgenti

Jan. 23, 2012

Common Stock

222,222

Director's Services

Jose Romano

Jan. 23, 2012

Common Stock

138,890

Director's Services

Glenn Fleischacker

Jan. 27, 2012

Common Stock

4,444,444

Conv. Preferred Stock

Steven Reichbach

Jan. 27, 2012

Common Stock

2,222,222

Conv. Preferred Stock

Myles Wittenstein

Jan. 31, 2012

Common Stock

2,222,222

Conv. Preferred Stock

Alvaro Pascual Leone

Jan 31, 2012

Common Stock

138,890

Advisory Comm. Fee

Matteo Rosselli

Feb. 9, 2012

Common Stock

2,222,222

Conv. Preferred Stock

Series C Preferred Stock:


Purchaser	Issue Date			Security	Shares Consideration
Purchaser	Issue Date			Security	Shares Consideration
MKM Opportunity Master Fund, Ltd.		June 6, 2011	Ser. C Pref. Stock			5.00	$	250,000
Andrew Mitchell		June 6, 2011	Ser. C Pref. Stock			0.50	$	25,000
Matthew Balk		June 6, 2011	Ser. C Pref. Stock			0.80	$	40,000
Daniel Balk		June 6, 2011	Ser. C Pref. Stock			1.10	$	55,000
David Balk		June 6, 2011	Ser. C Pref. Stock			1.10	$	55,000
Daniel Schneiderman		June 6, 2011	Ser. C Pref. Stock			0.45	$	22,500
Jonathan Balk		June 6, 2011	Ser. C Pref. Stock			0.50	$	25,000
Richard L. Hoffman		June 6, 2011	Ser. C Pref. Stock			0.45	$	22,500
Robert J and Sandra S. Neborsky Living Trust		June 6, 2011	Ser. C Pref. Stock			2.00	$	100,000
Skriloff Family Irrev. Trust fbo Samuel Skriloff		June 6, 2011	Ser. C Pref. Stock			0.10	$	5,000
Skriloff Family Irrev. Trust fbo Olivia Skriloff		June 6, 2011	Ser. C Pref. Stock			0.10	$	5,000
Jason Adelman		June 6, 2011	Ser. C Pref. Stock			1.80	$	90,000
Robert and Amy Bernstein		June 6, 2011	Ser. C Pref. Stock			0.50	$	25,000
Dick F. Chase, Jr.		June 6, 2011	Ser. C Pref. Stock			2.00	$	100,000
Boris and Alexandra Smirnov		June 6, 2011	Ser. C Pref. Stock			2.00	$	100,000
Nadejda Kassatkina		June 6, 2011	Ser. C Pref. Stock			2.00	$	100,000
Irina Pavlova		June 6, 2011	Ser. C Pref. Stock			1.00	$	50,000.00
Jeffrey J. and Jennifer S. Clayton		June 6, 2011	Ser. C Pref. Stock			1.00	$	50,000.00
Greenbridge Capital Partners IV, LLC		June 6, 2011	Ser. C Pref. Stock			1.50	$	75,000.00
Core Capital IV Trust		June 6, 2011	Ser. C Pref. Stock			1.50	$	75,000
Rolant Investments Limited		June 6, 2011	Ser. C Pref. Stock			6.00	$	300,000


Purchaser	Issue Date			Security	Shares Consideration
Purchaser	Issue Date			Security	Shares Consideration
David Wiener*		June 28, 2011	Ser. C Pref. Stock			1.00	$	50,000
One East Partners Opportunity, L.P.		June 28, 2011	Ser. C Pref. Stock			2.70	$	135,000
One East Partners Master, L.P.		June 28, 2011	Ser. C Pref. Stock			5.30	$	270,000
Narang Family Partnership, L.P.		June 28, 2011	Ser. C Pref. Stock			0.50	$	25,000
Hugh Scott Campbell		June 28, 2011	Ser. C Pref. Stock			0.20	$	10,000
Fraser Campbell		June 28, 2011	Ser. C Pref. Stock			0.20	$	10,000
Sean Campbell		June 28, 2011	Ser. C Pref. Stock			0.50	$	25,000
Wayne Fleischacker		June 28, 2011	Ser. C Pref. Stock			2.00	$	100,000
Glenn Fleischacker		June 28, 2011	Ser. C Pref. Stock			1.00	$	50,000
Jane Ellis		June 28, 2011	Ser. C Pref. Stock			2.00	$	100,000
Duane Renfro		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Guri Dauti		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Matteo Joseph Rosselli		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Sarah Benveniste		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Steven Reichbach		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Glenn Fleischacker		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Myles Wittenstein		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Neil Weiss		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Randolf Kahn		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Wayne Fleischacker		Aug. 4, 2011	Ser. C Pref. Stock			1.00	$	50,000
Marc A. Cohen		Aug. 4, 2011	Ser. C Pref. Stock			2.20	$	110,000

*The share transaction with David Wiener on June 28, 2011 was mutually rescinded in December 2011 and the shares were cancelled and funds returned to the investor.

The securities issued in the abovementioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act and Rule 506 of Regulation D.

ITEM 6. SELECTED FINANCIAL DATA


		12/31/11			12/31/10			12/31/09
					(Restated)			(Restated)
Revenues	$	971,367		$	316,450		$	199,046
Net loss	$	(4,778,541	)	$	(1,983,822	)	$	(1,164,036	)
Net loss per share	$	(0.006	)	$	(0.003	)	$	(0.040	)
Weighted average no. shares		780,096,806			663,168,900			29,183,482
Stockholders' equity (deficit)	$	875,324		$	88,714		$	(1,245,940	)
Total assets	$	3,571,640		$	2,153,694		$	400,960
Total liabilities	$	2,696,316		$	2,064,980		$	1,646,900

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

Critical Accounting Policies and Estimates

Uses of estimates in the preparation of financial statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated. To the extent management's estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant estimates and assumptions contained in the accompanying consolidated financial statements include management's estimate of the allowance for uncollectible accounts receivable, amortization of intangible assets, and the fair values of options and warrant included in the determination of debt discounts and share based compensation.

Going Concern

The Company's financial statements have been presented on a basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and assumes the Company will continue as a going concern. The Company has incurred losses since its inception, including a net loss of $4,778,541 for the year ended December 31, 2011, and the Company expects to continue to incur substantial additional losses in the future, including additional development costs, costs related to marketing and manufacturing expenses. The Company has incurred negative cash flows from operations since inception. As of December 31, 2011 the Company had a stockholders' equity of $875,324 and cash and cash equivalents of $950,841. The Company believes it would not have enough cash to meet its various cash needs unless the Company is able to obtain additional cash from the issuance of debt or equity securities. There is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Research and Development

The Company expenses all research and development costs as incurred. For the years ended December 31, 2011 and 2010, the amounts charged to research and development expenses were $115,665 and $15,208, respectively.

Cash and cash equivalents

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. Cash balances may at times exceed the FDIC insured limits. Cash also includes a US investment account in a money market backed by government securities up to 105% of the account balance. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Included within cash are deposits paid by patients, held by the Company until the patient returns the VRT device at the end of therapy. At December 31, 2011 and 2010 patient deposits amounted to $25,000 and $0, respectively, and are reserved against in Other Current Liabilities.

Property and equipment

The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful life of the assets, which is estimated to be between three and seven years. Maintenance, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized

Income taxes

The Company accounts for income taxes in accordance with the current authoritative guidance. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when it is more likely than not that such benefit will not be realized.

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 basis using a present value, cash flow method based upon the authoritative guidance. Trademarks have an indefinite life and are reviewed annually by management for impairment in accordance with the authoritative guidance.

Revenue Recognition

Vycor Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records revenue when a completed contract for the sale exists, the product is invoiced and shipped to the customer. Vycor Medical does provide for product returns or warranty costs.

NovaVision generates revenues from various programs, therapy services and other sources such as government grants. Therapy services revenues represent fees from NovaVision's vision restoration therapy software, diagnostic software, medical devices, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision recognizes revenue for providing the vision restoration therapy as the Company's work effort is expended. NovaVision provides vision restoration therapy directly to patients. The typical vision restoration therapy consists of six modules, performed on average over 6 months in the U.S. and 10 months in Germany. A patient contract comprise 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.

Research grants and other subsidies represent revenue from certain German government agencies to cover certain patients within an insurance group and also to reimburse NovaVision AG for certain payroll and other costs. The Company recognizes grant revenue when services or costs have been incurred which would entitle the Company to use the German government funds, and the grant requirements have been satisfied.

Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.

Accounts Receivable

The Company's accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly therapy or physicians for diagnostic products in the case of NovaVision. Accounts receivable are due once products have been delivered or at the time the therapy is initiated; however, for NovaVision therapy patients sometimes credit is extended through various payment plans based on individual financial conditions, generally not to exceed the 9 or 10 month therapy period. The outstanding balances are stated net of an allowance for doubtful accounts. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, and the customer's ability to pay its obligations. The Company writes off accounts receivable when they become uncollectible.

Inventory

Inventories are comprised of Vycor Medical VBAS devices, components ancillary to NovaVision's medical device provided to patients and centers and diagnostic products, and are stated at the lower of cost or market, determined under the first-in, first-out method. The inventory is charged to cost of revenue at the time that a device is shipped to a customer or patient.

Foreign Currency

The Euro is the local currency of the country in which NovaVision AG conducts its operations and is considered the functional currency of this entity. All balance sheet amounts are translated to U.S. dollars using the U.S. exchange rate at the balance sheet date except for the equity section which is translated at historical rates. Operating statement amounts are translated using an average exchange rate for the period of operations. Foreign currency translation effects are accumulated as part of the accumulated other comprehensive income (loss) and included in shareholders' (deficit) in the accompanying Consolidated Balance Sheet.

Educational marketing and advertising expenses

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

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 2011 to the Year Ended December 31, 2010

Revenue and Gross Margin:


		2011		2010	% Change
Revenue:
Vycor Medical	$	548,463	$	307,582	78	%
NovaVision	$	422,904	$	8,868	NM
	$	971,367	$	316,450	207	%


		2011			2010		% Change
Cost of Revenue:
Vycor Medical	$	(109,021	)	$	(47,607	)	128	%
NovaVision	$	(67,237	)	$	(1,130	)	NM
	$	(176,258	)	$	(48,737	)	262	%
Gross Profit
Vycor Medical	$	439,422		$	259,975		69	%
NovaVision	$	355,687		$	7,738		NM
	$	795,109		$	267,713		197	%

Vycor Medical recorded revenue of $548,463 from the sale of its products in 2011, an increase of 78% over 2010. The increase in sales was attributable to greater penetration and usage of our product in hospitals in the United States both direct and through distributors, and increased sales internationally. In December 2011 VBAS received SFDA approval to be marketed in the People's Republic of China (PRC) and shipped its first order with a value of $170,000. Approximately 39% of sales were international in 2011 compared to 20% in 2010. Gross margin of 80% was achieved in 2011 compared to 85% for 2010. Gross margin is mostly a product of sale mix between US sales through distributors, US sales direct and international sales. International sales are all indirect through distributors and end-market prices internationally tend to be lower. In addition in 2011 Vycor Medical had one-off costs from a packaging life extension program.

NovaVision recorded revenues of $422,904 for the period ended December 31, 2011 and a gross margin of 84%.

Research and Development Expense:
Research and development expenses were $115,665 in 2011 compared to $15,208 for 2010. The increase in R&D expense relates primarily to the inclusion of NovaVision in the 2011 period and the development work carried out on new products and technologies.

General and Administrative Expenses:

General and administrative expenses increased by $3,067,946 to $4,987,120 for 2011 from $1,919,174 for 2010. Included within General and Administrative Expenses are non-cash charges for share based compensation as the result of amortizing employee and non-employee shares, warrants and options which have been issued by the Company over various periods. The charge for 2011 was $1,755,661, an increase of $1,412,797 over $342,864 in 2010. The increase was primarily related to the recognition of $658,651 for fully vested warrants issued to Fountainhead during the 2011 period, the recognition of common stock issued to Jerrald Ginder and GreenBridge Capital Partners IV, LLC and the addition of members to the Board of Directors and the NovaVision Scientific Advisory Board who are partly compensated in stock. The remaining General and Administrative increase of $1,655,149 reflects approximately $1,150,990 of additional expenses related to the inclusion of NovaVision in 2011, increased professional and consulting fees, including increased consulting fees with Fountainhead following the NovaVision acquisition, and higher levels of marketing activities in Vycor Medical. In addition there were $119,273 of non-recurring costs; $70,463 with regard the accrual of a retention bonus to Ken Coviello, the Chief Executive, in relation to the 2009 Recapitalization Agreement; and $48,810 with regard to the accrual of a vendor settlement relating to the distribution of certain NovaVision products in Germany prior to the acquisition of NovaVision by Vycor.

Interest Expense:

Interest expense comprises: interest expense on the Company's debt and insurance policy financing. Interest expense for 2011 was increased by $81,260 to $127,142 from $45,882 for 2010, as a result of an increase in average debt levels during the year.

Liquidity and Capital Resources

Liquidity

The following table shows cash flow and liquidity data for the periods ended December 31, 2011 and December 31, 2010:


		December 31, 2011			December 31, 2010			$ Change
Cash	$	950,841		$	127,081		$	823,760
Accounts receivable, inventory and other current assets		1,378,754			774,122			604,632
Total current liabilities		(2,696,316	)		(2,064,980	)		(631,336	)
Working capital (deficit)	$	(366,721	)	$	(1,163,777	)	$	797,056
Cash provided by financing activities	$	4,173,426		$	2,489,500		$	1,683,926

As of December 31, 2011 we had $950,841 cash, a working capital deficit of $366,721 and an accumulated deficit of $11,661,704. The Stockholders' equity at December 31, 2011 was $875,324, an improvement from $786,610 at December 31, 2010. Debt at December 31, 2011 was $1,636,125 compared to $1,415,662 at December 31, 2010.

Off-Balance Sheet Arrangements

As of December 31, 2011, we had no off-balance sheet arrangements.

Seasonality

Our operating results are not affected by seasonality.

Inflation

Our business and operating results are not affected in any material way by inflation.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. See "Uses of estimates in the preparation of financial statements" above.

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.

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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial information required by Item 8 begins on the following page.

Paritz & Company, P.A.

15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
E-Mail: paritz @paritz.com

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors
Vycor Medical Inc. and Subsidiaries
Boca Raton, Florida

We have audited the accompanying consolidated balance sheets of Vycor Medical Inc. and Subsidiaries as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vycor Medical Inc. and Subsidiaries as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Paritz & Company, P.A.
Hackensack, New Jersey
March 29, 2012

VYCOR MEDICAL, INC.
Consolidated Balance Sheets
(Audited)


		December 31, 2011			December 31, 2010 (restated)
ASSETS

Current Assets

Cash	$	950,841		$	127,081
Accounts receivable, net		313,679			76,460
Inventory		184,070			52,360
Prepaid expenses and other current assets		881,005			645,302
		2,329,595			901,203

Fixed assets, net		671,291			773,188

Intangible and Other assets:
Trademarks		130,000			130,000
Patents, net of accumulated amortization		379,579			333,072
Website, net of accumulated amortization		4,906			3,932
Security deposits		56,269			12,299
		570,754			479,303

TOTAL ASSETS	$	3,571,640		$	2,153,694

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable	$	176,181		$	114,447
Accrued interest		56,993			36,992
Accrued liabilities		754,895			406,998
Other current liabilities		72,122			90,881
Notes payable - current		1,636,125			1,415,662
TOTAL LIABILITIES		2,696,316			2,064,980

STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, 10,000,000 shares authorized Series C Convertible Preferred Stock, 63.8 and 0 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively		1			-
Common Stock, $0.0001 par value, 1,500,000,000 shares authorized, 807,205,445 and 724,488,929 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively		80,721			72,449
Additional Paid-in Capital		12,432,114			6,902,427
Accumulated Deficit		(11,661,704	)		(6,883,163	)
Accumulated Other Comprehensive Loss		24,192			(2,999	)

		875,324			88,714

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,571,640		$	2,153,694

See accompanying notes to financial statements

F-1

VYCOR MEDICAL, INC.
Consolidated Statement of Operations
(Audited)


		For the twelve months ended December 31,
		2011			2010 (restated)

Revenue	$	971,367		$	316,450

Cost of Goods Sold		176,258			48,737

Gross Profit		795,109			267,713

Operating expenses:
Research and development		115,665			15,208
Depreciation and Amortization		209,973			56,801
General and administrative		4,987,120			1,919,174
Goodwill on Acquisition of Subsidiary		-			58,027
Costs related to Aqcuisition of Subsidiary		110,032			154,203

Total Operating expenses		5,422,790			2,203,413

Operating loss		(4,627,681	)		(1,935,700	)

Other income (expense)
Other income (expense)		(23,718	)		8
Interest expense, net		(127,142	)		(45,882	)
Total Other Income (expense)		(150,860	)		(45,874	)


Net Loss Before Taxes		(4,778,541	)		(1,981,574	)

Taxes		-			(2,248	)

Net Loss	$	(4,778,541	)	$	(1,983,822	)

Loss Per Share
Basic and diluted	$	(0.006	)	$	(0.003	)

Weighted Average Number of Shares Outstanding		780,096,806			663,168,900

See accompanying notes to financial statements

F-2

VYCOR MEDICAL, INC.
Statement of Stockholders' Equity


	Shares		Common Stock		Preferred Stock - Series B			Preferred Stock - Series C		Additional Paid-in Capital		Accumulated Deficit			Accumulated OCI (Loss)			Total
Balance at January 1, 2010	557,798,599	$	55,780	$	0		$	0	$	3,597,621	$	(4,899,341	)	$	0		$	(1,245,940	)
Issuance of stock for consulting fees	2,612,500		261							40,364								40,625
Share-based compensation for consulting services										823,693								823,693
Share-based compensation - employee options vesting										57,840								57,840
Purchases of equity - Series B preferred					14					139,986								140,000
Common stock issuance for conversion of Series B preferred and interest	11,768,197		1,177		(14	)				5,939								7,102
Common stock issuance for conversion of debt	64,295,200		6,430							797,260								803,690
Beneficial conversion feature on convertible debt																		0
Purchases of equity - Common stock	87,079,447		8,708							1,425,792								1,434,500
Common stock issuance for satisfaction of accounts payable	934,986		93							13,932								14,025
Accumulated Comprehensive Loss															(2,999	)		(2,999	)
Net loss for twelve months ended December 31, 2010											$	(1,983,822	)				$	(1,983,822	)
Balance at December 31, 2010	724,488,929	$	72,449	$	0		$	0	$	6,902,427	$	(6,883,163	)	$	(2,999	)	$	88,714
Issuance of stock for consulting fees	39,455,594		3,946							852,279								856,225
Share-based compensation for consulting services										699,605								699,605
Share-based compensation - employee options vesting										29,796								29,796
Purchases of equity - Common stock	40,690,055		4,069							884,931								889,000
Purchases of equity - Series C preferred								1		2,971,455								2,971,456
Common stock issuance for conversion of debt	2,167,902		217							40,973								41,190
Common stock issuance for warrant exercise	402,965		40							403								443
Preferred Stock issue placement agent warrants										50,245								50,245
Accumulated Comprehensive Loss															27,191			27,191
Net loss for twelve months ended December 31, 2011											$	(4,778,541	)					(4,778,541	)
Balance at December 31, 2011	807,205,445	$	80,721	$	-		$	1	$	12,432,114	$	(11,661,704	)	$	24,192		$	875,324

See accompanying notes to financial statements

F-3

VYCOR MEDICAL, INC.
Statement of Cash Flows
(Audited)


		For the twelve months ended December 31,
		2011			2010 (restated)
Cash flows from operating activities:
Net loss	$	(4,778,541	)	$	(1,983,822	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization of intangible assets		174,735			21,539
Depreciation of fixed assets		55,571			35,262
Share based interest expense		4,884			-
Share based compensation		1,755,661			342,864
Shares issued for Consulting Services		-			38,854
Interest satisfied with stock conversion		-			7,102
Goodwill written off on acquisition of subsidiary		-			58,027
Net loss as adjusted for non-cash items		(2,787,690	)		(1,480,174	)
Changes in assets and liabilities:
Accounts receivable		(237,294	)		(40,032	)
Inventory		(131,872	)		3,908
Prepaid expenses		(412,254	)		(39,262	)
Security deposit		(43,970	)		(9,949	)
Accounts payable		62,560			(247,163	)
Accounts payable satisfied with common stock					14,025
Accrued interest		21,191			34,088
Accrued liabilities		349,906			294,306
Other current liabilities		(15,911	)		19,983
Cash used in operating activities		(3,195,334	)		(1,450,270	)
Cash flows provided by / (used in) investing activities:
Purchase of fixed assets		(61,995	)		(21,521	)
Purchase of website		(3,360	)		-
Acquisition of subsidiary		-			(898,017	)
Acquisition of patents		(110,406	)		(8,575	)
Cash provided by / (used in) investing activities		(175,761	)		(928,113	)
Cash flows from financing activities:
Proceeds from issuance of Common Stock, net		889,443			1,434,500
Proceeds from issuance of Preferred Stock - Series B, net		-			140,000
Proceeds from issuance of Preferred Stock - Series C, net		3,021,700			-
Proceeds from Notes Payable		543,105			1,276,500
Repayment of Notes Payable		(280,822	)		(361,500	)
Cash provided by financing activities		4,173,426			2,489,500
Effect of exchange rate changes on cash		21,429			3,193
Net increase (decrease) in cash		823,760			114,310
Cash at beginning of period		127,081			12,771
Cash at end of period	$	950,841		$	127,081

Supplemental Disclosures of Cash Flow information:
Interest paid:	$	1,686		$	-
Taxes paid	$	-		$	2,248

Non-Cash Transactions:
Warrants, options and common stock issued for debt financing	$	41,190		$	803,690

See accompanying notes to unaudited financial statements

F-4

1. FORMATION AND BUSINESS OF THE COMPANY

Business Description

Vycor Medical, LLC was formed on June 17, 2005 as a New York Limited Liability Company. The Company changed its name to Vycor Medical, Inc. and converted to a Delaware Corporation on August 14, 2007 and issued 16,048 shares of common stock in exchange for each of the 1,122 partnership units outstanding at date of conversion. The assets, liabilities and operations of the Company did not change pursuant to this reorganization, and the accompanying financial statements are presented as if the change occurred on the first day of the earliest period presented. Accordingly, all references to number of shares prior to the date of conversion are based upon the common stock equivalent of the partnership units outstanding on such dates.

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.

2. GOING CONCERN

3. ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Vycor Medical, Inc., and its subsidiaries, NovaVision, Inc. (a U.S. corporation incorporated in Delaware) and NovaVision AG (German corporation), a wholly owned subsidiary of NovaVision, Inc. (individually and collectively referred to herein as the Company), which is headquartered in Boca Raton, FL. The operations of NovaVision, Inc have been consolidated from November 30, 2010, the date of the acquisition of substantially all the assets of the former NovaVision, Inc. All material inter-company accounts, transactions, and profits have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current presentation.

Research and Development

Software Development Costs For Internal Use

The authoritative guidance requires software development costs to be capitalized upon completion of the preliminary project stage. Accordingly, direct internal and external costs associated with the development of the features and functionality of the Company's software for internal use, incurred during the application development stage, are capitalized and amortized using the straight-line method of the estimated life of three years. The Company acquired internally developed software valued at $540,000 as part of the acquisition of the assets of NovaVision, Inc. For the years ended December 31, 2011 and 2010 there was no capitalization of software development costs.

F-5

Concentration of Credit Risk

Property and equipment

The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful life of the assets, which is estimated to be between three and ten years. Maintenance, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized.

Patents and Other Intangible Assets

The Company reviews intangible assets on an annual basis using a present value, cash flow method based upon the authoritative guidance. Trademarks have an indefinite life and are reviewed annually by management for impairment in accordance with the authoritative guidance

Income taxes

Uses of estimates in the preparation of financial statements

Revenue Recognition

NovaVision generates revenues from various programs, therapy services and other sources such as government grants. Therapy services revenues represent fees from NovaVision's vision restoration therapy software, diagnostic software, medical devices, clinic set up and training fees, and the professional and support services associated with the therapy. NovaVision recognizes revenue for providing the vision restoration therapy as the Company's work effort is expended. NovaVision provides vision restoration therapy directly to patients. The typical vision restoration therapy consists of six modules, performed on average over 6 months in the U.S. and 10 months in Germany. A patient contract comprises set-up fees and monthly therapy fees. Set-up fees are recognized at the outset of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being completed by a patient within a specified time frame.

Deferred revenue results from patients paying for the therapy in advance of receiving the therapy.

F-6

Accounts Receivable

The Company's accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly 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. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, and the customer's ability to pay its obligations. The Company writes off accounts receivable when they become uncollectible.

Inventory

Foreign Currency

Educational marketing and advertising expenses

Website Costs

The Company capitalizes the costs associated with the acquisition of hardware and development tools as well as the creation of database tools in connection with the Company's website pursuant to authoritative guidance. Other costs including the development of functionality and identification of software tools are expensed as incurred.

Stock-Based Compensation

The Company accounts for stock based compensation awards to employees using a fair-value-based method, for costs related to all share-based payments including stock options. These standards require companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model.

Fair Values of Assets and Liabilities

We value financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices for similar assets or liabilities in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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

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

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

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

F-7

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

The Company has no items that are subject to these standards as of December 31, 2011.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. The Company's potential dilutive shares, which include outstanding common stock options, convertible notes payable and warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive.

The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented:


	Decmeber 31,	December 31,
	2011	2010
Stock options outstanding	833,333	833,333
Warrants to purchase common stock	262,096,921	90,191,077
Debentures convertible into common stock	55,308,960	47,414,223
Preferred shares convertible into common stock	139,555,546	-
Total	457,794,760	138,438,633

Recent Accounting Pronouncements

From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company's accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

4. NOTES PAYABLE

As of December 31, 2011 and December 31, 2010, Notes Payable consists of:


	December 31, 2011	December 31, 2010

On December 29, 2009 and February 3, 2010, the Company issued convertible debentures in the amount of $371,362 and $70,000, respectively, payable to Fountainhead Capital Management ("Fountainhead"), the beneficial owner of more than 50% of the Company's common stock. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to or pari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0125 per share, subject to adjustment and does not require bifurcation. These debentures were originally due August 31, 2010. On May 14, 2010, the due date for satisfaction was extended to March 30, 2011, on March 28, 2011 the due date was further extended to August 31, 2011 and on June 6, 2011 the due date was further extended to December 31, 2012.	441,362	441,362

F-8


		December 31, 2011		December 31, 2010
On September 30, 2010 and October 14, 2010, the Company issued convertible debentures payable to Fountainhead in the amount of $85,000 and $90,000, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to or pari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debentures then outstanding into shares of common stock of the Company at the conversion price of $0.0175 per share, subject to adjustment and does not require bifurcation. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012.		175,000		175,000

On October 26, 2010 and November 15, 2010, the Company issued debentures payable to Fountainhead in the amount of $77,500 and $322,500, respectively. These debentures accrue interest at a rate of 6% per annum, are secured by a first priority security interest in all of the assets of the Company, and are senior to or pari passu with, all other obligations of the Company, subject to certain conditions. The debentures were originally due August 31, 2011, however the due date for satisfaction was extended on June 6, 2011 to December 31, 2012.		400,000		400,000

On November 15, 2010, the Company issued a convertible debenture in the amount of $350,000 payable to Peter Zachariou, a Director of the Company. This debenture accrues interest rate of 6% per annum, is due on December 31, 2012, is secured by a first priority security interest in all of the assets of the Company, and is senior to or pari passu with, all other obligations of the Company, subject to certain conditions. The Holder is entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and does not require bifurcation. On December 20, 2010, the Company repaid $50,000 of this debenture and removed the convertible rights. On June 6, 2011 the due date for satisfaction was extended to December 31, 2012.		300,000		300,000

On December 3, 2010, the Company issued a debenture in the amount of $40,000 payable to Berardino Investment Group. This debenture accrued interest at a rate of 6% per annum, was due June 30, 2011, was secured by a first priority security interest in all of the assets of the Company, and was senior to or pari passu with, all other obligations of the Company, subject to certain conditions. The Holder was entitled to convert all or any amount of the principal face amount of the debenture then outstanding into shares of common stock of the Company at the conversion price of $0.019 per share, subject to adjustment and did not require bifurcation. On June 30, 2011, the entire principal and unpaid interest on this debenture was converted into 2,167,902 shares of the Company's Common Stock at the conversion price of $0.019 per share.		-		40,000


On March 25, 2011 the Company issued a term note for $300,000 to EuroAmerican Investment Corp. ("EuroAmerican"). The term note bears interest at 16% per annum and was due June 25, 2011. In connection with the loan the Company also issued EuroAmerican warrants to purchase 400,000 shares of the Company's common stock at an exercise price of $0.03 per share for a period of three (3) years. On June 25, 2011 the due date for this note was extended to September 25, 2011 and the Holder was granted the right to convert all or any amount of the principal face amount of the debenture then outstanding and accrued interest into shares of common stock of the Company at the conversion price of $0.03 per share, subject to adjustment and does not require bifurcation. On October 25, 2011 the due date for this note was further extended to December 10, 2011 and on March 27, 2011 the due date was further extended to June 30, 2012		300,000		-

Unsecured, non-interest bearing loan from the chief executive of NovaVision AG, advanced a total of to NovaVision AG, which is being repaid in monthly installments. As of December 31, 2011 and 2010 the remaining balance was €8,250 and €33,000, respectively.		10,660		44,019
Insurance policy finance agreements		9,103		15,281
Total Notes Payable:	$	1,636,125	$	1,415,662

F-9

The following is a schedule of future minimum loan payments:


Twelve months ending December 31,		Amount
2012	$	1,636,125
Total	$	1,636,125

As of December 31, 2011, $1,316,362 of Company's notes payable are secured by a first security interest in all of the assets of the Company. The company assesses the value of the beneficial conversion feature of its convertible debt by determining the intrinsic value of such conversion, under ASC 470, at the time of issuance. At the time of issuance of each of the convertible debt instruments set out above, the fair value of the stock was either the same or less than the conversion price, and so there was no value attributable to any beneficial conversion feature.

5. SEGMENT REPORTING, GEOGRAPHICAL INFORMATION

(a) Business segments

The Company operates in two business segments: Vycor Medical, which focuses on devices for neurosurgery; and NovaVision, which focuses on neuro stimulation therapies and diagnostic devices for the treatment and screening of vision field loss. Set out below are the revenues, gross profits and total assets for each segment.


		December 31,
		2011		2010 (restated)
Revenue:
Vycor Medical	$	548,463	$	307,582
NovaVision		422,904		8,868
Total Revenue	$	971,367	$	316,450
Gross Profit:
Vycor Medical		439,422		259,975
NovaVision		355,687		7,738
Total Gross Profit	$	795,109	$	267,713
Total Assets:
Vycor Medical		2,068,084		1,085,680
NovaVision		1,503,556		1,068,014
Total Assets	$	3,571,640	$	2,153,694

(b) Geographic information. The Company operates in two geographic segments, the United States and Germany. Set out below are the revenues, gross profits and total assets for each segment.


		December 31,
		2011		2010 (restated)
Revenue:
United States	$	740,967	$	307,582
Germany		230,400		8,868
Total Revenue	$	971,367	$	316,450
Gross Profit:
United States		607,702		259,975
Germany		187,407		7,738
Total Gross Profit	$	795,109	$	267,713
Total Assets:

F-10


		December 31,
		2011		2010 (restated)
United States		3,470,993		2,084,029
Germany		100,647		69,665
Total Assets	$	3,571,640	$	2,153,694

6. PROPERTY AND EQUIPMENT

As of December 31, 2011 and 2010, Property and Equipment and the estimated lives used in the computation of depreciation is as follows:


		2011			2010

Machinery and equipment	$	106,368		$	93,764
Purchased Software		15,607			10,000
Molds and Tooling		234,230			230,830
Furniture and fixtures		21,130			18,288
Therapy Devices		59,065			44,412
Internally Developed Software		559,304			540,000
		995,704			937,294

Less: Accumulated depreciation and amortization		(324,413	)		(164,106	)

Property and Equipment, net	$	671,291		$	773,188

Estimated useful lives of property and equipment are as follows:


				Therapy devices			3 years
				Computer equipment and software			3 years
				Furniture and fixtures			7 years
				Machinery and office equipment			5 years
				Internally Developed Software			5 years

7. INTANGIBLE ASSETS

As of December 31, 2011 and 2010, Intangible Assets consists of:


		December 31,
		2011			2010
Amortized intangible assets: Patent (8 years useful life)
Gross carrying Amount	$	492,147		$	381,740
Accumulated Amortization		(112,568	)		(48,668	)
	$	379,579		$	333,072

Intangible assets not subject to amortization
Trademarks		130,000			130,000

Intangible asset amortization expense for the periods ended December 31, 2011 and 2010 was $66,735 and $21,539, respectively.

8. EQUITY

Certain Equity Transactions

In January and February 2011, the Company issued an aggregate of 7,578,947 shares of common stock to three investors at a price of $0.019 per share for aggregate gross proceeds of $144,000.

In February 2011, the Company issued 250,000 shares of its common stock (valued at $5,000) to Steven Girgenti in consideration for services provided to the Board of Directors. In May 2011, the Company issued an additional 222,222 shares of its common stock (valued at $5,000) to Mr. Girgenti.

F-11

On March 2, 2011, the Company issued warrants to seven parties to purchase 14,710,530 shares of the Company's common stock at a price of $0.03 per share. The warrants are exercisable over a period of three years from the date of issuance.

On March 25, 2011, in connection with the issuance by the Company of a term note for $300,000 to EuroAmerican Investment Corp, the Company issued warrants to purchase 400,000 shares of Company common stock at an exercise price of $0.03 per share for a period of three years from the date of issuance. The estimated fair value of this warrant was recorded as a debt discount at issuance and was amortized over the three-month term of the loan as interest expense.

In April 2011, the Company issued 24,444,442 shares of common stock together with Warrants to purchase 12,222,221 shares of common stock at an exercise price of $0.03 per share for a period of three years for aggregate gross proceeds of $550,000.

In April 2011, in connection with a consultancy agreement, the Company issued 18,000,000 shares of common stock (valued at $360,000) to Jerrald Ginder. On June 25, 2011, pursuant to an amendment to this consultancy agreement, the Company issued an additional 2,666,667 shares of common stock to Mr. Ginder in lieu of aggregate monthly cash payments due under the agreement totaling $60,000.

In May 2011, the Company issued 8,666,666 shares of common stock together with Warrants to purchase 4,333,334 shares of Company common stock at an exercise price of $0.03 per share for a period of three years for aggregate gross proceeds of $195,000.

On June 7, 2011, the Company completed the sale of 31.4 Units comprising Series C Convertible Preferred Shares and Warrants (the "Units") to accredited investors (the "Investors") (the "Preferred Offering") for aggregate proceeds of $1,570,000. The Units were issued pursuant to separate Series C Convertible Preferred Stock Purchase Agreements (the "Agreements") between the Company and each of the Investors. This sale was an initial closing (the "Initial Closing") under the Agreements which allows for maximum proceeds of $3,000,000. Each Unit was priced at $50,000 and comprised one share of Series C Preferred Convertible Stock convertible (at the Holder's option or mandatorily upon the occurrence of certain events) into 2,222,222 shares of the Company's Common Stock ($0.0225 per share) and a Warrant to purchase 1,111,111 shares of the Company's Common Stock at $0.03 per share (subject to adjustments) for a period of three years (the "Warrant" or "Warrants"). A total of 31.4 shares of Series C Convertible Preferred Stock convertible into 69,777,773 shares of the Company's Common Stock and Warrants to purchase 34,888,890 shares of the Company's Common Stock were issued. On June 28, 2011, the Company completed a second closing of the Preferred Offering (the "Second Closing") with the sale of an additional 15.40 Units to Investors for aggregate proceeds of $770,000. An additional 15.40 shares of Series C Convertible Preferred Stock convertible into 34,222,220 shares of the common stock and Warrants to purchase 17,111,111 shares of the Company's common stock were issued in connection with the Second Closing. The Company entered into a Registration Rights Agreement with the Investors with respect to the Warrants. In December 2011, by mutual consent for technical reasons, the sale of 1 unit of Series C Convertible Preferred Stock convertible into 2,222,222 shares of the Company's Common Stock was rescinded; the Company returned the $50,000 invested and the investor returned the preferred share and the warrants to purchase 1,111,111 shares of the Company's Common Stock

On June 3, 2011, in connection with a consultancy agreement, the Company issued 15,500,000 shares of common stock (valued at $348,750) to GreenBridge Capital Partners IV, LLC. 10,333,333 of these shares remain held in escrow and are subject to clawback options, at the Company's sole descretion, exerciseable in equal tranches by April 15 and 30, 2012.

On June 6, 2011, in connection with a consultancy agreement, the Company issued 1,000,000 shares of common stock (valued at $22,500) to Burnham Hill Advisors, LLC.

Burnham Hill Partners LLC ("BHP") served as placement agent in connection with the sale of 24.8 Units in the Preferred Offering. Pursuant to a placement agent agreement with BHP, the Company paid BHP a cash placement fee equal to seven percent (7%) of the gross proceeds received by the Company from Units placed by BHP. Also pursuant to the placement agent agreement, the Company issued BHP Warrants (the "Placement Agent Warrants") to purchase a number of shares equal to seven percent (7%) of the number of shares of common stock issuable upon conversion of the 24.8 Units placed by BHP (3,857,778 shares) in the Preferred Offering. The Placement Agent Warrants are exercisable for three years from the date of issuance at an exercise price of $0.0225 per share. In connection with the investor rescinding in December 2011 referred to above, the number of warrants was reduced to 3,702,223.

On June 30, 2011, the entire principal and unpaid interest on a Debenture dated December 3, 2010 payable to Berardino Investment Group in the original principal amount of $40,000 was converted into 2,167,902 shares of common stock at a conversion price of $0.019 per share.

Under the terms of a Consulting Agreement dated February 10, 2010 with Fountainhead, the Company was required to issue to Fountainhead fully vested warrants to purchase 39,063,670 shares of the Company's common stock should certain conditions

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be met during the term of the Consulting Agreement. These warrants are exercisable at $0.0125 per share for a period of five years from February 2010. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011.

On August 4, 2011, the Company completed a final closing of the Preferred Offering (the "Final Closing") with the sale of an additional 13.2 Units to Investors for aggregate proceeds of $660,000. An additional 13.2 shares of Series C Convertible Preferred Stock convertible into 29,333,330 shares of the Company's Common Stock and Warrants to purchase 14,666,665 shares of the Company's Common Stock were issued in connection with the Final Closing. An aggregate of 60 Units were sold to Investors in the First Closing, Second Closing and Final Closing of the Preferred Offering for total proceeds of $3,000,000. A total of 60 shares of Series C Convertible Preferred Stock, convertible into an aggregate of 133,333,324 shares of Common Stock, and Warrants to purchase 66,666,666 shares of the Company's Common Stock.

In August 2011 the Company issued 154,600 shares of Common Stock (valued at $5,000) to Steven Girgenti, 78,300 shares of Common Stock to Alvaro Pascale-Leone (valued at $3,125) and 428,571 shares of Common Stock (valued at $10,000) to McCombie Group, LLC in respect of consulting agreements.

On August 26, 2011, the Company completed a new sale of 3.8 Units comprising Series C Convertible Preferred Shares and Warrants (the "Units") to an accredited investor (the "Investor") (the " New Preferred Offering") for aggregate proceeds of $190,000. Each Unit was priced at $50,000 and comprised one share of Series C Preferred Convertible Stock convertible (at the Holder's option or mandatorily upon the occurrence of certain events) into 2,222,222 shares of the Company's Common Stock ($0.0225 per share) and a Warrant to purchase 1,111,111 shares of the Company's Common Stock at $0.03 per share (subject to adjustments) for a period of three years (the "Warrant" or "Warrants").

On September 30, 2011 the Company issued 510,000 shares of Company common stock to Joe Simone in respect of an amendment to a previously disclosed consulting agreement.

In October 2011 the Company issued 166,667 shares of Common Stock (valued at $5,000) to Steven Girgenti and 104,167 shares of Common Stock to Alvaro Pascale-Leone (valued at $3,125) in respect of consulting agreements.

Effective December 2011, the Company issued 222,222 shares of Common Stock (valued at $5,000) to Steven Girgenti and 96,620 shares of Common Stock (valued at $2,174) to Dr Oscar Bronsther in consideration for services provided to the Board of Directors; and 138,890 shares of Common Stock (valued at $3,125) to each of Alvaro Pasuale-Leone, Jason Barton and Jose Romano in respect of their roles as members of the NovaVision, Inc. Scientific Advisory Board.

In December 2011 the Company issued 402,965 shares of Common Stock to Fountainhead Capital Partners Limited in respect of the exercise of December 2006 warrants, and received $443.26 in cash.

During the year ended December 31, 2011, the Company received $889,000 in net cash proceeds from the sale of Common Shares, $3,018,200 in net proceeds from the sale of Preferred Stock and $443 in net proceeds from the exercise of warrants, as detailed above.

9. SHARE-BASED COMPENSATION

The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company's common stock or financial instruments that grant the recipient the right to acquire shares of the Company's common stock. For share-based payments to employees, which consist only of awards made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic 718, "Stock Compensation" (formerly referred to as SFAS No. 123(R)). Share-based payments to consultants, service providers and other non-employees are accounted for under in accordance with ASC Topic 718, ASC Topic 505, "Equity Payments to Non-Employees" or other applicable authoritative guidance.

Stock Option Plan

The Company adopted the Vycor Medical, Inc Employee, Director, and Consultant Stock Plan (the "Plan") as of February 13, 2008. The Plan provides for both incentive stock options and nonqualified stock options to be granted to employees, officers, consultants, independent contractors, directors and affiliates of the Company. The board of directors establishes the terms and conditions of all stock option grants, subject to the Plan and applicable provisions of the Internal Revenue Code. Incentive stock options must be granted at an exercise price not less than the fair market value of the common stock on the grant date. The options granted to participants owning more than 10% of the Company's outstanding voting stock must be granted at an exercise price not less than 110% of the fair market value of the common stock on the grant date. The options

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expire on the date determined by the board of directors, but may not extend mare than 10 years from the grant date, while incentive stock options granted to participants owning more than 10% of the Company's outstanding voting stock expire five years from the grant date. The vesting period for employees is generally over three years. The vesting Period for non-employees is determined based on the services being provided. The maximum number of shares of stock which may be delivered under the plan shall automatically increase by a number sufficient to cause the number of shares covered by the plan to equal 10% of the total number of shares of stock then outstanding on a fully diluted basis.

Under ASC Topic 718, the Company estimates the fair value of option awards on the date of grant using an option pricing model. The grant date fair value is recognized over the option vesting period, the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Under these standards, compensation cost for employee cost for employee stock-based awards is based on the estimated grant-date fair value and recognized over the vesting period of the applicable award on a straight-line basis. No employee stock options were granted for the six month periods ended June 30, 2011 and 2010.

Initial grants of options to purchase 500,000 shares were issued under the Plan on February 13, 2008 to each of Kenneth T. Coviello, the Company's Chief Executive Officer and Heather N. Vinas, the Company's President at an exercise price of $0.135 per share. The options vested 33-1/3% on each of the first, second, and third anniversary of the grant and expire February 12, 2018. Following Heather Vinas' resignation as President of the Company in May 2010, 166,667 unvested options were cancelled. Accordingly, for the year ended December 31, 2011, the Company recognized share-based compensation only for the grant to Mr. Coviello, totaling $29,796.

Stock appreciation rights may be granted either on a stand alone basis or in conjunction with all or part of any other stock options granted under the plan. As of September 30, 2011 there were no awards of any stock appreciation rights.

The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value, which is measured as of the "measurement date" using an option pricing model. The "measurement date" for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant.

The details of the outstanding rights, options and warrants and value of such rights, options and warrants are as follows:


STOCK WARRANTS:	Number of shares			Weighted average exercise price per share

Outstanding at December 31, 2009	35,493,172		$	0.030
Granted	90,191,077			0.015
Exercised
Cancelled or expired	(9,079,473	)		0.015
Outstanding at December 31, 2010	116,604,776		$	0.019
Granted	148,176,421			0.025
Exercised	(402,965	)		0.001
Cancelled or expired	(2,281,311	)		0.163
Outstanding at December 31, 2011	262,096,921		$	0.021

STOCK OPTIONS:	Number of shares			Weighted average exercise price per share
Outstanding at December 31, 2009	1,000,000		$	0.14
Granted
Exercised
Cancelled or expired	(166,667	)		0.14
Outstanding at December 31, 2010	833,333		$	0.14
Granted	-			-
Exercised	-			-
Cancelled or expired	-			-

STOCK OPTIONS:	Number of shares			Weighted average exercise price per share
Outstanding at December 31, 2011	833,333		$	0.14

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As of December 31, 2011, the weighted-average remaining contractual life of outstanding warrants and options is 2.93 and 7.88 years, respectively.

Non-Employee Stock Compensation

Under the terms of a consulting agreement dated February 2010, the Company issued fully vested warrants to Fountainhead to purchase up to 39,063,670 shares of the Company's common stock at $0.0125 per share. The warrants are valid from February 10, 2010 for a period of five years. The fair value of these warrants was estimated using the Black-Scholes option pricing model and is being amortized over the two-year life of the consultancy agreement. For the year ended December 31, 2011, $179,095 was recognized as share-based compensation in connection with this agreement. Under the same agreement, the Company was also required to issue fully vested warrants to purchase an additional 39,063,670 shares of the Company's common stock, at a price of $0.0125 per share should new funding totaling $3 million in aggregate in Common Stock of Vycor or in securities convertible into Common Stock of Vycor at a price of no less than $0.0125 per share of Common Stock be closed during the term of the Consulting Agreement. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011. The fair value of these warrants was estimated at $658,651 using the Black-Scholes model and, because the performance criteria of the warrants had been satisfied on the date of issuance the full value was expensed immediately.

During the year ended December 31, 2011, the Company issued an aggregate of 793,489 shares of common stock to Steven Girgenti for services rendered to the board of directors, valued at $20,000, which was recognized as share-based compensation for the year ended December 31, 2011.

Under the terms of a twelve-month sales and marketing consulting agreement dated March 2010, the Company issued 750,000 shares of its Common Stock to Joe Simone, valued at $9,375. As an amendment to this agreement in September 2011, 510,000 shares of Common Stock were issued, valued at $15,300. For the year ended December 31, 2011, $17,071 was recognized as share-based compensation in connection with this agreement.

Under the terms of an Extension of Funding Commitment agreement dated September 2010, the Company issued warrants to Fountainhead to purchase up to 50,627,407 shares of the Company's common stock at $0.0175 per share. The warrants are valid from September 29, 2010 for a period of five years. The fair value of these warrants was estimated using the Black-Scholes model and is being amortized over the life of the agreement to August 30, 2011. For the year ended December 31, 2011, $336,114 was recognized as share-based compensation in connection with this agreement.

Under the terms of a one-year consulting agreement dated December 6, 2010, the Company issued warrants to Market Media Connect, LLC to purchase up to 500,000 shares of the Company's common stock at $0.07 per share. The warrants are valid from December 1, 2010 for a period of three years. The fair value of these warrants was estimated using the Black-Scholes model and is being amortized over the life of the consulting agreement. For the year ended December 31, 2011, $3,063 was recognized as share-based compensation in connection with this agreement.

In March 2011 the Company entered into a one-year consultancy agreement with Mr Jerrald Ginder, effective April 1, 2011. Mr Ginder has extensive experience in sales and marketing and the development of medical device products, and has contacts which will be of use to the Company. Under the terms of the agreement, which the Company has the right to terminate with 30 days notice, Mr. Ginder was to receive $60,000 cash, payable monthly, and 18,000,000 restricted shares of common stock of the Company. The stock has been valued by the Company at $360,000 and is being amortized over the life of the agreement as share-based compensation expense. On June 22, 2011, the Company and Mr. Ginder entered into an Amendment to the Consulting Agreement. Pursuant to this amendment, the Company issued to Mr. Ginder an additional 2,666,667 shares of the Company's common stock in lieu of the $60,000 cash due under the Consulting Agreement. The $60,000 value of the additional shares is also being amortized as share-based compensation over the life of the agreement. For the year ended December 31, 2011, aggregate compensation recognized in respect of the Consulting Agreement, as amended, was $310,430.

In June 2011, the Company entered into a one-year Consulting Agreement with GreenBridge Capital Partners, IV, LLC, to provide consulting and advisory services to the Company. Under the terms of this agreement, GreenBridge is to receive up to 15,500,000 shares of the Company's common stock. 5,166,667 were received by Greenbridge during 2011 and the remainder is held in escrow subject to clawback, at the Company's sole option, in two tranches on April 15 and 30, 2012. The stock has

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been valued by the Company at $348,750 and is being amortized over the life of the agreement as earned as share-based compensation expense. For the year ended December 31, 2011, $113,344 was recognized as share-based compensation in connection with this agreement.

In June 2011 the Company entered into a Consulting Agreement with Burnham Hill Advisors LLC ("BHA") under which BHA shall provide, for a period of six months, financial and strategic advice to the Company. BHA received 1,000,000 restricted shares of the Company's common stock. The stock has been valued by the Company at $22,500 and is being amortized over the life of the agreement as share-based compensation expense. For the year ended December 31, 2011, $22,250 was recognized as share-based compensation in connection with this agreement.

In July 2011 the Company issued Warrants to purchase 2,300,000 shares of Company common stock at an exercise price of $0.03 per share for a period of three years to Millenium Capital Corporation in respect of consulting and advisory services. The fair value of these warrants was estimated at $28,735 using the Black-Scholes model and, because because the performance criteria of the warrants had been satisfied on the date of issuance, the full value was recognized immediately.

In relation to his role as Chairman of the Scientific Advisory Board of NovaVision, the Company issued a total of 182,467 shares of the Company's Common Stock to Alvaro Pascale-Leone, valued at $6,250, which was recognized as share-based compensation in the year ended December 31, 2011.

In July 2011 the Company entered into a Consulting Agreement with McCombie Group LLC with regard to certain business and strategic planning services. Under the terms of the agreement McCombie Group received 428,571 shares of Common Stock valued at $15,000, which was recognized as share-based compensation in the year ended December 31, 2011.

In September 2011 the Company entered into a Consulting Agreement with Dr Oscar Bronsther with regard to certain potential clinical studies utilizing Vycor's VBAS product. Under the terms of the agreement, Dr Bronsther received warrants to purchase up to 400,000 of the Company's Common Stock for a period of three years from September 30, 2011 at a price of $0.03 per share. The fair value of these warrants was estimated at $7,335 using the Black-Scholes model and, because the time period for the agreement is indeterminable, the full value was recognized immediately. Additionally, for services rendered to the board of directors, Dr Bronsther received 96,620 shares of Common Stock valued at $2,174, which was recognized as share-based compensation for the year ended December 31, 2011.

In relation to their roles as members of the Scientific Advisory Board of NovaVision, the Company issued a total of 138,890 shares of the Company's Common Stock, valued at $3,125, to each of Jason Barton and Jose Romano, which was recognized as share-based compensation in the year ended December 31, 2011

Aggregate stock-based compensation expense charged to operations on employee options and on stock and warrants granted to the above non-employees for the year ended December 31, 2011 is $1,755,661. As of December 31, 2011, there was approximately $365,373 of total unrecognized compensation costs related to warrant and stock awards and non-vested options, which are expected to be recognized over a weighted average period of approximately 0.36 years.

Stock-based compensation expenses related to employee options and warrants granted to non-employees are recognized as the stock options and warrants are earned. The fair value of the stock options or warrants granted is estimated at the grant date, using the Black-Scholes option pricing model, and the expense is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes option pricing model on the basis of the fair value of the underlying common stock on the measurement date, adjusted for the unique characteristics of those equity instruments, using the assumptions noted in the table below. The fair value of the common stock is determined by the then-prevailing private placement purchase price. Expected volatility was based on the historical volatility of a peer group of publicly traded companies. The expected term of options and warrants was based upon the life of the option, and the risk-free rate used was based on the U.S. Treasury Constant Maturity rate.

The following assumptions were used in calculations of the Black-Scholes option pricing model in years ended December 31, 2011 and 2010:


	Year ended December 31,
	2011	2010
Risk-free interest rates	0.42-1.60 %	1.91-2.39 %
Expected life	3 years	3 years
Expected dividends	0%	0%
Expected volatility	96-99%	96%
Vycor Common Stock fair value	$0.02-$0.03	$0.0125-$0.0175

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10. INCOME TAXES

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

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on the level of historical taxable losses and projections of future taxable income (losses) over the periods in which the deferred tax assets can be realized, management currently believes that it is more likely than not that the Company will not realize the benefits of these deductible differences. Accordingly, management has determined that a 100% valuation allowance is appropriate at December 31, 2011 and December 31, 2010. The Company's gross deferred tax assets and valuation allowance at December 31, 2011 and December 31, 2010 are as follows:


	December 31, 2011			December 31, 2010
Gross deferred tax assets		2,100,000			1,573,000
Valuation allowance		(2,100,000	)		(1,573,000	)
Net deferred tax asset		—			—

As of December 31, 2011 and December 31, 2010, the Company has U.S. federal net operating loss carryforwards of approximately $6,000,000 and $3,675,000, respectively. The federal net operating loss carryforwards expire in the tax years 2027 through 2031.

Federal tax laws impose significant restrictions on the utilization of net operating loss carryforwards and research and development credits in the event of a change in ownership of the Company, as defined by the Internal Revenue Code Section 382. The Company's net operating loss carryforwards and research and development credits may be subject to the above limitations.

At December 31, 2011 and December 31, 2010 the Company has available for carryforward German net operating losses of approximately $420,000 and $125,000 respectively, to be applied against future German taxable income which may be subject to certain restrictions and limitations. Such carryforwards are subject to certain restrictions and limitations in the event of changes in the NovaVision AG's ownership.

11. COMMITMENTS AND CONTINGENCIES

Lease

Kenneth Coviello retention bonus

Under the terms of the 2009 Recapitalization Agreement, certain accrued salaries totaling $70,643 were converted into a contingent retention bonus payable either on the closing of a Company fundraising of more than $1.5 million or on the sale of the Company (or substantially all of its assets) at a value above $3 million. The Company and Mr. Coviello are in discussions with regard to this agreement and timing of payment, but the company has accrued for this in full during 2011.

Contingent Vendor Settlement Provision

During the fourth quarter of 2011 the Company became aware of a matter with a distributor of NovaVision products in Germany relating to the distribution of products prior to the Company's acquisition of NovaVision. The Company is in discussions with the vendor regarding the terms of a future commercial and settlement agreement, and has provided an accrual in the amount of €37,000, net ($48,810) representing the maximum settlement amount.

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12. CONSULTING AND OTHER AGREEMENTS

The Company has entered into the following consulting and other agreements during the year ended December 31, 2011:

Consulting Agreement with Jerrald Ginder

In March 2011 the Company entered into a one-year consultancy agreement with Mr. Jerrald Ginder, a sales executive of Stryker Corporation, effective April 1, 2011. Mr. Ginder has extensive experience in sales and marketing and the development of medical device products, and has contacts which will be of use to the Company. Under the terms of the agreement, which the Company has the right to terminate with 30 days notice, Mr. Ginder was to receive $60,000 cash, payable monthly, and 18,000,000 restricted shares of common stock of the Company. The stock has been valued by the Company at $360,000 and is being amortized over the life of the agreement as share-based compensation expense. On June 22, 2011, the Company and Mr. Ginder entered into an Amendment to the Consulting Agreement. Pursuant to this amendment, the Company issued to Mr. Ginder an additional 2,666,667 shares of the Company's common stock in lieu of the $60,000 cash due under the Consulting Agreement. The $60,000 value of the additional shares is also being amortized as share-based compensation over the life of the agreement. For the six months ended June 30, 2011, aggregate compensation recognized in respect of the Consulting Agreement, as amended, was $91,720.

Supplement to Consulting Agreement with Fountainhead Capital Management Limited

On May 12, 2011, the Company entered into a Supplement to a prior Consulting Agreement with Fountainhead entered into on February 10, 2010 (amended September 29, 2010) to recognize Fountainhead's expanded responsibilities as a result of the acquisition by the Company of the assets of NovaVision, Inc. Under the terms of the Supplement, commencing January 1, 2011 the Company will pay to Fountainhead an additional monthly retainer of $29,000. This additional monthly retainer shall be accrued and paid out to Fountainhead at the option of Fountainhead as follows: (i) in Vycor stock at any time at $0.0225 per share; or (ii) in cash following the closing of a fundraising of no less than $2.5 million or on the sale of the Company or a substantial part of the assets thereof at any time after June 30, 2011. Notwithstanding, Fountainhead shall have the option to receive up to $5,000 of the additional monthly retainer in cash each month, commencing April 1, 2011. In addition, the term of the Consulting Agreement was extended to May 5, 2013. Other than as supplemented, the Consulting Agreement remains in full force and effect according to its terms.

Consulting Agreement with GreenBridge Capital Partners, IV, LLC

On June 3, 2011,the Company entered into a Consulting Agreement ("Consulting Agreement") with GreenBridge Capital Partners, IV, LLC, a Delaware limited liability company ("GreenBridge"), to provide consulting and advisory services to the Company. Under the terms of this agreement GreenBridge is to receive up to 15,500,000 shares of the Company's Common Stock. Said shares are subject to a Company repurchase option, which may be exercised within specified time periods at the Company's sole discretion.

On August 18, 2011, the Company agreed with GreenBridge to amend the Consulting Agreement to modify the dates for exercise of the Company's repurchase option related to the shares delivered to Greenbridge pursuant to the terms of the Agreement. Specifically, the parties agreed that, of the 15,500,000 shares delivered to GreenBridge, the Company would have the option to repurchase 5,166,666 of the shares prior to November 30, 2011 and an additional 5,166,667 shares prior to February 28, 2012. The remaining 5,166,667 shares are not subject to a repurchase option. The shares which are the subject of the repurchase option are to be held in escrow by a third party. In all other respects, the original Consulting Agreement remains in full force and effect as written. The Consulting Agreement was subsequently amended on several occasions and as of the date hereof the option to repurchase 5,166,666 of the shares is exercisable by the Company prior to April 15, 2012 and an additional 5,166,667 shares prior to April 30, 2012.

Consulting Agreement with Burnham Hill Advisors LLC

The Company entered into a Consulting Agreement dated June 6, 2011 with Burnham Hill Advisors LLC ("BHA") under which BHA shall provide, for a period of six months, financial and strategic advice to the Company. BHA shall receive fees of $10,000 per month and received 1,000,000 restricted shares of the Company's Common Stock.

Agreement with Partizipant, LLC

On July 31, 2011, the Company entered into an Agreement (the "Agreement") with Partizipant, LLC, a Delaware limited liability company ("Partizipant"), to provide a broad range of investor relations and public relations services as more particularly described in the Agreement, a copy of which is attached as Exhibit 10.1 to the Company's Current report on Form 8-K filed on August 4, 2011. Pursuant to the Agreement, the Company agreed to pay Partizipant a one-time payment of $300,000.

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13. RELATED PARTY TRANSACTIONS

In January, February and March 2011 the Company issued unsecured, subordinated loan notes to Fountainhead for a total of $99,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due May 30, 2011.

In January and February 2011 the Company issued unsecured, subordinated loan notes to Peter Zachariou, a director of the Company for a total of $55,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due on demand.

In February 2011 the Company issued an unsecured, subordinated loan note to David Cantor, a director of the Company for $10,000. The loan notes are subordinated to the Company's secured debentures, bear interest at a rate of 6% and are due on demand.

On May 6, 2011, the Company entered into a Supplement to a prior Consulting Agreement with Fountainhead entered into on February 10, 2010 (amended September 29, 2010) to recognize Fountainhead's expanded responsibilities as a result of the acquisition by the Company of the assets of NovaVision, Inc. Under the terms of the Supplement, commencing January 1, 2011 the Company will pay to FCM an additional monthly retainer of $29,000. This additional monthly retainer shall be accrued and paid out to Fountainhead at the option of Fountainhead as follows: (i) in Vycor stock at any time at $0.0225 per share; or (ii) in cash following the closing of a fundraising of no less than $2.5 million or on the sale of the Company or a substantial part of the assets thereof at any time after June 30, 2011. Notwithstanding, Fountainhead shall have the option to receive up to $5,000 of the additional monthly retainer in cash each month, commencing April 1, 2011. In addition, the term of the Consulting Agreement was extended to May 5, 2013. Other than as supplemented, the Consulting Agreement remains in full force and effect according to its terms.

Under the terms of a Consulting Agreement dated February 10, 2010 with Fountainhead, the Company was required to issue to Fountainhead fully vested warrants to purchase an additional 39,063,670 shares of the Company's Common Stock, at a price of $0.0125 per share should new funding totaling $3 million in aggregate in Common Stock of Vycor or in securities convertible into Common Stock of Vycor at a price of no less than $0.0125 per share of Common Stock be closed during the term of the Consulting Agreement. These warrants became issuable upon completion of the Preferred Offering and were issued in June 2011.

On June 6, 2011, in connection the Preferred Offering, Fountainhead agreed to extend to maturity of debentures totaling $931,362 to December 31, 2012. At the same time, Peter Zachariou, a director of the Company, agreed to extend the maturity of debentures totaling $300,000 to the same date.

On September 30, 2011, short-term loans including accrued interest of $102,450 and accrued interest on the loans extended on June 6, 2011 of $76,658, were repaid to Fountainhead. At the same time, short-term loans including accrued interest of $57,004 and accrued interest on the loans extended on June 6, 2011 of $14,992 were repaid to Peter Zachariou, a director of the Company; and short-term loans including accrued interest of $10,352 were repaid to David Cantor, a director of the Company.

In December 2011 the Company issued 402,965 shares of Common Stock to Fountainhead Capital Partners Limited in respect of the exercise of December 2006 warrants, and received $443.26 in cash.

F-19

14. SUBSEQUENT EVENTS

Share Issuance

During January to March 2012, the Company issued 222,222 shares of Common Stock (valued at $5,000) to Steven Girgenti and 96,620 shares of Common Stock (valued at $2,174) to Dr Oscar Bronsther in consideration for services provided to the Board of Directors.

During January to March 2012, the Company issued 138,890 shares of Common Stock (valued at $3,125) to each of Alvaro Pasuale-Leone, Jason Barton and Jose Romano in respect of their roles as members of the NovaVision, Inc. Scientific Advisory Board.

Conversion of Preferred Shares

During January to March 2012, the Company issued a total of 15,555,554 shares of Common Stock in respect of conversion of Series C Preferred Stock.

Acquisition of Sight Science Limited

Amendment of Consulting Agreement

Effective as of March 4, 2012 the Company agreed with with GreenBridge Capital Partners IV, LLC to amend the Consulting Agreement between the parties to modify the dates for exercise of the Company's repurchase option related to the shares delivered to Greenbridge pursuant to the terms of the Agreement. Specifically, the parties agreed that, of the 15,500,000 shares delivered to GreenBridge, the Company would have the option to repurchase 5,166,666 of the shares prior to April 15, 2012 and an additional 5,166,667 shares prior to April 30, 2012. The remaining 5,166,667 shares are not subject to a repurchase option. The shares which are the subject of the repurchase option are held in escrow by a third party. In all other respects, the original Consulting Agreement remains in full force and effect as written.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None

ITEM 9A. 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 carried out an evaluation, with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") (the Company's principal financial and accounting officer), of 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 upon that evaluation, and taking the matters which were the subject of certain remedial action described in our prior reports), the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 31, 2011 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) 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. In light of the matters described above with respect to accounting for warrants issued under consulting or other service agreements and the beneficial conversion feature of certain convertible debt, the Company intends to re-evaluate its internal control over financial reporting and to implement such changes as it may deem appropriate in light of such re-evaluation.

The Company's management, including the Company's CEO and CFO, does 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.

ITEM 9B. OTHER INFORMATION.

Subsequent Events

Share Issuance

Conversion of Preferred Shares

During January to March 2012, the Company issued a total of 15,555,554 shares of Common Stock in respect of conversion of Series C Preferred Stock.

F-21

Acquisition of Sight Science Limited

Amendment of Consulting Agreement

PART III

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

Adrian Christopher Liddell

Chairman of the Board and a Director

David Marc Cantor

President and a Director

Peter C. Zachariou

Executive Vice President and a Director

Kenneth T. Coviello

Chief Executive and a Director

Heather N. Vinas

Director

Pascale Mangiardi

Director

Steven Girgenti

Director

Oscar Bronsther, M.D.

Director

Adrian Christopher Liddell, 53, has been Chairman of the Board and a Director of the Company since January 2010. He is an advisor to Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands, which invests in, raises capital for and provides strategic advice to growth companies in healthcare and other sectors. Mr. Liddell has 30 years of strategic, corporate and financial advisory and company investment. From 2003-2006, Mr. Liddell was an investment advisor at Phoenix Equity Partners, a European private equity fund. From 1998 to 2003, Mr. Liddell served as Managing Director, Mergers & Acquisitions at Donaldson Lufkin & Jenrette and then Citigroup in London. From 1984 to 1998, Mr. Liddell held various positions at Samuel Montagu & Co, Lehman Brothers and Erik Penser Corporate Finance in London. Mr. Liddell qualified as a Chartered Accountant in 1984 and holds an MA from Christ's College, Cambridge University.

David Marc Cantor, 45, has been President of the Company since September 2010 and a Director since January 2010. He is an investment manager of Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands, which invests in, raises capital for and provides strategic advice to growth companies across a broad range of sectors. Mr. Cantor has over 22 years experience in Investment Banking with a focus on Mergers and Acquisitions and Equity Capital Raisings. Prior to Fountainhead from 2001 - 2005 he was at Citigroup Capital Markets where he was Co-head of its European Business Development and subsequently European Head of its Diversified Industrials and Aerospace activities. Prior to

F-22

Citigroup he was a Managing Director in M&A at Donaldson Lufkin & Jenrette and worked at Lehman Brothers both in New York and London in both the Equity capital and M&A groups. Mr. Cantor has a BSc with Honours from City Business School, London.

Peter C. Zachariou, 50, was appointed a Director of the Company in May 2010 and Executive Vice President in September 2010. He is an investment manager for Fountainhead Capital Management Limited, an investment company based in Jersey, Channel Islands, which invests in, raises capital for and provides strategic advice to growth companies in healthcare and other sectors. For the past 20 years, Mr. Zachariou has been an active investor in a variety of companies and industries, both public and private, specializing in workouts and capital formation. Mr. Zachariou's investments and activities have predominantly been in U.S. emerging and growth companies across a broad range of industry sectors. He has also been proprietor and operator of several businesses in the U.K. and U.S. in the manufacturing, retail and leisure industries.

Kenneth Coviello, 60, is our Chief Executive and a Director of the Company. Mr. Coviello has more than 25 years of experience in successfully developing, selling and marketing medical devices and managing medical device and healthcare product companies. Mr. Coviello has held positions of Vice President, Senior Vice President and President of medical device companies, including Lumex and Graham Field. From 2000-2005, he was Senior Vice President at Misonix Inc., a public NASDAQ-listed medical device company that specializes in the design, manufacture and sale of ultrasonic surgical devices for orthopedic, neurosurgical, wound and urological applications. Mr. Coviello was responsible for Misonix medical device revenues and profitability, distribution partner contracts and factory operations in Farmingdale, NY. During his association with Misonix, Inc., Misonix increased its medical devices line from a single product to nine, grew medical device revenue, acquired and developed medical technology. While he was with Misonix, Inc, he was also appointed by Misonix, Inc. to the position of Chief Executive Officer of Hearing Innovations, Inc., a major funding entity and senior debt holder of Misonix, Inc. from August 2002 - November 2005. Mr. Coviello joined us on January 1, 2006 after leaving Misonix, Inc. in November 2005. Previous associations were:

1999-2000 FNC Medical - manufacturer and distributor of diabetic skin care supplies,

1992-1998 Graham Field - manufacturer and distributor of Medical devices, equipment and supplies

1972-1991 Lumex Inc. - manufacturer of medical devices and healthcare products

Heather N. Vinas, 32, is our founder and former President and a director. Ms. Vinas has more than 10 years experience in the medical profession ranging from hospitals to medical device manufacturing. Ms. Vinas joined us in November 2005. Ms. Vinas's most recent position from 2001-2005 was as Director of Sales at Misonix, Inc., a public NASDAQ-listed medical device company that specializes in ultrasonic surgical devices for orthopedic, neurosurgical, wound and urological applications. Ms. Vinas's responsibilities included international and domestic business development, knowledge and certification in export compliance, regulatory approval process and high-level executive contact and negotiations at some of the largest device companies in the world such as Tyco, Mentor, Aesculap, Richard Wolf and ACMI. She was also responsible for both domestic and international sales development. Ms. Vinas belongs to the Brain Injury Association, American Brain Tumor Association, and the National Association for Female Executives. She holds an Associates Degree in Business with a focus on Human Sciences and has additional credits in business administration from Katharine Gibbs College.

Pascale Mangiardi, 39, has been our director since October 30, 2007. She is presently the founder and President of Rougemont Management Services LLC and Chief Financial Officer of Optimus Services, LLC. From 2002-2006, she was a financial officer for John R. Mangiardi, MD, PC and from 2001 - 2002, she was the Assistant CEO at Hirslanden-Group Management AG, Zurich. Ms. Mangiardi holds a Diploma from the Swiss Business Administration School.

Steven Girgenti, 66, has been a director since November 19, 2008. He is President, CEO, Director and Co-Founder DermWorx, a specialty pharmaceutical company dedicated to solutions for dermatological conditions. Steve is also the Worldwide Chairman of Ogilvy Healthworld, a leading global healthcare communications network with 55 offices in 36 countries. The network has more than 1,000 brand assignments from nearly 200 clients worldwide, providing strategic marketing and communications services to many of the world's leading healthcare companies. Mr. Girgenti founded Healthworld in 1986 and, under his leadership, the company has made numerous acquisitions to expand and diversify the business. Healthworld went public in 1997. In addition to Vycor Medical, Mr. Girgenti has served as a director of Burren Pharmaceuticals and Pharmacon International, and is currently a director of AVTV Networks. He is also Vice Chairman of the Board of Governors for the Mt. Sinai Hospital Prostate Disease and Research Center in New York City, and is on the Board of Directors for Jack Martin Fund, a Mt. Sinai Hospital affiliated charitable organization devoted to pediatric oncology research. He graduated from Columbia University and has worked in the pharmaceutical industry since 1968 for companies

F-23

such as Bristol-Myers Squibb, Carter Wallace and DuPont, as well as advertising agencies that specialize in healthcare. During his career, Steve has held positions in marketing research, product management, new product planning and commercial development.

Oscar Bronsther, M.D., F.A.C.S, 49, has been a director since November 2011. Dr. Bronsther is currently Clinical Professor at George Washington University, Washington, DC and has served in that capacity since 2002. He had previously served as an Associate Professor at the University of Rochester, Rochester, NY (1994-2001), University of Pittsburgh, Pittsburgh, PA (1989-1994) and University of California San Diego (1984). He also serves as the Chairman, Section of General Surgery at Inova Fairfax Hospital. Since 2002, he has served as a Board Member, National Board Member and Director of Transplant Services of Kaiser Permanente Medical Group. Dr. Bronsther is a graduate of the University of Rochester (B.A. 1973) and Downstate Medical Center, Brooklyn, N.Y. (M.D. 1978). He did post-graduate work at Downstate Medical Center (Research Assistant 1975; Kidney Transplant Fellowship 1983-1984), Mount Sinai Medical Center, New York, N.Y (Residency 1978-1983) and Children's Hospital Medical Center, Boston, MA (Research Fellowship 1980-1981). He resides in Potomac, MD.

All of our directors hold office until the next annual meeting of stockholders and until their respective successors have been elected or qualified. Officers serve at the discretion of the board of directors. There are no family relationships among our directors or executive officers. There is no arrangement or understanding between or among our officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current board of directors.

None of our directors and executive officers have during the past five years:


	•			had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;
	•			been convicted in a criminal proceeding and is not subject to a pending criminal proceeding;
	•			been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;
	•			or been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Committees of the Board of Directors

Our Board of Directors does not have any committees.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the Board of Directors or compensation committee of any other entity that has one or more of its executive officers serving as a member of our Board of Directors.

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ITEM 11. EXECUTIVE COMPENSATION.

The following is a summary of the compensation we paid for each of the last two years ended December 31, 2011 and 2010, respectively (i) to the persons who acted as our principal executive officer during our fiscal year ended December 31, 2011 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 our executive officer as of the end of our last fiscal year.


Name and Principal Position	Year		Salary ($)	Bonus ($)	Stock Awards ($) (1)		Option Awards ($)	Non-Equity Incentive Plan Compensation	Non-Qualified Deferred Compensation Earnings ($)		All other Compensation ($)		Total ($)
Kenneth T. Coviello	2011	$	153,989	—	—	$	29,212	—	—	$	12,578	$	195,779
(Chief Executive Officer)	2010	$	153,989	—	—	$	29,212	—	—	$	12,578	$	195,779


Heather N. Vinas	2011		—	—	—		—	—	—		—		—
(Former President)	2010	$	72,739	—	—	$	29,212	—	—	$	9,184	$	111,135

David Cantor	2011	$	—	—	—		—	—	—		—		—
(President)	2011	$	—	—	—		—	—	—		—		—

(1) Management Warrants

OUTSTANDING EQUITY AWARDS

Grants of Plan-Based Awards

Initial grants under the 2008 Stock Plan were to Kenneth T. Coviello and Heather N. Vinas of options to purchase 1,000,000 shares in the aggregate. There were no option exercises by or stock vested in fiscal 2010 or 2011. Following the resignation of Heather N. Vinas, 166,667 options were cancelled.


		Option Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Number of Securities Underlying Unexercised Options (#) Unexercisable (1)		Option Exercise Price ($)	Option Expiration Date
Kenneth T. Coviello	2/15/2008	-	-	500,000	$	0.135	2/12/2018

Heather N. Vinas	2/15/2008	-	-	333,333	$	0.135	2/12/2018


Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
Equity compensation plans approved by security holders	1,000,000	$	0.135	2,651,345
Equity compensation plans not approved by security holders	50,000		0.19	-
Total	1,050,000	$	0.138	2,651,345

(1) As of December 31, 2011

F-25

Warrants Issued to Management


Name	Grant Date	Number of Securities Underlying Unexercised Exercisable Warrants (1)	Number of Securities Underlying Unexercised Exercisable Warrants (1)		Warrant Exercise Price ($)	Warrant Expiration Date
Kenneth T. Coviello	12/29/2009	-	16,450,066	$	0.00717	12/29/2014
Heather N. Vinas	12/29/2009	-	8,225,063	$	0.00717	12/29/2014
Total		-	24,675,129	$	0.00717

(1) As of December 31, 2011

Employment Agreements

Effective December 29, 2009, the Company entered into new employment agreements with each of our Chief Executive Officer, Mr. Kenneth Coviello and with our Former President, Ms. Heather Vinas. Ms. Vinas' employment agreement terminated when she resigned her employment with the Company in May 2010. These new employment agreements superseded all prior employment agreements or arrangements between the Company and these individuals.

Effective September 30, 2010, the Company entered into identical employment agreements with David Cantor to serve as the Company's President and Peter C. Zachariou to serve as the Company's Executive Vice President. Each employment agreement continues until August 30, 2011 and is then automatically extended unless terminated by either party, and provides that the executives will receive no compensation for services rendered under the agreements.

Compensation of Directors

During the period January 1, 2011 through January 2012, we granted Steven Girgenti a total of 793,489 shares of the Company's Common Stock for Mr. Girgenti's service to the Board of Directors. Mr. Girgenti is entitled to receive $5,000 in cash or stock at the option of the company per quarter and $1,500 per board meeting. In January 2012, we granted Oscar Bronsther a total of 96,620 shares of the Company's Common Stock for Dr. Bronsther's service to the Board of Directors. No other directors of the Company receive compensation for their service to the Company.

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 March 23, 2011. Unless noted, the address for the following beneficial owners and management is 6401 Congress Ave., Suite 140, 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

Kenneth Coviello

5,284,587

Common Stock

Heather N. Vinas

5,284,587

Common Stock

Pascale Mangiardi

—

0.00%

Common Stock

Steven Girgenti

1,378,948

Common Stock

Adrian Christopher Liddell

—

0.00%

Common Stock

Marc David Cantor

—

0.00%

Common Stock

Peter C. Zachariou

—

0.00%

Common Stock

Oscar Bronsther, M.D

96,260

Common Stock

All executive officers and directors as a group

12,044,382

1.4%

Common Stock

Fountainhead Capital Management Limited
Portman House Hue Street, St. Helier,
Jersey JB4 5RP

531,779,465

63.5%

* Less than 1%

F-26


	(1)			In determining beneficial ownership of our common stock, the number of shares shown includes shares which the beneficial owner may acquire upon exercise of debentures, warrants and options which may be acquired within 60 days. In determining the percent of common stock owned by a person or entity on March 23, 2012, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which the beneficial ownership may acquire within 60 days of exercise of debentures, warrants and options, and (b) the denominator is the sum of (i) the total shares of that class outstanding on March 23, 2012 (837,472,111 shares of common stock) and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the debentures, warrants and options. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.


	(2)			In addition, in determining the percent of common stock owned by a person or entity on March 23, 2012, (a) the numerator is the number of shares of the class beneficially owned by such person and includes shares which the beneficial owner may acquire within 60 days upon conversion or exercise of a derivative security, and (b) the denominator is the sum of (i) the shares of that class outstanding on March 23, 2012 (837,472,111 shares of common stock) and (ii) the total number of shares that the beneficial owner may acquire upon conversion or exercise of a derivative security within such 60 day period. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

F-27

In December 2011 the Company issued 402,965 shares of Common Stock to Fountainhead Capital Partners Limited in respect of the exercise of December 2006 warrants, and received $443.26 in cash.

Director Independence

As of March 14, 2012, of our eight (8) directors, only Steven Girgenti, Oscar Bronsther, Pascale Mangiardi and Heather Vinas are considered "independent" in accordance with Rule 4200(a)(15) of the NASDAQ Marketplace Rules. The remaining directors are not considered "independent". We are currently traded on the Over-the-Counter Bulletin Board. The Over-the-Counter Bulletin Board does not require that a majority of the board be independent.

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, 2011 and December 31, 2010, respectively, were approximately $30,000 and $25,000.

Tax Fees

There were no 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, 2011 and 2010.

All Other Fees

Fees billed for other products or services provided by our principal accountant for the fiscal years ended December 31, 2011 and December 31, 2010 were $0 and $45,000, respectively.

PART IV

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:

•Report of Paritz & Co., P.C., Independent Registered Certified Public Accounting Firm

•Balance Sheets as of December 31, 2011 and 2010 (audited)

•Statements of Operations for the years ended December 31, 2011 and 2010 (audited)

•Statements of Stockholders' Deficit from January 1, 2009 to December 31, 2011 (audited)

•Statement of Cash Flows for the years ended December 31, 2011 and 2010 (audited)

•Notes to Financial Statements (audited)

F-28

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.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


							Vycor Medical, Inc.
							(Registrant)
				By:
							/s/ David M. Cantor
							________________________

							David M. Cantor
							President and Director (Principal Executive Officer)
				Date
							March 30, 2012
				By:
							/s/ Adrian Liddell
							________________________

							Adrian Liddell
							Chairman of the Board and Director
							(Principal Financial and Accounting Officer)
				Date
							March 30, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated.


				By:
							/s/ Kenneth T. Coviello
							________________________

							Kenneth T. Coviello
							Chief Executive and Director
				Date
							March 30, 2012

F-29


				By:
							/s/ Heather Vinas
							________________________

							Heather Vinas
							Director
				Date
							March 30, 2012
				By:
							/s/ Pascale Mangiardi
							_________________________

							Pascale Mangiardi
							Director
				Date
							March 30, 2012
				By:
							/s/ Steven Girgenti
							_________________________

							Steven Girgenti
							Director
				Date
							March 30, 2012

F-30


				By:
							/s/ Adrian Christopher Liddell
							_________________________

							Adrian Christopher Liddell
							Chairman of the Board and Director (Principal Financial and Accounting Officer)
				Date
							March 30, 2012
				By:
							/s/ David Marc Cantor
							_________________________

							David Marc Cantor
							President and Director (Principal Executive Officer
				Date
							March 30, 2012
				By:
							/s/ Peter C. Zachariou
							_________________________

							Peter C. Zachariou
							Executive Vice President and Director
				Date
							March 30, 2012
				By:
							/s/ Oscar Bronsther, M.D.
							_________________________

							Oscar Bronsther, M.D.
							Director
				Date
							March 30, 2012

F-31

Attached files

VYCOR MEDICAL INC Reports

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