Forward Looking Statements





This Interim Report on Form 10-Q contains, in addition to historical
information, certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 ("PLSRA"), Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") regarding
Vycor Medical, Inc. (the "Company" or "Vycor," also referred to as "us", "we" or
"our"). Forward-looking statements give our current expectations or forecasts of
future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. Forward-looking statements
involve risks and uncertainties. Forward-looking statements include statements
regarding, among other things, (a) our projected sales, profitability, and cash
flows, (b) our growth strategies, (c) anticipated trends in our industries, (d)
our future financing plans and (e) our anticipated needs for working capital.
They are generally identifiable by use of the words "may," "will," "should,"
"anticipate," "estimate," "plans," "potential," "projects," "continuing,"
"ongoing," "expects," "management believes," "we believe," "we intend" or the
negative of these words or other variations on these words or comparable
terminology. These statements may be found under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Description of
Business," as well as in this Form 10-Q generally. In particular, these include
statements relating to future actions, prospective products or product
approvals, future performance or results of current and anticipated products,
sales efforts, expenses, the outcome of contingencies such as legal proceedings,
and financial results.




Any or all of our forward-looking statements in this report may turn out to be
inaccurate. They can be affected by inaccurate assumptions we might make or by
known or unknown risks or uncertainties. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially as a
result of various factors, including, without limitation, the risks outlined
under "Risk Factors" and matters described in this Form 10-Q generally. In light
of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this filing will in fact occur. You
should not place undue reliance on these forward-looking statements. The
forward-looking statements speak only as of the date on which they are made,
and, except to the extent required by federal securities laws, we undertake no
obligation to publicly update any forward-looking statements, whether as the
result of new information, future events, or otherwise. We intend that all
forward-looking statements be subject to the safe harbor provisions of the
PSLRA.

1. Organizational History


The Company was formed as a limited liability company under the laws of the
State of New York on June 17, 2005 as "Vycor Medical LLC". On August 14, 2007,
we converted into a Delaware corporation and changed our name to "Vycor Medical,
Inc.". The Company's listing went effective on February 2009 and on November 29,
2010 Vycor completed the acquisition of substantially all of the assets of
NovaVision, Inc. ("NovaVision") and on January 4, 2012 Vycor, through its
wholly-owned NovaVision subsidiary, completed the acquisition of all the shares
of Sight Science Limited ("Sight Science").



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2. Overview of Business



Vycor is dedicated to providing the medical community with innovative and
superior surgical and therapeutic solutions and operates two distinct business
units within the medical device industry. Vycor Medical designs, develops and
markets medical devices for use in neurosurgery. NovaVision provides
non-invasive rehabilitation therapies for those who have vision disorders
resulting from neurological brain damage such as that caused by a stroke. Both
businesses adopt a minimally or non-invasive approach. Both technologies have
strong sales growth potential, address large potential markets and have the
requisite regulatory approvals. The Company has 65 issued or allowed patents and
a further 9 pending. The Company leverages joint resources across the divisions
to operate in a cost-efficient manner.



The Company periodically engages in discussions with potential strategic
partners for or purchasers of each or both of our operating divisions. In April
2020, the board of Vycor took the decision to close the German operations of
NovaVision, including the German office and NovaVision GmbH, and instead migrate
to a licensed business model; in June 2020 Vycor announced that it would be
entering into a license agreement and transition agreement (the "Agreements")
with HelferApp GmbH, a cognitive therapy specialist. Under the Agreements,
HelferApp is licensed to provide NovaVision's products and therapies in Germany,
Austria and Switzerland to patients and professionals; and has assumed
responsibility for the current patients of NovaVision in the territory. The
NovaVision German office was closed effective June 30, 2020.



Vycor Medical



Vycor Medical designs, develops and markets medical devices for use in
neurosurgery. Vycor Medical's ViewSite Brain Access System ("VBAS") is a next
generation retraction and access system that was fully commercialized in early
2010 and is the first significant technological change to brain tissue
retraction in over 50 years in contrast to significant development in most other
neuro-surgical technologies. Vycor Medical is ISO 13485:2016 and MDSAP (Medical
Device Single Audit Program) certified, and VBAS has U.S. FDA 510(k) clearance
and CE Marking for Europe (Class III) for brain and spine surgeries, and
regulatory approvals in a number of other international markets. Vycor Medical
has 27 granted and 9 pending patents.



NovaVision

NovaVision provides non-invasive, computer-based rehabilitation therapies targeted at people who have impaired vision as a result of stroke or other brain injury, and has 38 granted patents.





Strategy



The Company is continuing to execute on a plan to achieve revenue growth and a
reduction in cash operating losses1. For Vycor Medical this plan includes in
particular: increasing market penetration in the US through broadening of the
distribution network and programs to increase penetration in existing hospitals;
increasing international growth in territories where we are not represented or
under represented; and continued new product development. The first phase of the
modification of the existing VBAS product range to make it more compatible with
the most common IGS systems was completed in September 2017 and has been well
received by surgeons, resulting in increased hospital penetration and revenues
particularly in the US. The second phase of the development of further IGS
integration is complete, subject to regulatory clearances and approvals. Upon
regulatory clearances and product release of this new VBAS AC model range the
Company intends to conduct a multi-center study to provide additional clinical
data on the product. We will also be exploring with surgeons and focus groups
additional selected development work targeted at increasing the ease and
applicability of our products to additional common procedures. For NovaVision,
given the company's resources, and the large size and diversity of its end
markets, we believe that the most efficient way to tackle the distribution of
its broad range of patient and professional products is by partnering with
entities that have either direct access to the end users or a desire and
financial wherewithal to leverage the NovaVision therapy platform. As a result,
the Company has now closed the NovaVision German office and is entering into a
license agreement with HelferApp, a cognitive therapy specialist, for Germany,
Austria and Switzerland, and is seeking similar partnerships in other
territories with regional companies able to leverage NovaVision's clinically
supported vision therapies. Management is also open to a broad range of
alternatives for NovaVision as a whole, which could comprise distribution and
marketing partnerships, licensing, merger or sale.



The NovaVision German operation accounted for a very substantial proportion of
Vycor's operating cash loss1 during the year ended December 31, 2019. This
proportion has been reduced during the nine months ended September 30, 2020 for
two reasons: firstly, the selling, general and administrative expenses of
NovaVision Germany have been reduced as the operation has been wound down; and
secondly due to the impact on Vycor revenues from Covid-19 discussed below.

1 Operating Loss before Depreciation, Amortization and non-cash Stock Compensation





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COVID-19



In December 2019, an outbreak of a novel strain of coronavirus (COVID-19)
originated in Wuhan, China, and has since spread to a number of other countries,
including the United States. On March 11, 2020, the World Health Organization
characterized COVID-19 as a pandemic. In addition, as of the time of the filing
of this Form 10-Q, several states in the United States remain in states of
emergency, and travel restrictions continue to be applied in several countries
around the world, including the United States. Vycor Medical experienced a
reduction in demand during the three months ended September 30, 2020 in the US
and Europe. Although neurosurgery is not considered an elective procedure,
general hospital dislocation and diversion of resources away from non-emergency
surgeries, or surgeries that can be postponed for a short period without harm,
has impacted our revenues during the nine months ended September 30, 2020 and
could continue to do so. In addition, sales and marketing efforts by Vycor's
representatives have been disrupted or curtailed due to lockdown and social
distancing, and this has and may continue to hinder the recovery of revenues.
While our operations are principally located in the United States, and our
sub-contract manufacturers are located in the United States, we participate in a
global supply chain, and the existence of a worldwide pandemic, the fear
associated with COVID-19, or any, pandemic, and the reactions of governments
around the world in response to COVID-19, or any, pandemic, to regulate the flow
of labor and products and impede the travel of personnel, may impact our ability
to conduct normal business operations, which could adversely affect our results
of operations and liquidity. Disruptions to our supply chain and business
operations, or to our suppliers' or customers' supply chains and business
operations, could include disruptions from the closure of supplier and
manufacturer facilities, interruptions in the supply of raw materials and
components, personnel absences, or restrictions on the shipment of our or our
suppliers' or customers' products, any of which could have adverse ripple
effects on our manufacturing output and delivery schedule. Although we have
implemented business continuity plans for our offices and personnel to enable
continuity of service remotely, if a critical number of our employees become too
ill to work, or we are not able to access a sufficient quantity of our inventory
for shipment due to enforced office closures, our production ability could be
materially adversely affected in a rapid manner. Similarly, if our customers
experience adverse business consequences due to COVID-19, or any other,
pandemic, demand for our products could also be materially adversely affected in
a rapid manner. Global health concerns, such as COVID-19, could also result in
social, economic, and labor instability in the countries and localities in which
we or our suppliers and customers operate. Any of these uncertainties could have
a material adverse effect on our business, financial condition or results of
operations.

Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019





Revenue and Gross Margin:



                         Three months ended
                            September 30,
                  2020          2019        % Change
Revenue:
Vycor Medical   $ 250,648     $ 301,053           -17 %
NovaVision      $  25,277     $  21,831            16 %
                $ 275,925     $ 322,884           -15 %
Gross Profit
Vycor Medical   $ 211,089     $ 273,146           -23 %
NovaVision      $  24,285     $  20,776            17 %
                $ 235,374     $ 293,922           -20 %




Vycor Medical recorded revenue of $250,648 from the sale of its products for the
three months ended September 30, 2020, a decrease of $50,405 over the same
period in 2019. Sales of VBAS devices have been significantly disrupted during
the 2020 period in the US and internationally by COVID-19. Although neurosurgery
is not considered an elective procedure, general hospital dislocation and
diversion of resources away from non-emergency surgeries, or surgeries that can
be postponed for a short period without harm, has impacted our revenues during
the three months ended September 30, 2020. In addition, sales and marketing
efforts by Vycor's representatives have been disrupted or curtailed due to
lockdown and social distancing, and this has hindered the recovery of revenues.
Sales in the three months ended September 30, 2020 showed some recovery over the
three month period ended June 30, 2020, increasing by $31,651 or 14%, primarily
in the US. Gross margin of 84% and 91% was recorded for the three months ended
September 30, 2020 and 2019, respectively.



NovaVision recorded revenues of $25,277 for the three months ended September 30,
2020, an increase of $3,446 over the same period in 2019. Gross margin was 96%,
compared to 95% for the same period in 2019.



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Selling, General and Administrative Expenses:





Selling, general and administrative expenses decreased by $17,121 to $427,250
for the three months ended September 30, 2020 from $444,371 for the same period
in 2019. Included within Selling, General and Administrative Expenses are
non-cash charges for stock based compensation as the result of amortizing
employee and non-employee shares, warrants and options which have been issued by
the Company over various periods. The charge for the three months ended
September 30, 2020 was $126,500, a $7,000 decrease from the charge in 2019 of
$133,500, following the departure from the Board of Oscar Bronsther from July 1,
2020. Also included within Selling, General and Administrative Expenses are
Sales Commissions, which decreased by $3,955 from $56,761 to $52,806 in 2020,
reflecting the reduced level of sales in the US due to COVID-19.

The remaining Selling, General and Administrative expenses decreased by $6,166 from $254,110 to $247,944 in 2020.





An analysis of the change in cash and non-cash G&A is shown in the table below:



                                              Cash G&A       Non-Cash G&A

Legal, patent, audit/accounting, regulatory     (11,872 )                -
Board, financial and scientific advisory         (6,075 )           (7,000 )
Payroll                                          (2,380 )                -
Other (sales/travel/regulatory/premises)         14,161                  -

Commissions                                      (3,955 )                -
Total change                                    (10,121 )           (7,000 )




Interest Expense:



Interest comprises expense on the Company's debt and insurance policy financing.
Related Party Interest expense for the three months ended September 30, 2020 was
$7,836 compared to $5,315 for 2019. Other Interest expense for the three months
ended September 30, 2020 was $12,099 compared to $12,109 for 2019.



Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended
September 30, 2019



Revenue and Gross Margin:



                             September 30,
                  2020           2019         % Change
Revenue:
Vycor Medical   $ 776,932     $   988,786           -21 %
NovaVision      $  73,498     $    72,607             1 %
                $ 850,430     $ 1,061,393           -20 %
Gross Profit
Vycor Medical   $ 683,125     $   895,484           -24 %
NovaVision      $  68,967     $    68,463             1 %
                $ 752,092     $   963,947           -22 %




Vycor Medical recorded revenue of $776,932 from the sale of its products for the
nine months ended September 30, 2020, a decrease of $211,854. Sales of VBAS
devices have been significantly disrupted, particularly from March to June, in
the US and internationally by COVID-19 Although neurosurgery is not considered
an elective procedure, general hospital dislocation and diversion of resources
away from non-emergency surgeries, or surgeries that can be postponed for a
short period without harm, has impacted our revenues during the six months ended
September 30, 2020. In addition, sales and marketing efforts by Vycor's
representatives have been disrupted or curtailed due to lockdown and social
distancing, and this has hindered the recovery of revenues. Gross margin of 88%
was recorded for the nine months ended September 30, 2020 versus 91% for the
same period in 2019.



NovaVision recorded revenues of $73,498 for the nine months ended September 30,
2020, an increase of $891 over the same period in 2019 and gross margin of 94%,
compared to 94% for the same period in 2019.



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Selling, General and Administrative Expenses:





Selling, general and administrative expenses decreased by $84,111 to $1,260,742
for the nine months ended September 30, 2020 from $1,344,853 for the same period
in 2019. Included within Selling, 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 the nine months ended September
30, 2020 was $393,500, a decrease of $7,940 over $401,440 in 2019, following the
departure from the Board of Oscar Bronsther from July 1, 2020. Also included
within Selling, General and Administrative Expenses are Sales Commissions, which
decreased by $38,259 from $187,622 to $149,363, reflecting the reduced level of
sales in the US due to COVID-19.



The remaining Selling, General and Administrative expenses decreased by $37,912
from $755,791 to $717,879. Regulatory fees reduced by $49,367 reflecting the
completion of the transition to a new EU Notified Body for Vycor; patent fees
reduced by $20,296 reflecting the level of patent filing and prosecution
activity in the 2019 period; the professional fees related to the closure of
NovaVision Germany and the license agreement resulted accounting and legal

fees
increasing by $17,303.



An analysis of the change in cash and non-cash G&A is shown in the table below:



                                              Cash G&A       Non-Cash G&A

Legal, patent, audit/accounting, regulatory     (47,495 )                -
Board, financial and scientific advisory        (18,915 )           (7,000 )
Sales, marketing and travel                      (7,215 )                -
Payroll                                          12,234               (939 )
Other (travel/regulatory/premises)               23,478                  -

Commissions                                     (38,259 )                -
Total change                                    (76,172 )           (7,939 )




Interest Expense:



Interest comprises expense on the Company's debt and insurance policy financing.
Related Party Interest expense for the nine months ended September 30, 2020 was
$21,846 compared to $15,331 for 2019. Other Interest expense for the nine months
ended September 30, 2020 was $36,033 compared to $36,074 for 2019.

Income (loss) from Discontinued Operations:





 The reduction in operating loss for the three and nine months ended September
30, 2020 compared to the same periods in 2019, from $26,083 to $13,069 and from
$96,113 to $51,294, respectively, is primarily due to a reduction in Selling,
general and administrative expenses as a result of the wind-down of operations
in Germany.



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Liquidity

The following table shows cash flow and liquidity data for the periods ended September 30, 2020 and December 31, 2019:





                                       September 30,
                                            2020           December 31, 2019        $ Change
Cash                                   $       74,935     $            60,717     $      14,218
Accounts receivable, inventory and
other current assets                   $      409,969     $           595,715     $    (185,746 )
Total current liabilities              $   (2,848,749 )   $        (2,446,406 )   $    (402,343 )
Working capital                        $   (2,363,845 )   $        (1,789,974 )   $    (573,871 )
Cash provided by financing
activities                             $      307,634     $            43,117     $     264,517
Operating Activities. Cash used in operating activities comprises net loss
adjusted for non-cash items and the effect of changes in working capital and
other activities. The net repayment of normal insurance financing should also be
taken into account when considering cash used in operating activities.

The following table shows the principle components of cash used in operating activities during the nine months ended September 30, 2020 and 2019, with a commentary of changes during the periods and known or anticipated future changes:





                                       September 30, 2020      September 30, 2019        $ Change
Net loss                               $          (622,122 )   $          (575,211 )   $     (46,911 )

Adjustments to reconcile net loss to
cash used in operating activities:
Amortization and depreciation of
assets                                 $            44,922     $            46,371     $      (1,449 )
Share based compensation               $           393,500     $           401,440     $      (7,940 )
Other                                  $             9,418     $             9,418     $           0
                                       $           447,840     $           457,229     $      (9,389 )

Net loss adjusted for non-cash items   $          (174,282 )   $          (117,982 )   $     (56,300 )
Changes in working capital
Accounts receivable                    $           137,154     $            44,521     $      92,633
Accounts payable and accrued
liabilities                            $          (231,277 )   $            78,700     $    (309,977 )
Inventory                              $            19,221     $           (34,455 )   $      53,676
Prepaid expenses and net insurance
financing repayments                   $            21,695     $            (8,065 )   $      29,760
Accrued interest (not paid in cash)    $            57,879     $            51,233     $       6,646
Changes in discontinued operations,
net                                    $           (54,218 )   $               497     $     (54,715 )
                                       $           (49,546 )   $           132,431     $    (181,977 )

Cash provided by (used in) operating
activities, adjusted for net
insurance repayments                   $          (223,828 )   $            14,449     $    (238,277 )




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The adjustments to reconcile net loss to cash of $174,282 in the period have no
impact on liquidity. The change in Net loss adjusted for non-cash items of
($56,300) was primarily due to the impact of COVID-19 on the Vycor division
sales, which also accounts for the reduction in accounts receivable of $137,154.
At December 31, 2019 there was an increase in accounts payable and accrued
liabilities mainly due to expenditure on regulatory for the transition to a new
EU Notified Body, and regulatory and testing for the VBAS development occurring
during the fourth quarter. The change in accounts payable and accrued
liabilities of $231,277 was mainly due to the settlement of these accounts. The
net change of $54,218 in discontinued operations comprised a reduction of
$72,331 in liabilities being transferred to the license partner, NovaVision,
Inc. or eliminated; offset by a $18,113 reduction in assets being to the license
partner, NovaVision, Inc. or written off.



Additional inventory of $40,559 was purchased during the nine months ended
September 30, 2020 as part of normal production, and the Company anticipates
purchasing additional new inventory of approximately $80,000 during the next
twelve months.



Investing Activities. Cash used in investing activities of continuing operations
for the nine months ended September 30, 2020 was $60,132, which reflected
expenditure on the second phase of modifying the VBAS product suite to make it
easier to integrate with IGS. The Company anticipates additional expenditures
for this second phase, including work to obtain regulatory clearances and
approvals, of approximately $40,000. The $9,574 change in investing activities
of discontinued operations was due the writing off of long term assets.



Financing Activities. During the nine months ended September 30, 2020 the
Company received funds of $80,000 in respect of loans from Fountainhead. The
Company also received a loan of $58,600 during the period, pursuant to the
Paycheck Protection Program (the "PPP") under Division A, Title I of the CARES
Act, and a $150,000 loan from the Small Business Administration ("SBA") EIDL
program.

Liquidity and Plan of Operations, Ability to Continue as a Going Concern





The accompanying unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
incurred losses since its inception, including a net loss of $946,492 for the
nine months ended September 30, 2020 and has not generated sufficient positive
cash flows from operations. As of September 30, 2020 the Company had a working
capital deficiency of $688,725, excluding related party liabilities of
$1,675,120. These conditions, among others, raise substantial doubt regarding
our ability to continue as a going concern. The unaudited consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.



As described earlier in this ITEM 2 "Strategy", the Company is continuing to
execute on a plan to achieve revenue growth and a reduction in cash operating
losses2. For Vycor Medical this plan includes in particular: increasing market
penetration in the US through broadening of the distribution network and
programs to increase penetration in existing hospitals; increasing international
growth in territories where we are not represented or under represented; and
continued new product development. The first phase of the modification of the
existing VBAS product range to make it more compatible with the most common IGS
systems was completed in September 2017 and has been well received by surgeons,
resulting in increased hospital penetration and revenues particularly in the US.
The second phase of the development of further IGS integration is complete
subject to regulatory clearances and approvals. Upon regulatory clearances and
product release of this new VBAS AC model range the Company intends to conduct a
multi-center study to provide additional clinical data on the product. We will
also be exploring with surgeons and focus groups additional selected development
work targeted at increasing the ease and applicability of our products to
additional common procedures. For NovaVision, given the company's resources, and
the large size and diversity of its end markets, we believe that the most
efficient way to tackle the distribution of its broad range of patient and
professional products is by partnering with entities that have either direct
access to the end users or a desire and financial wherewithal to leverage the
NovaVision therapy platform. As a result, the Company has now closed the
NovaVision German office and is entering into a license agreement with
HelferApp, a cognitive therapy specialist, for Germany, Austria and Switzerland,
and is seeking similar partnerships in other territories with regional companies
able to leverage NovaVision's clinically supported vision therapies. Management
is also open to a broad range of alternatives for NovaVision as a whole, which
could comprise distribution and marketing partnerships, licensing, merger or
sale.

2 Operating Loss before Depreciation, Amortization and non-cash Stock Compensation





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However, the Company believes it may not have sufficient cash to meet its
various cash needs through November 30, 2021 unless the Company is able to
obtain additional cash from the issuance of debt or equity securities. Included
within the working capital deficiency above is a term note for $300,000 to
EuroAmerican Investment Corp. ("EuroAmerican"), together with accrued interest
of $316,798, which has a maturity date of December 31, 2020, having been
extended on a number of occasions from its initial due date of June 11, 2011. At
this time, it is not known whether any further extension of the note beyond
December 31, 2020 will be available. Fountainhead, the Company's largest
shareholder, has provided working capital funding to the Company on an as-needed
basis, although there is no guarantee that this will continue to be the case.
The Company may consider seeking additional equity or debt funding, although
there is no assurance that this would be available on acceptable terms or at
all. If adequate funds are not available, the Company may have to delay or
curtail development or commercialization of products, or cease some of its
operations.

Critical Accounting Policies and Estimates

Uses of estimates in the preparation of financial statements





The preparation of unaudited consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the unaudited
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 unaudited
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 stock-based compensation.

A detailed description of our significant accounting policies can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2019.

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