SS Innovations International, Inc. — Q1 2023 Form 10-Q
Business context and reporting period. This unaudited filing covers the three months ended March 31, 2023, when the company still operated as Avra Medical Robotics, Inc. The reported financials reflect only pre-acquisition operations and do not give pro forma effect to the April 14, 2023 merger or one-for-ten reverse stock split. In the merger, the company acquired CardioVentures, the indirect parent of India-based surgical robotics developer SSI-India, changed its name to SS Innovations International, Inc., and underwent a change in control.
Financial highlights
| Metric | Q1 2023 | Q1 2022 or prior balance-sheet date |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $2.06 million | $80,455 |
| Net loss | $2.00 million | $80,421 |
| Loss per share, basic and diluted | $0.032 | $0.002 |
| Operating cash flow | $(336,649) | $(58,905) |
| Cash and cash equivalents | $448,543 at March 31, 2023 | $1.35 million at December 31, 2022 |
| Total assets | $5.47 million at March 31, 2023 | $4.37 million at December 31, 2022 |
| Current liabilities | $5.12 million at March 31, 2023 | $4.05 million at December 31, 2022 |
| Stockholders’ equity | $347,414 at March 31, 2023 | $320,213 at December 31, 2022 |
Compensation expense was $1.59 million, including $1.60 million of stock-based compensation in the cash-flow reconciliation; general and administrative expense was $464,758. Research and development expense was zero. Other income and expense, net, was positive $52,747, including a $120,000 origination fee and $67,699 of interest expense. With no revenue, a revenue margin is not meaningful.
Investing cash outflow was $2.00 million, representing an increase in acquisition-related notes receivable from $3.00 million to $5.00 million. Financing activities provided $1.43 million, including $446,188 from securities offerings and $1.00 million from a 7% convertible promissory note; the filing also reports a $12,360 warrant repayment. The balance sheet lists a $5.00 million promissory note as a current liability. The filing does not provide a clear breakdown of the note’s terms or maturity.
Material changes and significant transactions
- Net loss increased to $2.00 million from $80,421, primarily alongside a sharp increase in compensation and administrative costs. Weighted-average shares rose to 61.7 million from 37.8 million, and reported loss per share increased.
- Cash declined by $902,821 from year-end 2022. The company issued 670,000 shares to investors for $189,500 and received $240,000 from warrant exercises during the quarter; it also issued shares through cashless option and warrant exercises.
- On April 14, 2023, merger consideration included 135.8 million company shares, representing approximately 95% of post-merger common shares, according to the filing. Series A preferred shares issued to merger holders carry 51% of the company’s total voting power. Dr. Sudhir Srivastava became the controlling shareholder.
- Dr. Srivastava’s holding company assigned intellectual property to a company subsidiary in exchange for a quarterly royalty of 3% of net revenues generated from the relevant IP, products, or services.
Outlook, risks, and controls
- Management intends to focus on SSI-India’s SSI Mantra surgical robotic system and instruments and plans to expand the business globally. The filing provides no quantified revenue, earnings, or cash-flow guidance.
- The company had no established revenue source sufficient to cover operating costs and depended on debt and equity financing. Management said it was seeking additional funding, but acknowledged there were no committed funding sources and no assurance of obtaining capital. The filing states that these conditions raise substantial doubt about the company’s ability to continue as a going concern.
- Management warned that a funding shortfall could constrain research and development, force further operational curtailments, or require strategic alternatives; additional financing could substantially dilute shareholders. The company also faces execution, product-development, commercialization, and regulatory-approval risks.
- Disclosure controls and procedures were reported as not effective at the reasonable assurance level because of material weaknesses identified in the 2022 Form 10-K. No material changes in internal control over financial reporting were reported during the quarter.
- The company reported $198,543 of cash above the FDIC insurance limit at March 31, 2023. It reported no material off-balance-sheet arrangements and no legal proceedings in the filing.
Most important facts for investors to verify
- Post-merger capitalization, voting control, reverse-split-adjusted share counts, and the precise ownership and dilution effects of merger and financing issuances.
- Availability and terms of additional financing, the 7% note’s repayment or conversion provisions, and the company’s ability to meet near-term obligations.
- Collectability and terms of the $5.00 million acquisition-related note receivable, and how it relates to the acquisition financing.
- Progress toward SSI-India product commercialization, required approvals, revenue generation, and the effect of the 3% intellectual-property royalty.
- Remediation of the disclosed material weaknesses and subsequent reporting-control effectiveness.