Business context and reporting period
Entity identification: The supplied filing is AVRA Medical Robotics, Inc.’s Form 10-Q, not a filing identified as SS Innovations International, Inc. It covers the quarter and nine months ended September 30, 2017; the statements are unaudited. AVRA describes itself as a development-stage medical robotics company developing a surgical robotic prototype with the University of Central Florida (UCF).
Financial performance and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | $0 in 2017 and 2016 | $0 in 2017 and 2016 |
| Research and development expense | $6,067 in 2017; $54,436 in 2016 | $57,208 in 2017; $81,654 in 2016 |
| General and administrative expense | $165,008 in 2017; $182,464 in 2016 | $479,589 in 2017; $194,982 in 2016 |
| Net loss | $180,067 in 2017; $246,866 in 2016 | $563,759 in 2017; $290,142 in 2016 |
| Basic and diluted loss per share | $0.01 in 2017 and 2016 | $0.03 in 2017; $0.02 in 2016 |
At September 30, 2017, cash and cash equivalents were $520,855, total current assets $522,537, current liabilities $132,916, total assets $569,679, and stockholders’ equity $436,763. The company reported no current promissory-note balance after the notes converted to equity. Nine-month cash flows were $(297,388) from operations, $(4,174) from investing, and $574,198 provided by financing. Cash increased from $248,219 at year-end 2016 to $520,855. No income tax provision was recorded. Gross margin is not meaningful because the company reported no revenue.
Material changes versus the prior comparable period
- Quarterly net loss narrowed by $66,799 year over year, while nine-month net loss increased by $273,617.
- Quarterly R&D expense declined, which management attributed to completion of UCF’s first research phase. Nine-month G&A expense rose, attributed to management compensation, registration-related legal and professional costs, and stock-based compensation.
- On September 30, a $542,260 common-stock offering was completed; $461,075 had been received by quarter-end and $81,185 was recorded as stock subscriptions receivable. The resulting qualified financing triggered conversion of $480,000 principal of 7.5% notes into 960,000 shares.
- Cash increased despite operating cash use, principally due to financing proceeds. Total current liabilities fell from $647,292 at December 31, 2016 to $132,916 at September 30, 2017, including elimination of the notes and shareholder payable.
Outlook, risks, contingencies, and unusual items
Management provided no quantified revenue or earnings guidance. It expects substantial funding needs for R&D and plans to seek additional securities financing and potentially development partnerships. The company has no committed funding source and states that failure to obtain financing could require it to curtail operations or consider alternatives. The filing says conditions raise substantial doubt about its ability to continue as a going concern.
- The UCF research agreement was extended through September 30, 2019 with no additional payments required under the extension. A $68,952 matching grant is subject to research obligations; failure to meet them could leave AVRA responsible for a shortfall. A 1% royalty is payable to UCF in any year sales of products using the intellectual property exceed $20 million.
- On October 1, 2017, noteholders received three-year warrants for 144,000 shares at $1.25 per share in lieu of accrued interest and for extending the notes’ original maturity.
- Management reported disclosure controls were not effective due to material weaknesses identified in the company’s S-1. The filing’s controls discussion gives an evaluation date of September 30 but states the conclusion was as of June 30, 2017.
- The filing reports no legal proceedings, defaults upon senior securities, or material off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the correct issuer: the supplied filing names AVRA Medical Robotics, Inc., despite the request metadata naming SS Innovations International, Inc.
- Review the going-concern disclosure, financing dependence, and availability and terms of future capital.
- Verify the $81,185 stock subscription receivable was collected and confirm the share count and note conversion treatment.
- Check the status of the UCF prototype, grant obligations, and any future royalty exposure.
- Reconcile filing presentation inconsistencies: the balance sheet displays total liabilities and stockholders’ equity as “$(292,232)” for December 31, 2016 although the component figures indicate a positive total; the cash-flow contents page refers to June 30 although the statement is for September 30; and the controls section cites differing assessment dates.