SS Innovations International, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. The company develops, manufactures and sells the SSI Mantra surgical robotic system and related instruments. On April 14, 2023, it acquired CardioVentures, bringing in the SSI-India business, changed its name, and effected a 1-for-10 reverse stock split. The filing presents combined operations and gives effect to the split; comparisons with 2022 are therefore not directly comparable.
Financial results and position
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 | Comparable 2022 period |
|---|---|---|---|
| Revenue | $1.575 million | $3.087 million | $0 |
| Gross profit | $224,164; approximately 14.2% margin | $735,339; approximately 23.8% margin | $0 |
| SG&A | $1.983 million | $3.400 million | $170,031 and $250,486, respectively |
| Operating loss | $1.759 million | $2.665 million | $170,031 and $250,486, respectively |
| Net loss | $1.850 million | $2.838 million | $170,002 and $250,422, respectively |
| Operating cash flow | $(10.679) million for the six months | $(216,766) | |
| Investing cash flow | $(1.508) million for the six months | $0 | |
| Financing cash flow | $11.258 million for the six months | $72,081 |
At June 30, cash was $423,060, down from $1.351 million at year-end 2022. Total assets were $9.693 million and liabilities were $8.872 million; stockholders’ equity was $821,595. The company reported a $2.886 million working-capital deficit and an accumulated deficit of $19.102 million. Current liabilities included a $4.963 million bank overdraft, $1.225 million of notes payable, and $2.131 million of other accrued liabilities. The overdraft is secured by fixed deposits and company current assets. The filing also describes $1.818 million of unsecured, non-interest-bearing related-party advances due on demand, but its balance-sheet presentation is unclear.
Changes, outlook and risks
- Commercial sales began in late 2022. Management reported nine systems sold by June 30, 2023, with more than 230 procedures performed; the financial statements say six systems were sold in the first half of 2023.
- Warranty revenue is recognized over the warranty period. The filing says $936,262 was deferred under the revenue-recognition policy, affecting reported revenue and profitability.
- The company expects substantial funding for growth, manufacturing capacity and capital expenditure. It gave no quantified revenue or profit guidance. Management said it was seeking additional funding, but no funding beyond disclosed arrangements was assured.
- A related-party convertible credit facility permits discretionary advances of up to $20 million through December 31, 2023. Advances bear no interest, are due by that date, and may be converted at the lender’s option at $0.74 per share. $1.225 million was outstanding at quarter-end.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern if additional financing or revenue growth is not achieved. The statements were prepared on a going-concern basis, and management cautioned that further financing could materially dilute shareholders.
- Disclosure controls were reported ineffective at June 30 because of previously identified material weaknesses. Management said it had begun remediation after the merger. The filing reports no legal proceedings and no material off-balance-sheet arrangements.
Important facts for investors to verify
- Resolve filing inconsistencies: the going-concern note states a six-month net loss of $1.850 million, while the statements report $2.838 million; related-party advances appear as an asset on the balance sheet but are described as amounts due to related parties.
- Verify the reported cash-flow detail and financing sources, including the large prepaid/other-assets movement and the filing’s differing descriptions of operating working-capital changes.
- Assess collection timing and credit risk for $1.070 million of current receivables and $1.953 million classified as long-term receivables; no collateral is required.
- Review the related-party arrangements, including the convertible facility, secured overdrafts, executive compensation, and the 3% royalty on net revenues payable for intellectual property assigned by the controlling shareholder’s holding company.
- Confirm capitalization and dilution: the balance-sheet text refers to 100 million authorized common shares despite the merger note stating authorization increased to 250 million; 146.172 million shares were reported outstanding as of June 30, with 146.172 million reported as of August 4.
- Monitor funding needs, going-concern conditions, and remediation of ineffective disclosure controls.