Business context and reporting period
This unaudited Form 10-Q covers the three and six months ended June 30, 2022; it was signed November 30, 2022. The filing is for AVRA Medical Robotics, Inc., not a registrant named SS Innovations International, Inc. AVRA described a medical-robotics development business and, in later events disclosed in this filing, a proposed merger with SSI-related entities and a planned name change to SS Innovations International, Inc.
Financial results and condition
| Metric | Q2 2022 / June 30, 2022 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q2 2021 and first half 2021 |
| Operating expenses | $170,030 for Q2; $250,486 for six months | $412,351 for Q2 2021; $712,430 for six months 2021 |
| Net loss | $170,001 for Q2; $250,421 for six months | $412,314 for Q2 2021; $712,370 for six months 2021 |
| Cash and cash equivalents | $261,089 | $405,774 at Dec. 31, 2021 |
| Total assets | $279,336 | $428,607 at Dec. 31, 2021 |
| Current liabilities | $221,585 | $287,281 at Dec. 31, 2021 |
| Operating cash flow | $(216,766) for six months | $(133,144) for six months 2021 |
There was no meaningful revenue base or gross margin to report. First-half financing provided $72,081; cash fell by $144,685. Current liabilities included $145,000 of related-party notes payable, described in the notes as non-interest-bearing loans, and $55,885 of accounts payable. The filing does not clearly state the maturity status of the outstanding related-party balance. No interest expense was reported.
Material changes versus prior periods
Net loss declined about 59% in Q2 and 65% for the first half year over year, principally alongside sharply lower compensation and stock-based compensation expense. First-half compensation expense was $94,766 versus $545,636 in 2021; general and administrative expense was $155,719 versus $165,794. Cash used in operations increased from the prior-year first half despite the lower reported loss, in part reflecting changes in payables and noncash expenses.
Outlook, risks, contingencies and unusual items
- Going concern: Management reported no established ongoing revenue source and dependence on debt and equity financing. It stated that substantial doubt exists about the company’s ability to continue as a going concern and that additional funding was not assured. The filing’s balance sheet, equity statement and going-concern disclosure contain inconsistent stockholders’ deficit figures; the precise deficit is therefore unclear from the filing text.
- Business outlook: AVRA discussed development and regulatory plans for an autonomous robotics platform initially aimed at aesthetic skin-resurfacing procedures. These are forward-looking plans, not reported commercial results; the filing provides no financial guidance or target dates.
- Proposed merger: A November 7, 2022 merger agreement contemplated SSI-related shareholders receiving 95% of post-merger common equity, with existing AVRA shareholders retaining 5%. Newly designated Series A preferred shares would carry 51% of total voting power. Closing remained subject to conditions, including a name change, a 1-for-10 reverse split, increased authorized common shares, regulatory/filing steps and other customary conditions. Completion was not assured.
- Interim financing: After the reporting date, AVRA advanced $2.25 million to SSI-related parties under one-year notes bearing 7% interest, and disclosed the possibility of further advances up to an aggregate $5 million. AVRA also issued convertible notes to investors to fund the advance. Subsequent disclosures include $250,000 from an August share sale and $565,250 from share sales from September through the filing date.
- Potential dilution: On July 1, 2022, AVRA issued immediately vested options for 2.52 million shares to a consultant, 5.4 million to its CEO, and 500,000 each to its chief medical officer and chief strategy advisor. The filing also reports subsequent stock issuances and an increase in the incentive plan’s share reserve.
- Controls and other risks: Management concluded disclosure controls were not effective at the reasonable-assurance level because of material weaknesses previously identified. The filing reports no legal proceedings and no material off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the registrant and reporting period: this is an AVRA 2022 Q2 filing, not a filing issued under the SS Innovations International, Inc. name.
- Reconcile the inconsistent stockholders’ deficit and accumulated-deficit figures across the balance sheet, equity statement and going-concern note.
- Review the status, terms and funding sources of the SSI-related advances and convertible notes, and whether the proposed merger closed and on what final terms.
- Assess available liquidity against ongoing operating cash use, including the status and maturity of the $145,000 related-party notes.
- Verify the actual effect of post-quarter option grants, equity issuances, reverse split and authorized-share changes on dilution and voting control.