Filing identity and reporting period
Important identity discrepancy: The supplied filing is Avra Medical Robotics, Inc.’s Form 10-Q for the quarter ended June 30, 2019, not a filing identified as SS Innovations International, Inc. Confirm the intended issuer before relying on this summary.
The filing reports second-quarter and six-month results through June 30, 2019, with comparisons to the corresponding 2018 periods. Avra describes itself as a medical-robotics developer in the prototype stage.
Financial results and liquidity
| Metric | Three months ended June 30, 2019 | Six months ended June 30, 2019 | Comparable 2018 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Research and development | $27,812 | $51,874 | $4,229 and $16,281, respectively |
| General and administrative | $355,693 | $641,197 | $201,298 and $427,676, respectively |
| Net loss | $389,997 | $700,715 | $205,509 and $443,913, respectively |
| Basic and diluted loss per share | $0.02 | $0.03 | $0.01 and $0.02, respectively |
At June 30, 2019, cash was $39,095 and total assets were $207,228. Current liabilities were $883,914, against current assets of $45,386, a working-capital deficit of $838,528. Stockholders’ deficit was $676,686. Current liabilities included $122,500 of related-party notes and $100,086 of promissory notes, net of discount. The filing reports no revenue, so operating margins are not meaningful.
For the first six months, operating cash use was $145,121; investing cash use was $75,000, primarily for equipment; and financing provided $223,500, including shareholder loans, promissory notes, and option exercises. Cash increased by $3,379 from year-end 2018.
Changes versus prior periods
- First-half net loss increased by $256,802, approximately 58%, from 2018. Second-quarter net loss increased by $184,488.
- First-half R&D expense rose to $51,874 from $16,281, reflecting continued prototype development with the University of Central Florida.
- First-half G&A increased to $641,197 from $427,676. Management attributes G&A generally to management compensation, public-company and professional expenses, and stock-based compensation.
- Interest expense was $7,649 for the first half of 2019, compared with none in the 2018 period, reflecting borrowing and amortization of note discounts.
- Cash remained low despite new financing; accounts payable, accrued expenses, and notes payable increased from December 31, 2018.
Outlook, risks, and notable items
- Management states that the company has no established revenue source sufficient to cover operating costs and depends on debt and equity financing. The filing says these conditions raise substantial doubt about the company’s ability to continue as a going concern; additional funding is not assured and could substantially dilute shareholders.
- Avra is developing an autonomous medical robotic system, initially targeting skin-resurfacing procedures. It had no products or training programs approved or ready for retail marketing, and disclosed no assurance as to when products may reach market.
- Management expected a pre-collaboration meeting with the FDA in August 2019. This is an expectation, not a disclosed approval or marketing authorization.
- Subsequent events included a $50,000 interest-free CEO loan on July 19, 2019, due July 19, 2020, and restricted shares issued or approved for consultants and service providers.
- Disclosure controls were reported as not effective at the reasonable-assurance level because of material weaknesses previously identified in the 2018 Form 10-K. Management reported no material change in internal control over financial reporting during the quarter.
- The filing reports no material off-balance-sheet arrangements and no legal proceedings. It identifies a potential 1% royalty to the University of Central Florida in any year when sales of products using its intellectual property exceed $20 million.
Important facts for investors to verify
- Whether this Avra Medical Robotics filing is the intended filing, given the SS Innovations International metadata.
- Availability, timing, and terms of additional financing, including related-party borrowing and any equity funding facility.
- FDA submission status, the anticipated meeting, required approvals, and the product’s development and commercialization timeline.
- The scope and remediation status of the material weaknesses affecting disclosure controls.
- A first-half G&A discrepancy: the financial statements report 2018 expense of $427,676, while MD&A states $427,626.
- Subsequent share issuances and dilution, and the terms and balances of short-term and related-party notes.