Business Context and Reporting Period
This Form 8-K, dated November 7, 2022, reports a material definitive agreement entered into by AVRA Medical Robotics, Inc. (the "Company"). The filing details a merger agreement with CardioVentures, Inc. ("SSI-DE"), a Delaware corporation controlled by Dr. Sudhir Srivastava. SSI-DE holds a controlling interest in Sudhir Srivastava Innovations Pvt. Ltd. ("SSI-India"), an Indian entity developing medical and surgical robotic systems. Upon consummation, the Company intends to change its name to "SS Innovations, Inc." and focus on expanding SSI-India's business.
Key Financial Metrics and Capital Structure
The filing does not provide historical revenue, profit, cash flow, or margin data for the Company or the target entity. Key financial terms related to the transaction and interim financing include:
- Interim Financing Advanced: $1,440,000 advanced to SSI-DE and affiliates as of the report date.
- Interim Financing Capacity: Up to an additional $5,000,000 may be advanced prior to the merger.
- Convertible Notes Issued: $1,600,000 in principal amount sold to three accredited investors to fund the interim financing ($1,000,000, $100,000, and $500,000).
- Debt Terms: Notes bear 7% annual interest with a 10% original issue discount (OID) for the initial tranche; additional notes over $2,000,000 would carry a 6% OID.
- Equity Structure Post-Merger: SSI-DE shareholders will own 95% of post-merger common stock; current AVRA shareholders will own 5%.
- Voting Control: New Series A Non-Convertible Preferred Stock will be issued to SSI-DE holders, granting 51.0% of total voting power.
Material Changes and Transaction Terms
The filing outlines a reverse merger structure with significant changes to the Company's corporate identity and capitalization:
- Corporate Actions: The Company must execute a 1-for-10 reverse stock split, increase authorized common stock to 250,000,000 shares, and change its name to "SS Innovations, Inc."
- Management Changes: Current directors and executive officers will resign, except for Barry Cohen, who will remain as a director and assume a new executive capacity. SSI-DE designees will populate the new board and management.
- Intellectual Property: Dr. Srivastava will assign the SSI Intellectual Property to AVRA or a subsidiary upon closing.
- Preferred Stock Features: The Series A Preferred Shares are not convertible, have no dividend rights, and possess a nominal liquidation preference. They are automatically redeemable if the holder's common stock ownership falls below 50%.
Guidance, Risks, and Contingencies
The transaction is subject to several conditions and risks:
- Closing Conditions: Consummation is contingent upon the name change, reverse stock split, stock authorization increase, and regulatory filings with FINRA and the Florida Secretary of State.
- Financing Risks: The interim financing notes contain default provisions. If not repaid at maturity, they convert into equity in SSI-DE based on a valuation of $100 million (or $250 million for notes exceeding $2,000,000).
- Future Financing: Both entities may seek additional equity or debt financing pending the merger.
- Management Commentary: Post-merger, the Company intends to focus significantly on expanding and developing the business of SSI-India.
Investor Verification Checklist
- Verify the execution of the 1-for-10 reverse stock split and the name change to "SS Innovations, Inc."
- Confirm the filing of the Issuer Company-Related Action Notification Form with FINRA and amendments to the Articles of Incorporation.
- Review the definitive Merger Agreement (Exhibit 2.1) for specific representations, warranties, and indemnification clauses.
- Monitor the status of the $1,440,000 interim financing and any additional advances up to the $5,000,000 limit.
- Assess the valuation implications of the note conversion triggers ($100 million vs. $250 million) should the merger not close or notes remain unpaid.