Filing summary
Entity and period: The supplied filing is AVRA Medical Robotics, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2018, not a filing identified in the request metadata as SS Innovations International, Inc. Verify the issuer before relying on this summary.
Business context
AVRA was developing a prototype robotic system for minimally invasive facial procedures in collaboration with the University of Central Florida. The company reported no products or training programs approved or ready for retail marketing and had not established revenue-generating operations.
Financial performance and position
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | $0 in 2018 and 2017 | $0 in 2018 and 2017 |
| Operating expenses | $297,281 in 2018; $171,075 in 2017 | $741,238 in 2018; $536,797 in 2017 |
| Net loss | $297,272 in 2018; $180,067 in 2017 | $741,185 in 2018; $563,759 in 2017 |
| Loss per share, basic and diluted | $0.01 in both periods | $0.04 in 2018; $0.03 in 2017 |
- Third-quarter G&A was $294,621, up from $165,008; nine-month G&A was $722,297, up from $479,589. Management attributed increases principally to management compensation, public-company legal and professional costs, and stock-based compensation.
- R&D expense declined to $18,941 for the nine months from $57,208, which management attributed to completion of the first phase of UCF research. Third-quarter R&D was $2,660 versus $6,067.
- Cash and cash equivalents were $100,182 at September 30, 2018, down from $452,572 at December 31, 2017. Total assets were $216,413; current liabilities were $480,619; and stockholders’ deficit was $264,206. The resulting working-capital deficit was $374,608.
- Nine-month operating cash use was $348,822, investing cash use was $23,568, and financing provided $20,000. Cash decreased by $352,390. The filing reports no cash paid for interest or income taxes during the period.
- The balance sheet lists a $202,125 current “Stock Liability” and $274,494 in accrued expenses, including $258,000 of accrued officer compensation. The $480,000 convertible notes described in the notes had converted into common shares in 2017; the filing does not identify outstanding promissory-note debt at September 30, 2018.
Changes, outlook, and risks
- Compared with 2017, nine-month net loss widened by $177,426, primarily alongside higher G&A; R&D declined. The company continued to report no revenue.
- Management said substantial additional funding would be needed for research and development and operations. It planned to seek financing through securities sales and potentially development partnerships, but reported no committed funding sources. Failure to obtain funding could require further curtailment or strategic alternatives; new financing could substantially dilute existing shareholders.
- The filing states that the company had not established sufficient operations or revenue to sustain itself and that these conditions raised substantial doubt about its ability to continue as a going concern. Management expressed confidence in raising funds but gave no assurance of success.
- Product-development and commercialization timing remained uncertain; management warned that delays in market readiness could substantially harm prospects. The UCF research grant was subject to obligations, and failure to meet them could result in loss of grant funding. A 1% royalty to UCF applies in any year when sales of products using the intellectual property exceed $20 million.
- Disclosure controls and procedures were reported not effective at the reasonable-assurance level due to material weaknesses identified in the 2017 Form 10-K. No material change in internal control over financial reporting during the quarter was reported.
- Subsequent to quarter-end, the board authorized restricted shares for services and 16,000 shares associated with a subscription. The filing also says shares for the August 2018 sale were not issued by September 30.
Most important facts to verify
- Confirm the issuer: the filing names AVRA Medical Robotics, Inc., while the request metadata names SS Innovations International, Inc.
- Confirm the company’s cash runway, financing plans, and the status and terms of any post-quarter-end share issuances.
- Review the going-concern disclosure and the nature and remediation status of the material weaknesses in disclosure controls.
- Reconcile the filing’s stock-compensation figures: the cash-flow statement reports $128,886, while the stock-option note reports $149,886 for nine-month 2018 compensation.
- Assess accrued officer compensation, the “Stock Liability,” and potential dilution from outstanding options and future financing.