Business context and reporting period
This summary covers the unaudited Form 10-Q for the quarter and nine months ended September 30, 2019. The supplied filing identifies the registrant as Avra Medical Robotics, Inc., not SS Innovations International, Inc.; verify the filing/company match.
Avra is a development-stage medical robotics company focused initially on an autonomous, AI-guided system for aesthetic skin resurfacing. It reported no revenue and remains dependent on external financing.
Financial performance and position
- Revenue: $0 for both the third quarter and nine-month periods in 2019 and 2018. Gross margin is not meaningful with no reported revenue.
- Net loss: $1,071,665 in Q3 2019 versus $297,272 in Q3 2018; $1,772,380 for nine months 2019 versus $741,185 for nine months 2018. Basic and diluted loss per share was $0.05 and $0.08, respectively, in 2019, versus $0.01 and $0.04.
- Expenses: Nine-month operating expenses were $1,758,244, including $1,701,870 of general and administrative expense and $56,374 of research and development. Interest expense was $14,142 for the nine-month period. Management attributed much of the expense and loss increase to stock-based compensation.
- Cash flow: Nine-month operating cash use was $304,127, investing cash use was $75,122, and financing provided $373,500. Cash decreased $5,749 to $29,967.
- Liquidity and liabilities: Current assets were $36,257 against current liabilities of $1,069,042, a working-capital deficit of $1,032,785. Current liabilities included $272,500 of related-party notes and $105,492 of promissory notes, net of discount. Total assets were $187,893; shareholders’ deficit was $881,149.
- Equity and noncash items: Common shares outstanding rose to 22,107,218 from 21,007,446 at year-end 2018. The cash-flow statement reports $719,944 of stock compensation expense and $1,112,216 of stock issued for services as noncash financing activity for the nine months.
Material changes versus the prior comparable period
- Nine-month net loss increased by about $1.03 million year over year; general and administrative expense increased from $722,297 to $1,701,870, while research and development increased from $18,941 to $56,374.
- Cash at period-end fell from $100,182 at September 30, 2018 to $29,967 at September 30, 2019. Operating cash use was lower than the prior-year nine-month period ($304,127 versus $348,822), with financing inflows in 2019 primarily from shareholder loans and promissory notes.
- Current liabilities increased from $449,783 at December 31, 2018 to $1,069,042 at September 30, 2019; accumulated deficit grew to $4,255,473.
Outlook, risks, contingencies and unusual items
- Going concern: The filing says the company has no established ongoing revenue source sufficient to cover operating costs, depends on debt and equity financing, and faces substantial doubt about its ability to continue as a going concern. It has no committed funding source; failure to raise capital could require curtailed research and development or other strategic alternatives, and new financing could substantially dilute shareholders.
- Development and regulation: Management says the prototype design is substantially complete and describes an FDA pre-collaboration meeting held August 12, 2019. FDA clearance/approval, development completion, commercialization timing, and market access remain uncertain; claimed expedited regulatory pathways and anticipated market entry are expectations, not assured outcomes.
- Collaboration: A September 10, 2019 agreement with Infinite Mind, LLC provides Avra an exclusive, worldwide, paid-up, perpetual, royalty-free license to commercialize specified medical-robotics technology. The filing notes that Avra’s CEO is an owner of Infinite Mind, creating a relationship investors may wish to review.
- Financing and dilution: The company obtained multiple CEO loans during 2019, including a $100,000 non-interest-bearing note in August. After quarter-end, it borrowed another $30,000 from its CEO on October 11, 2019, due March 11, 2020. The filing also describes short-term notes and warrants issued with certain loans.
- Controls: Management concluded disclosure controls and procedures were not effective as of September 30, 2019 because of material weaknesses identified in the 2018 Form 10-K. No material changes to internal control over financial reporting were reported during the quarter.
- Other commitments: The UCF research agreement runs through April 30, 2021; a 1% royalty applies in any year when sales of products using the related intellectual property exceed $20 million. The filing reports no material off-balance-sheet arrangements and no legal proceedings.
Important facts for investors to verify
- Confirm that this Avra Medical Robotics filing is the intended company filing, given the SS Innovations International metadata.
- Review the company’s cash runway, near-term note maturities, related-party borrowing, and ability to raise additional capital.
- Assess the nature and recurrence of stock-based compensation and stock issued for services, and their effects on reported losses and dilution.
- Verify FDA requirements, development milestones, commercialization assumptions, and the status and terms of the Infinite Mind relationship.
- Review the 2018 Form 10-K risk factors and material weaknesses referenced in this filing.