SSII SS Innovations International Inc (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended March 31, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-56608

SS INNOVATIONS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

405, 3rd Floor, iLabs Info Technology Centre

Udyog Vihar, Phase III

Gurugram, Haryana 122016, India

(Address of Principal Executive Offices)

+91 73375 53469

(Registrant’s telephone number, including area code) 

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files.) Yes ☐  No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

There were 170,739,381 shares of common stock, $0.0001 par value of the registrant issued and outstanding as of May 14, 2024.

When used in this report, unless otherwise indicated, the terms “SSi,” “the Company,” “we,” “us” and “our” refer to SS Innovations International, Inc.

EXPLANATORY NOTE

On May 3, 2024, the Securities and Exchange Commission (the “SEC”) entered an order barring BF Borgers CPA PC (“Borgers”), the Company’s independent registered public accounting firm, from appearing or practicing before the SEC as an accountant. As a result, Borgers could no longer act as the Company’s independent registered public accounting firm and effective May 13, 2024, the Company dismissed Borgers as its independent registered public accounting firm. The Company is currently in discussions with several firms with respect to their engagement as our new independent registered public accounting firm. However, as SSi has not completed that process, it is filing this Quarterly Report on Form 10-Q (this “Report”) without the required auditor review. The Company will amend this Report as soon as practicable following engagement of a new independent registered public accounting firm and completion of the required auditor review.

CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

Certain statements made in this Report are “forward-looking statements” regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth under the heading “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” in this report and under the headings “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

SS INNOVATIONS INTERNATIONAL, INC. F/K/A AVRA MEDICAL ROBOTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Item 1. Financial Statements. 

See accompanying notes to unaudited Condensed Consolidated Financial Statements

SS INNOVATIONS INTERNATIONAL, INC. F/K/A AVRA MEDICAL ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

SS INNOVATIONS INTERNATIONAL, INC. F/K/A AVRA MEDICAL ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND MARCH 31, 2023

(Unaudited)

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

SS INNOVATIONS INTERNATIONAL, INC. F/K/A AVRA MEDICAL ROBOTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

SS INNOVATIONS INTERNATIONAL, INC. F/K/A AVRA MEDICAL ROBOTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are a commercial-stage surgical robotics company focused on transforming patient lives by democratizing access to advanced surgical robotics technologies.

We design, manufacture and market an advanced, next-generation and affordable surgical robotic system called the SSi Mantra.

While surgical robotic systems have gained acceptance globally in the past two decades for providing greater efficiency, better clinical outcomes and reducing healthcare costs, access to such systems remains largely limited to developed countries such as the United States, the European Union and Japan.

With the SSi Mantra, we are breaking down barriers and accelerating access to surgical robotics technologies in underserved regions of the world.

Results of Operations 

Introduction

The financial statements appearing elsewhere in this report have been prepared assuming the Company will continue as a going concern. In the second half of 2022, the Company commercially launched its “SSi Mantra” robotic surgical system in India. As of March 31, 2024, we have sold 23 systems and in addition to these sold systems, we have also installed 5 systems on pay-per-use/revenue share basis, three systems are installed in three prominent hospitals in India for clinical evaluation and one system is installed at Johns Hopkins hospital for research and training purposes. As of March 31, 2024, we have a network of 32 systems within India and overseas. More than 1000 procedures of various types involving varying degrees of complexities have been performed on the systems installed in India.

The following table provides selected balance sheet data for our Company as of March 31, 2024, (unaudited) and December 31, 2023:

The Company has been consistently making efforts to raise debt and equity capital to meet the demands of further scaling up its growing operations. To date, the Company has relied on debt and equity raised in private offerings and shareholder loans to finance operations and no other sources of capital has been identified. If we experience a shortfall in operating capital, we could face slower revenue growth and we may be faced with having to slow down our expansion plans.

Three months ended March 31, 2024, 2023, as compared to three months ended March 31, 2023

Revenues. We had revenues of $6,851,058 for the three months ended March 31, 2024, compared to $ 1,511,379 for the three months ended March 31, 2023. The company sold 8 surgical robotic systems during the three months ended March 31, 2024, and in addition to the sale of these eight systems, the Company also installed a robotic system at a minimal access surgery training institute in India on revenue share basis.

Salary and Payroll Expense. We had salary and payroll expenses of $674,436 during the three months ended March 31, 2024, as compared to $357,674 for the three months ended March 31, 2023. This 89% y-o-y increase is mainly due to increase in manpower strength at our India manufacturing facility from 128 at the end of March 2023 to 237 at the end of March 2024.

Stock Compensation Expense. We had stock compensation expense of $1,937,202 for the three months period ended March 31, 2024, as against $1,592,309 for the three months ended March 31, 2023. This includes stock-based compensation expenses related to the Company’s 2016 Stock Incentive Plan.

Selling, General and Administrative Expenses. We incurred $2,611,019 and $1,490,414 in selling, general and administrative expenses during the three months ended March 31, 2024, and March 31, 2023, respectively. General and administrative expenses mainly include travel expenses, marketing and business promotions expenses, legal and other professional expenses including the expenses related to the Company’s filings as a public company with the Securities and Exchange Commission (the “SEC”). The y-o-y increase of about 75% in selling, general and administration expenses is mainly due to increased marketing and business promotion expenses to expand our system installed base across India. We also organized a global robotics conference in New Delhi, India in the month of Jan 2024 involving significant expense which also led to this increase in Selling, General and Administrative expenses, year on year basis.

Other Income/Expenses. We incurred other expenses of $80,271 for the three months ended March 31, 2024, as compared to $29,510 of other income during the three months ended March 31, 2023, Other expenses consist mainly of interest expenses related to bank overdraft and other income mainly consist of interest earned on fixed deposits.

Net Loss. We incurred a net loss of $2,798,448 for the three months ended March 31, 2024, as compared to a net loss of $2,992,362 for the three months ended March 31, 2023.

Liquidity and Capital Resources

The Company expects to require substantial funds for expansion of its manufacturing capacity through the installation of additional machinery and equipment, bulk ordering of components for use in manufacturing of its final products, conducting global clinical trials to meet various regulatory requirements, lease of additional office and manufacturing space, augmenting working capital and establishing regional marketing offices. To meet these fund requirements, the company is making efforts to raise long term funds by way of equity or loans.

Between February 1, 2024, and February 14, 2024, the Company raised $2.45 million through a private offering of 7% One-Year Convertible Promissory Notes (“Notes”) from two affiliates ($1,000,000 each) and $450,000 from three other investors to finance its ongoing working capital requirements.

These Notes are payable in full after 12 months from the respective date of issuance of these Notes and are convertible at the election of noteholder at any time through the maturity date at a per share price of $4.45.

On February 14, 2024, the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission with respect to a proposed public offering of our common stock.

In April 2024, the Company has raised US$2.00 Million from Sushruta Pvt Ltd. by issuance of two, One-Year 7% Promissory Notes of US$ 1.00 Million each, to meet certain working capital needs.

While we have been successful in raising funds to meet our working capital needs to date, believe that we have the resources to do so for the balance, we do not have any committed sources of funding and there are no assurances that we will be able to secure additional funding if and when needed. The condensed consolidated financial statements included in this report have been prepared assuming that the Company will continue as a going concern; however, if the efforts noted above are not successful, it would raise substantial doubt about the Company’s ability to continue as a going concern. If we cannot obtain financing, then we may be forced to further curtail our operations or consider other strategic alternatives. Even if we are successful in raising the additional financing, there is no assurance regarding the terms of any additional investment and any such investment or other strategic alternative would likely substantially dilute our current shareholders.

Cash Flows used in Operating Activities

During the three months ended March 31, 2024, net cash provided by operating activities was $1,338,218 resulting from our net loss of $2,798,448 partially offset by non-cash charges of $1,980,537 comprising of depreciation, stock compensation expense and translation adjustment and movement of $2,156,128 in net operating assets and liabilities comprising mainly of prepaid expenses and other current assets and accounts payable and accrued expenses.

During the three months ended March 31, 2024, net cash used by operating activities was $173,553, resulting from our net loss of $2,992,362, partially offset by non-cash expenses of $1,599,972 and movement of $1,218,838 in net operating assets and liabilities comprising mainly of accounts payable and accrued expenses.

Cash Flows from Investing Activities

During the three months ended March 31, 2024, we had net cash used in investing activities of $4,207,606 which is the net result of $1,245,508 towards net additions in equipment and right-of-use assets and $2,962,098 towards increase in loans and advances and long-term receivables.

During the three months ended March 31, 2023, we had $2,000,000 as reduction in Notes Receivables.

Cash Flows from Financing Activities

During the three months ended March 31, 2024, we had $2,739,507 of net cash provided by financing activities including $2,450,000 in proceeds from Notes Payables, $101,249 in securities offering, and $188,259 as increase in bank overdraft.

During the three months ended March 31, 2023, we had $1,433,828 of net cash provided by financing activities comprising of $446,188 in securities offering, $1,000,000 from 7% convertible promissory notes and repayment of warrants of $12,360.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates included deferred revenue, costs incurred related to deferred revenue, the useful lives of property and equipment and the useful lives of intangible assets.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes.  Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws.  Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year.  In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies.  If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required.  Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.  For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative Disclosures About Market Risks.

As a “smaller reporting company,” we are not required to provide the information required by this Item.  

Item 4. Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2024, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level in that:

Notwithstanding the foregoing, over the last year, we have been addressing and remediating these weaknesses with the support and assistance of the accounting and financial staff of our Indian operating subsidiary (“SSI-India”). We have also begun to implement a new ERP system at SSI-India which will integrate all business functions within the accounting and financial department to further address the abovementioned weaknesses. Some of the functional modules like Human Resource Management, Suppliers Chain Management, Production and material management have already been rolled out on test basis while work on other ERP modules is currently in progress.

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of any control system is subject to resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Other than with respect to legal proceedings previously reported in our filings under the Exchange Act, there are no legal proceedings currently pending or threatened against us. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.

Item 1A. Risk Factors.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.