SS Innovations International Inc(SSII) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements For the nine months ended September 30, 2023, the company reported initial revenues of $4.5 million, a net loss of $4.8 million, and significant balance sheet growth driven by a merger and debt-to-equity conversion Condensed Consolidated Balance Sheets As of September 30, 2023, the company's financial position significantly strengthened, with total assets increasing to $24.1 million and stockholders' equity growing to $15.76 million, primarily due to capital contributions and debt conversion Condensed Consolidated Balance Sheet Data (as of Sep 30, 2023 vs. Dec 31, 2022) | Balance Sheet Item | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $19,328,031 | $4,360,042 | | Total Assets | $24,058,996 | $4,371,441 | | Total Current Liabilities | $8,296,341 | $4,051,229 | | Total Liabilities | $8,296,341 | $4,051,229 | | Total Stockholders' Equity | $15,762,655 | $320,213 | Condensed Consolidated Statements of Operations The company began generating revenue in 2023, recording $1.43 million for Q3 and $4.52 million for the first nine months, yet net losses widened significantly due to increased operating expenses post-merger Operating Results for the Three Months Ended September 30 | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $1,429,772 | $0 | | Gross Profit | $159,844 | $0 | | Loss from Operations | ($1,972,462) | ($900,145) | | Net Loss | ($1,983,940) | ($790,104) | Operating Results for the Nine Months Ended September 30 | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $4,516,458 | $0 | | Gross Profit | $895,182 | $0 | | Loss from Operations | ($4,637,136) | ($1,150,632) | | Net Loss | ($4,822,406) | ($1,040,525) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, cash used in operating and investing activities was offset by $24.0 million from financing, primarily debt conversion, resulting in a $5.2 million increase in cash to $6.6 million Cash Flow Summary for the Nine Months Ended September 30 | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($13,831,054) | ($303,711) | | Net cash used in investing activities | ($4,946,786) | $0 | | Net cash provided by financing activities | $24,022,701 | $412,080 | | Net change in cash | $5,244,861 | $108,369 | | Cash at end of period | $6,596,224 | $514,143 | Notes to Condensed Consolidated Financial Statements The notes detail the company's transformation post-merger with CardioVentures, the commercial launch of its 'SSI Mantra' system, the $16.98 million debt-to-equity conversion, and the deferral of $1.36 million in warranty revenue under ASC 606 - On April 14, 2023, the company merged with CardioVentures, Inc., resulting in a 'change in control', a name change to 'SS Innovations International, Inc.', and a one-for-ten reverse stock split[21][59] - The company commercially launched its 'SSI Mantra' surgical robotic system in late 2022 and has sold twelve systems as of September 30, 2023, including its first export sale to Dubai[24] - A convertible promissory note with Sushruta Pvt Ltd. (SPL), a holding company of the CEO, allowed for up to $20 million in advances, with $16,980,000 converted into 22,945,946 shares of common stock at $0.74 per share on September 27, 2023[25][56][70] - Due to the application of ASC 606, $1,355,448 in revenue attributable to warranties was deferred for recognition over the period to which it relates, reducing reported revenue for the nine-month period[41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a commercial-stage medical robotics firm, reporting initial revenues of $4.5 million and a net loss of $4.8 million for the nine months ended September 30, 2023, while liquidity improved significantly due to a $17.0 million debt-to-equity conversion Results of Operations Commercial sales of the 'SSI Mantra' system generated $1.43 million in Q3 2023 and $4.52 million for the first nine months, but increased operating expenses led to a higher net loss of $4.8 million for the nine-month period - In Q3 2023, the company sold 3 surgical robotic systems and installed two additional systems on a pay-per-use basis[92] Comparison of Nine Months Ended September 30 (2023 vs. 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $4,516,458 | $0 | | Salaries, Payroll & Compensation Expense | $3,886,197 | $819,732 | | General & Administrative Expenses | $1,646,121 | $330,900 | | Net Loss | ($4,822,406) | ($1,040,525) | Liquidity and Capital Resources The company's liquidity significantly improved in Q3 2023, with a $16.98 million debt-to-equity conversion boosting stockholders' equity to $15.76 million and creating an $11.03 million working capital surplus, though substantial future funding is still required - A convertible note with the CEO's holding company, SPL, was fully converted into equity, with $16,980,000 in advances converted into 22,945,946 shares at $0.74 per share on September 27, 2023[101] - As of September 30, 2023, the company had stockholders' equity of $15.76 million and a working capital surplus of $11.03 million, a significant improvement from a working capital deficit of $2.88 million at the end of Q2 2023[102] - Management states that while successful in raising funds to date, there are no committed future funding sources, raising substantial doubt about the company's ability to continue as a going concern without new financing[103] Quantitative Disclosures About Market Risks The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company," the company is not required to provide the information required by this Item[115] Controls and Procedures As of September 30, 2023, management concluded that disclosure controls and procedures were ineffective due to previously identified material weaknesses, with remediation efforts underway including a new CFO appointment - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2023, the company's disclosure controls and procedures were not effective at a reasonable assurance level[116] - The ineffectiveness is attributed to material weaknesses identified in the 2022 Form 10-K, with remediation efforts commencing, including the appointment of a new CFO and utilization of SSI-India's financial staff[116] PART II - OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings - Not Applicable[121] Risk Factors As a "smaller reporting company," the company is not required to provide this information - As a "smaller reporting company," the company is not required to provide the information required by this Item[122] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - None[123] Other Information The company reports no other information - None[126] Exhibits This section lists the exhibits filed with the report, including CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL data files - Exhibits filed include Section 302 and 906 certifications by the CEO and CFO, and various Inline XBRL documents[127]