SS Innovations International Inc(US:SSII)2024-11-14 14:21PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited financial statements for September 30, 2024, reflect significant revenue growth but a substantial net loss increase, with all figures subject to restatement pending a reaudit - The company is undergoing a reaudit of its FY2022 and FY2023 financial statements by BDO India LLP, with previously issued statements for these periods and interim 2023/Q1 2024 statements subject to restatement and not to be relied upon91112 - This quarterly report is filed without auditor review to comply with Over-the-Counter Market requirements and will be amended upon audit completion14 Condensed Consolidated Balance Sheets As of September 30, 2024, total assets increased to $37.8 million while total liabilities more than doubled to $23.9 million, leading to a decrease in stockholders' equity Condensed Consolidated Balance Sheet Data (as of Sep 30, 2024 vs. Dec 31, 2023) | Balance Sheet Item | Sep 30, 2024 | Dec 31, 2023 (Restated) | | :--- | :--- | :--- | | Total Assets | $37,811,974 | $30,825,337 | | Cash and cash equivalents | $220,364 | $2,022,276 | | Inventory | $9,190,414 | $6,327,256 | | Total Liabilities | $23,919,989 | $11,797,914 | | Total Current Liabilities | $18,941,275 | $8,473,718 | | Notes Payable | $4,950,000 | $0 | | Total Stockholders' Equity | $13,891,985 | $19,027,423 | Condensed Consolidated Statements of Operations For the three and nine months ended September 30, 2024, revenues significantly increased, but net losses widened substantially due to a massive rise in operating expenses, notably a $6.6 million stock compensation expense Operating Results (Nine Months Ended Sep 30) | Metric | 2024 | 2023 (Restated) | | :--- | :--- | :--- | | Total Revenues | $15,025,717 | $4,866,287 | | Gross Profit | $5,419,839 | $751,462 | | Total Operating Expenses | $16,767,142 | $4,185,959 | | Stock Compensation Expense | $6,586,381 | $0 | | Operating Loss | ($11,347,303) | ($3,434,497) | | Net Loss | ($11,699,076) | ($4,060,806) | | Net loss per share | ($0.07) | ($0.04) | Operating Results (Three Months Ended Sep 30) | Metric | 2024 | 2023 (Restated) | | :--- | :--- | :--- | | Total Revenues | $3,408,706 | $1,779,602 | | Gross Profit | $1,302,677 | $16,124 | | Total Operating Expenses | $7,238,746 | $785,946 | | Stock Compensation Expense | $3,337,465 | $0 | | Operating Loss | ($5,936,069) | ($769,822) | | Net Loss | ($6,119,381) | ($1,222,340) | | Net loss per share | ($0.04) | ($0.01) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash used in operating activities improved to $5.5 million, while financing activities provided $6.0 million, resulting in an overall cash decrease of $1.2 million Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2024 | 2023 (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,474,776) | ($12,128,972) | | Net cash used in investing activities | ($1,655,495) | $629,247 | | Net cash provided by financing activities | $6,019,381 | $23,043,941 | | Net change in cash | ($1,110,890) | $11,544,216 | Notes to Condensed Consolidated Financial Statements The notes detail significant events, accounting policies, and financial breakdowns, including the reverse merger, going concern assumption, new debt financing, related-party transactions, and a subsequent legal proceeding - The company has a working capital surplus of $7.7 million but an accumulated deficit of $41.9 million as of September 30, 2024, with management asserting going concern based on product sales and recent fundraising343536 - In 2024, the company raised $4.95 million in short-term funds, including $2.5 million from a related party controlled by the CEO3839101 - A legal proceeding was initiated in April 2024 against a downstream subsidiary by an ex-shareholder claiming a 9% interest, with the company believing the outcome will be favorable and having an indemnification agreement with the CEO123169170 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased sales of its SSi Mantra system, noting significant revenue growth for 2024, but also a sharp rise in operating expenses, leading to larger net losses and a reliance on uncommitted debt financing for expansion - The company is a commercial-stage surgical robotics firm marketing the SSi Mantra system, aiming to provide an affordable alternative in underserved global regions124126 - As of September 30, 2024, 40 SSi Mantra systems have been sold, 5 installed on pay-per-use, and 2 are under clinical evaluation, with over 2,000 procedures performed in India129 - Regulatory approvals have been secured in India, Indonesia, Nepal, Guatemala, and Ecuador, with US and EU approvals anticipated in late 2025128 Results of Operations Revenues for the three and nine months ended September 30, 2024, grew substantially due to increased sales, but escalating operating expenses, including a $6.6 million stock compensation expense, led to a widened net loss of $11.7 million for the nine-month period Comparison of Revenues (Nine Months Ended Sep 30) | Period | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $15,025,717 | $4,866,287 | - The increased net loss for both periods in 2024 is primarily due to significant, non-recurring stock compensation expenses of $3.3 million and $6.6 million, respectively133138141 - General & Administrative (G&A) expenses for the nine months ended September 30, 2024, increased to $7.4 million from $3.3 million due to increased operational scale, staff growth, and expanded marketing efforts143145 Liquidity and Capital Resources The company requires substantial funds for expansion, having raised $4.95 million in debt during 2024, but lacks committed funding sources, potentially leading to curtailed expansion or dilutive new investments if further financing is not secured - The company has relied on private debt and equity offerings, raising $4.95 million in 2024 through one-year promissory notes, including $2.5 million from a related party controlled by the CEO130149150 - The company has no committed funding sources and may be forced to curtail expansion plans if adequate financing is not obtained, raising going concern considerations151 Item 3. Quantitative Disclosures About Market Risks As a "smaller reporting company," the company is exempt from providing quantitative disclosures about market risks - The company is exempt from providing quantitative disclosures about market risks as it qualifies as a "smaller reporting company"160 Item 4. Controls and Procedures As of September 30, 2024, the CEO and CFO concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, prompting remediation efforts including a new ERP system - Management concluded that disclosure controls and procedures and internal control over financial reporting were not effective as of September 30, 2024163 - Material weaknesses identified in internal controls include improper U.S. GAAP application, lack of written policies, and insufficient segregation of duties167 - Remediation efforts are underway, including enhancing transaction review processes, engaging external experts, and implementing a new ERP system164 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company discloses ongoing litigation in the Bahamas involving its subsidiary, Otto Pvt Ltd., where an ex-shareholder claims a 9% ownership stake, with the CEO providing an indemnification agreement - A lawsuit was filed in the Bahamas against the company's subsidiary, Otto, by an ex-shareholder claiming a 9% interest, with the CEO filing a counter-action to confirm share cancellation169 - The CEO entered into an Indemnification Agreement on October 12, 2024, to cover any claims, damages, and costs arising from this litigation170 Item 1A. Risk Factors As a "smaller reporting company," the company is exempt from providing risk factor disclosures - The company is exempt from providing risk factor disclosures in this report as it qualifies as a "smaller reporting company"171 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In September 2024, the company issued 125,000 shares of common stock in a private transaction to five doctors/proctors in India for their ongoing support in surgeon training and proctoring - The company issued 125,000 shares of common stock to five doctors/proctors in India in a private transaction in September 2024 as consideration for training and proctoring services172 Item 3. Defaults Upon Senior Securities No defaults upon senior securities are reported Item 4. Mine Safety Disclosures This item is not applicable to the company's operations Item 5. Other Information No other material information is reported Item 6. Exhibits The report includes various exhibits, such as Section 302 and 906 certifications by the CEO and CFO, and Inline XBRL data files