SS Innovations International, Inc. 10-Q/A

Item 1. Financial Statements As of June 30, As of December 31, Notes 2023 2022 (As Restated) ASSETS Current Assets: Cash and cash equivalents 6 423,062 217,177 Restricted cash 6 43,284 57,448 Accounts receivable, net 5 611,707 156,857 Receivable from related party 14 727,598 1,628,839 Inventory, net 3,965,750 904,103 Prepaids and other current assets 7 1,876,290 1,130,811 Total Current Assets 7,647,691 4,095,235 Non- Current Assets: Property, plant, and equipment, net 3 455,493 417,014 Right of use asset 15 2,598,135 1,498,109 Accounts receivable, net 5 1,512,742 886,263 Restricted cash 6 60,593 - Prepaids and other non current assets 7 155,164 83,912 Total Non-Current Assets 4,782,127 2,885,298 Total Assets 12,429,818 6,980,533 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current Liabilities Bank overdraft facility 10 4,965,744 3,123,046 Notes payable 9 1,225,000 3,000,000 Current maturities of long-term debt 11 - 120,880 Current portion of operating lease liabilities 15 258,774 181,900 Accounts payable 8 725,822 165,477 Payable to related party 14 - 675,013 Deferred revenue 12 37,630 1,776 Other accrued liabilities 8 820,510 498,097 Total Current Liabilities 8,033,480 7,766,189 Operating lease liabilities, less current portion 15 2,408,017 1,371,097 Deferred revenue 12 348,993 42,141 Other accrued liabilities 8 29,234 10,626 Long-term borrowings, less current portion 11 493,998 469,017 Total Non-Current Liabilities 3,280,242 1,892,881 Total Liabilities 11,313,722 9,659,070 Stockholders’ (deficit) equity: Preferred stock, authorized 5,000,000 shares of Series A, Non-Convertible Preferred Stock, $ 0.0001 par value per share; 5,000 shares and nil shares issued and outstanding as of June 30, 2023 and December 31, 2022 respectively 13 1 - Common stock, 250,000,000 shares authorized, $ 0.0001 par value, 146,172,443 shares and 128,161,013 shares issued and outstanding as of June 30, 2023 and December 31, 2022 respectively 13 14,618 12,817 Non-controlling interest 13 - - Accumulated other comprehensive income (loss) ( 9,368 ) 54,599 Additional paid in capital 13 10,681,490 ( 12,812 ) Capital reserve 899,917 899,917 Accumulated deficit ( 10,470,562 ) ( 3,633,058 ) Total stockholders’ (deficit) equity 1,116,096 ( 2,678,537 ) Total liabilities and stockholders’ (deficit) equity 12,429,818 6,980,533 See accompanying notes to Condensed Consolidated Financial Statements 1 SS INNOVATIONS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) For The Three Month Ended June 30, Notes 2023 2022 (As Restated) (As Restated) REVENUES System sales 12 1,424,783 - Instruments sale 12 467,030 - Total revenue 1,891,813 - Cost of revenue ( 1,124,116 ) - GROSS (LOSS) PROFIT 767,697 - OPERATING EXPENSES: Research & development expense 246,426 337,407 Stock compensation expense 8,150 - Depreciation and amortization expense 3 34,466 23,302 Selling, general and administrative expense 5,669,790 364,345 TOTAL OPERATING EXPENSES 5,958,832 725,054 Loss from operations ( 5,191,135 ) ( 725,054 ) OTHER INCOME (EXPENSE): Interest expenses ( 365,205 ) ( 28,821 ) Interest and other income, net 31,852 1,850 TOTAL OTHER (EXPENSE) INCOME ( 333,353 ) ( 26,971 ) LOSS BEFORE INCOME TAXES ( 5,524,488 ) ( 752,025 ) Income tax expense - - NET LOSS ( 5,524,488 ) ( 752,025 ) Net loss per share - basic and diluted 2(p) ( 0.04 ) ( 0.01 ) Weighted average-basic shares 2(p) 143,599,382 128,256,013 Weighted average-diluted shares 2(p) 143,736,382 128,256,013 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS June 30, June 30, 2023 2022 (As Restated) (As Restated) NET LOSS ( 5,524,488 ) ( 752,025 ) OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation (loss) ( 20,890 ) ( 16,190 ) Retirement benefit (net of tax) 1,246 ( 10 ) TOTAL COMPREHENSIVE LOSS ( 5,544,132 ) ( 768,225 ) See accompanying notes to Condensed Consolidated Financial Statements. 2 SS INNOVATIONS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) For The Six Month Ended June 30, Notes 2023 2022 (As Restated) (As Restated) REVENUES System sales 12 1,780,197 - Instruments sale 12 481,736 - Total revenue 2,261,933 - Cost of revenue ( 1,416,289 ) - GROSS (LOSS) PROFIT 845,644 - OPERATING EXPENSES: Research & development expense 488,553 799,917 Stock compensation expense 8,150 - Depreciation and amortization expense 3 67,057 47,033 Selling, general and administrative expense 6,543,648 809,217 TOTAL OPERATING EXPENSES 7,107,408 1,656,167 Loss from operations ( 6,261,764 ) ( 1,656,167 ) OTHER INCOME (EXPENSE): Interest expenses ( 621,875 ) ( 46,860 ) Interest and other income, net 46,135 3,739 TOTAL OTHER (EXPENSE) INCOME ( 575,740 ) ( 43,121 ) LOSS BEFORE INCOME TAXES ( 6,837,504 ) ( 1,699,288 ) Income tax expense - - NET LOSS ( 6,837,504 ) ( 1,699,288 ) Net loss per share – basic and diluted 2(p) ( 0.05 ) ( 0.01 ) Weighted average-basic shares 2(p) 135,965,966 128,256,013 Weighted average-diluted shares 2(p) 136,102,966 128,256,013 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS June 30, June 30, 2023 2022 (As Restated) (As Restated) NET LOSS ( 6,837,504 ) ( 1,699,288 ) OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation (loss) ( 69,513 ) ( 29,627 ) Retirement benefit (net of tax) 5,546 ( 1,969 ) TOTAL COMPREHENSIVE LOSS ( 6,901,471 ) ( 1,730,884 ) See accompanying notes to Condensed Consolidated Financial Statements. 3 SS INNOVATIONS INTERNATIONAL, INC. CONDENSED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023, AND JUNE 30, 2022 (Unaudited) Preferred Stock Common Stock Additional Paid-In Accumulated Capital Accumulated other comprehensive Non Controlling Total Stockholders’ Notes Number Amount Number Amount Capital Deficit Reserve income (loss) Interest Equity BALANCE AT DECEMBER 31, 2022 - - 128,161,013 12,817 ( 12,812 ) ( 3,633,058 ) 899,917 54,599 - ( 2,678,537 ) Net loss - - - - - ( 1,313,016 ) - ( 44,322 ) - ( 1,357,338 ) BALANCE AT MARCH 31, 2023 - - 128,161,013 12,817 ( 12,812 ) ( 4,946,074 ) 899,917 10,277 - ( 4,035,875 ) Preferred stock issued 4 5,000 1 - - ( 1 ) - - - - - Reverse recapitalization 4 - - 6,545,531 655 ( 655 ) - - - - - Conversion of notes payable to equity 4 - - 7,647,871 765 6,137,773 - - - - 6,138,538 Stock issued for services 4 - - 3,818,028 382 4,463,417 - - - - 4,463,799 Stock compensation expense - - - - 8,150 - - - - 8,150 Shares to be issued for services - - - - 85,616 - - - - 85,616 Net loss - - - - - ( 5,524,488 ) - ( 19,645 ) - ( 5,544,133 ) BALANCE AT JUNE 30, 2023 5,000 1 146,172,443 14,618 10,681,490 ( 10,470,562 ) 899,917 ( 9,368 ) - 1,116,096 BALANCE AT DECEMBER 31, 2021 - - 100,000 10 99,990 ( 419,176 ) 899,917 5,222 ( 352 ) 585,611 Retroactive application of recapitalization - - 128,156,013 12,816 ( 12,816 ) - - - - - Net loss - - - - - ( 947,263 ) - ( 15,396 ) - ( 962,659 ) BALANCE AT MARCH 31, 2022 - - 128,256,013 12,826 87,174 ( 1,366,439 ) 899,917 ( 10,174 ) ( 352 ) ( 377,048 ) Net loss - - - - - ( 752,025 ) - ( 16,200 ) - ( 768,225 ) BALANCE AT JUNE 30, 2022 - - 128,256,013 12,826 87,174 ( 2,118,464 ) 899,917 ( 26,374 ) ( 352 ) ( 1,145,273 ) See accompanying notes to Condensed Consolidated Financial Statements. 4 SS INNOVATIONS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For The Six Month Ended June 30, 2023 2022 (As Restated) (As Restated) Cash flows from operating activities: Net loss ( 6,837,504 ) ( 1,699,288 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation & amortization 67,057 47,033 Operating lease expense 13,777 13,899 Stock compensation expense 8,150 - Share issue to investor and advisors 4,463,799 - Interest expense (net) 575,740 43,121 Changes in operating assets and liabilities: Accounts receivable, net ( 1,040,193 ) ( 100,000 ) Inventory, net ( 3,061,647 ) ( 200,352 ) Receivables from / payable to related parties 226,228 745,253 Deferred revenue 342,706 - Prepaids and other current assets ( 962,286 ) 79,637 Accounts payable 560,346 ( 18,659 ) Prepaids and other non current assets ( 73,700 ) ( 3,762 ) Other accrued liabilities 341,021 ( 86,853 ) Net cash used in operating activities ( 5,376,506 ) ( 1,179,971 ) Cash flows from investing activities: Purchase of / proceeds from sale of property, plant and equipment ( 105,536 ) 381,778 Net cash (used in) / provided by investing activities ( 105,536 ) 381,778 Cash flows from financing activities: Proceeds from issuance of convertible notes to other investors 3,000,000 - Proceeds from issuance of convertible notes to principal shareholder 1,225,000 - Proceeds from bank overdraft facility (net) 1,677,577 897,979 Repayment of term loan ( 142,895 ) ( 88,568 ) Net cash provided by financing activities 5,759,682 809,411 Net change in cash 277,640 11,218 Effect of exchange rate on cash ( 25,326 ) ( 27,011 ) Cash at beginning of year¹ 274,625 87,709 Cash at end of year¹ 526,939 71,916 1 For cash and cash equivalents and restricted cash, refer Note 6 Supplemental disclosure of cash flow information: Conversion of convertible notes into common stock 6,138,538 - See accompanying notes to Condensed Consolidated Financial Statements. 5 SS INNOVATIONS INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – FINANCIAL STATEMENTS Organization SS Innovations International, Inc. (the “ Company ” or “ SSII ”) was incorporated as AVRA Surgical Microsystems, Inc. in the State of Florida on February 4, 2015. Effective November 5, 2015, the Company’s corporate name was changed to Avra Medical Robotics, Inc. (AVRA). On April 14, 2023, a wholly owned subsidiary of the Company, AVRA-SSI Merger Corporation (Merger Sub) merged with CardioVentures, Inc., a Delaware corporation (“ CardioVentures ”), the indirect parent of Sudhir Srivastava Innovations Pvt. Ltd., an Indian private limited company engaged in the business of developing innovative surgical robotic technologies. As a result of the transaction, a “ change in control ” of the Company took place. In addition, among other matters, the Company changed its name to “ SS Innovations International, Inc. ” and implemented a one for ten reverse stock split. The financial statements, financial information, share and per share information contained in this report reflect the operations of both the Company and CardioVentures and give actual effect to the reverse stock split. The Transaction (Note 4) was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method, AVRA was treated as the “acquired” company (“Accounting Acquiree”) and Cardio Ventures Inc., the accounting acquirer, was assumed to have issued stock for the net assets of AVRA, accompanied by a recapitalization. Accordingly, for the year ended December 31, 2022, CardioVentures has been considered the ultimate holding company. Prior to October 18, 2022, Cardio Ventures Pvt Ltd., Bahamas (Cardio Bahamas), was in existence and served as the ultimate holding company. On October 18, 2022, Cardio Ventures Inc. acquired controlling interest in Otto Pvt Ltd. from Cardio Bahamas, making Cardio Ventures Inc. the ultimate holding company. Basis of Presentation Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheet as of June 30, 2023, and the interim condensed consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity (deficit) for the three and six months ended June 30, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of our financial position as of June 30, 2023 and our results of operations and cash flows for the three and six months ended June 30, 2023 and 2022. The financial data and other financial information disclosed in these notes to the interim condensed consolidated financial statements related to the three and six month periods are also unaudited. The interim condensed consolidated results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future annual or interim period. The interim condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited consolidated financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in the Annual Report on Form 10-K/A as filed by us with the U.S. Securities and Exchange Commission (the “SEC”) on December 6, 2024. The interim condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”). The accompanying financial statements have been prepared on a consolidated basis and reflect the consolidated financial statements of SS Innovations International, Inc. and all of its subsidiaries (“Group”) for the quarter and six month ended June 30, 2023. However, the comparative financial statements for the quarter and six month ended June 30, 2022, have been prepared on a consolidated basis and reflect the consolidated financial statements of Cardio Bahamas and all of its subsidiaries (“Group”). The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing condensed consolidated financial statements. Accounting policies of the respective individual subsidiaries are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S. GAAP. Restatement of Previously Issued Financial Statements for Correction of Errors The Company restated the accompanying condensed consolidated balance sheet as at June 30, 2023 as well as the condensed consolidated statement of operations and comprehensive loss and the condensed consolidated statements of cash flows for the quarter and six-months ended June 30, 2023, and June 30, 2022 respectively, as previously reported in its Form 10-Q, to reflect the correction of errors arising out of: i. Accounting for the merger transaction ii. Functional / other reclassification iii. Recognition of revenue in case of deferred payment sales iv. Recognition of right of use of certain assets and liabilities v. Errors / Adjustments 6 Restatement in June 2023 Summary of restatements made in condensed consolidated balance sheet, as at June 30, 2023, is as follows: Particulars As Previously Reported As Restated Changes Accounting for the merger transaction¹ Functional / Other reclassification² Recognition of revenue in case of deferred payment sales³ Recognition of right of use of certain assets and liabilities³ Errors / Adjustments⁴ ASSETS Current Assets: Cash and cash equivalents 423,060 423,062 2 - - - - 2 Restricted cash - 43,284 43,284 - 43,680 - - ( 396 ) Accounts receivable, net 1,070,358 611,707 ( 458,651 ) - 414,386 ( 1,414,197 ) - 541,160 Receivable from related party - 727,598 727,598 - 793,426 - - ( 65,828 ) Inventory, net 2,608,490 3,965,750 1,357,260 - - - - 1,357,260 Prepaids and other current assets 1,383,369 1,876,290 492,921 ( 2,978 ) 446,489 - - 49,410 Total Current Assets 5,485,277 7,647,691 2,162,414 ( 2,978 ) 1,697,981 ( 1,414,197 ) - 1,881,608 Non- Current Assets: Property, plant, and equipment, net 436,508 455,493 18,985 ( 6,841 ) - - - 25,826 Right of use asset - 2,598,135 2,598,135 - - - 2,598,135 - Accounts receivable, net 1,953,127 1,512,742 ( 440,385 ) - ( 440,385 ) - - - Restricted cash - 60,593 60,593 - 63,997 - - ( 3,404 ) Receivable from related party 1,818,420 - ( 1,818,420 ) - ( 1,818,420 ) - - - Prepaids and other non current assets - 155,164 155,164 - 158,496 - - ( 3,332 ) Total Non Current Assets 4,208,055 4,782,127 574,072 ( 6,841 ) ( 2,036,312 ) - 2,598,135 19,090 Total Assets 9,693,332 12,429,818 2,736,486 ( 9,819 ) ( 338,331 ) ( 1,414,197 ) 2,598,135 1,900,698 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Bank overdraft facility 4,963,385 4,965,744 2,359 - - - - 2,359 Notes payable 1,225,000 1,225,000 - - - - - - Current portion of operating lease liabilities - 258,774 258,774 - - - 258,774 - Accounts payable 31,760 725,822 694,062 - 678,266 - - 15,796 Deferred tax liability 20,760 - ( 20,760 ) - - - - ( 20,760 ) Deferred revenue - 37,630 37,630 - - 37,630 - - Other accrued liabilities 2,130,831 820,510 ( 1,310,321 ) ( 409,141 ) ( 923,718 ) - 22,538 Total Current Liabilities 8,371,736 8,033,480 ( 338,256 ) - 269,125 ( 886,088 ) 258,774 19,933 Operating lease liabilities, less current portion - 2,408,017 2,408,017 - - - 2,408,017 - Deferred revenue - 348,993 348,993 - 348,993 - - - Other accrued liabilities 500,000 29,234 ( 470,766 ) - ( 500,000 ) - - 29,234 Long-term borrowings, less current portion - 493,998 493,998 - - - - 493,998 Total Non Current Liabilities 500,000 3,280,242 2,780,242 - ( 151,007 ) - 2,408,017 523,232 Total Liabilities 8,871,736 11,313,722 2,441,986 - 118,118 ( 886,088 ) 2,666,791 543,165 Stockholders’ (deficit) equity : Preferred stock, $ 0.0001 par value per share; authorized 5,000,000 shares of Series A Non-Convertible Preferred Stock, 5,000 shares and nil shares issued and outstanding as of June 30, 2023 - 1 1 - - - - 1 Common stock, 250,000,000 shares authorized, $ 0.0001 par value,146,172,443 shares issued and outstanding as of June 30, 2023 14,615 14,618 3 - - - - 3 Accumulated other comprehensive income (loss) ( 157,644 ) ( 9,368 ) 148,276 - ( 451,233 ) - - 599,509 Additional paid in capital 19,166,730 10,681,490 ( 8,485,240 ) ( 13,042,805 ) - - - 4,557,565 Capital reserve 899,917 899,917 - - - - - - Accumulated deficit ( 19,102,022 ) ( 10,470,562 ) 8,631,460 13,032,986 ( 5,216 ) ( 528,109 ) ( 68,656 ) ( 3,799,545 ) Total stockholders’ (deficit) equity 821,596 1,116,096 294,500 ( 9,819 ) ( 456,449 ) ( 528,109 ) ( 68,656 ) 1,357,533 Total liabilities and stockholders’ (deficit) equity 9,693,332 12,429,818 2,736,486 ( 9,819 ) ( 338,331 ) ( 1,414,197 ) 2,598,135 1,900,698 7 Condensed consolidated statement of operations and comprehensive loss for the six-months ended June 30, 2023. Particulars As Previously Reported As Restated Changes Accounting for the merger transaction¹ Functional / Other reclassification² Recognition of revenue in case of deferred payment sales³ Recognition of right of use of certain assets and liabilities³ Errors / Adjustments⁴ Revenue: System sales 3,028,534 1,780,197 ( 1,248,337 ) - ( 481,736 ) ( 435,729 ) - ( 330,872 ) Warranty sales 58,151 - ( 58,151 ) - - ( 58,151 ) - - Instrument sale - 481,736 481,736 - 481,736 - - - Total revenue 3,086,685 2,261,933 ( 824,752 ) - - ( 493,880 ) - ( 330,872 ) Cost of revenue ( 2,351,346 ) ( 1,416,289 ) 935,057 - ( 374,891 ) - - 1,309,948 Gross profit 735,339 845,644 110,305 - ( 374,891 ) ( 493,880 ) - 979,076 Operating expenses: Research & development expense - 488,553 488,553 - 488,505 - - 48 Stock compensation expense - 8,150 8,150 - - - - 8,150 Depreciation and amortization expense - 67,057 67,057 - 61,754 - - 5,303 Selling, general and administrative expense 3,400,013 6,543,648 3,143,635 ( 338,083 ) ( 1,134,097 ) - 13,305 4,602,510 Total operating expenses 3,400,013 7,107,408 3,707,395 ( 338,083 ) ( 583,838 ) - 13,305 4,616,011 Loss from operations ( 2,664,674 ) ( 6,261,764 ) ( 3,597,090 ) 338,083 208,947 ( 493,880 ) ( 13,305 ) ( 3,636,935 ) OTHER INCOME (EXPENSE): Interest expenses - ( 621,875 ) ( 621,875 ) - ( 608,863 ) - - ( 13,012 ) Interest and other income, net ( 173,791 ) 46,135 219,926 ( 488 ) 175,165 41,136 - 4,113 Loss before INCOME taxes ( 2,838,465 ) ( 6,837,504 ) ( 3,999,039 ) 337,595 ( 224,751 ) ( 452,744 ) ( 13,305 ) ( 3,645,834 ) Income tax expense - - - - - - - - Net loss ( 2,838,465 ) ( 6,837,504 ) ( 3,999,039 ) 337,595 ( 224,751 ) ( 452,744 ) ( 13,305 ) ( 3,645,834 ) Net loss attributable to non-controlling interests ( 2,838,465 ) ( 6,837,504 ) ( 3,999,039 ) 337,595 ( 224,751 ) ( 452,744 ) ( 13,305 ) ( 3,645,834 ) 8 Condensed consolidated statement of operations and comprehensive loss for the three-months ended June 30, 2023. Particulars As Previously Reported As Restated Changes Accounting for the merger transaction¹ Functional / Other reclassification² Recognition of revenue in case of deferred payment sales³ Recognition of right of use of certain assets and liabilities³ Errors / Adjustments⁴ Revenue: System sales 1,537,224 1,424,783 ( 112,441 ) - ( 467,030 ) 491,388 - ( 136,799 ) Warranty sales 38,082 - ( 38,082 ) - - ( 38,082 ) - - Instrument sale - 467,030 467,030 - 467,030 - - - Total revenue 1,575,306 1,891,813 316,507 - - 453,306 - ( 136,799 ) Cost of revenue ( 1,351,143 ) ( 1,124,116 ) 227,027 - ( 1,130,233 ) - - 1,357,260 Gross profit 224,163 767,697 543,534 - ( 1,130,233 ) 453,306 - 1,220,461 Operating expenses: Research & development expense - 246,426 246,426 - 246,426 - - - Stock compensation expense - 8,150 8,150 - - - - 8,150 Depreciation and amortization expense - 34,466 34,466 - 32,359 - - 2,107 Selling, general and administrative expense 1,983,053 5,669,790 3,686,737 ( 338,083 ) ( 607,626 ) - 8,025 4,624,421 Total operating expenses 1,983,053 5,958,832 3,975,779 ( 338,083 ) ( 328,841 ) - 8,025 4,634,678 Loss from operations ( 1,758,890 ) ( 5,191,135 ) ( 3,432,245 ) 338,083 ( 801,392 ) 453,306 ( 8,025 ) ( 3,414,217 ) OTHER INCOME (EXPENSE): Interest expenses - ( 365,205 ) ( 365,205 ) - ( 365,205 ) - - - Interest and other income, net ( 91,533 ) 31,852 123,385 ( 488 ) 92,021 28,724 - 3,128 Loss before INCOME taxes ( 1,850,423 ) ( 5,524,488 ) ( 3,674,065 ) 337,595 ( 1,074,576 ) 482,030 ( 8,025 ) ( 3,411,089 ) Income tax expense - - - - - - - - Net loss ( 1,850,423 ) ( 5,524,488 ) ( 3,674,065 ) 337,595 ( 1,074,576 ) 482,030 ( 8,025 ) ( 3,411,089 ) Net loss attributable to non-controlling interests ( 1,850,423 ) ( 5,524,488 ) ( 3,674,065 ) 337,595 ( 1,074,576 ) 482,030 ( 8,025 ) ( 3,411,089 ) 9 Condensed consolidated statement of cashflows for the six-months ended June 30, 2023. Particular As Previously Reported As Restated Changes Accounting for the merger transaction¹ Functional / Other reclassification² Recognition of revenue in case of deferred payment sales³ Recognition of right of use of certain assets and liabilities³ Errors / Adjustments⁴ Cash flows from operating activities: Net loss ( 2,838,465 ) ( 6,837,504 ) ( 3,999,039 ) 337,595 ( 224,751 ) ( 783,616 ) ( 13,305 ) ( 3,314,962 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 310,897 67,057 ( 243,840 ) - - - - ( 243,840 ) Translation diff ( 157,645 ) - 157,645 157,645 Operating lease expense - 13,777 13,777 - - - 13,777 - Stock compensation expense - 8,150 8,150 - - - - 8,150 Share issue to investor and advisors - 4,463,799 4,463,799 4,463,799 Interest expense (net) - 575,740 575,740 - 553,921 - - 21,819 Non cash expense - - - - - - - - Changes in operating assets and liabilities: - - - - - Accounts receivable, net - ( 1,040,193 ) ( 1,040,193 ) 25,999 1,327,730 ( 2,393,922 ) Inventory, net - ( 3,061,647 ) ( 3,061,647 ) - - - - ( 3,061,647 ) Receivables from / payable to related parties - 226,228 226,228 - 257,324 - - ( 31,096 ) Deferred revenue - 342,706 342,706 - - 342,706 - - Prepaids and other current assets - ( 962,286 ) ( 962,286 ) - ( 1,405,242 ) - - 442,956 Accounts payable 2,632,123 560,346 ( 2,071,777 ) - ( 1,131,642 ) ( 940,135 ) Prepaids and other non current assets - ( 73,700 ) ( 73,700 ) ( 73,700 ) Prepaid expenses and other assets ( 10,626,023 ) - 10,626,023 - - - - 10,626,023 Other accrued liabilities - 341,021 341,021 45,529 566,566 ( 348,993 ) - 77,919 - - - - - Net cash used in operating activities ( 10,679,113 ) ( 5,376,506 ) 5,302,607 - - - - - Cash flows from investing activities: Notes receivables - acquisition 3,000,000 - ( 3,000,000 ) - - - - ( 3,000,000 ) Long term receivable ( 3,771,546 ) - 3,771,546 - - - - 3,771,546 Purchase of / proceeds from sale of property, plant and equipment ( 736,006 ) ( 105,536 ) 630,470 4,558 - - - 625,912 Net cash used in investing activities ( 1,507,552 ) ( 105,536 ) 1,402,016 - - - - - Cash flows from financing activities: Proceeds from issuance of convertible notes to other investors 4,963,385 3,000,000 ( 1,963,385 ) - - - - ( 1,963,385 ) Proceeds from issuance of convertible notes to principal shareholder - 1,225,000 1,225,000 - - - - 1,225,000 Proceeds from bank overdraft facility (net) - 1,677,577 1,677,577 - - - - 1,677,577 Repayment of term loan - ( 142,895 ) ( 142,895 ) - - - - ( 142,895 ) Proceeds from securities offering 8,170,061 - ( 8,170,061 ) - - - - ( 8,170,061 ) Accumulated other comprehensive income (loss) 899,917 - ( 899,917 ) - - - - ( 899,917 ) Repayments of notes payable ( 2,775,000 ) - 2,775,000 - - - - 2,775,000 Net cash provided by financing activities 11,258,362 5,759,682 ( 5,498,680 ) Net change in cash ( 928,304 ) 277,640 1,205,944 Effect of exchange rate on cash - ( 25,326 ) ( 25,326 ) Cash at beginning of year 1,351,364 274,625 ( 1,076,739 ) Cash at end of year 423,060 526,939 103,879 10 Impact on restated condensed consolidated financial statements for the period ended June 30, 2023 (1) Accounting for merger transaction Background On April 14, 2023, SSII (earlier known as ‘AVRA Medical Robotics Inc’ or ‘AVRA’) consummated the acquisition of Cardio Ventures, Inc., a Delaware corporation (“Cardio Ventures”), pursuant to a Merger Agreement dated November 7, 2022 (the “Merger Agreement”), by and among the Company, a wholly owned subsidiary of the Company (“Merger Sub”), Cardio Ventures and Dr. Sudhir Srivastava, who, through his holding company, owned a controlling interest in Cardio Ventures. Pursuant to the Merger Agreement, at Closing, Merger Sub merged with and into Cardio Ventures (the “Cardio Ventures Merger”). Further, the Company changed its name to “SS Innovations International, Inc.,” effected a one-for-ten reverse stock split and increased its authorized common stock to 250,000,000 shares. Further, prior to October 18, 2022, Cardio Ventures Pvt Ltd., Bahamas (Cardio Bahamas), was in existence and served as the ultimate holding company. On October 18, 2022, Cardio Ventures Inc. acquired controlling interest in Otto Pvt Ltd. from Cardio Bahamas, making Cardio Ventures Inc. the ultimate holding company. Before In the previously filed financial statements (Form 10-Q) for the period ended June 30, 2023, the merger transaction between SS Innovations International, Inc. (“SSII” or “the Company”) and CardioVentures, Inc., was accounted for as a reverse merger in the nature of a recapitalization, in accordance with ASC 805. According to Note 1 of the originally filed Form 10-Q, a wholly owned subsidiary of the Company was treated as the accounting acquirer, and CardioVentures, Inc. was treated as the accounting acquiree. The opening balances in the financial statements for the period ended June 30, 2022, included only the assets, liabilities and operations of AVRA. After Upon review of merger agreements and related technical accounting guidance available in ASC 805, it was determined that AVRA’s assets and liabilities should have been recorded at their fair value as of the date of merger and comparative balances as at December 31, 2022 should have been considered only for Cardio Venture Inc. at historical cost basis, being the accounting acquirer in the merger transaction. The fair value of assets and liabilities of AVRA was assessed as nil at the time of the merger. This revaluation resulted in a change in the recorded amounts for the acquired assets, which has now been appropriately reflected in the restated financial statements. Additionally, the amount recognized as issued equity interests in the condensed consolidated financial statements was determined by considering the equity interests of Cardio Venture Inc. (for the quarter and six months ended June 30, 2022 considered the equity interest of Cardio Bahamas) outstanding immediately before the business combination. In accordance with ASC 805, the equity structure (the number and type of equity interests issued) reflects that of AVRA, including the equity interests issued by AVRA to effect the merger as reverse recapitalization. As a result, the equity structure of Cardio Venture Inc. (for the quarter and six months ended June 30, 2022, equity structure of Cardio Bahamas) (the accounting acquirer) has been restated using the exchange ratio established in the acquisition agreement to reflect the number of shares issued by the legal parent (AVRA, the accounting acquiree) in the merger. 11 The Company identified that fair value of assets and liabilities of AVRA was assessed as nil at the time of merger. Additionally, the Company excluded Accumulated deficit and Additional paid in Capital pertaining to AVRA as per ASC 805. Further, Selling, general and administrative expenses and Interest and other income, net amounting to $ 338,083 and $ 488 respectively were excluded as they relate to the expenses incurred by AVRA before merger and the same is not to be included in the condensed consolidated statement of operations and comprehensive loss subsequent to merger as per the guidance of ASC-805 reverse recapitalization. Differential impact of above adjustments have been corrected in the condensed consolidated statement of cash flows for the period ended June 30, 2023. (2) Functional / Other reclassifications In 2023, the Company conducted an in-depth review of its functional expense classification and other reclassifications resulting in more appropriate allocation of costs based on their specific business functions. The following adjustments have been implemented: 1. Reclassification of lease expenses related to Production (COGS) and Research & Development (R&D) from Sales General & Administration cost (SG&A) Previously, lease expenses related to production and R&D activities were grouped under SG&A expenses. As a result of the review, these costs have now been reclassified to more accurately reflect their functional relationship with core business activities. Lease expenses for production-related activities are now included under cost of revenue, as they are directly tied to the production process. Lease expenses for R&D activities are now classified under R&D expenses, ensuring that these costs are appropriately aligned with innovation efforts and accurately allocated based on the proper assumptions regarding their direct contribution to the Company’s research and development initiatives. This reclassification provides a clearer picture of how the Company allocates resources toward both operational production and future product development. 12 2. Salaries and Related Expenses in COGS, R&D and SG&A Previously, salaries and related expenses were shown directly as a separate head in the statement of Income and Other comprehensive income. Following further evaluation, these expenses have been reclassified between COGS, R&D and SG&A. Salaries and benefits for production staff are now included under COGS, aligning them more accurately with the Company’s production costs. This enhances the calculation of gross profit margins and ensures the expenses are matched with the corresponding revenue. Salaries for R&D personnel have been classified exclusively in R&D expenses, properly attributing costs to the development of new products and technologies and reflecting the Company’s ongoing investment in innovation. These changes improve the functional categorization of expenses and provide a more accurate depiction of the Company’s operating performance. 3. Other reclassifications in condensed consolidated balance sheet and condensed consolidated statement of cash flows We noted that there are reclassifications required in the condensed consolidated balance sheet and condensed consolidated statement of cash flows to - correct current/non-current positions - correct classification basis nature of receivable/payable (A) Reclassifications in Condensed Consolidated Balance Sheet Reclassifications were of below nature: 1. Restricted Cash: 1. Fixed deposit against bank guarantee of $ 43,680 and FD earlier classified under prepaids and other current assets now reclassified to Restricted Cash Current, 2. Fixed Deposits against Credit card facility of $ 63,997 reclassified to Restricted Cash Non-Current, 3. Fixed Deposit with no withdrawal restrictions of $ 6,919 reclassified under Prepaids and other non-current assets. 2. Accounts receivable of $ 440,385 are reclassified from non-current to current based on their due date of collection as per contract with customers. 3. Receivables from related parties of $ 793,426 reclassified from non-current to current based on their due date of collection. Further, payable balances related to same party were netted off against the receivable balances amounting to $ 1,100,000 . 4. Prepaids and other current assets: Security Deposit of $ 158,496 for long term lease earlier classified under Prepaid Current assets now reclassified to Prepaid non-current assets. Fixed deposits of $ 107,678 earlier classified in Prepaid and other current assets now reclassified to restricted cash current and non-current. 5. Reclassification of long term deferred revenue from other accrued liabilities to long term deferred revenue amounting to $ 348,993 . This amount has now been reclassified to deferred revenue (Non-Current) for accurate reporting and compliance with revenue recognition standards. 6. Accounts payable: As at June 30, 2023 Amount of advance to vendors knocked off earlier amounting to $ 678,266 to prepaid and other current asset. 7. Other accrued liabilities: As at June 30, 2023, A. Due to increase in advance from customer amounting to $ 109,383 , B. Due to reclassification of receivable from related party from other accrued liabilities amounting to $675,006. Differential impact of above adjustments have been corrected in the condensed consolidated statement of cash flows for the period ended June 30, 2023. 13 (B) Reclassifications Condensed Consolidated Statement of Operations and comprehensive loss Reclassifications were of below nature: (i) Functional classification 1. Operating expenses are now reclassified functionally, encompassing Selling, General and Administrative, Research and Development, and Salaries & Payroll Expenses. This reclassification has resulted in a decrease in the Cost of Revenue by $ 374,891 and an increase in R&D by $ 488,505 , decrease in SG&A by $ 1,134,097 , and depreciation expense now disclosed separately $ 61,754 for six months ended June 30, 2023. This reclassification has further resulted in a decrease in the Cost of Revenue by $ 1,130,233 and an increase in R&D by $ 246,426 , increase in SG&A by $ 607,626 , and depreciation expense now disclosed separately $ 32,359 for three months ended June 30, 2023. (ii) Other reclassifications 1. In the financial reporting structure, total revenue is now detailed into two categories: System Sales and Instrument Sales. Earlier, Instrument Sales were not disclosed separately which has been effected now. Consequently, in restated financial statements, System Sales is now reduced by $ 481,736 for six months ended June 2023 and by $ 467,030 for three months ended June 30, 2023 and is disclosed as Instrument sales specifically to reflect this refined categorization. 2. Interest expenses related to credit notes and discounts on credit note have been reclassified from Selling, General, and Administrative Expenses and Interest and other income to Interest Expense. This reclassification amounts to $ 608,863 for six months ended June 30, 2023, and $ 365,205 for three months ended June 30, 2023, aligning the reporting with appropriate expense categorization standards. (3) Correction of accounting policies misapplications A. Revenue recognition Background The Company identified that it had inadvertently failed to apply some of the relevant provisions of ASC 606, “Revenue from Contacts,” accordingly, in the preparation of our revised financial statements for the period ended June 30, 2023. We have revised our revenue recognition policy to incorporate discounting for the present value of expected revenue. Before In previously filed financial statements, our revenue was recognized at nominal values without considering the time value of money. Also, in previously filed financial statements, the Company recognized revenue from maintenance and warranty services starting in the first year following delivery. Further, the Company included deferred revenue within accrued liabilities. After The decision to adopt a discounting approach arises from our commitment to providing stakeholders with a more precise representation of our revenue streams. By discounting future cash flows to their present value, we ensure that our revenue reflects the economic reality of our transactions, considering the timing of cash receipts. This adjustment aligns our financial statements with best practices in revenue recognition and improves the comparability of our financial information across periods. However, after management’s evaluation, it has been determined that the first year post-delivery is classified as a standard warranty period, with extended comprehensive maintenance and warranty services commencing in the second year. The services offered under the extended maintenance and warranty agreements are consumed by customers concurrently with the Company’s performance of those services. In line with ASC 606-10-25-27, revenue from maintenance and warranty services is to be recognized over the term of the comprehensive maintenance and warranty agreements. As a result, any advance revenue received will be recorded as deferred revenue until the related performance obligations are fulfilled. 14 Also, deferred revenue has now been reclassified as a separate line item on the Balance Sheet, in accordance with U.S. GAAP guidelines. Additionally, deferred revenue has now been divided into short-term and long-term classifications based on when revenue is expected to be recognized. These adjustments provide more clarity and transparency. Moreover, the Company has now separated revenue into instrument sales and system sales. This differentiation enables a more detailed understanding of the revenue streams and their respective recognition patterns. Revenue from instrument sales and system sales will now be recorded separately on the face of condensed consolidated statement of operations and other comprehensive loss, reflecting the distinct performance obligations and timing of revenue recognition for each category. Impact on restated condensed consolidated financial statements for the period ended June 30, 2023 The Company identified that revenue and accounts receivable were incorrectly recorded due to the financing component of trade receivables and deferred revenue, which is to be recovered and recognized after one year from the balance sheet date according to purchase order terms. In line with ASC 606, correction entries were made to reflect the financing component in accounts receivable and revenue. Long term account receivables balances were presented at gross balances basis in previous filed financial statements however, as per ASC 606, revenue contract in which company have significant financing component in consideration receivable from customers, the net sales and related debtor balance should be accounted at the present value of the future cash flow and the interest component related to financing component should be recorded over the period of contract. Accordingly, the company restated the account receivable balances on net level to provide impact of significant financing component and reduced trade receivable by $ 1,414,197 . Also, warranty income to be recognized once the performance obligation condition gets fulfil to in line with this provision, unrealized warranty income included of the sale were reversed and recoded as deferred revenue in balance sheet till the time performance obligation relation to this is not fulfilled. Hence due to this $ 386,623 was recorded as deferred revenue during the year and further the same was reclassed as current and non-current $ 37,630 and $ 348,993 respectively in these restated financial statements. Earlier all unrealized income (deferred revenue) are recorded in other accrued liabilities and now the same had been recorded separately as deferred revenue in balance sheet by $ 923,718 . Interest income for the current period related to unwinding of account receivable balances recorded as interest income of $ 41,136 which is adjusted with the net of system and warranty sale of $ 493,880 in condensed consolidated statement of operations and other comprehensive loss for six months ended June 30, 2023. Interest income for the current period related to unwinding of account receivable balances recorded as interest income of $ 28,724 which is adjusted with the net of system and warranty sale of $ 453,306 in condensed consolidated statement of operations and other comprehensive loss for three months ended June 30, 2023. B. Lease Before For the period ended June 30, 2023, the Company identified that it had inadvertently failed to apply ASC 842, “Leases,” to certain operating lease arrangements. Upon further review, the Company also determined that similar issues impacted the financial statements for the period ended June 30, 2023. During these periods, while preparing the condensed consolidated financial statements, the Company inadvertently failed to apply ASC 842 to all of their lease agreements. This resulted in the exclusion of material lease liabilities and related right-of-use assets from the financial statements. 15 After In conjunction with the correction of the lease accounting, the Company has also updated its incremental borrowing rates used to measure lease liabilities and right-of-use assets. The revised rates are now more reflective of the Company’s current borrowing conditions and have been applied retrospectively to all affected lease arrangements. Impact on Financial Statements: The restatement is expected to primarily affect: Lease Liabilities: Previously unrecorded liabilities associated with the identified leases will be recognized. Right-of-Use Assets: Corresponding assets related to the identified lease arrangements will be recognized. Lease Expenses: Adjustments will be made to accurately reflect lease-related expenses, including interest and depreciation charges for the right-of-use assets. The Company identified that it had a leased property in India, but no transection recorded initially as per ASC 842 only the lease payments were recorded as rent expenses. As per ASC 842, if a company entered into a lease contract for specific period of time it shall record the Right to Use Assets (ROU), Lease liabilities and amortize ROU and interest on lease liabilities over the lease term. Accordingly, Restatement adjustment of $ 2,598,135 was recorded to correct the balances of ROU in line with above provision of ASC 842. Classification of current and non-current amount of lease liability corrected by $ 258,774 and $ 2,408,017 respectively. Further lease expenses was classified based on functional classification as $ 13,305 as Selling, general and administrative, for the six months ended June 30, 2023 and functional classification as $ 8,025 as Selling, general and administrative for the three months ended June 30, 2023. Differential impact of above adjustments has been corrected in the consolidated statement of cash flows for the period ended June 30, 2023. 4. Correction of other errors in measurement of income/expense/asset/liabilities. We also noted errors in measurement of income/expense/assets/liabilities throughout different financial statements captions which were corrected in the restated financial statements. Below are major error corrections made in condensed consolidated financial statements for the period ended June 30, 2023: (i) Reinstatement of recourse letter of credit: The Company identified that the encashment of a letter of credit (LC – with recourse) received from banker against the customer’s invoicing was incorrectly netted off with the customer’s closing balance, affecting the financing component for the period ending June 30, 2023. To rectify this, a correction was made to reconcile the accounts receivable balance and the impact of the financing component on the income statement. Accounts receivable balance of $ 541,023 has been restated and corresponding current maturities of long-term borrowings, as the bank retains the right to recover proceeds from the company in case customer makes default in payment. (ii) Personal expenses pertaining to Director earlier recorded as business expense of the Company: - The company identified that legal expenses amounting to $ 91,096 which were incorrectly charged as a legal expense, were actually related to the personal expenses of Dr. Sudhir Prem Srivastava and office expenses amounting to $ 156,924 is recorded against advance made to Dr. Sudhir Prem Srivastava earlier not recorded. (iii) Stock compensation expenses: The Company identified that stock compensation expense was recorded incorrectly as it did not include advisory shares given to non employees. Rectification adjustments were made and stock compensation expense of $ 8,150 was recorded for six months and three months period ended June 30, 2023. 16 The Company identified that an additional issuance of advisory shares to Dr. Frederic Moll during the period ended June 30, 2023, recognizing his strategic knowledge and expertise within the industry to be recorded as selling, general and administration expense. This transaction has been classified under Selling, General, and Administrative (SG&A) expenses, totaling $ 4,463,799 . This classification underscores the strategic value Dr. Moll brings to the organization and aligns with our financial reporting standards. (iv) Advance to vendors: For the period ended June 30, 2023, the Company identified that an advance given to a vendor was not adjusted against respective capital and operating expenditures while the invoices were received by the Company. An adjustment was recorded to adjust the vendor advance against respective expenditure totaling $ 93,001 . (v) Incorrect useful life of PPE: The company identified that property, plant, and equipment were previously recorded incorrectly, with depreciation charged based on estimated useful life determined by management. Following a thorough analysis, the asset lives were corrected, and depreciation was recalculated accordingly. As a result of this adjustment, an entry of $ 25,826 has been recorded under the property, plant, and equipment heading in the balance sheet. (vi) Incorrect valuation of Inventory: The Company identified that the inventory was previously recorded at incorrect valuation. As a result of this adjustment inventory is increased by $ 1,357,260 as at June 30, 2023. Consequent to this adjustment, cost of revenue has decreased by $ 1,357,260 and $ 1,309,948 for three and six months period ended June 30, 2023 respectively. (vii) Cut off errors: The Company has identified that expense relating to origination fees has been recorded in its entirety as and when the convertible notes are issued and this expense needs to be amortized over the period of convertible notes, hence the Company has recorded the said expense to the extent it relates to current period and correspondingly recorded the differential amount in prepaid expense whose amount of amortization is $ 339,534 for the period ended June 30, 2023. (viii) Unrecognized Gratuity provision: The Company identified that the expense and provision for gratuity were not recorded from the initial stage. These were subsequently recorded for the years 2021, 2022, and the current period, with balances reconciled against the actuarial report. A gratuity liability recorded by $ 29,234 relates to noncurrent and $ 63 as current portion which was not accounted for earlier. (ix) Discounting of Security deposits: The Company identified that discounting of security deposits was not initially performed. As a result, the discounting of security deposits has now been recorded, along with the corresponding prepaid security deposit. (x) Foreign exchange of revenue for system sales:- The Company had applied incorrect foreign exchange rates for translating balances to reporting currency which was corrected. (xi) Deferred tax liability: Since the company has significant carried forward tax losses hence earlier recorded deferred tax liability reversed $ 20,760 . Differential impact of above adjustments has been corrected in the condensed consolidated statement of cash flows for the period ended June 30, 2023. 17 Restatement in June 2022 Condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2022. Particulars As Previously Reported As Restated Changes Accounting for the merger transaction Revenue: System sales - - - - Warranty sales - - - - Instrument sale - - - - Total revenue - - - - Cost of revenue - - - - Gross profit - - - - Operating expenses: Research & development expense - 799,917 799,917 799,917 Depreciation and amortization expense - 47,033 47,033 47,033 Selling, general and administrative 250,486 809,217 558,731 558,731 Total operating expenses 250,486 1,656,167 1,405,681 1,405,681 Loss from operations ( 250,486 ) ( 1,656,167 ) ( 1,405,681 ) ( 1,405,681 ) OTHER INCOME (EXPENSE): Interest expenses - ( 46,860 ) ( 46,860 ) ( 46,860 ) Interest and other income, net 64 3,739 3,675 3,675 Loss before income taxes ( 250,422 ) ( 1,699,288 ) ( 1,448,866 ) ( 1,448,866 ) Income tax expense - - - - Net loss ( 250,422 ) ( 1,699,288 ) ( 1,448,866 ) ( 1,448,866 ) Net loss attributable to non-controlling interests ( 250,422 ) ( 1,699,288 ) ( 1,448,866 ) ( 1,448,866 ) 18 Condensed consolidated statement of operations and comprehensive loss for the three months ended June 30, 2022. Particulars As Previously Reported As Restated Changes Accounting for the merger transaction REVENUE: System sales - - - - Warranty sales - - - - Instrument sale - - - - Total revenue - - - - Cost of revenue - - - - GROSS PROFIT - - - - OPERATING EXPENSES: Research and development expense - 337,407 337,407 337,407 Depreciation and amortization expense - 23,302 23,302 23,302 Selling, general and administrative 170,031 364,345 194,314 194,314 TOTAL OPERATING EXPENSES 170,031 725,054 555,023 555,023 Loss from operations ( 170,031 ) ( 725,054 ) ( 555,023 ) ( 555,023 ) OTHER INCOME (EXPENSE): Interest expenses - ( 28,821 ) ( 28,821 ) ( 28,821 ) Interest and other income, net 29 1,850 1,821 1,821 LOSS BEFORE INCOME TAXES ( 170,002 ) ( 752,025 ) ( 582,023 ) ( 582,023 ) Income tax expense - - - - NET LOSS ( 170,002 ) ( 752,025 ) ( 582,023 ) ( 582,023 ) Net loss attributable to non-controlling interests ( 170,002 ) ( 752,025 ) ( 582,023 ) ( 582,023 ) 19 SS Innovations International Inc. Consolidated Statements Of Cash Flow For The Year Ended June 30, 2022 Condensed consolidated statement of cashflows for the six months ended June 30, 2022. Particular As Previously Reported As Restated Changes Accounting for the merger transaction Cash flows from operating activities: Net loss ( 250,422 ) ( 1,699,288 ) ( 1,448,866 ) ( 1,448,866 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 4,586 47,033 42,447 42,447 Operating lease expense - 13,899 13,899 13,899 Stock compensation expense 94,766 - ( 94,766 ) ( 94,766 ) Interest expense (net) - 43,121 43,121 43,121 Changes in operating assets and liabilities: Accounts receivable, net - ( 100,000 ) ( 100,000 ) ( 100,000 ) Inventory, net - ( 200,352 ) ( 200,352 ) ( 200,352 ) Receivables from / payable to related parties - 745,253 745,253 745,253 Prepaids and other current assets - 79,637 79,637 79,637 Accounts payable ( 65,696 ) ( 18,659 ) 47,037 47,037 Prepaids and other non current assets - ( 3,762 ) ( 3,762 ) ( 3,762 ) Other accrued liabilities - ( 86,853 ) ( 86,853 ) ( 86,853 ) Net cash used in operating activities ( 216,766 ) ( 1,179,971 ) ( 963,205 ) Cash flows from investing activities: Purchase of / proceeds from sale of property, plant and equipment - 381,778 381,778 381,778 Net cash used in investing activities - 381,778 381,778 Cash flows from financing activities: Proceeds from bank overdraft facility (net) - 897,979 897,979 897,979 Repayment of term loan - ( 88,568 ) ( 88,568 ) ( 88,568 ) Proceeds from securities offering 72,081 - ( 72,081 ) ( 72,081 ) Net cash provided by financing activities 72,081 809,411 737,330 Net change in cash ( 144,685 ) 11,218 155,903 Effect of exchange rate on cash - ( 27,011 ) ( 27,011 ) Cash at beginning of year 405,774 87,709 ( 318,065 ) Cash at end of year 261,089 71,916 ( 189,173 ) 20 Impact on restated consolidated financial statements for the six-months period ended June 30, 2022 (refer note 4) During the course of a detailed re-review of the original filing of Form 10-Q for period ended June 2023, it has been observed that there were also significant inaccuracies in the corresponding figures reported for the three and six months period ended June 2022 condensed consolidated statement of operations and comprehensive loss and condensed consolidated statement of cashflows. These errors primarily originated from the inclusion of figures that pertain to AVRA Medical Robotics, Inc., rather than the correct entities i.e. Cardio Bahamas Pvt. Ltd and its subsidiaries. Details of Identified Errors: 1. Condensed consolidated statement of operations and comprehensive loss and condensed consolidated statement of cashflows figures for the three months and six months period ended June 2022: The corresponding figures reported, in the condensed consolidated statement of operations and comprehensive loss and condensed consolidated statement of cashflows for June 2022 were entirely related to AVRA Medical Robotics, Inc., rather than Cardio Bahamas Pvt. Ltd and its subsidiaries. Corrective Actions Undertaken: 1. Condensed consolidated statement of operations and comprehensive loss and condensed consolidated statements of cashflow adjustments for the three months and six months period ended June 2022: The figures related to Cardio Bahamas Pvt. Ltd. and its subsidiaries now have been updated as the corresponding figures in the condensed consolidated statement of operations and comprehensive loss and condensed consolidated statements of cashflow for three months and six months period ended June 2022. These updated numbers provide a correct basis for comparison with the financials for the three and six months periods ended June 30, 2023. Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued. The Company had a working capital deficit of $ 385,789 and an accumulated deficit of $ 10,470,562 as of June 30, 2023. The Company also had a net loss of $ 6,837,504 for the six months ended June 30, 2023 and $ 5,524,488 for the three months ended June 30, 2023 which was mainly on account of non-cash items like Depreciation of $ 67,057 for six month and $ 34,466 for three month and advisory share issue to Dr. Moll for $ 4,463,799 for three months and six months included in SG&A. In addition, the Company has been dependent on related parties to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. Management recognizes that the Company must obtain additional resources to successfully implement its business plans. The Company has been able to augment its financial resources to further supplement its operations. On April 15, 2023, the Company executed a Convertible Promissory Note (the “Line of Credit Note”) with Sushruta Pvt Ltd. (“SPL “), the Bahamian holding company owned by Dr. Sudhir Srivastava, our Chairman, Chief Executive Officer and principal shareholder. Pursuant to the line of credit note, SPL, in its discretion could make multiple advances to the Company through December 31, 2023 (the “Maturity Date”), in an aggregate amount of up to $ 20,000,000 for working capital purposes and the advances under the line of credit note do not bear interest and are due and payable on or before the maturity date. SPL, at its option, could also convert the principal amount of any advance into shares of our common stock, at a conversion price of $ 0.74 per share. As of June 30, 2023, $ 1,225,000 in advances were outstanding under the line of credit note. 21 Subsequent to June 30, 2023, SPL exercised its option to convert its outstanding advances into common stock at a conversion price of $ 0.74 per share. This conversion of funds advanced under the line of credit note and subsequently converted into equity has resulted in a significant improvement in the Company’s stockholders’ equity and working capital position. As of June 30, 2023, the Company had a stockholders’ equity of $ 1,116,096 and a working capital deficit of $ 385,789 as compared to stockholders’ deficit of $ 2,678,537 and a working capital deficit of $ 3,670,954 as of December 31, 2022. However, the Company’s existing cash resources and income from operations, are not expected to provide sufficient funds to carry out the Company’s operations and business development through the next twelve (12) months. The management of the Company is making efforts to raise further funding to scale up operations and meet its longer-term capital needs. While management of the Company believes that it will be successful in its capital formation and planned expansion of its operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in generating additional revenues and ultimately achieving profitability. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Use of Estimates The preparation of condensed consolidated 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, liabilities and expenses. The Company regularly evaluates estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates made by management. Significant estimates included discount rate for measuring significant financing component for deferred collections in revenue contracts, fair value of stock options, incremental borrowing rate for leases and useful life of property plant and equipment. b) Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of ninety days or less to be cash equivalents. c) Restricted Cash Restricted cash includes any cash and cash equivalents that are legally restricted as to withdrawal or usage for the Company’s operations. For the purposes of the condensed consolidated statement of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents. 22 d) Accounts Receivable and Allowance for Expected Credit Losses The Company’s account receivables are due from customers relating to contracts to supply surgical robotic systems, instruments, and accessories and to provide post sales warranty/maintenance services. The Company also sells surgical robotic systems under deferred payment arrangements and in such cases, the amounts due and recoverable beyond the one year period at the balance sheet date are classified as long-term receivables. Collateral is currently not required. The Company also maintains credit loss allowance for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of June 30, 2023, and December 31, 2022 amounted to $ nil and $ nil respectively. e) Employee Benefits Contributions to defined contribution plans are charged to the condensed consolidated statement of operations and comprehensive loss in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are recognized in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. The Company records annual amounts relating to its defined benefit plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, future compensation increases and attrition rates. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in other comprehensive income (loss) (“OCI”) and amortized to net periodic benefit cost over the expected remaining period of service of the covered employees using the corridor method. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions. These assumptions may not be within the control of the Company and accordingly it is reasonably possible that these assumptions could change in future periods. The Company includes the service cost component of the net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the respective employees during the period. The interest cost, expected return on plan assets and amortization of actuarial gains/loss, are included in “Other income/(expense), net”. f) Foreign Currency Translation The functional currency of each entity in the group is the currency of the primary economic environment in which it operates. Transactions in foreign currencies are initially recorded into functional currency at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured into functional currency at the rates of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are remeasured to the functional currency at exchange rates that prevailed on the date of inception of the transaction. All foreign exchange gains and losses arising on re-measurement are recorded in the Company’s condensed consolidated statement of operations and comprehensive loss. The assets and liabilities of the subsidiaries for which the functional currency is other than the U.S. dollar are translated into U.S. dollars, the reporting currency, at the rate of exchange prevailing on the balance sheet date. Revenues and expenses are translated into U.S. dollars at the exchange rates prevailing on the last business day of each month, which approximates the average monthly exchange rate. Share capital and other equity items are translated at exchange rates that prevailed on the date of inception of the transaction. Resulting translation adjustments are included in “Accumulated other comprehensive income/(loss)” in the condensed consolidated balance sheet. The relevant translation rates are as follows: for the six months ended June 30, 2023 closing rate at 82.0735 US$: INR, average rate at 82.3717 US$:INR. The relevant translation rates are as follows: for the six months ended June 30, 2022 closing rate at 74.4000 US$: INR, average rate at 76.6850 US$:INR. The relevant translation rates are as follows: for the year ended December 31, 2022 closing rate at 82.73 US$: INR, average rate at 78.51 US$:INR 23 g) Inventory The Company’s inventory consists of finished goods in the form of fully assembled and tested surgical robotic system, semi-finished goods in the form of various sub-systems of the surgical robotic systems in various stages of assembly and manufacturing and raw material in the form of various mechanical, electrical, and other material components, parts, motors, encoders etc. which are not yet assembled/manufactured. The inventory is valued at the lower of cost (first-in, first-out) or estimated net realizable value. As of June 30, 2023, and December 31, 2022, the Company valued the inventory at $ 3,965,750 and $ 904,103 respectively. h) Fair value measurements ASC Topic 820, Fair Value Measurements and Disclosures defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk. The fair value hierarchy consists of the following three levels: ● Level I — Quoted prices for identical instruments in active markets. ● Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. ● Level III — Instruments whose significant value drivers are unobservable. i) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. and cash equivalents, time deposits and accounts receivable. By their nature, all such financial instruments involve risks including the credit risks of non-performance by counterparties. The surplus funds are maintained as cash and cash equivalents and time deposits, placed with highly rated financial institutions to reduce its exposure to market risk with regard to these funds. The Company’s exposure to credit risk on account receivable is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. To mitigate this risk the Company evaluates the creditworthiness of its customers in conjunction with its revenue recognition processes as well as through its ongoing collectability assessment processes for accounts receivable. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. j) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. A disclosure for a contingent liability is made when there is a possible obligation that may require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Legal costs incurred in connection with such liabilities are expensed as incurred. Capital commitments are disclosed in the condensed consolidated financial statements. 24 k) Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of a contract with a customer or placement of a purchase order by the customer. ● Identification of the performance obligations in the contract or the purchase order as the case may be. ● Determination of the transaction price which is reflected in the purchase order placed by the customer. ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when or as the performance obligations are satisfied as per the terms of the purchase order received from the customer. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Product type and payment terms vary by client. i. System Sales: The Company recognizes revenue when the “transfer of control” occurs, which typically takes place upon the delivery of the system to the customer. In cases where a deferred payment arrangement exists, revenue is recognized at the present value of the consideration receivable, adjusted by the present value of any extended warranty obligations. Key Terms of Customer Contracts The Company enters into binding contracts with customers through either an agreement or a sales order, with all terms and conditions mutually agreed upon by both parties. The key terms and conditions include: 1. Finalization of Product and Price: Agreement on the specific model of the “SSI Mantra” system and its selling price. 2. Payment Terms: Determination of payment terms, which may involve either a deferred payment arrangement or a one-time payment upon delivery and installation of the system at the customer’s premises. 3. Deferred Payment Model: For deferred payments, customers typically pay an advance amount before the dispatch of the system. The remaining balance is payable in yearly installments over a period of 3 to 5 years. Present value of deferred payment is calculated using the prevailing interest rate. 4. Warranty Services: Instead of negotiating the sales price, the Company provides a warranty service that includes a 1-year assurance warranty and an extended warranty for an additional 3 to 5 years. The exact terms are mutually agreed upon with the customer. 5. Delivery, Installation, and Training: The Company is responsible for delivering and installing the system at the customer’s premises. Post-installation, the Company provides free training to surgeons and surgical staff to enable them to operate the system effectively. 6. Transfer of Risk and Rewards: The risks and rewards associated with the system are transferred to the customer upon delivery to their premises. 25 ii. Instrument and accessories Sales: We also sell instruments for use by surgeons in conjunction with the use of our surgical robotic systems. These instruments are consumable items for our hospital customers, and we recognize the revenues from the sale of instruments as and when the instruments are delivered to the customer. iii . Warranty and Annual Maintenance Contract Sales: Under ASC 606, the portion of the equipment sales value attributable to annual maintenance contracts is recorded separately as Warranty sales, which are recognized at their present value. Once the warranty periods expire, the maintenance contracts commence, and the revenue generated from these maintenance contracts is recognized as a distinct revenue stream. l) Property Plant & Equipment Property and equipment are stated at cost, which is generally comprised of the purchase price for such property or equipment, non-refundable duties and taxes, but excludes any discounts and/or rebates, less accumulated depreciation and impairment. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Property Plant & Equipment depreciated using the straight-line method at rates determined as per estimated useful lives of the assets. The estimated useful lives used in in calculating depreciation are as follows: Years Computer & peripherals 3 Furniture 5 Leasehold improvement 4 - 9 Office equipment 5 Plant and machinery 4 - 8 R & D equipment 5 Server & networking 3 Vehicles 5 m) Long-lived Assets In accordance with ASC 360, “ Property Plant and Equipment ”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset and current expectation that the asset will more than likely not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the discounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain circumstances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. 26 n) Stock Compensation Expense Under the fair value recognition provisions of ASC Topic 718, Compensation-Stock Compensation, cost is measured at the grant date based on the fair value of the award and is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Determining the fair value of stock-based awards at the grant date requires significant judgment, including estimating the expected term over which the stock awards will be outstanding before they are exercised and the expected volatility of our stock. Stock Options : These provide employees with the right, but not the obligation, to purchase shares of the Company’s stock at a specified price, within a defined period, as per the terms of the stock option agreement. Stock-based compensation expense associated with AVRA 2016 Stock Incentive Plan is measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period. Stock Units (Restricted Stock Units, or RSUs): These do not require the employee to exercise any options. Each stock unit automatically converts into a specified number of shares upon vesting. The Company uses last three month’s average share price of common stock on OTC exchange as grant date fair value for RSUs. The Company recognizes stock-based compensation expense in the condensed consolidated statement of operations and comprehensive loss for both employees and non-employee directors based on the grant-date fair value of the awards. These costs are recognized on a straight-line basis over the requisite service period, or until the date at which the recipient becomes eligible for retirement, if shorter. Forfeitures of equity awards are accounted for as they occur. The Company accounts for equity instruments issued in exchange for goods or services from non-employees in accordance with ASC Topic 718 Stock Compensation. The costs associated with these equity instruments are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. o) Income Taxes The Company accounts for income taxes using the asset and liability method of accounting for income taxes. The Company calculates and provides income taxes in each of the tax jurisdictions in which it operates. The deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the condensed consolidated financial statement carrying values of existing assets and liabilities and their respective tax bases and all operating losses carried forward, if any. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which the applicable temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or tax status is recognized in the statements of income in the period in which the change is identified. The Company releases (reclassifies) the tax effects from AOCI to the condensed consolidated statement of operations and comprehensive loss for amortization of deferred actuarial gain/(loss) on retirement benefits. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company establishes provisions for uncertain tax provisions and related interest and penalties when the Company believes those tax positions are not more likely than not of being sustained, if challenged. 27 p) Basic and Diluted Loss per Share The following table sets forth the computation of basic and diluted earnings per share: For the Six Months ended June 30, 2023 2022 (As Restated) (As Restated) Net Loss ( 6,837,504 ) ( 1,699,288 ) Basic weighted average common shares outstanding (1) 135,965,966 128,256,013 Dilutive effect of stock-based awards 137,000 - Diluted weighted average common shares outstanding 136,102,966 128,256,013 Earnings per share attributable to SS INNOVATIONS INTERNATIONAL INC. stockholders: Basic and Diluted ( 0.05 ) ( 0.01 ) For the Three Months ended June 30, 2023 2022 (As Restated) (As Restated) Net Loss ( 5,524,488 ) ( 752,025 ) Basic weighted average common shares outstanding (1) 143,599,382 128,256,013 Dilutive effect of stock-based awards 137,000 - Diluted weighted average common shares outstanding 143,736,382 128,256,013 Earnings per share attributable to SS INNOVATIONS INTERNATIONAL INC. stockholders : Basic and Diluted ( 0.04 ) ( 0.01 ) (1) Prior period information has been adjusted to reflect the 1-for-10 reverse stock split of the Company’s common stock effected in April 2023. Refer to condensed statement of changes in equity to the condensed consolidated financial statements for further details. Basic net loss per share is calculated by dividing the net loss attributable to SSII stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. For periods in which we report net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. q) Research and Development Costs In accordance with ASC Topic 730 “Research and Development”, with the exception of intellectual property that is purchased from another enterprise and have alternative future use, research and development expenses are charged to operations as incurred. r) Fair Value of Financial Instruments Our financial instruments consist principally of accounts receivable, amounts due to related parties and promissory notes payable. The carrying amounts of cash and cash equivalents and promissory notes approximate fair value because of the short-term nature of these items. s) Leases The Company determines if an arrangement is a lease at inception of the contract. The Company’s assessment is based on whether: (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company has the right to direct the use of the asset. A lease is classified as a finance lease if any one of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. Operating leases are presented within “Right-of-use assets, operating lease” “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company’s condensed consolidated balance sheet. 28 Right-of-use assets (ROU) assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs, and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date. The Company determines the incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads applicable to the respective geographies where the leases are entered and lease specific adjustments for the effects of collateral, if applicable. Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost. The Company evaluates lease agreements to determine lease and non-lease components, which are accounted for separately. Lease payments that depend on factors other than an index or rate are considered variable lease payments and are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. Lease payments include payments for common area maintenance, utilities such as electricity, heating and water, among others, and property taxes, and other similar payments paid to the landlord, which are treated as non-lease component. The Company accounts for lease-related concessions in accordance with guidance in Topic 842, Leases, to determine, on a lease-by-lease basis, whether the concession provided by lessor should be accounted for as a lease modification. The Company accounts for a modification as a separate contract when it grants an additional right of use not included in the original lease and the increase is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as of the effective date of the modification based on its modified terms and conditions and the facts and circumstances as of that date. Upon modification, the Company remeasures the lease liability to reflect changes to the remaining lease payments and discount rates and recognizes the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in condensed consolidated statement of operations and comprehensive loss. The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. t) Segment reporting The Company operates in one segment only. The chief operating decision maker regularly reviews the operating results of the Company on a condensed consolidated basis as part of making decisions for allocating resources and evaluating performance. As of both June 30, 2023 and December 31, 2022 100 % of long-lived assets were in India. Revenue from external customers is attributed to individual countries based on customer location. u) Recent Accounting Pronouncements In March 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-01, Leases (“Accounting Standards Codification (“ASC”) Topic 842”): Common Control Arrangements. This ASU provides guidance in ASC Topic 842 that leasehold improvements associated with common control leases should be (i) amortized by the lessee over the useful life of the leasehold improvements to the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease, and (ii) accounted for as a transfer between entities under common control through an adjustment to equity if and when the lessee no longer controls the use of the underlying asset. The ASU is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. When adopted in an interim period, it must be adopted from the beginning of the year that includes that interim period. The Company does not have any lease arrangements with entities under common control and the adoption of this ASU is not expected to have a material impact on its condensed consolidated financial statements. 29 NOTE 3 – PROPERTY, PLANT AND EQUIPMENT, NET The Company’s property and equipment consisted of the following: - June 30, 2023 December 31, 2022 (As Restated) Gross Amount Computer & peripherals 123,658 80,532 Furniture 104,065 89,044 Office equipment 68,808 68,059 Plant and machinery 110,272 49,331 R & D equipment 121,439 120,480 Server & networking 11,518 8,761 Vehicles 186,075 153,619 Machine CWIP - 48,000 Accumulated depreciation ( 270,342 ) ( 200,812 ) Total 455,493 417,014 Depreciation expenses for the three month quarter ended June 30, 2023, and 2022 amounted to $ 34,466 and $ 23,302 respectively. Depreciation expenses for the six months ended June 30, 2023, and 2022 amounted to $ 67,057 and $ 47,033 respectively. NOTE 4- REVERSE RECAPITALIZATION The Transaction On April 14, 2023 (“Closing”), the Company consummated the acquisition of CardioVentures, Inc., a Delaware corporation (“CardioVentures”), pursuant to a Merger Agreement dated November 7, 2022 (the “Merger Agreement”). This agreement was executed among AVRA-SSI Merger Corporation, a wholly owned subsidiary of the Company (“Merger Sub”), CardioVentures, and Dr. Sudhir Srivastava, who, through his holding company, owned a controlling interest in CardioVentures. At Closing, Merger Sub merged with and into CardioVentures (the “Merger”), with CardioVentures being determined as the accounting acquirer for financial reporting purposes in accordance with ASC 805. The transaction was accounted for as a reverse recapitalization, with AVRA being treated as the accounting acquiree. This determination was based on several factors: ● CardioVentures’ stockholders obtained the largest portion of voting rights in the post-combination company. ● The Board and management of the combined entity are primarily composed of individuals associated with CardioVentures. ● CardioVentures had a larger entity size based on historical operations, assets, revenues, and workforce. ● The ongoing operations, post-combination, are those of CardioVentures. Merger Consideration and Share Issuance: As part of the Merger, holders of CardioVentures’ outstanding common stock, including certain parties who provided interim convertible financing, were issued 135,808,884 shares of SSII common stock, representing approxi mately 95 % of the issued and outstanding shares of SSII post-merger, while the existing SSII shareholders retained approximately 5 % ( 6,545,531 shares) of the post-merger issued shares. 30 Pursuant to the Merger Agreement, the holders of CardioVentures’ common stock also received shares 5,000 of newly designated Series A Non-Convertible Preferred Stock (the “Series A Preferred Shares”). These shares: ● Vote together with SSII common stock as a single class, except as required by law. ● Entitle holders to exercise 51 % of the total voting power of the Company. ● Are not convertible into common stock, have no dividend rights, and carry a nominal liquidation preference. ● Include protective provisions requiring the majority vote of Series A Preferred Shares to amend their rights. ● Are subject to automatic redemption for nominal consideration if holders own less than 50 % of the shares received in the Merger. Restructuring and Capital Contributions: Concurrent with the Merger: ● The Company changed its name to “SS Innovations International, Inc.,” effected a one-for-ten reverse stock split, and increased its authorized common stock to 250,000,000 shares. ● Dr. Sudhir Srivastava, through his holding company, assigned patents, trademarks, and other intellectual property related to its surgical robotic systems to a wholly owned subsidiary of SSII. ● Dr. Frederic Moll and Andrew Economos provided interim financing during 2022, contributing $ 3,000,000 each. As a result, Dr. Moll received 7 % of SSII’s post-merger issued and outstanding common stock on a fully diluted basis, with 4 % treated as stock compensation expenses for strategic value. Economos received 2.86 % of SSII’s post-merger issued shares. Reverse Recapitalization Impact: As part of the reverse recapitalization, CardioVentures acquired the net assets of AVRA at fair value at Closing. The fair value of AVRA’s net assets was assessed to be zero by management, resulting in a recognized loss of $ 5,000,000 in additional paid-in capital. This loss was due to the difference between the fair value of the shares issued ( 5 % of the total) and AVRA’s net assets. For comparative periods, the assets and liabilities of CardioVentures (the accounting acquirer) were recognized at their pre-combination carrying amounts, with retained earnings and equity balances carried forward. The equity structure reflects that of AVRA (the legal parent) using the exchange ratio established in the Merger Agreement. NOTE 5 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 (As Restated) Accounts receivable, net (current) 611,707 156,857 Accounts receivable, net (non-current) 1,512,742 886,263 Total accounts receivable, net 2,124,449 1,043,120 31 The Company performed an analysis of the trade receivables related to SSI India and determined, based on the deferred payment terms of the contracts, that a $ 1,512,742 may not be due and collectible in next one year and thus company classified these receivables as non- current. Details of customers which accounted for 10% or more of total revenues during the six months and three months period ended June 30, 2023, and June 30, 2022 and 10% or more of total accounts receivables as at June 30, 2023, and December 31, 2022. Percentage of Revenue Percentage of Revenue Percentage of Accounts For six months ended For three months ended Receivable as at June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 June 30, 2023 December 31, 2022 Customer A 1 % - 1 % - 25 % 52 % Customer B 19 % - 22 % - 23 % - Customer C 17 % - 20 % - 18 % - Customer D - - - - 17 % - Customer E 47 % - 57 % - - - Customer F 16 % - - - 14 % - Customer G - - - - - 43 % NOTE 6 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH For the purpose of condensed consolidated statement of cash flows, cash, cash equivalents and restricted cash (Current) & (Non-Current) consisted of the following as of June 30, 2023, and December 31, 2022. June 30, 2023 December 31, 2022 (As Restated) Cash and cash equivalents 423,062 217,177 Fixed deposit Lien against overdraft facility 43,284 42,942 Lien against credit card facility - 14,506 Restricted cash (Current) 43,284 57,448 Fixed deposit Lien against bank guarantee 43,680 - Lien against credit card facility 16,913 - Restricted cash (Non- current) 60,593 - Total cash, cash equivalents and restricted cash 526,939 274,625 We have classified fixed deposits (FDs), which are subject to withdrawal restrictions, as Restricted cash. Additionally, time deposits with a maturity of over one year have been classified as non-current. The Company has secured a bank overdraft facility from HDFC bank, collateralized by fixed deposits held with HDFC bank. This facility includes a withdrawal restriction tied to the fixed deposit. (Refer Note 10 – Bank Overdraft.) NOTE 7 – PREPAID, CURRENT AND NON- CURRENT ASSETS Prepaid, Current and Non-Current Assets consisted of the following as of June 30, 2023, and December 31, 2022: June 30, 2023 December 31, 2022 (As Restated) Receivables from statutory authorities 1,223,796 706,817 Security deposit 9,564 7,796 Other prepaid- current assets 642,930 416,198 Prepaid and other current assets 1,876,290 1,130,811 Security deposits 155,164 77,048 Other prepaid- non current asset - 6,864 Prepaid and other non current assets 155,164 83,912 Total prepaid, current and non current assets 2,031,454 1,214,723 Prepaid expenses – stock compensation represents unamortized portion of common stock granted to advisors for services to be rendered by them in future. (Refer Note 18 – Stock Compensation Expenses) 32 NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued current and non-current expenses consisted of the following as of June 30, 2023, and December 31, 2022: June 30, 2023 December 31, 2022 (As Restated) Accounts Payable 725,822 165,477 Payable to statutory authorities 32,175 14,515 Salary payable 204,794 136,501 Other accrued liabilities 583,541 347,081 Other accrued liabilities 820,510 498,097 Provision for gratuity long term 29,234 10,626 Other accrued liabilities- non current 29,234 10,626 Total accounts payable, accrued current and non-current expenses 1,575,566 674,200 Accounts payable $ 725,822 as of June 30, 2023, reflect the amounts due to various vendors of supplies and services in the normal course of business operations. Other accrued liabilities of $ 583,541 as of June 30, 2023, mainly include $ 566,566 advance from customers. NOTE 9 - NOTES PAYABLE On April 15, 2023, the Company executed a Convertible Promissory Note (the “Line of Credit Note”) with Sushruta Pvt Ltd. (“Sushruta”), the Bahamian holding company owned by Dr. Sudhir Srivastava, our Chairman, Chief Executive Officer and principal shareholder. Pursuant to the line of credit note, SPL, in its discretion may make multiple advances to the Company through December 31, 2023 (the “Maturity Date”), in an aggregate amount of up to $ 20,000,000 for working capital purposes. The advances under the line of credit note do not bear interest and are due and payable on or before the maturity date. Sushruta may, at its option, convert the principal amount of any advance into shares of our common stock, at a conversion price of $ 0.74 per share. As of June 30, 2023, $ 1,225,000 were outstanding in advances under the line of credit note. The Company entered into an Agreement with Andrew Economos and Dr. Frederic Moll for issuing a convertible redeemable note in the principal amount of $ 3,000,000 each. The note may be converted into common shares (without any significant conversion premium on the debt) of the Company’s common stock at valuation of $ 100,000,000 . As on the date of merger, i.e. April 14, 2023, Andrew Economos converted $ 3,089,178 (comprising of $ 3,000,000 of principal and $89,178 as interest) of his convertible note into 3,879,938 shares of common stock and Dr. Frederic Moll converted $ 3,049,364 (comprising of $ 3,000,000 of principal and $49,364 as interest) of his convertible note into 3,767,933 shares of common stock. 33 NOTE 10 – BANK OVERDRAFT FACILITY Bank overdraft facility consisted of the following as of June 30, 2023, and December 31, 2022. June 30, 2023 December 31, 2022 (As Restated) HDFC Bank Ltd overdraft (with personal guarantee of Dr. Sudhir Srivastava)(OD1) 4,267,888 2,762,962 HDFC Bank Ltd overdraft (with personal guarantee of Dr. Sudhir Srivastava)(OD2) 697,856 360,084 Bank overdraft 4,965,744 3,123,046 The HDFC bank overdraft (OD1) of US$ 4,267,888 availed on the basis of lien on the fixed deposits of $ 43,284 provided by the company and is secured by Dr. Sudhir Srivastava as security for this facility, by the fixed deposits out of its own funds, thereby improving the net working capital position of the Company. The HDFC bank (OD2) is secured by all the current assets of the Company. Both above overdrafts are additionally secured by personal guarantees provided by Dr Sudhir Srivastava. As of June 30, 2023 and December 31, 2022, all financial and non-financial covenants under the bank overdraft facility agreement were complied with by the Company. HDFC bank has sanctioned overdraft facilities subject to operational terms and conditions, including payment on demand, comprehensive insurance coverage against all risks of primary security, periodic inspections of the plant by the bank, and submission of monthly stock and financial records to the bank within 30 days after each month-end. Security for this facility includes current assets, plant and machinery, furniture and fixtures, and a personal guarantee from Mr. Sudhir Prem Shrivastava. The cash credit facility is sanctioned at an interest rate of 9.20 % per annum on the working capital overdraft limit, with interest payable monthly on the first day of the subsequent month. Overdraft facility against fixed deposits is sanctioned with an interest rate linked to HDFC bank’s 3-year MCLR, payable at monthly intervals on the first day of the following month. NOTE 11-BORROWINGS As part of our ongoing efforts to manage working capital and improve liquidity, we have arranged for Axis Bank to issue a Letter of Credit (LC) on behalf of one of our debtors, Indraprastha Cancer Society & Research Centre (RGCI), for $ 452,818 . This LC is valid for a period of 666 days. It is classified as a long-term obligation (including interest) for the year ended December 31, 2022, and for the period ended June 30, 2023. In 2021, the Company received an offer for a term loan with a tenure of 24 months. The loan is structured with a half-yearly principal repayment schedule, and it carries an initial interest rate of 7.80 %. This rate is subject to variation as per the terms outlined in the loan schedule and is payable on a monthly rest basis. The primary securities provided against the loan include current assets, movable fixed assets, fixed deposits and plant and machinery. Additionally, the loan is backed by the personal guarantee of Dr. Sudhir Prem Shrivastava. This loan structure provides the company with a financing solution, secured by a comprehensive range of assets to support ongoing operational and capital needs. June 30, 2023 December 31, 2022 (As Restated) Current maturities of long-term debt - 120,880 Long-term borrowings, less current portion 493,998 469,017 Total Borrowings 493,998 589,897 34 NOTE 12- DEFERRED REVENUE Contract liabilities (deferred revenue) consist of advance billings and billing in excess of revenues recognized. Deferred revenue also includes the amount for which services have been rendered but other conditions of revenue recognition are not met, for example, where the Company does not have an enforceable contract. The revenues attributable to the warranty is recognized over the period to which it relates. During the quarter and six month period ended June 30, 2023, the company had sold three and four surgical robotic systems, respectively. The revenues attributable to warranty for the agreed warranty period in respect of each of the sales contracts are deferred for recognition over the period to which it relates. In case of systems sold on deferred payment basis, the present value of the invoiced system sales realizable over the deferred payment period is recognized as systems sales. The difference between the invoiced amount and its present value is adjusted (reduced) in the accounts receivable balance. This difference is recorded as interest income under other income, with a corresponding impact on accounts receivable over the collection period of contract. The Company recorded $ 41,136 and nil as interest income on account of deferred financing component during the period ended June 30, 2023, and 2022 respectively. June 30, 2023 December 31, 2022 (As Restated) Deferred revenue— beginning of period 43,917 - Additions 342,706 43,917 Net changes in liability for pre-existing contracts 386,623 43,917 Revenue recognized - - Deferred revenue— end of period 386,623 43,917 June 30, 2023 December 31, 2022 (As Restated) Deferred revenue expected to be recognized in: One year or less 37,630 1,776 More than One year 348,993 42,141 386,623 43,917 For the six months ended June 30, 2023, and 2022. The following table disaggregates our revenue by major source: June 30, 2023 June 30, 2022 (As Restated) (As Restated) System sales 1,780,197 - Instruments sale 481,736 - Total revenue 2,261,933 - Revenues for six month ended June 30, 2023 and 2022 by geographic region (determined based upon customer domicile), were as follows: June 30, 2023 June 30, 2022 (As Restated) (As Restated) India 2,261,933 - 2,261,933 - 35 For the three-months ended June 30, 2023, and 2022. The following table disaggregates our revenue by major source: June 30, 2023 June 30, 2022 (As Restated) (As Restated) System sales 1,424,783 - Instruments sale 467,030 - Total revenue 1,891,813 - Revenues for three month ended June 30, 2023 and 2022 by geographic region (determined based upon customer domicile), were as follows: June 30, 2023 June 30, 2022 (As Restated) (As Restated) India 1,891,813 - 1,891,813 - NOTE 13 – STOCKHOLDERS’ EQUITY Common stock The Company is authorized to issue up to 250,000,000 shares of common stock, $ 0.0001 par value per share. The Company has one class of common stock outstanding. Holders of the Company’s common stock are entitled to one vote per share. Upon the liquidation or dissolution of the Company, its common stockholders are entitled to receive a ratable share of the available net assets of the Company after payment of all debts and other liabilities. The Company’s shares of common stock have no pre-emptive, subscription, redemption or conversion rights. Preference shares The Company had issued and outstanding 5,000 shares of preferred stock, par value $ 0.0001 for the period ended June 30, 2023. Common stock issued at the time of Merger At Closing of the Merger on April 14, 2023, 135,808,884 shares of our common stock and 5,000 Series A Preferred Shares were issued to Cardio Ventures. This includes common stock that was issued to Dr. Frederic Moll and one other accredited investor, who each provided $ 3,000,000 in interim financing to the Company pending consummation of the Merger. Following the Merger an additional 3,818,028 shares of our common stock were issued to Dr. Frederic Moll per his interim financing agreement with the Company. As of June 30, 2023, there were 146,172,443 issued and outstanding common shares. Holders of common stock are entitled to one vote for each share of common stock. 36 NOTE 14 - RELATED PARTY TRANSACTIONS As of June 30, 2023, and December 31, 2022, there were amounts due from related parties, respectively. The advances are unsecured, non-interest bearing and due on demand. June 30, 2023 December 31, 2022 (As Restated) Receivable from related party 727,598 1,628,839 Total 727,598 1,628,839 June 30, 2023 December 31, 2022 (As Restated) Payable to related party - ( 675,013 ) Total - ( 675,013 ) The receivable/payable balances from/to related parties is across the Company and its related entities in the normal course of business. All such receivable/payable balances are non-interest bearing and are receivable/repayable on demand. Receivable from related party amounting to $ 727,598 and $ 1,628,839 as at June 30, 2023 and December 31, 2022 respectively, represents proceeds of convertible promissory notes raised by the Company from the investors during the respective years, but collected by related entities on its behalf. Further, payable to related party amounting to $ 675,013 as at December 31, 2022 represents liability for expenses paid by related entities on behalf of the Company. On April 15, 2023, the Company executed a Convertible Promissory Note (the “Line of Credit Note”) with Sushruta Pvt Ltd. (“SPL”), the Bahamian holding company owned by Dr. Sudhir Srivastava, our Chairman, Chief Executive Officer and principal shareholder. Pursuant to the line of credit note, SPL, in its discretion may make multiple advances to the Company through December 31, 2023 (the “Maturity Date”), in an aggregate amount of up to $ 2,000,000 for working capital purposes. The advances under the line of credit note do not bear interest and are due and payable on or before the maturity date. SPL may, at its option, convert the principal amount of any advance into shares of our common stock, at a conversion price of $ 0.74 per share. As of June 30, 2023, $ 1,225,000 in advances were outstanding under the line of credit note. 37 NOTE 15 – LEASES The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates. The following is a summary of operating lease assets and liabilities: June 30, December 31, 2023 2022 Operating leases (As Restated) Assets Right of use operating lease assets 2,598,135 1,498,109 Liabilities Current portion of operating lease liability 258,774 181,900 Non Current portion of operating lease liability 2,408,017 1,371,097 Total lease liabilities 2,666,791 1,552,997 June 30, December 31, 2023 2022 Operating leases (As Restated) Weighted average remaining lease term (years) Ilabs Info Technology 3rd Floor 6.70 7.19 Village Chhatarpur-1257-1258-Farm 1.48 1.97 Ilabs Info Technology Ground Floor 8.93 - Weighted average discount rate Ilabs Info Technology 3rd Floor 12 % 12 % Village Chhatarpur-1257-1258-Farm 10 % 10 % Ilabs Info Technology Ground Floor 12 % - 38 Supplemental cash flow and other information related to leases are as follows: Period ended June 30 2023 2022 (As Restated) (As Restated) Cash payments for amounts included in the measurement of lease liabilities: Operating cash outflows for operating leases 193,046 185,422 Maturities of lease liabilities as of June 30, 2023 were as follows: Operating Leases Fiscal Year Amount (in $) 2023 272,402 2024 572,990 2025 498,403 2026 506,252 2027 514,495 2028 and thereafter 1,711,964 Total Lease Payment 4,076,506 Less: Imputed Interest 1,409,715 Present value of lease liabilities 2,666,791 39 NOTE 16– INCOME TAX The Company has not recorded income tax benefits for the net operating losses incurred during the period ended June 30, 2023, and 2022 nor for other deferred tax assets generated, due to its uncertainty of realizing a benefit from those items . The components of income/(loss) before income taxes consist of the following: Period ended June 30, 2023 June 30, 2022 (As Restated) (As Restated) Domestic - - Foreign ( 6,837,504 ) ( 1,699,288 ) Total ( 6,837,504 ) ( 1,699,288 ) The Company does not have federal and state net operating losses for the period ended June 30, 2023, and June 30, 2022. The Company has not recorded any amounts for unrecognized tax benefits as of June 30, 2023, and June 30, 2022. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had no accrual of interest and penalties on the Company’s balance sheets and has not recognized interest and penalties in the condensed consolidated statement of operations and comprehensive loss for the period ended June 30, 2023, and June 30, 2022. The Company is subject to taxation in the United States and India. The Company’s tax returns filed has no pending examinations in India and US. The effective income tax rate differs from the amount computed by applying the income tax rate of India to Income/(Loss) before income taxes approximately as follows: Period ended June 30, 2023 June 30, 2022 (As Restated) (As Restated) Accounting profit / (loss) before income tax ( 6,837,504 ) ( 1,699,288 ) Income tax expense (benefit) at federal statutory rate at 21 % ( 1,435,876 ) ( 356,850 ) Foreign tax rate differential ( 341,875 ) ( 84,964 ) Non-deductible expenses 6,631 36,398 Excess tax expense/(benefit) on depreciation 4,618 3,690 Excess tax expense/(benefit) on Security deposit 70 66 Impact of unrecognized deferred tax asset on the loss of the year 1,424,557 316,696 Income tax expense/(benefit) - - The Company recorded nil income tax expense for the period ended June 30, 2023 and June 30, 2022, due to losses in current period and prior period and it does not expect to recover the tax benefit on the losses incurred during the period ended June 30, 2023, and June 30, 2022. 40 The components of the deferred tax balances were as follows: June 30, 2023 December 31, 2022 (As Restated) Deferred tax assets: Net operating loss carry forwards 763,591 93,772 Net operating loss 1,435,876 669,819 Lease payments 14,417 11,527 Others 8,511 1,533 2,222,395 776,651 Valuation allowance ( 2,198,357 ) ( 768,324 ) Deferred tax assets 24,038 8,327 Deferred tax liabilities: Depreciation and amortization 30,125 929 Others ( 6,087 ) 7,398 Deferred tax liabilities 24,038 8,327 Net deferred tax assets/Liability - - Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of assets and liabilities and their respective tax bases and operating loss carry forwards. The Company performed an analysis of the realizability of deferred tax assets as of June 30, 2023, and December 31, 2022, and recorded a valuation allowance of $ 2,198,357 and $ 768,324 , respectively. NOTE 17 – FAIR VALUE MEASUREMENT – FINANCIAL INSTRUMENTS Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are: ● Level 1: observable inputs such as quoted prices in active markets. ● Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and ● Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions. 41 The company’s financial assets which are set out below in the table is measured at fair value by considering the level III inputs. The company does not have financial assets which are measured using Level I or Level II inputs. Carrying value and fair value of Level III Financial assets and liabilities: Carrying Value Fair value June 30, December 31, June 30, December 31, 2023 2022 2023 2022 Financial Assets Account receivables net (1) 1,512,742 886,263 1,512,742 886,263 Other non-current financial assets (2) 113,940 63,266 113,940 63,266 Total 1,626,682 949,529 1,626,682 949,529 Financial Liabilities Borrowings (3) 493,998 469,017 493,998 469,017 Lease liabilities (4) 2,408,017 1,371,097 2,408,017 1,371,097 Other non-current financial liabilities (5) 29,234 10,626 29,234 10,626 Total 2,931,249 1,850,740 2,931,249 1,850,740 (1) Account receivable net of allowance represent the long-term debtors of the company in relation to the sales made during the year. The Company has presented the receivable balances account after reducing the significant financing component included using the discount rate of 10%. (2) Other non-current assets include security deposits and long-term fixed deposits with banks. Company has calculated the fair value of security deposit at present value of future receipt using discount rate of 10% and fair value of long-term fixed deposit with banks are carried at cost which is approximate to the fair value. (3) Long term borrowing includes a loan from the Axis bank. The Company has carried the loan balance at cost which is approximate to the fair value. (4) The Company has long term lease liabilities in relation to office properties which is carried at cost using the discount rate (Refer Note 15 Lease). (5) Other non-current financial liabilities include provision for gratuity which is carried at a cost which is approximate to its fair value. The Company has assessed that the financial instruments that are not carried at fair value consist primarily of cash and cash equivalents, restricted cash, receivable from related party, prepaid and other current assets, note payable, Bank overdraft facility, account payable, and payable to related party for which fair values approximate their carrying amounts due to the short-term maturities of these instruments. 42 NOTE 18 – STOCK COMPENSATION EXPENSES Stock Options issued to Doctors/Proctors as Advisors : Company issue common stock (“Advisory Share”) to retain the Advisor to perform the Services and in exchange for the compensation, which is issued in a phased manner as determined by the company. The “Services” includes (a) provide proctoring and medical advisory services, (b) advise the Company related to development of surgical robotics procedures and improvements in design and technology (c) participate in case observation and live surgery performance (d) disseminate information about Company’s products as speaker in various scientific meets/surgical robotic conferences globally. Advisory shares: Common stock issued to consultants as advisory shares during the period as follows: Grant dates Fair value on grant date Total shares granted Option vested Unvested Option at period end 1-Jun-23 8.15 12,000 1,000 11,000 1-May-23 2.00 50,000 14,286 35,714 28-Jun-23 6.67 75,000 8,557 66,443 Total 137,000 23,843 113,157 During the period ended June 30, 2023, the Company has recorded share compensation expense of $ 8,150 in relation to Advisory shares. As share-based compensation expense recognized in the condensed consolidated statement of operations and comprehensive loss during the period ended June 30, 2023, and 2022, is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, if any. As of June 30, 2023, there was $ 604,034 of total unrecognized compensation expense related to unvested advisory stock. The total unrecognized compensation expense is expected to be recognized until end of May 31, 2024. NOTE 19 – COMMITMENTS The Company, through its SSI-India subsidiary, occupies office, manufacturing, and assembly space in Gurugram, Haryana (India) under a lease agreement entered into in March 2021, with monthly payments of $ 16,528 plus applicable taxes. This lease expires in March 2030 . Effective June 01, 2023, SSI-India subsidiary signed another lease agreement for occupying an additional space of 21,600 sq ft on the ground floor of the same building where its current facility is located, to further expand its manufacturing and assembly capacity. This lease provides for a monthly payment of $ 12,033 plus taxes and expires on May 31, 2032 , subject to further renewal on mutually acceptable terms. 43 NOTE 20 – SUBSEQUENT EVENTS 1. Subsequent to June 2023, the Company had issued a raised a total of $ 16,980,000 in Convertible Notes from Sushruta. As of September 2023, Sushruta exercised its option to convert the full amount of advances made into 22,945,94 shares of the Company’s common stock at a conversion price of $ 0.74 per share. 2. On February 13, 2024, the Company granted 3,350,221 stock options to Dr Sudhir Prem Srivastava to purchase common stock of the Company under Company’s Incentive Stock Plan. These options vested as of the grant date and can be exercised at a price of $ 5.00 per Share subject to adjustment pursuant to the terms of the Plan. The options to the extent vested and not exercised expire five years from the date of grant or earlier as provided for in the Incentive Stock Plan. 3. In the month of February 2024, through February 14, 2024, the Company raised $ 2,450,000 through 7 % One-Year Convertible Promissory Notes (“Notes”) from two affiliates ($ 1,000,000 each) and $ 450,000 from 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 . 4. In April 2024, the Company raised $ 2,000,000 from Sushruta Pvt Ltd. by issuance of two 7 % One-Year Promissory note of $ 1,000,000 each, to meet certain working capital needs. 5. In July 2024, the Company raised $ 500,000 from Sushruta Pvt Ltd. by issuance of another One-Year 7 % One-Year Promissory notes to meet certain working capital needs. 6. In August 2024, the Company issued 125,000 shares to certain doctors/proctors for providing their proctoring/mentoring services. 7. In October 2024, the Company borrowed $ 250,000 from Sushruta Pvt Ltd. to meet certain working capital needs evidenced by an additional One-Year 7 % Promissory Note in such principal amount. In October 2024, our SSI-India subsidiary’s working capital facilities from HDFC bank were also increased by an additional $ 1,093,881 . 8. In December 2024, the Company borrowed $ 2,000,000 from Sushruta Pvt. Ltd. to meet certain working capital needs evidenced by an additional 7 % One-Year Convertible Promissory Note. 44