SS Innovations International, Inc. 10-Q/A

Item 1. Financial Statements Notes June 30, 2024 (As restated) December 31, 2023 ASSETS Current Assets: Cash and cash equivalents 6 608,215 2,022,276 Restricted cash 6 5,620,153 5,029,650 Accounts receivable, net 5 4,280,188 1,901,244 Receivable from related party 14 1,286,980 1,567,559 Inventory, net 7,217,663 7,017,913 Prepaids and other current assets 7 4,255,897 3,890,017 Total Current Assets 23,269,096 21,428,659 Non-Current Assets: Property, plant, and equipment, net 3 2,774,967 706,405 Right of use asset 15 2,448,965 2,657,554 Accounts receivable, net 5 3,046,783 2,365,013 Restricted cash 6 327,034 35,919 Prepaids and other non current assets 7 3,800,258 4,322,444 Total Non-Current Assets 12,398,007 10,087,335 Total Assets 35,667,103 31,515,994 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Bank overdraft facility 10 6,861,536 6,018,926 Notes payable 9 4,450,000 - Current maturities of long-term debt 11 533,854 510,189 Current portion of operating lease liabilities 15 428,713 396,784 Accounts payable 8 1,126,373 901,552 Deferred revenue 12 395,565 156,330 Other accrued liabilities 8 1,181,912 489,939 Total Current Liabilities 14,977,953 8,473,720 Non- Current Liabilities Operating lease liabilities, less current portion 15 2,125,946 2,351,113 Deferred revenue 12 3,732,399 939,150 Other accrued liabilities 8 58,391 33,933 Total Non-Current Liabilities 5,916,736 3,324,196 Total Liabilities 20,894,689 11,797,916 Stockholders’ equity: Preferred stock, authorized 5,000,000 shares of Series A, Non-Convertible Preferred Stock, $ 0.0001 par value per share; 5,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023 13 1 1 Common stock, 250,000,000 shares authorized, $ 0.0001 par value, 170,739,380 shares and 170,711,880 shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively 13 17,075 17,072 Accumulated other comprehensive income (loss) 13 ( 279,138 ) ( 195,499 ) Common stock to be issued, 12,500 shares 13 - 50,000 Additional paid in capital 13 52,628,232 43,457,937 Capital reserve 899,917 899,917 Accumulated deficit ( 38,493,673 ) ( 24,511,350 ) Total stockholders’ equity 14,772,414 19,718,078 Total liabilities and stockholders’ equity 35,667,103 31,515,994 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 months ended Notes June 30, 2024 (As restated) June 30, 2023 REVENUES System sales 12 4,258,198 1,424,783 Instruments sale 12 204,121 467,030 Warranty sale 12 28,795 - Lease income 12 18,012 - Total revenue 4,509,126 1,891,813 Cost of revenue ( 3,071,340 ) ( 1,124,116 ) GROSS PROFIT 1,437,786 767,697 OPERATING EXPENSES: Research & development expense 759,004 246,426 Stock compensation expense 19 2,443,792 8,150 Depreciation and amortization expense 3 90,476 34,466 Selling, general and administrative expense 2,244,703 5,669,790 TOTAL OPERATING EXPENSES 5,537,975 5,958,832 Loss from operations ( 4,100,189 ) ( 5,191,135 ) OTHER INCOME (EXPENSE): Interest Expense ( 242,577 ) ( 365,205 ) Interest and other income, net 202,196 31,852 TOTAL OTHER EXPENSE, NET ( 40,381 ) ( 333,353 ) LOSS BEFORE INCOME TAXES ( 4,140,570 ) ( 5,524,488 ) Income tax expense - - NET LOSS ( 4,140,570 ) ( 5,524,488 ) Net loss per share - basic and diluted 2 (p) ( 0.02 ) ( 0.04 ) Weighted average- basic shares 2 (p) 170,739,380 143,599,382 Weighted average- diluted shares 2 (p) 181,843,313 143,736,382 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS NET LOSS ( 4,140,570 ) ( 5,524,488 ) OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation loss ( 16,131 ) ( 20,890 ) Retirement benefit (net of tax) 3,299 1,246 TOTAL COMPREHENSIVE LOSS ( 4,153,402 ) ( 5,544,132 ) 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 months ended Notes June 30, 2024 (As restated) June 30, 2023 REVENUES System sales 12 7,752,957 1,780,197 Instruments sale 12 322,636 481,736 Warranty sale 12 38,202 - Lease income 12 33,024 - Total revenue 8,146,819 2,261,933 Cost of revenue ( 5,980,851 ) ( 1,416,289 ) GROSS PROFIT 2,165,968 845,644 OPERATING EXPENSES: Research & development expense 1,286,995 488,553 Stock compensation expense 19 9,552,542 8,150 Depreciation and amortization expense 3 170,577 67,057 Selling, general and administrative expense 5,088,362 6,543,648 TOTAL OPERATING EXPENSES 16,098,476 7,107,408 Loss from operations ( 13,932,508 ) ( 6,261,764 ) OTHER INCOME (EXPENSE): Interest Expense ( 432,665 ) ( 621,875 ) Interest and other income, net 382,850 46,135 TOTAL OTHER EXPENSE, NET ( 49,815 ) ( 575,740 ) LOSS BEFORE INCOME TAXES ( 13,982,323 ) ( 6,837,504 ) Income tax expense - - NET LOSS ( 13,982,323 ) ( 6,837,504 ) Net loss per share - basic and diluted 2(p) ( 0.08 ) ( 0.05 ) Weighted average- basic shares 2(p) 170,734,435 135,965,966 Weighted average- diluted shares 2(p) 181,726,502 136,102,966 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS NET LOSS ( 13,982,323 ) ( 6,837,504 ) OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation loss ( 95,445 ) ( 69,513 ) Retirement benefit (net of tax) 11,806 5,546 TOTAL COMPREHENSIVE LOSS ( 14,065,962 ) ( 6,901,471 ) See accompanying notes to Condensed Consolidated Financial Statements. 3 SS INNOVATIONS INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2024, AND JUNE 30, 2023 (Unaudited) Preferred Stock Common Stock Common Stock to be Issued Additional Paid-In Accumulated Capital Accumulated other comprehensive Total Stockholders’ Notes Number Amount Number Amount Number Amount Capital Deficit Reserve income (loss) equity Balance as at December 31, 2023 5,000 1 170,711,880 17,072 12,500 50,000 43,457,937 ( 24,511,350 ) 899,917 ( 195,499 ) 19,718,078 Stock compensation 19 - - - - - - 6,842,002 - - - 6,842,002 Common stock issued against exercise of warrants - - 12,500 1 ( 12,500 ) ( 50,000 ) 49,999 - - - - Stock issued for services - - 15,000 2 - - 101,249 - - - 101,250 Net loss - - - - - - - ( 9,841,753 ) - ( 70,807 ) ( 9,912,560 ) Balance as at March 31, 2024 5,000 1 170,739,380 17,075 - - 50,451,187 ( 34,353,103 ) 899,917 ( 266,306 ) 16,748,770 Stock compensation 19 - - - - - - 2,177,045 - - - 2,177,045 Common stock issued against exercise of warrants - - - - - - - - - - - Stock issued for services - - - - - - - - - - - Net loss - - - - - - - ( 4,140,570 ) - ( 12,832 ) ( 4,153,402 ) Balance as at June 30, 2024 5,000 1 170,739,380 17,075 - - 52,628,232 ( 38,493,673 ) 899,917 ( 279,138 ) 14,772,414 Balance as 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 as at March 31, 2023 - - 128,161,013 12,817 - - ( 12,812 ) ( 4,946,074 ) 899,917 10,277 ( 4,035,875 ) Preferred stock issued 5,000 1 - - - - ( 1 ) - - - - Reverse recapitalization - - 6,545,531 655 - - ( 655 ) - - - - Conversion of notes payable to equity - - 7,647,871 765 - - 6,137,773 - - - 6,138,538 Stock issued for services - - 3,818,028 382 - - 4,463,417 - - - 4,463,799 Stock compensation expense 19 - - - - - - 8,150 - - - 8,150 Shares to be issued for services - - - - - - 85,616 - - - 85,616 Net loss - - - - - - ( 5,524,488 ) - ( 19,644 ) ( 5,544,132 ) Balance as at June 30, 2023 5,000 1 146,172,443 14,619 - - 10,681,488 ( 10,470,562 ) 899,917 ( 9,367 ) 1,116,096 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, 2024 (As restated) June 30, 2023 Cash flows from operating activities: Net loss ( 13,982,323 ) ( 6,837,504 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 170,577 67,057 Operating lease liability 15,331 13,777 Interest expense (net) 49,815 575,740 Credit loss reserve 573,048 - Shares issued to investors and advisors - 4,463,799 Stock compensation expense 9,552,542 8,150 Changes in operating assets and liabilities: Accounts receivable, net ( 3,475,878 ) ( 1,040,193 ) Inventory, net ( 199,750 ) ( 3,061,647 ) Receivables from / payable to related parties 280,579 226,228 Deferred revenue 3,032,484 342,706 Prepaids and other current assets ( 488,235 ) ( 962,286 ) Accounts payable 224,821 560,346 Prepaids and other non current assets ( 6,180 ) ( 73,700 ) Other accrued liabilities 558,683 341,021 Net cash used in operating activities ( 3,694,486 ) ( 5,376,506 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 2,239,139 ) ( 105,536 ) Net cash used in investing activities ( 2,239,139 ) ( 105,536 ) Cash flows from financing activities: Proceeds from bank overdraft facility (net) 842,610 1,677,577 Proceeds from issuance of convertible notes to principal shareholder 3,000,000 1,225,000 Proceeds from issuance of convertible notes to other investors 1,450,000 3,000,000 Repayment of term loan - ( 142,895 ) Net cash provided by financing activities 5,292,610 5,759,682 Net change in cash ( 641,015 ) 277,640 Effect of exchange rate on cash 108,572 ( 25,326 ) Cash and cash equivalents at the beginning of the period 7,087,845 274,625 Cash and cash equivalents at end of the period 6,555,402 526,939 See accompanying notes to Condensed Consolidated Financial Statements. 5 SS INNOVATIONS INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 (the “ 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, 2024, and the interim condensed consolidated statements of operations, comprehensive loss and stockholders’ equity for the six months and three months and cash flows for the six months ended June 30, 2024 and June 30, 2023 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 presentation of our financial position as of June 30, 2024 and our results of operations for the six months and three months and cash flows for the six months ended June 30, 2024 and June 30, 2023. The financial data and other financial information disclosed in these notes to the interim condensed consolidated financial statements related to the six months and three months are also unaudited. The interim condensed consolidated results of operations for the six months and three months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future annual or interim period. The condensed consolidated balance sheet as of December 31, 2023 included herein was produced 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 condensed financial statements have been prepared on a consolidated basis and reflect the condensed consolidated financial statements of SS Innovations International, Inc. and all of its subsidiaries (the “ 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 GAAP. Restatement of Previously Issued Financial Statements for Correction of Errors The Company restated the accompanying condensed consolidated balance sheet as at June 30, 2024 as well as the condensed consolidated statement of operations and comprehensive loss and the condensed consolidated statements of cash flows for the quarter and three-months ended June 30, 2024, and June 30, 2023, respectively, as previously reported in its Form 10-Q, to reflect the correction of errors arising out of: i. Functional / other reclassification ii. Errors / Adjustments 6 Restatement in June 2024 Summary of restatements made in condensed consolidated balance sheet, as at June 30, 2024, is as follows: Particulars As Previously Reported As Restated Changes Functional / Other reclassification¹ Errors / Adjustments² ASSETS Current Assets: Cash and cash equivalents 1,454,675 608,215 ( 846,460 ) ( 846,460 ) - Restricted cash 5,619,490 5,620,153 663 - 663 Accounts receivable, net 4,603,800 4,280,188 ( 323,612 ) 2,219,125 ( 2,542,737 ) Receivable from related party - 1,286,980 1,286,980 1,297,410 ( 10,430 ) Inventory, net 6,443,067 7,217,663 774,596 - 774,596 Prepaids and other current assets 4,501,398 4,255,897 ( 245,501 ) - ( 245,501 ) Total Current Assets 22,622,430 23,269,096 646,666 2,670,075 ( 2,023,409 ) Non- Current Assets: Property, plant, and equipment, net 2,023,645 2,774,967 751,322 - 751,322 Right of use asset 2,448,918 2,448,965 47 - 47 Accounts receivable, net 5,265,908 3,046,783 ( 2,219,125 ) ( 2,219,125 ) - Restricted cash 327,012 327,034 22 - 22 Receivable from related party 1,297,410 - ( 1,297,410 ) ( 1,297,410 ) - Prepaids and other non current assets 4,332,081 3,800,258 ( 531,823 ) ( 531,823 ) Total Non-Current Assets 15,694,975 12,398,007 ( 3,296,968 ) ( 3,516,535 ) 219,567 Total Assets 38,317,405 35,667,103 ( 2,650,302 ) ( 846,460 ) ( 1,803,842 ) LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Bank overdraft facility 7,707,534 6,861,536 ( 845,998 ) ( 846,460 ) 463 Notes payable 4,450,000 4,450,000 - - - Current maturities of long-term debt - 533,854 533,854 510,189 23,665 Current portion of operating lease liabilities 428,705 428,713 8 - 8 Accounts payable 1,295,003 1,126,373 ( 168,630 ) - ( 168,630 ) Deferred revenue - 395,565 395,565 395,565 - Other accrued liabilities 3,844,064 1,181,912 ( 2,662,152 ) ( 2,335,601 ) ( 326,551 ) Total Current Liabilities 17,725,305 14,977,953 ( 2,747,352 ) ( 2,276,307 ) ( 471,045 ) Non-Current Liabilities: Operating lease liabilities, less current portion 2,125,906 2,125,946 40 - 40 Deferred revenue - 3,732,399 3,732,399 2,879,186 853,213 Other accrued liabilities 939,150 58,391 ( 880,759 ) ( 905,217 ) 24,458 Long-term borrowings, less current portion 544,122 - ( 544,122 ) ( 544,122 ) - Total Non-Current Liabilities 3,609,178 5,916,736 2,307,558 1,429,847 877,711 Total Liabilities 21,334,483 20,894,689 ( 439,794 ) ( 846,460 ) 406,666 Stockholders’ 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, 2024 and December 31, 2023 1 1 - - - Common stock, 250,000,000 shares authorized, $ 0.0001 par value, 170,739,380 shares and 170,711,880 shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively 17,073 17,075 2 - 2 Accumulated other comprehensive income (loss) ( 378,165 ) ( 279,138 ) 99,027 - 99,027 Additional paid in capital 48,455,054 52,628,232 4,173,178 - 4,173,178 Capital reserve 899,917 899,917 - - - Accumulated deficit ( 32,010,958 ) ( 38,493,673 ) ( 6,482,715 ) ( 6,482,715 ) Total stockholders’ equity 16,982,922 14,772,414 ( 2,210,508 ) - ( 2,210,508 ) Total liabilities and stockholders’ equity 38,317,405 35,667,103 ( 2,650,302 ) ( 846,460 ) ( 1,803,842 ) 7 Condensed consolidated statement of operations and comprehensive loss for the six-months ended June 30, 2024: Particulars As Previously Reported As Restated Changes Functional / Other reclassification¹ Errors / Adjustments² REVENUE: System sales 11,312,947 7,752,957 ( 3,559,990 ) ( 27,725 ) ( 3,532,266 ) Instruments sale 266,785 322,636 55,851 27,725 28,126 Warranty sale 37,278 38,202 924 - 924 Lease income - 33,024 33,024 - 33,024 Total revenue 11,617,011 8,146,819 ( 3,470,192 ) - ( 3,470,192 ) Cost of revenue ( 7,499,849 ) ( 5,980,851 ) 1,518,998 ( 389,932 ) 1,908,930 GROSS PROFIT 4,117,163 2,165,968 ( 1,951,195 ) ( 389,932 ) ( 1,561,263 ) OPERATING EXPENSES: Research & development expense 426,118 1,286,995 860,877 830,919 29,958 Stock compensation expense - 9,552,542 9,552,542 3,248,916 6,303,626 Salaries & Payroll Expenses - - - - - Depreciation and amortization expense - 170,577 170,577 169,919 658 Selling, general and administrative expense 9,102,278 5,088,362 ( 4,013,916 ) ( 4,436,679 ) 422,763 TOTAL OPERATING EXPENSES 9,528,396 16,098,476 6,570,080 ( 186,925 ) 6,757,005 Loss from operations ( 5,411,234 ) ( 13,932,508 ) ( 8,521,275 ) ( 203,007 ) ( 8,318,267 ) OTHER INCOME (EXPENSE): Interest expense ( 399,004 ) ( 432,665 ) ( 33,662 ) - ( 33,662 ) Interest and other income, net 230,542 382,850 152,308 - 152,308 TOTAL OTHER INCOME (EXPENSE), NET ( 168,462 ) ( 49,815 ) 118,647 - 118,647 LOSS BEFORE INCOME TAXES ( 5,579,695 ) ( 13,982,323 ) ( 8,402,628 ) ( 203,007 ) ( 8,199,621 ) Income tax expense - - - - - NET LOSS ( 5,579,695 ) ( 13,982,323 ) ( 8,402,628 ) ( 203,007 ) ( 8,199,621 ) Consolidated statements of other comprehensive loss NET LOSS ( 5,579,695 ) ( 13,982,323 ) ( 8,402,628 ) ( 203,007 ) ( 8,199,621 ) Foreign currency translation loss ( 4,078 ) ( 95,445 ) ( 91,367 ) - ( 91,367 ) Retirement benefit (net of tax) - 11,806 11,806 - 11,806 TOTAL COMPREHENSIVE LOSS ( 5,583,773 ) ( 14,065,962 ) ( 8,482,189 ) ( 203,007 ) ( 8,279,182 ) 8 Condensed consolidated statement of operations and comprehensive loss for the three-months ended June 30, 2024: Particulars As Previously Reported As Restated Changes Functional / Other reclassification¹ Errors / Adjustments² REVENUE: System sales 4,175,755 4,258,198 82,443 ( 22,033 ) 104,476 Instruments sale 182,088 204,121 22,033 22,033 - Warranty sale 28,207 28,795 588 - 588 Lease income - 18,012 18,012 - 18,012 Total revenue 4,386,050 4,509,126 123,076 - 123,076 Cost of revenue ( 3,345,560 ) ( 3,071,340 ) 274,220 1,930 272,290 GROSS PROFIT 1,040,491 1,437,786 397,296 1,930 395,366 OPERATING EXPENSES: Research & development expense 30,068 759,004 728,937 698,979 29,958 Stock compensation expense - 2,443,792 2,443,792 1,311,714 1,132,078 Depreciation and amortization expense - 90,476 90,476 90,476 - Selling, general and administrative expense 3,777,479 2,244,703 ( 1,532,776 ) ( 1,776,275 ) 243,499 TOTAL OPERATING EXPENSES 3,807,546 5,537,975 1,730,429 324,894 1,405,535 Loss from operations ( 2,767,056 ) ( 4,100,189 ) ( 1,333,134 ) ( 322,965 ) ( 1,010,169 ) OTHER INCOME (EXPENSE): Interest expense ( 229,521 ) ( 242,577 ) ( 13,057 ) - ( 13,057 ) Interest and other income, net 64,742 202,196 137,454 - 137,454 TOTAL OTHER INCOME (EXPENSE), NET ( 164,779 ) ( 40,381 ) 124,398 - 124,398 LOSS BEFORE INCOME TAXES ( 2,931,834 ) ( 4,140,570 ) ( 1,208,736 ) ( 322,965 ) ( 885,772 ) Income tax expense - - - - - NET LOSS ( 2,931,834 ) ( 4,140,570 ) ( 1,208,736 ) ( 322,965 ) ( 885,772 ) Consolidated statements of other comprehensive loss NET LOSS ( 2,931,834 ) ( 4,140,570 ) ( 1,208,736 ) ( 322,965 ) ( 885,772 ) Foreign currency translation loss ( 1,689 ) ( 16,131 ) ( 14,442 ) - ( 14,442 ) Retirement benefit (net of tax) - 3,299 3,299 - 3,299 TOTAL COMPREHENSIVE LOSS ( 2,933,523 ) ( 4,153,402 ) ( 1,219,879 ) ( 322,965 ) ( 896,915 ) 9 Condensed consolidated statement of cashflows for the six-months ended June 30, 2024: Particular As Previously Reported As Restated Changes Functional / Other reclassification¹ Errors / Adjustments² Cash flows from operating activities: Net loss ( 5,579,695 ) ( 13,982,323 ) ( 8,402,628 ) ( 203,007 ) ( 8,199,621 ) Adjustments to reconcile net loss to net cash used in operating activities: - - Depreciation and amortization 379,608 170,577 ( 209,031 ) 169,919 ( 378,950 ) Operating lease liability 149,215 15,331 ( 133,884 ) - ( 133,884 ) Stock compensation expense 3,248,916 9,552,542 6,303,626 - 6,303,626 Interest expense (net) - 49,815 49,815 - 49,815 Credit loss reserve - 573,048 573,048 - 573,048 Changes in operating assets and liabilities: - - Accounts receivable, net ( 2,702,556 ) ( 3,475,878 ) ( 773,322 ) 2,219,125 ( 2,992,447 ) Inventory, net 4,064 ( 199,750 ) ( 203,814 ) - ( 203,814 ) Receivables from / payable to related parties 280,579 280,579 270,149 10,430 Deffered revenue 3,032,484 3,032,484 - 3,032,484 Prepaids and other current assets ( 902,474 ) ( 488,235 ) 414,239 - 414,239 Accounts payable 3,660,476 224,821 ( 3,435,655 ) - ( 3,435,655 ) Prepaids and other non current assets ( 9,637 ) ( 6,180 ) 3,457 - 3,457 Other accrued liabilities 558,683 558,683 - 558,683 Lease payments ( 342,501 ) - 342,501 - 342,501 Net cash used in operating activities ( 2,094,584 ) ( 3,694,486 ) ( 1,599,902 ) 2,456,186 ( 4,056,088 ) Cash flows from investing activities: Accounts receivable, net ( 2,900,895 ) - 2,900,895 2,900,895 - Purchase of property, plant and equipment ( 1,488,212 ) ( 2,239,139 ) ( 750,927 ) - ( 750,927 ) Receivables from / payable to related parties 270,149 - ( 270,149 ) ( 270,149 ) - Net cash used in investing activities ( 4,118,959 ) ( 2,239,139 ) 1,879,819 2,630,746 ( 750,927 ) Cash flows from financing activities: Proceeds from issuance of convertible notes to other investors 1,450,000 1,450,000 - - - Proceeds from issuance of convertible notes to principal shareholder 3,000,000 3,000,000 - - - Proceeds from bank overdraft facility (net) 1,688,608 842,610 ( 845,998 ) - ( 845,998 ) Proceeds from securities offering 101,252 - ( 101,252 ) - ( 101,252 ) Net cash provided by financing activities 6,239,860 5,292,610 ( 947,250 ) - ( 947,250 ) Net change in cash 26,318 ( 641,015 ) ( 667,333 ) 5,086,932 ( 5,754,265 ) Effect of exchange rate on cash ( 4,080 ) 108,572 112,652 - - Cash and cash equivalents at the beginning of the period 7,051,927 7,087,845 35,918 - - Cash and cash equivalents at end of the period 7,074,165 6,555,402 ( 518,763 ) 5,086,932 ( 5,754,265 ) (1) Functional / Other reclassifications In 2024, 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. 10 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. 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 loss. 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 Impact on restated condensed consolidated financial statements for the period ended June 30, 2024 (A) Impact on restated Condensed Consolidated Balance Sheet Reclassifications were of below nature: 1. Cash & cash equivalents: The company identified that previously cash & cash equivalents includes bank overdraft balance of $ 846,460 which are now correctly reclassified to bank overdraft facility. 2. Accounts receivable of $ 2,219,215 are reclassified from non-current to current based on their due date of collection as per contract with customers. 3. Receivables from related party (net) of $ 1,297,410 reclassified from non-current to current based on their due date of collection. 4. Other accrued liabilities: Deferred revenue was previously recorded under other accrued liability (current) amounting to $ 2,335,601 and other accrued liability (non-current) amounting to $ 939,150 . This has now been classified separately as defer revenue current amounting to $ 395,565 and non-current amounting to $ 2,879,186 . 5. Long term borrowings: As at June 30, 2024, long term borrowings amounting to $ 510,189 are now reclassified to current maturities of long-term debt. Additionally, actuarial liability amounting $ 33,933 which were previously classified under long term borrowing (non-current) has now been reclassified to other accrued liabilities (non-current). Differential impact of above adjustments have been corrected in the condensed consolidated statement of cash flows for the six months ended June 30, 2024. 11 (B) Reclassifications Condensed Consolidated Statement of Operations and comprehensive loss Reclassifications were of below nature: (i) Functional classification Operating expenses are now reclassified functionally, encompassing Selling, general and administrative expense, research and development expense and stock compensation expense. This reclassification has resulted in increase in the Cost of revenue by $ 389,932 , Research and development expense by $ 830,919 , Stock compensation expense by $ 3,248,916 , Depreciation and amortization expense by $ 169,919 and a decrease in Selling, general and administrative expense by $ 4,436,679 for the six months ended June 30, 2024. Similarly, this reclassification has resulted in decrease in the Cost of revenue by $ 1,930 , Research and development expense by $ 698,979 , Stock compensation expense by $ 1,311,714 , Depreciation and amortization expense by $ 90,476 and a decrease in Selling, general and administrative expense by $ 1,776,275 for the three months ended June 30, 2024. (ii) Other reclassifications Sales of instruments amounting to $ 27,725 and $ 22,033 for the six months and three months period ended June 30, 2024 respectively, was previously recorded under System sales and has now been correctly classified to Instrument sales. 2. 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, 2024: (i) Errors relating to sales cut-off: The Company identified that sale of systems amounting to $ 2,542,737 were recorded in previously filed financial statements as System sales that were not related to current period. Correspondingly, a reversal entry was made in current period resulting in decrease of accounts receivable and System sale. (ii) Deferred Revenue: The Company identified that sale of system amounting to $ 887,237 and $ 104,476 for six months and three months period ended June 30, 2024 respectively, were recorded in previously filed financial statements which relates to unsatisfied performance obligations. Accordingly, the same was rectified in current period that results in increase of deferred revenue and decrease in System sales. (iii) Lease income: Lease payments relating to the fixed payments arising out of the systems installed on Pay per use basis was recorded as lease income amounting to $ 33,024 and $ 18,012 for six months and three months period ended June 30, 2024 respectively. (iv) Incorrect recognition of prepaid and other current asset: The Company identified that recovery of security deposits/advances amounting to $ 316,947 is doubtful and hence a credit loss reserve for the same was created. This was not accounted for in the previously filled financial statements. Additionally, prepaid assets amounting to $ 47,804 were expensed off as services were already availed. Further the Company accrued interest on fixed deposits amounting to $ 119,250 which was not recorded in the previously filed financial statements. As a result of these adjustments, prepaid and other current assets decreased by $ 245,501 . 12 (v) Incorrect capitalization of PPE: The Company identified that it has leased one system on “pay per use basis” to a customer and one system was used for “demo”. However, in the previous financial statements these systems were classified as inventory, which are now capitalized in property, plant and equipment and depreciation is recomputed accordingly. As a result of this adjustment property, plant and equipment was increased by $ 540,040 (net of depreciation) as at June 30, 2024. 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 life were corrected, and depreciation was recalculated accordingly. As a result of this adjustment property, plant, and equipment was increased by $ 211,282 for the six months ended June 30, 2024. (vi) The Company identified that the inventory was previously recorded at incorrect valuation. As a result of this adjustment, inventory is increased by $ 774,596 (net off amount capitalized in property, plant and equipment relating to system leased on “pay per use basis” to a customer and one system was used for “demo” amounting to $ 542,040 as at June 30, 2024. Consequent to this adjustment, cost of revenue has decreased by $ 1,908,930 and $ 272,290 for six months and three months period ended June 30, 2024 respectively. (vii) Incorrect accrual of expenses: The company has identified some payable balances which was previously recorded incorrectly in books of accounts, as a result amount of $ 326,551 and $ 168,830 was reduced from other accrued liability and accounts payable respectively. (viii) 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. (ix) Stock compensation expenses: The Company had issued stocks to advisors upfront for services to be received in the future. However the Company had recorded complete expense upfront in the previously filed financial statements. This was corrected by reversing the stock compensation expense and recording prepaid and non current assets amounting to $ 533,495 . Further, the stock compensation expense was incorrectly recorded and requires correction in grant date fair value. Consequently, an amount of $ 6,837,121 and $ 1,665,573 has additionally recognized in condensed consolidated statements of operations and comprehensive loss for six months and three months ended June 30, 2024 respectively. (x) The Company identified that certain traveling and lodging expenses amounting to $ 10,430 were not recorded as business expense of the Company, and this has now been correctly recorded and corresponding receivables from related party (Dr. Sudhir Prem Srivastava) have been decreased. (xi) Unrecognized Gratuity provision: The Company identified that the expense and provision for gratuity were not recorded for the period ended June 30, 2024. These were subsequently recorded for the in the current period, with balances reconciled against the actuarial report. Accordingly, gratuity liability is recorded in other accrued liabilities (non-current) by $ 24,458 . (xii) Unrecognized Research & development expenses: The Company identified that there are certain expenses relating to research and development expense which was not recorded in the previously filed financial statements amounting to $ 29,958 for six and three months ended June 30, 2024 and this has now been recognized. (xiii) Unrecognized Interest expense: The Company identified that interest expense relating to unwinding of interest on Letter of Credit availed on recourse basis was not recorded in the previously filed financial statements amounting to $ 23,665 and $ 13,057 for six and three months ended June 30, 2024 and this has now been recognized. (xiv) Foreign currency translation loss amounting to $ 91,367 and $ 14,442 for the six months and three months for the period ended June 30, 2024 are primarily due to translation difference in foreign exchange on account of errors / adjustments as mentioned above. Differential impact of above adjustments has been corrected in the condensed consolidated statement of cash flows for the six months ended June 30, 2024. 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 surplus of $ 8,291,143 and an accumulated deficit of $ 38,493,673 as of June 30, 2024. The Company also had a net loss of $ 13,982,323 for the six months ended June 30, 2024 and $ 4,140,570 for the three months ended June 30, 2024 which was mainly on account of non-cash items like Stock Compensation expense of $ 9,552,542 for six months and $ 2,443,792 for three months, Depreciation of $ 170,577 for six months and $ 90,476 for three months. 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. 13 Between February 1, 2024 and February 14, 2024, the Company raised $ 2,450,000 through a private offering of 7 % One-Year Convertible Promissory Notes (“Notes”) from two affiliates of $1,000,000 each and $ 450,000 from three other investors to finance its ongoing working capital requirements. These notes are payable in full after 12 months from the respective date of issuance of these Notes and are convertible at the election of noteholder at any time through the maturity date at a per share price of $ 4.45 . In April 2024, the Company has further raised $2,000,000 from its affiliate by issuance of two One-Year 7 % Promissory Notes of $ 1,000,000 each, to meet certain working capital needs. 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. 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, 2024, and December 31, 2023 amounted to $ 255,536 and $ nil respectively. 14 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, 2024 closing rate at 83.35 US$: INR, average rate at 83.27 US$:INR. The relevant translation rates are as follows: for the six months ended June 30, 2023 closing rate at 82.07 US$: INR, average rate at 82.37 US$:INR. The relevant translation rates are as follows: for the year ended December 31, 2023 closing rate at 83.19 US$: INR, average rate at 82.96 US$:INR 15 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, 2024 and December 31, 2023 the Company valued the inventory at $ 7,217,663 and $ 7,017,913 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. 16 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. ii. Instrument and Accessories Sales: The Company also sells 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. 17 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. iv. Lease Income: Under ASC 842, in case where the systems are installed under a pay-per-use arrangement, the fixed component of income arising from the contract shall be recognized as lease income over the lease term on a straight-line basis. Further this arrangement doesn’t involves any transfer of title to the counterparty, hence the Company has capitalized the cost of production relating to those systems under property, plant and equipment and accordingly charges the depreciation over its period of useful life. 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 life of the assets. The estimated useful lives used in calculating depreciation are as follows: Years Computer & peripherals 3 Furniture 5 Leasehold improvement 4 - 9 Office equipment 5 Plant and machinery 4 - 8 Research & Development equipment 5 Server & networking 3 Vehicles 5 Pay per use systems 10 Demo system 10 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. 18 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. 19 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, 2024 (As Restated) June 30, 2023 Net Loss (a) ( 13,982,323 ) ( 6,837,504 ) Basic weighted average common shares outstanding (b) 170,734,435 135,965,966 Dilutive effect of convertible note (1) 438,696 - Dilutive effect of stock-based awards 10,553,371 137,000 Diluted weighted average common shares outstanding 181,726,502 136,102,966 Earnings per share attributable to SS INNOVATIONS INTERNATIONAL INC. stockholders: Basic and Diluted (a)/(b) ( 0.08 ) ( 0.05 ) For the Three Months ended June 30, 2024 (As Restated) June 30, 2023 Net Loss (a) ( 4,140,570 ) ( 5,524,488 ) Basic weighted average common shares outstanding (b) 170,739,380 143,599,382 Dilutive effect of convertible note (1) 550,562 - Dilutive effect of stock-based awards 10,553,371 137,000 Diluted weighted average common shares outstanding 181,843,313 143,736,382 Earnings per share attributable to SS INNOVATIONS INTERNATIONAL INC. stockholders: Basic and Diluted (a)/(b) ( 0.02 ) ( 0.04 ) 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. (1) Represents dilution effect related to the interest on convertible notes in the calculation of diluted weighted average shares outstanding for the portion of the period. Refer Note 9– Notes Payable to the condensed consolidated financial statements for further details. 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. 20 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. 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, 2024 and December 31, 2023 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 On November 27, 2023, the FASB issued Accounting Standards Update (ASU) No. 2023- 07, “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). The effective date of ASU 2023-07 is for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 will enhance expense disclosures in segment reporting and other qualitative disclosures and allows for disclosing multiple measures of segment profit or loss. The Company does not expect any significant impact from the adoption of this standard. On December 14, 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). The effective date of ASU 2023-09 is for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-09 will enhance quantitative and qualitative disclosures related to rate reconciliation of significant components and income tax paid. The Company does not expect any significant impact from the adoption of this standard. 21 NOTE 3 – PROPERTY, PLANT AND EQUIPMENT, NET The Company’s property and equipment consisted of the following: - June 30, 2024 (As restated) December 31, 2023 Gross Amount Computer & peripheral 261,585 180,009 Furniture 212,173 175,707 Leasehold improvement 200,686 154,651 Office equipment 136,361 103,371 Pay Per Use Systems 1,694,813 - Plant and machinery 220,128 128,498 Research & Development equipment - 90,434 Server & networking 34,098 21,999 Vehicles 183,216 183,577 Demo system 271,933 - Accumulated depreciation ( 440,026 ) ( 331,841 ) Total 2,774,967 706,405 Depreciation expenses for the six months ended June 30, 2024, and 2023 amounted to $ 170,577 and $ 67,057 respectively. Depreciation expenses for the three months ended June 30, 2024, and 2023 amounted to $ 90,476 and $ 34,466 respectively. Further 1 system has been installed for demonstration purposes which was initially recorded as inventory. Hence, from the date of installation it has been recorded under “Property, plant and equipment” in accordance with ASC 360. 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. 22 ● 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 approximately 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. 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. 23 NOTE 5 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following as of June 30, 2024 and December 31, 2023: June 30, 2024 (As restated) December 31, 2023 Accounts receivable, net 4,280,188 1,901,244 Accounts receivable, net (non-current) 3,046,783 2,365,013 7,326,971 4,266,257 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 $ 3,046,783 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, 2024, and June 30, 2023 and 10% or more of total accounts receivables as at June 30, 2024, and December 31, 2023. Percentage of revenue For six months ended Percentage of revenue For three months ended Percentage of Accounts Receivables As at June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 June 30, 2024 December 31, 2023 Customer A 0 % - 0 % - 6 % 10 % Customer B 0 % 17 % 0 % 20 % 5 % 10 % Customer C 0 % 19 % 0 % 22 % 6 % 12 % Customer D 1 % 1 % 1 % 1 % 8 % 13 % Customer E 18 % - - - - - Customer F 6 % - 11 % - - - Customer G 6 % - 11 % - - - Customer H 8 % - 14 % - 9 % - Customer I 5 % - 10 % - 4 % - Customer J 6 % - 11 % - 6 % - Customer K 7 % - 12 % - 6 % - 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, 2024, and December 31, 2023. June 30, 2024 December 31, (As Restated) 2023 Cash and cash equivalents 608,215 2,022,276 Fixed deposit Lien against overdraft facility 5,552,579 4,962,515 Lien against letter of credit 24,565 24,041 Lien against bank guarantee 43,009 43,094 Restricted cash (Current) 5,620,153 5,029,650 Fixed deposit Lien against bank guarantee 310,381 19,233 Lien against credit card facility 16,653 16,686 Restricted cash (Non- current) 327,034 35,919 Total cash, cash equivalents and restricted cash 6,555,402 7,087,845 24 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, 2024, and December 31, 2023: June 30, 2024 (As Restated) December 31, 2023 Receivables from statutory authorities 1,852,166 1,904,859 Prepaid expense- stock compensation current 1,066,991 1,066,991 Security deposits 205,238 299,540 Other prepaid- current assets 1,131,502 618,627 Prepaid and other current assets 4,255,897 3,890,017 Prepaid expense- stock compensation non current 3,556,636 4,090,131 Security deposits 176,245 225,488 Other prepaid- non current assets 67,377 6,825 Prepaid and other non current assets 3,800,258 4,322,444 Total prepaid, current and non current assets 8,056,155 8,212,461 Prepaid expenses – stock compensation represents unamortized portion of common stock granted to advisors for services to be rendered by them in future. (Refer Note 19 – Stock Compensation Expenses) NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued current and non-current expenses consisted of the following as of June 30, 2024, and December 31, 2023: June 30, 2024 (As restated) December 31, 2023 Accounts payable 1,126,373 901,552 Payable to statutory authorities 4,974 35,149 Salary payable 492,651 310,789 Other accrued liabilities 684,287 144,001 Other accrued liabilities 1,181,912 489,939 Provision for Gratuity Long term 58,391 33,933 Other accrued liabilities- Non Current 58,391 33,933 Total accounts payable, accrued current and non current expenses 2,366,676 1,425,424 Accounts payable $ 1,126,373 as of June 30, 2024, reflect the amounts due to various vendors of supplies and services in the normal course of business operations. Other accrued liabilities of $ 579,986 as of June 30, 2024, mainly include $ 333,348 advance from customers and expenses payable of $ 327,812 . 25 NOTE 9 – NOTES PAYABLE In the month of February 2024, the Company raised $ 2,450,000 through 7 % One-Year Convertible Promissory Notes (“Notes”) from two affiliates of $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 . In month of April 2024, the Company raised $ 2,000,000 from its affiliate by issuance of two One-Year 7 % Promissory Notes of $ 1,000,000 each, to meet certain working capital requirements. These Notes are payable in full after 12 months from the respective date of issuance of these Notes. NOTE 10 – BANK OVERDRAFT FACILITY Bank overdraft facility consisted of the following as of June 30, 2024, and December 31, 2023. June 30, 2024 (As Restated) December 31, 2023 HDFC Bank Ltd overdraft (with lien against fixed deposits) (OD1) ( 602,581 ) 4,756,389 HDFC Bank Ltd overdraft (OD2) ( 243,944 ) 1,262,537 HDFC Bank working capital demand loan (1) - 8.65 % 599,849 - HDFC Bank working capital demand loan (2) - 9.07 % 239,940 - HDFC Bank working capital demand loan (3) - 9 23% 599,849 - HDFC Bank working capital demand loan (4) - 9.11 % 1,319,668 - HDFC Bank working capital demand loan (5) - 8.50 % 4,948,755 - Bank overdraft 6,861,536 6,018,926 HDFC bank has sanctioned the facilities for the Company which include overdraft and working capital demand loan (WCDL). The facility of HDFC Bank overdraft (OD1) is availed on the basis of lien on the fixed deposits of $ 5,549,118 provided by the Company while (OD2) is secured by all the current assets, plant and machinery of the Company and additionally secured by personal security of Dr. Sudhir Srivastava for this facility. As of June 30, 2024 and December 31, 2023, 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 Dr. Sudhir Srivastava. The cash credit facility is sanctioned at an interest rate of 9.50 % (linked with 3-month T-Bill) 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 of 1.25 % over and above prevailing rate of interest on fixed deposits, payable at monthly intervals on the first day of the following month. During the current period, the Company has availed the facility of working capital demand loan (WCDL) against the conversion of Bank overdraft which is availed on basis of lien on the fixed deposits provided by the Company, all the current assets, plant and machinery of the Company and additionally on personal guarantee of Dr. Sudhir Srivastava for this facility as set forth above. This facility of WCDL carries a fixed interest rate (as mentioned above) and is repayable in the month of July, August and November 2024 amounting to $ 1,319,668 , $ 5,548,604 and $ 839,789 respectively. 26 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 short-term liability (including interest) for the year ended December 31, 2023, and for the period ended June 30, 2024. June 30, 2024 (As Restated) December 31, 2023 Current maturities of long-term debt 533,854 510,189 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 six months and three months ended June 30, 2024, the company had sold fourteen and ten 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 $ 159,376 and $ 41,136 as interest income on account of deferred financing component during the period ended June 30, 2024 and 2023 respectively. 30 June 2024 December 31, (As restated) 2023 Deferred revenue- beginning of period 1,095,480 43,917 Additions 3,100,972 1,053,334 Net changes in liability for pre-existing contracts 4,196,452 1,097,251 Revenue recognized for warranty sales 38,202 1,771 Revenue recognized for instrument sales 30,286 - Deferred revenue- end of period 4,127,964 1,095,480 Deferred revenue expected to be recognized in: One year or less 395,565 156,330 More than one year 3,732,399 939,150 4,127,964 1,095,480 27 For the six-months ended June 30, 2024, and 2023: The following table disaggregates our revenue by major source: June 30, 2024 June 30, (As restated) 2023 System sales 7,752,957 1,780,197 Instruments sale 322,636 481,736 Warranty sale 38,202 - Lease income 33,024 - Total revenue 8,146,819 2,261,933 Revenues for six months ended June 30, 2024 and 2023 by geographic region (determined based upon customer domicile), were as follows: June 30, 2024 (As Restated) June 30, 2023 India 7,638,754 2,261,933 Nepal 508,065 - 8,146,819 2,261,933 For the three-months ended June 30, 2024, and 2023: The following table disaggregates our revenue by major source: June 30, 2024 (As Restated) June 30, 2023 System sales 4,258,198 1,424,783 Instruments sale 204,121 467,030 Warranty sale 28,795 - Lease income 18,012 - Total revenue 4,509,126 1,891,813 Revenues for three months ended June 30, 2024 and 2023 by geographic region (determined based upon customer domicile), were as follows: June 30, 2024 (As Restated) June 30, 2023 India 4,001,061 1,891,813 Nepal 508,065 - 4,509,126 1,891,813 28 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. As of June 30, 2024, there were 170,739,380 issued and outstanding common shares. Holders of common stock are entitled to one vote for each share of common stock. Preference shares The Company had outstanding 5,000 shares of preferred stock, par value $ 0.0001 as at June 30, 2024 and December 31, 2023. NOTE 14 – RELATED PARTY TRANSACTIONS As of June 30, 2024, and December 31, 2023, there were amounts due from related parties, respectively. The advances are unsecured, non-interest bearing and due on demand. June 30, 2024 (As Restated) December 31, 2023 Receivable from related party 1,286,980 1,567,559 Total 1,286,980 1,567,559 The receivable balances from related parties are across the Company and its related entities in the normal course of business. All such receivable balances are non-interest bearing and are receivable on demand. Receivable from related party amounting to $ 1,286,980 and $ 1,567,559 as at June 30, 2024 and December 31, 2023 respectively, majorly consists proceeds of convertible promissory notes raised by the Company from the investors during the respective years, but collected by related entities on its behalf. 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, Operating leases 2024 (As Restated) December 31, 2023 Assets Right of use operating lease assets 2,448,965 2,657,554 Liabilities Current portion of operating lease liability 428,713 396,784 Non Current portion of operating lease liability 2,125,946 2,351,113 Total lease liabilities 2,554,659 2,747,897 June 30, Operating leases 2024 (As Restated) December 31, 2023 Weighted average remaining lease term (years) Ilabs Info Technology 3rd Floor 5.69 6.19 Ilabs Info Technology Ground Floor 7.92 8.42 Village Chhatarpur-1849-1852-Farm 1.08 1.58 Weighted average discount rate Ilabs Info Technology 3rd Floor 12 % 12 % Ilabs Info Technology Ground Floor 12 % 12 % Village Chhatarpur-1849-1852-Farm 10 % 10 % 29 Supplemental cash flow and other information related to leases are as follows: Period ended June 30 2024 (As Restated) 2023 Cash payments for amounts included in the measurement of lease liabilities: Operating cash outflows for operating leases 342,202 193,046 Maturities of lease liabilities as of June 30, 2024 were as follows: Operating Leases Fiscal Year Amount (IN $) 2024 351,144 2025 616,692 2026 498,452 2027 506,567 2028 515,088 2029 and thereafter 1,170,498 Total Lease Payment 3,658,441 Less: Imputed Interest 1,103,782 Present value of lease liabilities 2,554,659 NOTE 16 – INCOME TAX The Company has not recorded income tax benefits for the net operating losses incurred during the period ended June 30, 2024, and 2023 nor for other deferred tax assets generated, due to its uncertainty of realizing a benefit from those items . The components of loss before income taxes consist of the following: For the Six months ended June 30, 2024 June 30, 2023 (As Restated) Domestic - - Foreign ( 13,982,323 ) ( 6,837,504 ) Total ( 13,982,323 ) ( 6,837,504 ) 30 The Company does not have federal and state net operating losses for the period ended June 30, 2024, and June 30, 2023. The Company has not recorded any amounts for unrecognized tax benefits as of June 30, 2024, and June 30, 2023. 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, 2024, and June 30, 2023. 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, 2024 June 30, 2023 (As Restated) Accounting loss before income tax ( 13,982,323 ) ( 6,837,504 ) Income tax expense (benefit) at federal statutory rate at 21 % ( 2,936,288 ) ( 1,435,876 ) Foreign tax rate differential ( 582,783 ) ( 341,875 ) Non-deductible expenses 135,434 6,631 Excess tax expense/(benefit) on depreciation ( 38,755 ) 4,618 Excess tax expense/(benefit) on security deposit 152 70 Impact of unrecognized deferred tax asset on the loss of the year 3,422,240 1,424,557 Income tax expense/(benefit) - - The Company recorded nil income tax expense for the period ended June 30, 2024 and June 30, 2023, 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, 2024, and June 30, 2023. The components of the deferred tax balances were as follows: June 30, 2024 (As Restated) December 31, 2023 Deferred tax assets: Net operating loss carry forwards 5,123,862 763,591 Net operating loss 2,839,581 4,360,270 Lease payments 22,196 18,976 Others 110,865 23,754 8,096,504 5,166,591 Valuation allowance ( 8,060,150 ) ( 5,145,040 ) Deferred tax assets 36,354 21,551 Deferred tax liabilities: Depreciation and amortization 36,354 16,763 Others - 4,788 Deferred tax liabilities 36,354 21,551 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, 2024, and December 31, 2023, and recorded a valuation allowance of $ 8,060,150 and $ 5,145,040 , respectively. 31 NOTE 17 – EMPLOYEE BENEFIT PLAN The Company’s Gratuity Plan in India provides for a lump sum payment to employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of employment with the Company. Liabilities under this plan are determined by actuarial valuation using the projected unit credit method. Current service costs for these plans are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans, are recognized and amortized over the remaining period of service of the employees. The Gratuity Plan is unfunded, and the company does not make contributions to the plan assets. The benefit obligation has been measured as of June 30, 2024, and December 31, 2023. The following table sets forth the activity and the amounts recognized in the Company’s consolidated financial statements at the end of the relevant periods: June 30, 2024 (As restated) December 31, 2023 Change in projected benefit obligation Projected benefit obligation as on beginning 34,005 10,655 Service cost 12,531 15,707 Interest cost 1,203 759 Benefits paid - - Actuarial loss ^ 11,806 7,009 Effect of exchange rate changes ( 26 ) ( 125 ) Projected benefit obligation at end 59,519 34,005 Unfunded status in the end 59,519 34,005 Unfunded amount recognized in consolidated balance sheets Non-current liability (included under other non-current liabilities 58,391 33,933 Current liability (included under accrued employee costs) 1,128 72 Total accrued liability 59,519 34,005 Accumulated benefit obligation at end 29,968 15,508 ^ During the period ended June 30, 2024, and December 31, 2023, actuarial loss was driven by changes in actuarial assumptions, offset by experience adjustments on present value of benefit obligations. Components of net periodic benefit costs recognized in condensed consolidated statements of operations and comprehensive loss and actuarial loss reclassified from AOCI, were as follows: June 30, 2024 (As restated) December 31, 2023 Service cost 12,531 15,707 Interest cost 1,203 759 Expected return on plan assets - - Amortization of actuarial loss, gross of tax - - Net gratuity cost 13,734 16,466 32 The components of retirement benefits included in AOCI, excluding tax effects, were as follows: June 30, 2024 (As restated) June 30, 2023 Net actuarial loss 11,806 5,546 Amount recognized in AOCI, excluding tax effects 11,806 5,546 The weighted average actuarial assumptions used to determine benefit obligations and net gratuity cost were: June 30, 2024 (As restated) December 31, 2023 Discount rate 7.18 % 7.08 % Rate of increase in compensation levels 12.50 % 15.00 % Expected long-term rate of return on plan assets per annum - - The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are either based on current market yields on government securities or yields on government securities adjusted for a suitable risk premium, if available. Expected benefit payments as of June 30, 2024 June 30, 2024 1,128 2025 9,659 2026 10,741 2027 9,716 2028 8,080 2029-2033 51,699 NOTE 18 – 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. 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. 33 Carrying value and fair value of Level III Financial assets and liabilities: Carrying Value Fair Value June 30, 2024 (As restated) December 31, 2023 June 30, 2024 (As restated) December 31, 2023 Financial Assets Account receivables, net (1) 3,046,783 2,365,013 3,046,783 2,365,013 Other non-current financial assets (2) 183,713 171,146 183,713 171,146 Total 3,230,496 2,536,159 3,230,496 2,536,159 Financial Liabilities Lease liabilities (3) 2,125,946 2,351,113 2,125,946 2,351,113 Total 2,125,946 2,351,113 2,125,946 2,351,113 (1) Account receivable net of allowance for credit losses 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) The Company has long term lease liabilities in relation to office properties which is carried at cost using the discount rate (Refer Note 15 Leases). 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 and account payable for which fair values approximate their carrying amounts due to the short-term maturities of these instruments. NOTE 19 – STOCK COMPENSATION EXPENSES Stock options to Employees : Company grants share of the company’s common stock, par value $ 0.0001 . The price at which the Grantee shall be entitled to purchase the Shares upon the exercise of the Option (the “Option Price”) shall be $ 5.00 per Share. The Shares shall vest as to twenty percent ( 20 %) of the shares covered thereunder as of the Grant Date, with the balance of the shares covered thereunder vesting in four equal annual installments on the first, second, third and fourth anniversaries of the Grant Date provided that the Grantee remains in the Continuous Employment of the Company or any of its subsidiaries or affiliates, as defined and provided for in the Plan. The Options, to the extent vested and not exercised, shall expire five ( 5 ) years from the Grant Date. Restricted Stock Award to Employees: Company grants restricted share of the company’s common stock, $ 0.0001 per value under the company’s 2016 stock incentive plan. The grant of restricted share is made in consideration of services to be rendered by the Grantee to the company. The Restricted Stock Award shall vest as to twenty percent ( 20 %) of the Restricted Shares covered thereunder as of the Grant Date, with the balance of the Restricted Shares covered thereunder vesting in four equal annual installments on the first, second, third and fourth anniversaries of the Grant Date, subject to the Grantee’s continued employment by the Company, as provided for in the Plan. Unvested portions of the Restricted Stock Award may not be transferred at any time, except to the extent provided for in the Plan. Until the Restricted Stock Award granted under this Agreement vests in accordance with the terms hereof, the Grantee shall have no rights as a shareholder (including, without limitation, voting and dividend rights) with respect to any of the Restricted Shares covered by the Restricted Stock Award. 34 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. Stock options: Stock options activity for the period ended June 30, 2024, was as follows: Number of shares options Weighted average grant date fair value Unvested balance as of December 31, 2023 3,303,601 $ 3.41 Granted 3,350,221 $ 1.39 Vested 3,350,221 $ 1.39 Forfeited - - Unvested balance as of June 30, 2024 3,303,601 $ 3.41 The aggregate fair value of the stock options vested was $ 4,656,807 and $ 3,152,066 during the period ended June 30, 2024 and year ended December 31, 2023 respectively. The options vested during the year were not exercised at the end of the June 30, 2024. Restricted Stock Awards (RSA) Restricted Stock Awards activity for the period ended June 30, 2024, was as follows: Number of shares RSAs Weighted average grant date fair value per share Unvested balance as of December 31, 2023 2,807,289 $ 7.76 Granted - - Vested - - Forfeited - - Unvested balance as of June 30, 2024 2,807,289 $ 7.76 During the period ended June 30, 2024, 358,294 RSA are vested. The aggregate vesting date fair value of RSAs vested was $ nil and $ 6,095,401 during the period ended June 30, 2024, and year ended December 31, 2023 respectively. There were no RSAs issued during the period ended June 30, 2024. 35 Advisory shares: Common stock issued to consultants as advisory shares during the period as follows: Grant dates Fair value on grant date Unvested options in the beginning Option vested Unvested option at period end 01-Jun-23 8.15 5,000 5,000 - 31-Oct-23 8.99 52,963 6,908 46,055 31-Oct-23 8.99 7,130 930 6,200 31-Oct 23 8.99 5,673 740 4,933 31-Oct 23 8.99 22,368 2,918 19,450 01-Mar-24 6.75 - 15,000 - 93,134 31,496 76,638 The aggregate vesting date fair value of Advisory shares vested was $ 244,147 and $ 5,633,147 during the period ended June 30, 2024 and year ended December 31, 2023 respectively. Stock compensation expenses During the period ended June 30, 2024 and June 30, 2023, the Company has recorded share compensation expense of $ 9,552,542 and $ 8,150 respectively in relation to stock options, RSAs and Advisory shares as follows: For the period ended For the period June 30, 2024 (As Restated) ended June 30, 2023 Stock options 6,094,592 - Restricted stock award (RSA) 2,780,358 - Advisory shares 677,592 8,150 Total stock compensation expenses 9,552,542 8,150 Stock option model & assumptions The Black-Scholes-Merton option pricing model is used to estimate the fair value of stock options and RSU granted under the Company’s share based compensation plans and the rights to acquire stock granted under the stock options plans. The weighted-average estimated fair values of stock options and the rights to acquire stock as well as the weighted-average assumptions used in calculating the fair values of stock options and the rights to acquire stock that were granted during June 30, 2024 is as follows: Period ended June 30, 2024 (As restated) Stock Options Stock Options Restricted stock awards Grant date February 13, 2024 November 27, 2023 November 27, 2023 Fair value on grant date $ 1.39 $ 3.41 $ 7.76 Risk free interest rate 4.40 % 4.40 % 4.40 % Expected volatility 24.96 % 18.50 % 18.50 % Exercise prices $ 5.00 $ 5.00 $ 0.0001 Share price on the grant date $ 5.50 $ 7.76 $ 7.76 Expected term of vesting 2.5 years 4 years 4 years As share-based compensation expense recognized in the Condensed Consolidated Statements of operations and comprehensive loss during the period ended June 30, 2024, and 2023, is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, if any. 36 As of June 30, 2024, there was $ 9,827,493 , $ 19,004,208 of total unrecognized compensation expense related to unvested stock options and restricted stock units to acquire common stock under the 2016 Inventive Stock plan respectively. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 3.41 years for unvested stock options and restricted stock units for rights granted to acquire common stock under 2016 Incentive Stock Plan. NOTE 20 – 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 $ 24,384 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 in Gurugram, to further expand its manufacturing and assembly capacity. This lease provides for a monthly payment of $ 16,144 plus taxes and expires on May 31, 2032 , subject to further renewal on mutually acceptable terms. In August 2023, SSI India had leased a house pursuant to the terms of employment agreement to provide residential accommodation to Dr Sudhir Srivastava. This lease provides for a monthly payment of $ 17,995 plus taxes. NOTE 21 – SUBSEQUENT EVENTS 1. 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. 2. In August 2024, the Company issued 125,000 shares to certain doctors/proctors for providing their proctoring/mentoring services. 3. The Company borrowed $ 250,000 each in the months of October and November 2024 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 . 4. 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. 5. In January 2025, the Company borrowed $ 20,000,000 from Sushruta Pvt. Ltd. to meet certain working capital needs evidenced by an additional 7 % One-Year Convertible Promissory Note. 37