What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-03-22 · 171 added, 139 removed, 65 unchanged (83% of the section changed)

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manufacturing, and selling a surgical robotic system under our proprietary brand “ SSi Mantra ,” together with allied

accessories and a wide range of surgical instruments capable of supporting cardiac and a variety of other surgical procedures.

commenced commercial sales of our surgical robotic system in the second half of 2022, the year 2023 was our first full year of commercial

sales of our surgical robotic system and its allied instruments and accessories.

Accordingly, the operating results detailed below largely

reflect the impact of the consummation of the CardioVentures Merger in April 2023, when compared with operating results for the corresponding

period in 2022.

accessories and a wide range of surgical instruments capable of supporting cardiac and a variety of other surgical procedures under our

proprietary brand “SSi Mudra”.

Having commenced commercial sales of our surgical robotic system in the second half

of 2022, the year 2023 was our first full year of commercial sales and during the year 2024, we further consolidated our installed base

of SSi Mantra in various parts of India and also expanded our presence in the global markets.

Our financial performance is largely driven by

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of production which eventually helps us make our surgical robotic system cost effective and relatively affordable.

During the years ended December 31, 2023, and

December 31, 2022, we sold twelve and three surgical robotic systems, respectively.

During the year ended December 31, 2024, we sold

36 surgical robotic systems out of which 7 systems were sold on deferred payment basis.

In addition, during the year ended December 31,

we also installed four systems in four hospitals, belonging to well-known hospital groups in India, for their clinical evaluation in anticipation

of orders from these hospital groups.

In addition to this, we also installed three systems on a pay-per-use basis.

These systems were

installed in December 2023 and accordingly had not generated any revenues as of December 31, 2023.

We also installed one system at the

Johns Hopkins Hospital, in Baltimore, Maryland at no cost, for clinical training and ongoing research and development purposes.

at the end of December 2023, we had a total of twenty-three installed systems of which 20 were installed during the year ended December

2024, we also installed 11 systems on a pay-per-use basis.

The system installed at the Johns Hopkins Hospital in Baltimore Maryland for

research and clinical training, having completed one year period post its import into USA, was returned back to India in compliance with

the Indian government regulations for medical devices exported overseas for exhibition/clinical training/research purposes.

year ended December 31, 2024, we also received back 3 systems which, as of December 31, 2023, were installed in 3 hospitals for evaluation

purposes and as such we had no systems under evaluation at any of the hospitals as on December 31, 2024.

At the end of December 2024,

we had a total of 62 installed systems of which 47 were installed during the year ended December 31, 2024.

Results of Operations

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this report have been prepared assuming that the Company will continue as a going concern.

The Company has recently commenced its commercial

operations by way of the sale of its product and has not yet established consistent operational revenue cash flows to meet all its fixed

operating costs and hence may continue to incur losses for some time.

These conditions raise doubt about the Company’s ability to

continue as a going concern.

The Company is still in its initial years of

revenue generation by way of the sale of its product and has not yet established consistent operational revenue cash flows to meet all

its fixed operating costs and hence may continue to incur losses for some time.

These conditions raise doubt about the Company’s

ability to continue as a going concern.

The following table provides selected financial

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Total Shareholders’ Equity

$ (2,460,547 )

* Amounts for the year ended December 31, 2022, represent consolidated

financials for AVRA Medical Robotics, Inc.

and CardioVentures Inc.

to reflect the effect of the CardioVentures Merger.

** Represents Fixed Deposits held by bank as security for bank

facilities and certain performance guarantees.

Represents Fixed Deposits held by the bank as security for bank facilities and certain performance guarantees.

To date, the Company has mainly relied on debt

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with having to limit our expansion plans, research and development and marketing activities.

December 31, 2023, as compared to year ended December 31, 2022

For the year ended

Total Revenue

Cost of revenue

(12,197,162 )

Research & development expense

Stock compensation expense

Depreciation and amortization expense

Selling, general and administrative expense

Loss from operations

(18,975,962 )

(20,273,984 )

Other income (expenses)

Income tax expense

(19,151,197 )

(20,878,292 )

Year ended December

31, 2024, as compared to year ended December 31, 2023

During the year ended December

31, 2023, the Company had revenues of $5,879,710 (comprising $5,692,721 of system and instrument sales and $186,989 of warranty sales),

compared to revenues of $1,458,315 (comprising $1,438,969 of system and instrument sales and $19,346 of warranty sales) during the year

ended December 31, 2022.The increase in revenue is primarily due to sale of increased number of surgical robotic systems and instruments

in the year ended December 31, 2023 as compared to the year ended December 31, 2022.

31, 2024, the Company had revenues of $20,649,528 (comprising $19,457,767 of system sales, $942,548 of instrument sales and $177,518 of

warranty sales and $71,695 of Lease income), compared to revenues of $5,875,314 (comprising $5,225,777 of system sales, $647,766 of instrument

sales and $1,771 of warranty sales) during the year ended December 31, 2023.The increase in revenue is primarily due to sale of increased

number of surgical robotic systems and instruments in the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Research and Development Expenses.

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compensation expenses of $14,342,784 and $9,723,492 during the years ended December 31, 2024, and December 31, 2023 respectively.

substantial increase in the stock compensation expense in 2023 is primarily the result of the award of stock grants to employees of the

Company and its subsidiaries and the issuance of stock awards and stock options to executive officers of the Company and its subsidiaries

in November 2023 under our Incentive Stock Plan, in recognition of their efforts in developing and commercializing our SSi Mantra system.

Salaries and Payroll Expense .

We had salary

and payroll expense of $2,215,620 for the year ended December 31,2023, as compared to $1,698,283 in the year ended December 31, 2022.

This increase in salary and payroll expense is a reflection of the increase in Company’s employee count from 102 at December 31,

2022 to 221 at December 31, 2023, commensurate with the expansion in the Company’s manufacturing and commercial sales operations

during 2023 Salaries and payroll expense includes salaries and payroll expense related to executive officers of the Company.

General and Administrative Expenses.

incurred $5,164,713 in general and administrative expenses during the year ended December 31, 2023, as compared to $3,251,794 for the

year ended December 31, 2022.

General and administrative expenses include sales, marketing and travel-related expenses, rent for the manufacturing

facility offices, legal and other professional expenses related to the Company’s filings as a public company with the SEC.

in general and administrative expenses resulted from the increased scale of commercial operations during 2023.

as compared to the year

ended December 31, 2022.

substantial increase in the stock compensation expense in 2024 is primarily the result of the award of second tranche of stock grants

to employees of the Company and its subsidiaries and the issuance of stock awards and stock options to executive officers of the Company

and its subsidiaries in November 2024 under our Incentive Stock Plan, in recognition of their efforts in Company’s operational growth.

Depreciation and amortization expenses.

had depreciation and amortization expense of $436,005 for the year ended December 31,2024, as compared to $152,738 in the year ended December

The depreciation and amortization expenses primarily consist of depreciation on fixed assets only.

Selling, General and Administrative expenses.

incurred $10,157,768 in selling, general and administrative expenses during the year ended December 31, 2024, as compared to $10,064,622

for the year ended December 31, 2023.

Our Selling, General and Administrative expenses

(“SG&A”) comprise of expenses relating to salaries and benefits, retirement benefits as well as costs related to recruitment,

other compensation expenses of sales and marketing and client management personnel, sales commission, travel and brand building, client

events and conferences, training and retention of senior management and other support personnel in enabling functions, telecommunications,

utilities, travel and other miscellaneous administrative costs.

SG&A expenses also include acquisition-related costs, legal and professional

fees (which represent the costs of third party legal, tax, accounting, immigration and other advisors), investment in product development,

digital technology, advanced automation and robotics, related to grant of our equity awards to members of our board of directors.

our SG&A costs to increase as we continue to strengthen our support and enabling functions and invest in leadership development, performance

management and training programs.

The increase in selling, general and administrative expenses resulted from the increased manpower strength

and an increased scale of commercial operations during 2024 as compared to the year ended December 31, 2023.

Other Income (Expenses) .

We have incurred

$273,599 in interest expenses during the year ended December 31,2023 as compared to net interest income of $77,729 during the year ended

December 31, 2022.

The increase in interest expense from 2022 to 2023 resulted from an increase in bank borrowings for working capital

from HDFC Bank in India.

$175,235 in interest expenses (net) during the year ended December 31, 2024, as compared to an interest expense (net) of $604,308 during

the year ended December 31, 2023.

The decrease in interest expense (net) from 2023 to 2024 is due to increase in interest income on fixed

deposits with HDFC bank in India and interest income recognized during the year related to deferred payment sales.

We incurred a net loss of

$19,151,197 for the year ended December 31, 2024, as compared to a net loss of $20,878,292 for the year ended December 31, 2023.

in net loss from 2022 to 2023 is primarily the result of the increase in stock compensation expenses as set forth above.

for the year ended December 31, 2023, was also higher due to $1,668,146 of system sales revenue that stands to be transferred to unrealized

deferred revenue pursuant to the application of ASC606.

in net loss from 2023 to 2024 is primarily due to increase in gross profit of $7,726,838, offset by increase in stock compensation expense

and of $4,619,292 and decrease in interest expense (net) of $ 175,235 from $ 604,308 respectively.

Liquidity and Capital Resources

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capacity and to continue to finance its research and development work in the field of surgical robotics.

On April 15, 2023, the Company executed a Convertible

Promissory Note (the “ Line of Credit Note ”) with Sushruta Pvt Ltd.

(“ Sushruta ”), the Bahamian holding

company owned by Dr.

Sudhir Srivastava, our Chairman, Chief Executive Officer and principal shareholder.

Pursuant to the Line of Credit

Note, Sushruta, in its discretion could make multiple advances to the Company through December 31, 2023 (the “ Maturity Date ”),

in an aggregate amount of up to $20 million for working capital purposes.

The advances under the Line of Credit Note did not bear interest

and were due and payable on or before the Maturity Date.

During the year ended December 31, 2023, Sushruta made advances aggregating to

$16,980,000 under the Line of Credit Note and exercised its option to convert the full amount of advances made into shares of our common

stock at a conversion price of $0.74 per share.

Accordingly, 22,945,946 shares of our common stock were issued to Sushruta during the

year ended December 31, 2023.

As of December 31, 2024, the Company had shareholders’

equity of $14.3 million and a working capital surplus of $9.1 million as compared to shareholders’ deficit of $2.46 million and

a working capital deficit of $4.42 million as of December 31, 2022.

Cash Flows Used in Operating Activities

During the year ended December 31, 2023, net cash

used in operating activities was $13,572,758 resulting from our net loss of $20,941,972, partially offset by non-cash charges of $ 14,193,327

comprised mainly of depreciation, stock compensation expense and expenses for which common stock issued.

During the year ended December

31, 2023, we had net cash invested in our operating assets and liabilities of $6,962,654 primarily as a result of increases in prepaid

expenses and other current assets to the extent of $9,200,688, including fixed deposits provided to HDFC bank to secure working capital

facilities and an increase in accounts payable and accrued expenses of $2,238,034.

During the year ended December 31, 2022, net cash

used in operating activities was $5,555,345, resulting from our net loss of $5,601,504, partially offset by non-cash charges of $994,369

comprised mainly of depreciation and stock compensation expense.

During 2022 we had net cash invested in our operating assets and liabilities

primarily as a result of increased prepaid expenses and other current assets.

equity of $13,457,103 and a working capital surplus of $6,086,069 as compared to shareholders’ equity of $19,718,078 and a working

capital surplus of $12,954,939 as of December 31, 2023.

For the year ended

Net cash provided by operating activities:

(19,151,197 )

(20,878,292 )

Non-cash adjustments

Change in operating assets and liabilities

(10,182,463 )

Net cash used in operating activities

(15,361,645 )

Net cash used in investing activities

Net cash provided by financing activities

Net change in cash

Effect of exchange rate on cash

Cash at beginning of year

Cash at end of year

Cash Flows Used in Operating

Net cash used in operating activities was $9,503,030 for

the year ending 31 December 2024, compared to $15,361,645 for the year ending 31 December 2023, reflecting lower cash losses and decrease

in working capital needs due to increased scale of operations.

The major drivers contributing to the decrease of $5,858,615 in net cash

used in operating activities year-over-year included the following:

Decrease in net cash loss to the extent of $2,463,249 (net of non-cash adjustments) in fiscal year 2024 compared to fiscal year 2023.

Non-cash adjustments included stock compensation expense, credit loss reserve, operating lease expense, interest expense and depreciation.

Decrease of $3,395,366 in operating assets and liabilities comprising mainly of an increase of $4,305,512 in deferred revenue and of $713,744 in accrued expenses and other liabilities in fiscal year 2024 as compared to 2023 and a net decrease of $1,623,890 in other operating assets and liabilities other than deferred revenue, accrued expenses and other liabilities.

Changes in accounts receivable contributed to lower cash flow of $1,818,392 for fiscal year 2024 as compared to fiscal year 2023.

Although the Company’s revenue increased from system sales by $14,231,990, from instruments sales by $294,782, from warranty sales by $175,747 and from lease income by $71,695 in fiscal year 2024 compared to fiscal year 2023.

Increased investment in inventory contributed to higher cash outflow of $7,691,518 for fiscal year 2024 compared to fiscal year 2023 due to revenue growth and expansion of business activities.

Cash Flows from Investing Activities

During the year ended December 31, 2024, we had

net cash used in investing activities of $2,299,356, resulting mainly from investment of $563,967 in purchases of equipment, $2,199,418

towards the value of a Right of Use asset, as well as long term loans and advances and long-term receivables of $2,535,971 and receipt

of funds through Note receivables – acquisition of $3,000,000.

net cash used in investing activities of $661,479 resulting from purchases of property, plant and equipment.

During the year ended December 31, 2023, we had

net cash used in investing activities of $2,735,814, resulting mainly from investment of $220,324 in purchases of fixed assets, reduction

in Notes Receivable – Acquisition of $3,000,000 and realization of $484,510 from sale of fixed assets.

net cash used in investing activities of $453,327 resulting from purchase of property, plant and equipment.

Cash Flows from Financing Activities

During the year ended December 31, 2024, we had

net cash provided by financing activities of $16,734,963, comprised of a $4,947,233 increase in restricted cash (i.e., fixed deposits

provided to secure bank facilities and for providing guarantees), partially offset by an increase of $2,895,880 in proceeds from our bank

overdraft facility, $808,244 from private securities offerings, $12,360 from the exercise of previously issued warrants, $22,980,000 in

proceeds from promissory notes converted to common stock, $100,000 in proceeds from the exercise of stock options, as well as the reduction

by conversion of promissory notes of $7,000,000.

We also had an increase in right of use liability (non-current portion) of $1,910,432.

net cash, provided by financing activities of $9,425,980, which comprised of $1,975,980 in proceeds from our bank overdraft facility,

$3,000,000 each in proceeds from issuance of convertible notes and promissory notes to our principal shareholder and $1,450,000 in proceeds

from issuance of convertible notes to other investors.

During the year ended December 31, 2023, we had

net cash provided by financing activities of $9,294,395, comprised of $145,000 in repayment of promissory notes, $2,583,798 of proceeds

from our bank overdraft facility, $1,500,431 in proceeds from private securities offerings, $7,000,000 in proceeds from the issuance of

7% convertible promissory notes, $26,000 in common stock issued and a decrease of $1,670,834 in related party loans.

While we have been successful in raising funds

to finance our operations since inception and we believe that we will be successful in obtaining the necessary financing to fund our operations

going forward, we do not have any committed sources of funding and there are no assurances that we will be able to secure additional funding.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern;

however, if the efforts

noted above are not successful, it would raise substantial doubt about the Company’s ability to continue as a going concern.

we cannot obtain financing, then we may be forced to further curtail our operations or consider other strategic alternatives.

we are successful in raising the additional financing, there is no assurance regarding the terms of any additional investment and any

such investment or other strategic alternative would likely substantially dilute our current shareholders.

Critical Accounting Policies

net cash, provided by financing activities of $22,796,286, which comprised of $2,480,735 in proceeds from our bank overdraft facility,

$412,056 in proceeds from issuance of common stock against warrant and options, $16,980,000 in proceeds from issuance of convertible notes

to our principal shareholder, $3,000,000 in proceeds from issuance of convertible notes to other investors and $50,000 in proceeds from

the exercise of stock options.

There was a decrease of $126,505 on account of repayment of term loans

While we have been successful in raising funds to finance our operations

since inception and we believe that we will be successful in obtaining the necessary financing to fund our operations going forward,

we do not have any committed sources of funding and there is no assurance that we will be able to secure additional funding.

The accompanying

consolidated financial statements have been prepared assuming that the Company will continue as a going concern;

however, if we cannot

obtain financing, then we may be forced to further curtail our operations or consider other strategic alternatives.

Even if we are successful

in raising the additional financing, there is no assurance regarding the terms of any additional investment and any such investment or

other strategic alternative would likely substantially dilute our current shareholders.

Critical Accounting Estimates

Use of Estimates

The preparation of financial statements in conformity

with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

estimates included deferred revenue, costs incurred related to deferred revenue, the useful lives of property and equipment and the useful

lives of intangible assets.

The Company accounts for income taxes in accordance

with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes.

Under this method,

deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax

basis of assets and liabilities given the provisions of enacted tax laws.

Deferred income tax provisions and benefits are based on changes

to the assets or liabilities from year to year.

In providing for deferred taxes, the Company considers tax regulations of the jurisdictions

in which the Company operates, estimates of future taxable income, and available tax planning strategies.

If tax regulations, operating

results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities

may be required.

Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria

ASC 740-10 requires that the Company recognize

the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain

the position following an audit.

For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in

the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement

with the relevant tax authority.

The discussion and analysis of our financial condition

and results of operations are based upon the consolidated financial statements included in this Annual Report on Form 10-K, which have

been prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

A summary of our significant

accounting policies is included in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements under

Part II, Item 15, “Exhibits and Financial Statements Schedules.”

We consider the policies discussed below to be

critical to an understanding of our consolidated financial statements, as their application places the most significant demands on management’s

judgment regarding matters that are inherently uncertain at the time an estimate is made.

These policies include fair value of stock options

and standalone selling price in case of bundled revenue contracts.

These accounting policies, estimates and the associated

risks are set out below.

Future events may not develop exactly as forecasted and estimates routinely require adjustment.

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.

As of December 31, 2024, the Company has issued

two types of equity incentives:

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

The Company uses last three months’ average share price of common stock on OTC exchange as grant date fair value for RSUs.

Standalone Selling Price:

Our system sale arrangements contain multiple

products and services, including system, accessories, instruments and services.

Other than services, we generally deliver all of the products

Each of these products and services is a distinct performance obligation.

System, instruments, accessories and services are also

sold on a standalone basis.

For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative

standalone selling price.

Standalone selling prices are based on observable prices at which we separately sell the products or services.

If a standalone selling price is not directly observable, then we estimate the standalone selling prices considering market conditions

and entity-specific factors including, but not limited to, historical pricing data, features and functionality of the products and services

and industry benchmark.

We regularly review standalone selling prices and maintain internal controls over establishing and updating these

Revenue that is allocated to the service obligation is deferred and recognized ratably over the service period upon expiration

of first year of service which is free and included in the system sale arrangements.

Off-Balance Sheet Arrangements

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on page F-1 below.

Changes in and Disagreements with

Accountants on Accounting and Financial Disclosure.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis