What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-04-15 · 116 added, 123 removed, 113 unchanged (68% of the section changed)

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and Analysis of Financial Condition and Results of Operations.

The Company is engaged in the business of developing,

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 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.

The Company is engaged in the business of developing, manufacturing,

and selling a surgical robotic system under our proprietary brand “ SSi Mantra ,” together with related 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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various regulated markets where we have plans to sell our products.

Robotically assisted surgeries are increasingly being recognized as

an approved treatment modality from an insurance coverage perspective.

Robotically assisted surgeries are increasingly being recognized

as an approved treatment modality from an insurance coverage perspective.

Our manufacturing operations being based in India

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

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,

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

The financial statements appearing elsewhere in

this report have been prepared assuming that the Company will 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 consolidated financial statements appearing elsewhere in this Annual

Report have been prepared assuming that we will continue as a going concern.

We are still in our initial years of revenue generation by

way of the sale of our product and have not yet established consistent operational revenue cash flows to meet all our fixed operating

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

These conditions raise substantial doubt about our ability to continue as

a going concern.

The following table provides selected financial

data about our Company at December 31, 2025, and December 31, 2024:

Balance Sheet Data

Restricted cash**

Total Liabilities

Total Shareholders’ Equity

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

Total stockholders’ equity

** 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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(22,940,492 )

(12,197,162 )

Research & development expense

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(18,975,962 )

(20,273,984 )

Other income (expenses)

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(19,151,197 )

(20,878,292 )

Year ended December

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During the year ended December

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.

31, 2025, the Company had revenues of $42,484,747 (comprising $38,353,048 of system sales, $3,183,757 of instrument sales, $877,033 of

warranty sales and $70,909 of lease income), compared to revenues of $20,649,528 (comprising $19,457,767 of system sales, $942,548 of

instrument sales, $177,518 of warranty sales and $71,695 of lease income) during the year ended December 31, 2024.

The increase in revenue

is primarily due to sale of increased number of surgical robotic systems and instruments in the year ended December 31, 2025 as compared

to the year ended December 31, 2024.

Research and Development Expenses.

and Development expenses during the year ended December 31, 2025, were $3,685,840, as compared to $2,491,771 for the year ended December

The increase in the Research and Development expenses as compared to the previous year is in line with the Company’s continued

focus on improving the design and technological capabilities of its existing SSi Mantra system and further expanding its product offerings.

Stock Compensation Expense.

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 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.

The increase in the research and development expenses as compared to the previous year is in line with the Company’s

continued focus on improving the design and technological capabilities of its existing SSi Mantra system and further expanding its product

Stock Compensation Expenses.

compensation expenses of $8,128,103 for the year ended December 31, 2025, compared to $14,342,784 for the year ended December 31, 2024.

The substantial decrease in stock-based compensation expense for the year ended December 31, 2025 was primarily due to award of stock

options in February 2024 under the Company’s 2016 Incentive Plan to certain executive officers.

These were vested immediately

upon grant and were fully expensed in the year ended December 31, 2024, resulting in the recognition of approximately $4,656,807 of stock-based

compensation expense in the previous year.

These options were awarded in recognition of the executives’ efforts in advancing the

development and commercialization of the Company’s SSi Mantra system and the residual impact is primarily due to resignation of

employees in the current year.

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

had depreciation and amortization expense of $1,075,907 for the year ended December 31,2025, as compared to $436,005 in the year ended

December 31, 2024.

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.

We incurred $14,848,439

in selling, general and administrative expenses during the year ended December 31, 2025, as compared to $10,157,768 for the year ended

December 31, 2024.

Our Selling, General and Administrative expenses

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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.

SG&A expenses also include 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.

We expect 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 2025 as compared to the year ended December 31, 2024.

Other Income (Expenses) .

We have incurred

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

We have recognized

$33,087 in interest income (net) during the year ended December 31, 2025, as compared to an interest expense (net) of $175,235 during

the year ended December 31, 2024.

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.

The increase in interest income by $343,724 relating to fixed deposits which is offset by increase in

interest expense by $135,402 related to interest on our bank overdraft facility and convertible notes.

We incurred a net loss of $12,127,387

$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 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.

for the year ended December 31, 2025, compared to a net loss of $19,151,197 for the year ended December 31, 2024.

The decrease in net

loss of $7,023,810 was primarily attributable to an increase in gross profit of $11,091,889 and a decrease in stock-based compensation

expense of $6,214,681.

These favorable variances were partially offset by increases in research and development expenses of $1,194,069,

depreciation expense of $639,902, selling, general and administrative expenses of $4,690,671, and income tax expense of $3,966,440.

Liquidity and Capital Resources

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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

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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 Used in Operating Activities

Net cash used in operating activities was $18,542,987

for the year ended December 31, 2025, compared to $ 9,503,030 for the year ended December 31, 2024, representing an increase of $9,039,957

year over year, reflecting the increase in net cash used in operating activities was primarily driven by higher working capital requirements

associated with the Company’s expanded scale of operations, which more than offset improvements in operating results.

drivers contributing to the increase of $9,039,957 in net cash used in operating activities year-over-year included the following:

● Accounts receivable amounted to $13,037,284 in fiscal year 2025, compared

to $4,890,032 in fiscal year 2024, reflecting higher billings and the timing of customer collections.

● Inventory amounted to $8,070,786 in fiscal year 2025, compared to $7,691,518

in fiscal year 2024, reflecting production levels and inventory management in support of anticipated demand.

Prepaid expenses and other assets amounted to $5,101,794 in fiscal year 2025, compared to $1,411,621 primarily related to advance payments made in connection with operating activities.

These uses of cash were partially offset by deferred revenue of $3,953,938

in fiscal year 2025 and accounts payable of $2,877,810 in fiscal year 2025, reflecting customer advance payments and vendor activity.

In addition, net loss was $12,127,387 in fiscal

year 2025, compared to $19,151,197 in fiscal year 2024, and stock-based compensation expense was $8,128,103 in fiscal year 2025, compared

to $14,342,784 in fiscal year 2024.

These items impacted operating cash flows during the respective periods and were considered together

with the working capital changes discussed above.

Cash Flows from Investing Activities

During the year ended December 31, 2024, we had

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

During the year ended December 31, 2025, we had net cash used in investing

activities of $3,659,058 resulting from purchases of property, plant and equipment.

During the year ended December 31, 2024, we had

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net cash provided by financing activities of $26,166,556, which comprised of $3,448,042 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.

$28,000,000 in proceeds from the issuance of convertible notes to our principal shareholder, partially offset by repayments of $4,212,637

related to convertible notes to our principal shareholder, including interest, and repayments of $1,068,849 related to convertible notes

to other investors, including interest.

During the year ended December 31, 2024, we had

net cash, provided by financing activities of $9,425,980, which comprised of $1,975,980 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.

$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.

Critical Accounting Estimates

Use of Estimates

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.”

The preparation of consolidated financial statements in conformity

with accounting principles generally accepted in the U.S.

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 consolidated financial statements

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

Actual results could differ from those estimates.

We consider the policies discussed below to be

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and standalone selling price in case of bundled revenue contracts.

These accounting policies, estimates and the associated

risks are set out below.

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.

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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.

right, but not the obligation, to purchase shares of our stock at a specified price, within a defined period, as per the terms of the

stock option agreement.

Stock-based compensation expense associated with our 2016 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):

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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.

We use last three months’ average share price of common stock on OTC (prior to April 24, 2025) or on Nasdaq (subsequent

to April 24, 2025) as grant date fair value for RSUs.

Standalone Selling Price

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

Other than services, we generally deliver all of the products

Other than services, we generally deliver all of the

products upfront.

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.

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

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 estimates.

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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have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues

or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Quantitative and Qualitative Disclosures

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Financial Statements and Supplementary

See the Index to the Financial Statements beginning

on page F-1 below.

See the Index to the Consolidated Financial Statements beginning on

page F-1 below.

Changes in and Disagreements with Accountants on Accounting

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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