Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ☒
Indicate by check mark whether
the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☐
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State the aggregate market
value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity as of the last business day of the registrant’s most recently
completed second fiscal quarter: Not applicable.
The number of shares outstanding
of the issuer’s common stock, $0.0001 par value, as of March 30, 2023, was 53,887,738 shares.
DOCUMENTS INCORPORATED BY
REFERENCE: No documents are incorporated by reference into this Report except those Exhibits so incorporated as set forth in the Exhibit
index.
PART I
Item 1 Business.
Overview
We are a medical robotics company developing a
fully autonomous medical robotic system using proprietary software which integrates Artificial Intelligence (“AI”)
and Deep Learning, or machine learning, (“DL”). By using an AI and DL enhanced software program, we are creating an
intelligent robotic system that we believe can “robotize” a wide range of medical procedures currently being performed
by human hands. We are concentrating our research and development efforts to meet rising expectations of patients and practitioners alike
for the precision, safety and speed offered by an AI enhanced robotics platform system that can be combined with proven medical devices,
end-effectors and surgical instruments.
We believe that progress in mechanical and software
engineering has made possible lightweight and relatively inexpensive robotic devices for difficult procedures in various medical fields.
Medical robots are already being successfully employed in several areas of surgery, including Urology (Prostate), Colo-Rectal, Gynecology,
Thoracic, General Surgery, Orthopedics, and Neuro and Spine Surgery. Robots are also being used for Telemedicine and assistive robotic
methods are addressing the delivery of healthcare in inaccessible locations, ranging from rural areas lacking specialist expertise to
post-disaster scenarios, and battlefield areas. With the aging population dominating demographics in the U.S. across all spectrums of
healthcare, robotic technologies are being developed toward promoting improved function, lower morbidity and improved overall outcomes.
We are developing a treatment-independent autonomous
robotics system utilizing our proprietary AI-driven precision guidance system, applicable to a variety of minimally and non-invasive procedures,
with an initial focus on skin resurfacing aesthetic procedures utilizing several FDA approved skin enhancing techniques robotized for
superior performance and optimal results. Our medical robotic system is being developed to deliver skin resurfacing treatments, such as
micro-needling and laser therapies with improved efficiency, accuracy and precision over current procedures conducted by human hand, and
only requiring the doctor to input or just confirm treatment parameters. As a result, use of our medical robotic system is expected to
provide improved quality and safety as well as improve patient throughput and workflow.
Our autonomous medical robotics system is being
developed to be compatible with available FDA approved surgical tools and end-effectors, enabling us to initially penetrate a sizable
and fast-growing aesthetics market, which includes micro-needling and laser solutions. Our robotics system will allow doctors, and anyone
permitted to treat patients, defined at the State level, such as a licensed aesthetician, to treat damaged skin autonomously by delivering,
for example, micro-needling to the skin. The micro-needling catalyzes the natural process of collagen remodeling, consisting of formation
of new collagen, elastin, and vascularization in the papillary dermis, similar to the effect of laser treatments.
We expect our robotic system to eliminate
many of the common errors that occur during handheld procedures, such as over- or under- exposure of the needles or energy-based instruments
that can have terrible cosmetic results and even injure the patient. In addition, our system is being designed to continuously adjust
treatment parameters, such as penetration depth, time, and energy in order to individualize the outcome based on our algorithms. Our robotic
system has been designed and developed through a seamless collaboration of the surgeon, the engineer and the scientist. Since the medical
robotic industry has progressed greatly in miniaturization, adaptability and lower costs, we believe that the Avra “brains”
technology component can lead to dramatic opportunities in all of medicine.
The advantages of robotizing already FDA approved
aesthetic devices are many. In contrast to a human using a handheld device, our aesthetics robotic system has the potential to perform
each and every procedure with unsurpassed precision without constraint of age, proficiency, experience or fatigue. Likewise, in many skin
related treatments the amount of energy delivered, distance and/or depth of the instrument to, or into, the skin, and treating only the
affected area are critical to the outcome. The robotic system can maintain these parameters with unparalleled accuracy. The system can
also replicate the same procedure time and again precisely. Delivery of certain aesthetic treatments by robotic systems is believed to
be the most efficient option, requiring fewer visits per patient while increasing patient throughput — a benefit for patients and
practitioners alike.
Advantages of using our medical robotic approach
to procedures include:
| ● | Reduced
cost per treatment. |
| ● | Better
treatment accuracy. |
| ● | Better
treatment outcomes. |
| ● | Increased
patient throughput and revenue generation for the physician. |
| ● | Easier
multi-platform integration. |
| ● | Addresses
shortfall of physicians/surgeons. |
| ● | Easier
future integration of medical and technological advancements such as molecular biologics. |
We believe that our initial medical robotic system
for the aesthetics market should find rapid acceptance based on the aforementioned advantages of using the attribute of robotics versus
traditional manual applications. Furthermore, there is general acceptance by consumers for fee-for-service cash payments in the facial
aesthetics market thereby avoiding medical insurance reimbursement issues. Our medical robotic system utilizes a robotic arm that has
7-degrees of freedom integrated with our proprietary AI-driven control software and algorithms. The robotic arm was designed and built
under the required medical device standards of the U.S. Food and Drug Administration (the “FDA”). Our strategy is to
integrate the robotic arm with FDA approved devices, which is expected to allow for a more expedited approval of the integrated system.
We believe that the FDA approval process will primarily focus upon validation of the medical robotic system’s software control.
This could lead to a less onerous, more de-risked regulatory path to approval, particularly if strong preclinical results are achieved.
Subsequent to the completion of the FDA preclinical work, estimated to take six months, we believe that we will be able to additionally
modify and robotize certain non-invasive instruments that do not require FDA approvals and proceed to the cosmetic treatments marketplace.
This action could sharply reduce the time to commercial operations and revenues.
We previously retained the services of The Horizon
Phoenix Group (“HPG”), a consulting firm experienced in securing U.S. and foreign regulatory approvals for medical
devices, in order to initiate the regulatory process. Working with HPG, we prepared and filed an application with the FDA for our initial
medical robotic system and in August 2019 held an initial pre-collaboration meeting with the FDA. We believe that this is the first of
a series of meetings where the Avra system and its regulatory requirements will be discussed in ever-increasing specificity. This should
allow for a more focused regulatory process, saving both resources and time. The robotic arm that we intend to utilize for our system
has already been granted approval in the EU and received a CE mark. We have begun implementing a quality and regulatory system that will
serve as the foundation for U.S., Canadian, European, Australian, Japanese, and Brazilian market access for our medical robotic system.
The Medical Device Single Audit Program(“MDSAP”), which we plan to employ, is a single inspection that, when completed,
is expected to support market access to these six most important medical device marketplaces.
Since 2016, we had a research partnership with
the University of Central Florida (“UCF”) to develop a prototype intelligent medical robotic system. UCF is recognized
particularly for its work in the area of medical robotic research and design, with a focus on the guidance systems. Avra has paid UCF
a one-time fee for outright ownership of work developed by UCF in the collaboration. The Research Agreement was extended several times
and expired on April 30, 2021. To further the depth of our research and development we also began a partnership in 2021 with Florida Polytechnic
University and are actively working with them on developing our system. Avra recently brought in two Associate Professors and three graduates
to join Avra’s engineering development team. Effective October 11th, 2021 Avra executed a Sponsored Student Project Agreement which
includes two payments of $8,030 each covering Fall semester in 2021 and Spring semester in 2022.
Recent Developments
On November 7, 2022, AVRA entered into a definitive
Merger Agreement (the “Merger Agreement”), by and among AVRA, AVRA-SSI Merger Corporation, a Delaware corporation
and wholly-owned subsidiary of AVRA (“Merger Sub”), CardioVentures, Inc., a Delaware corporation (“SSI -
DE”) Dr. Sudhir Srivastava (“Dr. Srivastava”), who, through his holding company, owns a controlling interest
in SSI-DE.
SSI-DE, through a subsidiary, owns a controlling
interest in Sudhir Srivastava Innovations Pvt. Ltd., an Indian private limited company (“SSI - India”). Based in Haryana,
India, SSI-India is engaged in the development, commercialization, manufacturing and sale of medical and surgical robotic systems utilizing
patents, trademarks and other intellectual property held by Dr. Srivastava (the “SSI Intellectual Property”).
Pursuant to the Merger Agreement, Merger Sub
will merge with and into SSI – DE (the “Merger”). In the Merger, holders of the outstanding shares of common
stock of SSI – DE at closing (including certain parties providing Interim Financing as described below), will receive in exchange
for their SSI – DE shares, such number of shares of AVRA common stock as will result in such holders owning 95% of the outstanding
post-Merger shares of AVRA common stock, with the current shareholders of AVRA owning 5% of the outstanding post-Merger shares of AVRA
common stock.
In addition to the foregoing, upon completion
of the Merger, the holders of SSI – DE common stock will receive, pro rata, shares of newly designated Series A Non-Convertible
Preferred Stock (the “Series A Preferred Shares”).
The Series A Preferred Shares will vote together
with Shares of our common stock as a single class on all matters presented to a vote of stockholders, except as required by law and entitle
the holders of the Series A Preferred Shares to exercise 51.0% of the total voting power of the Company. The Series A Preferred Shares
are not convertible into common stock, do not have any dividend rights and have a nominal liquidation preference. The Series A Preferred
Shares also have certain protective provisions, such as requiring the vote of a majority of Series A Preferred Shares to change or amend
their rights, powers, privileges, limitations and restrictions. The Series A Preferred Shares are automatically redeemable by the Company
for nominal consideration at such time as the holder owns less than 50% of the shares of AVRA common stock received in the Merger.
Concurrent with consummation of the Merger, Dr.
Srivastava will assign the SSI Intellectual Property being utilized by SSI – India in the development, manufacture and sale of its
robotic surgical system to a subsidiary of AVRA. In exchange for such assignment, Dr. Srivastava will receive a royalty of three percent
(3%) of net revenues (gross revenues less cost of goods sold) generated from the sale or license of products using the SSI Intellectual
Property.
In addition, at closing, the current directors
and executive officers will resign, other than Barry Cohen, who will continue as a director and in a new executive capacity, and the designees
of the SSI – DE stockholders will be appointed to AVRA’s board of directors and management. Post – Merger, AVRA intends
to focus a significant part of its efforts on expanding and further developing the business of SSI-India, which will be an indirect majority-owned
subsidiary of AVRA.
In addition to customary closing conditions, consummation
of the Merger is subject to the following conditions to be satisfied or waived by SSI – DE and Dr. Srivastava at or prior to consummation
of the Merger:
| ● | AVRA shall have changed its corporate name to “SS Innovations,
Inc.; |
| ● | AVRA shall have implemented a one for ten reverse stock split;
and |
| ● | AVRA shall have increased its authorized common stock to
250,000,000 shares. |
The Merger Agreement, the Merger and the above
corporate actions have been approved by AVRA’s board of directors and majority stockholders. They are subject to the final processing
of an Issuer Company – Related Action Notification Form, which we have filed with the Financial Industry Regulatory Authority and
the filing of appropriate amendments to our Articles of Incorporation with the Florida Secretary of State.
Interim Financing
As contemplated by the Merger Agreement, pending
consummation of the Merger, we have provided SSI – DE and its affiliates, a total of $5,000,000 in interim financing as of the date
of this Report (the “Interim Financing”). The Interim Financing is evidenced by one-year promissory Notes made in favor
of the Company by SSI-DE and its affiliates, including Dr. Srivastava, jointly and severally (the “SSI Notes”). Interest
on the SSI Notes accrues at the rate of 7% per annum, payable together with the principal amount at maturity. The SSI Notes have an original
issue discount of 10% for the first $2,000,000 and 6% for the balance. If the SSI Notes are not repaid in full on or at maturity, they
will automatically convert into a percentage equity interest in SSI-DE determined by dividing the principal amount of accrued interest
on the SSI Notes divided by $100 million. The SSI Notes contain customary default provisions and other typical terms and conditions.
Prior to consummation of the Merger, we may make
additional advances to SSI – DE and its affiliates, evidenced by additional SSI Notes. These SSI Notes will be substantially similar
in form and substance to the initial SSI Notes, provided, however, that SSI Notes issued in excess of an aggregate principal amount of
$2,000,000, will have an original issue discount of 6% as opposed to 10%, and the valuation for determining conversion may be $250 million
as opposed to $100 million.
In order to fund the Interim Financing, the Company
offered and sold to two accredited investors, a total of $3,000,000 and $2,000,000 in principal amount of one-year convertible promissory
notes (the “Convertible Notes”), respectively. The Convertible Notes will have the same interest rate and payment terms
as the SSI Notes and otherwise be substantially similar to the SSI Notes, provided, however, that the Convertible Notes do not have an
original issue discount. Further, upon consummation of the Merger (if and when it is consummated) the Convertible Notes will automatically
convert into a number of shares of AVRA common stock determined by dividing the principal amount of the Convertible Notes by $100 million
and multiplying such number expressed as a percentage by the number of AVRA shares of common stock issued to the stockholders of SSI-DE
upon consummation of the Merger.
The Convertible Notes were issued in private transactions
pursuant to the exemptions from registration under Section 4(a)2 of the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder.
Pending the Merger, each of AVRA and SSI–DE
and its affiliates may seek to secure additional equity or debt financing, including, without limitation, further Interim Financing.
Employees
As of the date of this report the Company has two full-time and three
part-time employees, including certain executive officers. We also rely on independent third-party consultants to perform additional services
as needed.
Item 1A. Risk Factors.
As a “smaller reporting company,”
as defined in Rule 12b-2 under the Securities Exchange Act of 1924, as amended (the “Exchange Act”), we are not required
to provide the information required by this Item.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
The Company currently does not own any properties but leases an office
from UCF at 3259 Progress Drive, Orlando, FL 32826 under a lease expiring July 31, 2023, at a rental of $404.68 per month.
Item 3. Legal Proceedings.
Currently there are no material legal proceedings pending or threatened
against us. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course
of business. Litigation is subject to inherent uncertainties, and an adverse result in any such matter may harm our business.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
From July 2018 through September 2018, our common
stock traded on the OTC Pink tier of the over-the counter market operated by OTC Markets Group, Inc. From September 2018 until September
2020, our common stock traded on the OTC QB tier of the over-the-counter market and from September 2020 until September 2021, our common
stock again traded on the OTC Pink tier of the over-the-counter market. As a result of the death of the principal of our independent registered
public accounting firm in December 2019 and the subsequent cessation of that firm’s operations, we temporarily ceased filing our
periodic reports under the Exchange Act. Accordingly, commencing September 28, 2021, our common stock commenced trading on the Expert
Market. In early December 2022, the Company became current again in our Exchange Act filings and our common stock began trading again
on the OTC Pink tier of the over-the counter market.
The trading symbol for our common stock is AVMR.
Regardless of which market our common stock has traded on, the trading market for our common stock has been sporadic and extremely limited.
There can be no assurance that a liquid public trading market for our shares will develop or if developed, that it will be sustained.
Holders of our Common Stock
As of March 30, 2023, we had 53,887,738 shares
of common stock issued and outstanding and 191 holders of record of our common stock.
Dividends
The payment by us of dividends, if any, in the
future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements
and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to
pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.
Securities Authorized for Issuance under Equity
Compensation Plans
Plan
category | |
Number
of
securities to
be issued upon
exercise
of outstanding
options,
warrants and
rights | | |
Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights | | |
Number
of
securities
remaining
available for
future
issuance
under equity
compensation
plans(excluding
securities
reflected in
column
(a)) | |
Equity compensation
plans approved by security holders | |
| 14,818,777
shares | (1) | |
$ | $0.269 | | |
| 5,181,223
shares | (1) |
| |
| | | |
| | | |
| | |
Equity compensation
plans not approved by security holders | |
| 0
shares | | |
| -- | | |
| 0
shares | |
| |
| | | |
| | | |
| | |
Total | |
| 14,818,777 | (1) | |
$ | 0 | | |
| 5,181,2230
| (1) |
(1) |
Represents shares of common stock under our 2016 Incentive Stock Plan. |
Recent Sales of Unregistered Securities.
During the quarter ended December 31, 2022, the Company issued and
sold 4,401,000 shares of our common stock to 21 accredited investors at $0.25 per share receiving $1,100,250 in total proceeds.
On October 1, 2021, the Company’s CEO, converted
a total of $595,000 of accrued salary into 5,950,000 shares of common stock at a price of $0.10 per share and agreed to receive 450,000
shares of common stock for $45,000 of the remaining salary due for the three months ending December 31, 2021 at a price of $0.10 per share.
On October 1, 2021, a former employee now a consultant
elected to convert a total of $251,500 of accrued consulting fees into 2,515,000 shares of common stock at a price of $0.10 per share,
converted $161,500 of accrued salary into 1,615,000 shares of common stock at a price of $0.10 per share. and $4,500 of expenses into
45,000 shares of common stock at a price of $0.10 per share.
On July 1, 2022 the Company paid $5,000 and issued
to a consultant an option for 2,520,000 common shares with an exercise price of $0.10 per share as a performance bonus and for foregoing
all accrued and unpaid fees due for 2022 and for foregoing a portion of the fees due for the remaining five months of calendar year 2022.
The option vested immediately.
On July 1, 2022 the Company issued to its CEO
an option for 5,400,000 common shares with an exercise price of $0.10 per share as a performance bonus and for foregoing all of his 2022
salary. The option vested immediately.
On July 1, 2022 the Company issued to its Chief
Medical Officer an option for 500,000 common shares with an exercise price of $0.10 per share as a performance bonus. The option vested
immediately.
On July 1, 2022 the Company issued to its Chief
Strategy Advisor an option for 500,000 common shares with an exercise price of $0.10 per share as a performance bonus. The option vested
immediately.
On July 1, 2022 the Company issued 240,270 shares
of common stock as payment in full for the accrued but unpaid fees due to its Counsel.
On July 1, 2022 the Company issued 27,250 shares
of common stock to its patent attorney per their fee agreement.
On July 1, 2022 the Company issued 160,000 shares
of common stock to its Chief Strategy Officer as required by his Stock Grant Award dated April 15, 2019 and his Employment Agreement dated
March 1, 2018.
On July 1, 2022 the Company issued 40,000 shares
of common stock to its Chief Medical Officer as required by his employment agreement dated September 15, 2021
On July 1, 2022 the Company issued a total of
569,747 shares of common stock to several consultants.
In July 2022, four investors exercised their put
options obtained from the Offering dated October 26, 2021, transferred their Membership Units in Avra Air LLC back to AVRA and received
301,027 shares of the Company’s common stock in return.
On July 25, 2022 the Directors and Shareholders
holding a majority of the issued and outstanding common shares of the Company adopted, by joint written consent, a resolution to increase
the Company’s common stock reserved for issuance under the Company’s 2016 Incentive Stock Plan to 20,000,000.
On August 5, 2022, AVRA entered into a non-binding
letter of intent with Dr. Sudhir Srivastava (“Dr. Srivastava”), Cardio Ventures Pvt. Ltd., a Bahamian private limited company
of which Dr. Srivastava is the sole stockholder(“Cardio”), Otto Pvt, Ltd., a Bahamian private limited company and direct subsidiary
of Cardio (“Otto”) and Sudhir Srivastava Innovations Pvt. Ltd., an Indian private limited company and indirect subsidiary
of Cardio (“SSI,” and together with Cardio and Otto, the “SSI Parties”) with respect to a business combination
between AVRA and the SSI Parties (the “Transaction”). SSI, based in Haryana, India is engaged in the development, commercialization,
manufacturing and sale of medical and surgical robotic systems utilizing patents, trademarks and other intellectual property held by Dr.
Srivastava (the “SSI Intellectual Property”).
If and when the transaction is consummated, the
business of the SSI Parties, including the SSI Intellectual Property will be owned by AVRA. The shareholders of the SSI Parties will own
95% of the common stock of post-transaction AVRA and the current shareholders of AVRA will own 5% of the common stock of post-transaction
AVRA. In addition, there will be changes in composition of the board of directors, implementation of corporate governance policies and
changes in management, all with a view to listing the common stock of AVRA on the Nasdaq Stock Market, LLC or another National Securities
Exchange. In addition, AVRA will change its name to “SS Innovations International, Inc.”
On November 7, 2022, AVRA entered into a
definitive Merger Agreement (the “Merger Agreement”), by and among AVRA, AVRA-SSI Merger Corporation, a Delaware
corporation and wholly-owned subsidiary of AVRA (“Merger Sub”), Cardio Ventures, Inc., a Delaware corporation
(“SSI - DE”) Dr. Sudhir Srivastava (“Dr. Srivastava”), who, through his holding company, owns a controlling
interest in SSI-DE SSI-DE, through a subsidiary, owns a controlling interest in Sudhir Srivastava Innovations Pvt. Ltd., an Indian
private limited company (“SSI - India”). Based in Haryana, India, SSI-India is engaged in the development,
commercialization, manufacturing and sale of medical and surgical robotic systems utilizing patents, trademarks and other
intellectual property held by Dr. Srivastava (the “SSI Intellectual Property”).
Pursuant to the Merger Agreement, Merger Sub will
merge with and into SSI – DE (the “Merger”). In the Merger, holders of the outstanding shares of common stock of SSI
– DE at closing (including certain parties providing Interim Financing as described below), will receive in exchange for their SSI
– DE shares, such number of shares of AVRA common stock as will result in such holders owning 95% of the outstanding post-Merger
shares of AVRA common stock, with the current shareholders of AVRA owning 5% of the outstanding post-Merger shares of AVRA common stock.
In addition to the foregoing, upon completion
of the Merger, the holders of SSI – DE common stock will receive, pro rata, shares of newly designated Series A Non-Convertible
Preferred Stock (the “Series A Preferred Shares”).
The Series A Preferred Shares will vote together
with Shares of our common stock as a single class on all matters presented to a vote of stockholders, except as required by law and entitle
the holders of the Series A Preferred Shares to exercise 51.0% of the total voting power of the Company. The Series A Preferred Shares
are not convertible into common stock, do not have any dividend rights and have a nominal liquidation preference. The Series A Preferred
Shares also have certain protective provisions, such as requiring the vote of a majority of Series A Preferred Shares to change or amend
their rights, powers, privileges, limitations and restrictions. The Series A Preferred Shares are automatically redeemable by the Company
for nominal consideration at such time as the holder owns less than 50% of the shares of AVRA common stock received in the Merger.
Concurrent with consummation of the Merger, Dr.
Srivastava will assign the SSI Intellectual Property to AVRA or a subsidiary of AVRA. Moreover, the current directors and executive officers
will resign, other than Barry Cohen, who will continue as a director and in a new executive capacity, and the designees of the SSI –
DE stockholders will be appointed to AVRA’s board of directors and management. Post – Merger, AVRA intends to focus a significant
part of its efforts on expanding and further developing the business of SSI-India, which will be an indirect majority-owned subsidiary
of AVRA.
In addition to customary closing conditions, consummation
of the Merger is subject to the following conditions to be satisfied or waived by SSI – DE and Dr. Srivastava at or prior to consummation
of the Merger:
| ● | AVRA shall have changed its corporate name to “SS Innovations
International, Inc.;” |
| ● | AVRA shall have implemented a one for ten reverse stock split;
and |
| ● | AVRA shall have increased its authorized common stock to
250,000,000 shares. |
The Merger Agreement, the Merger and the above
corporate actions have been approved by AVRA’s board of directors and majority stockholders. They are subject to the filing with
and processing of an Issuer Company – Related Action Notification Form with the Financial Industry Regulatory Authority and the
filing of appropriate amendments to our Articles of Incorporation with the Florida Secretary of State.
On December 1, 2022, 10,000 shares of restricted
common stock were issued for services to Farhan Taghizadeh, per his employment agreement dated September 15, 2020.
During the quarter ended December 31, 2022, 60,000
shares of restricted common stock were issued to Nikhil Shah per his consulting agreement dated March 1, 2018.
On December 1, 2022, 60,000 shares of restricted
common stock were issued for services to a corporate services consultant.
During the quarter ended December 31, 2022, 50,000
shares of restricted common stock were issued to legal counsel as a bonus for general corporate advisory and legal services.
During the quarter ended December 31, 2022, 25,000
shares of restricted common stock were issued to each of Ettore Tomassetti and Alen York, in consideration for their services as members
of the Board.
During the quarter ended December 31, 2022, 2,060,000
shares of restricted common stock were issued to Barry Cohen as a bonus for his services as Chief Executive Officer for an approximately
eight year period.
During the quarter ended December 31, 2022, 2,125,000
shares of restricted common stock were issued to an independent administrative consultant as a bonus for rendering services over and above
those required pursuant to an agreement with the Company.
During the quarter ended December 31, 2022, 15,000
shares of restricted common stock were issued to a third-party consultant as a bonus per a services agreement with the Company dated March
15, 2022.
During the quarter ended December 2022, 20,000
shares of restricted common stock were issued for services to Farhan Taghizadeh dated November 1, 2022 as per his employment agreement
with the Company dated September 15, 2020.
During the quarter ended December 31, 2022, 18,146
shares of restricted common stock were issued for services completed through September 17, 2022 to an independent consultant, per a services
agreement dated June 16, 2022.
During the quarter ended December 31, 2022, 11,641
shares of restricted common stock were issued for services completed through September 17, 2022 to another independent consultant, per
a services agreement dated June 16, 2022.
During the quarter ended December 31, 2022, the
Company issued to a business consultant 1,000,000 shares of restricted common stock in exchange for services rendered.
The offer and sale of the above securities were
made in private transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on exemptions afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation
D promulgated thereunder.
Item 6. [Reserved]
Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
Results of Operations
Introduction
The financial statements appearing elsewhere in
this prospectus have been prepared assuming the Company will continue as a going concern. The Company was recently formed and has not
established sufficient operations or revenues to sustain the Company. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
The following table provides selected financial
data about our Company at December 31, 2022 and December 31, 2021:
Balance Sheet Data
| |
As of | | |
As of | |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Cash | |
$ | 1,351,364 | | |
$ | 405,774 | |
Total Assets | |
$ | 4,371,441 | | |
$ | 428,607 | |
Total Liabilities | |
$ | 4,051,229 | | |
$ | 287,281 | |
Total Stockholders’ Equity | |
$ | 320,213 | | |
$ | 141,326 | |
To date, the Company has relied on debt and equity
raised in private offerings to finance operations and no other source of capital has been identified or sought. If we experience a shortfall
in operating capital, we could be faced with having to limit our research and development and marketing activities.
Year ended December
31, 2022, as compared to year ended December 31, 2021
Revenues. We had no revenue during
the years ended December 31, 2022 and December 31, 2021.
Research and Development Expenses. Research
and development expenses during year ended December 31, 2022 were $72,959 as compared to $1,000 for the year ended December 31, 2021.
Research and development expenses reflect continuing development work on the Company’s prototype robotic system at its facilities
at UCF’s incubator in Orlando, Florida.
Compensation Expense. We had compensation
expenses of $1,135,468 and $947,237 during year ended 2022 and 2021 respectively. This includes compensation for the management staff
and stock-based compensation expense related to the Company’s 2016 Stock Incentive Plan.
General and Administrative Expenses. We
incurred $1,239,179 in general and administrative expenses during the year ended December 31, 2022, as compared to $458,801 for the year
ended December 31, 2021. General and administrative expenses include legal and other professional expenses related to the Company’s
filings as a public company with the Securities and Exchange Commission (the “SEC”).
Other Income (Expenses). We have earned
$234,594 during the year ended 2022 as compared to $118 during 2021. The increase in other income is primarily result of origination fees
on notes.
Net Loss. We incurred a net loss of
$2,213,012 for 2022 as compared to a net loss of $1,484,313 for 2021. The increase in net loss from 2022 to 2021 is primarily a result
of the increase in consulting fees, payroll expenses, compensation expenses.
Liquidity and Capital Resources
The Company expects to require substantial funds
for research and development, to continue to develop its initial proposed medical robotic system. The Company plans to meet its operating
cash flow requirements by raising additional funds from the sale of our securities and, if possible, on favorable terms, by entering into
development partnerships to assist the Company with its technology development activities.
Between October 5, 2021 to December 8, 2021 the
Company sold a total of 2,229,231 shares of common stock at prices ranging between $0.13 and $0.52 per share. The
Company received proceeds of $315,200.
During the quarter ended December 31, 2022, the Company issued and
sold 4,401,000 shares of our common stock at $0.25 per share to 21 purchasers in a private offering. The Company received proceeds of
$1,100,250.
While we have been successful in raising funds
to fund 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. 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 Policies
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. Significant
estimates included deferred revenue, costs incurred related to deferred revenue, the useful lives of property and equipment and the useful
lives of intangible assets.
Income Taxes
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
of ASC 740.
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.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that
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.
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary
Data.
See the Index to the Financial Statements beginning
on page F-1 below.
Item 9. Changes in
and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(a) Disclosure Controls and
Procedures
Management’s Report on Disclosure Controls
and Procedures
Our Chief Executive Officer, as our principal Executive, Financial
and Accounting Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
as of December 31, 2022, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including to
ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer, as our Principal Executive, Financial and Accounting Officer, or
persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation,
our Chief Executive Officer, as our principal Executive, Financial and Accounting Officer, has concluded that as of December 31, 2022,
our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified
and described in Item 9A(b) of this report.
Our Chief Executive Officer, as our principal
Executive, Financial and Accounting Officer, does not expect that our disclosure controls or internal controls will prevent all error
and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives
and our principal executive officer has determined that our disclosure controls and procedures are effective at doing so, a control system,
no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions.
(b) Management’s Report on Internal
Control over Financial Reporting
Management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal
control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer, as our Principal
Executive, Financial and Accounting Officer, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). Internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and
expenditures of our company are being made only in accordance with authorizations of management and directors of our Company; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our Company’s
assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial
reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Our Chief Executive Officer, as our Principal Executive, Financial
and Accounting Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended,
as of December 31, 2022, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the SEC, including
to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated
and communicated to our management, including our Chief Executive Officer (our principal executive, financial and accounting officer),
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation,
our Chief Executive Officer, as our Principal Executive, Financial and Accounting Officer, has concluded that as of December 31, 2022,
our disclosure controls and procedures were not effective at the reasonable assurance level reasonable assurance level in that:
| ● | We
do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over
financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have
written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded
that the control deficiency that resulted represented a material weakness. |
| ● | We
do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature,
segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible,
the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.
Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures
and has concluded that the control deficiency that resulted represented a material weakness. |
Our Chief Executive Officer, as our Principal
Executive, Financial and Accounting Officer, does not expect that our disclosure controls or internal controls will prevent all error
and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives
and our principal executive officer has determined that our disclosure controls and procedures are effective at doing so, a control system,
no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions.
(c) Remediation of Material Weaknesses
To remediate the material weakness in our documentation,
evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once
resources become available.
We also intend to remedy our material weakness
with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes
effective internal controls once resources become available.
(d) Changes in Internal Controls Over Financial
Reporting
There were no changes in our internal controls
over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
None.
PART III
Item 10. Directors, Executive Officers and
Corporate Governance.
Our directors and executive officers and their
respective ages and titles are as follows:
Name |
|
Age |
|
Position(s) and Office(s) Held |
Barry F. Cohen |
|
83 |
|
Chief Executive Officer. Acting Chief Financial Officer and Director |
Dr. Ray Powers |
|
77 |
|
Chief Operating Officer |
Farhan Taghizadeh, M.D. |
|
51 |
|
Chief Medical Officer |
Alen Sands York |
|
90 |
|
Director |
Ettore Tomasetti |
|
83 |
|
Director |
Set forth below is a brief description of the
background and business experience of our directors and executive officers.
Barry F. Cohen founded the Company and
has served as its Chief Executive Officer and a director since February 4, 2015. Between 2006 and 2008, Mr. Cohen was a private investor
and founded AVRA Surgical, Inc., a medical technology company. Prior to founding AVRA, Mr. Cohen was a director of Dualis Med-Tech from
2012 to 2014 and has been a director of AvraMiro since 2009 and Avra Surgical Robotics, Inc. since 2011, which companies are currently
inactive. From approximately 1979 to 1983 he served as director of Synalloy Corp., a manufacturer of pipe, piping systems and specialty
chemicals after which he was appointed to serve as President from 1984 to 1985. Mr. Cohen also served as Chairman of the Executive Board
of Wolverine Technologies, Inc., a NYSE listed company from 1979 to 1983 and President of Barry F. Cohen & Co., an NASD (n/k/a FINRA)
member firm from 1983 to 1999. Mr. Cohen has over 50 years’ experience in managing private and public industrial companies, and
47 years’ experience as a securities executive. This significant experience qualifies Mr. Cohen to serve as a director.
Dr. Ray Powers, who became our Chief Operating
Officer on August 1. 2016, was an executive within the Bell System for 30 years prior to moving on to C-level positions in the technology
sector serving in both private and public companies. He has served as Director of Standards for the Project Management Institute, and
on their Board of Directors as well as on several non-profit boards. During the last 5 years, he has been a full-time professor and administrator
in higher education. In December 2015, Dr. Powers and his spouse filed a petition for bankruptcy protection under Chapter 11 of the Bankruptcy
Code. Their plan of reorganization was confirmed, and the bankruptcy was discharged in December 2016. Dr. Powers holds a professional
project manager credential (PMP); a Bachelor of Science degree in business from Arizona State University; a master of arts degree in education;
a master of arts degree in business (MBA); and a doctorate degree in leadership (EdD).
Farhan Taghizadeh, M.D., 45, became our
Chief Medical Officer on September 15, 2017, after serving as a member of our Medical Advisory Board since October 1, 2016. Dr. Taghizadeh
received his undergraduate degree from Yale University and attended medical school at Penn State University. He completed his residency
at the University of Rochester in Rochester, New York and his post-residency fellowship at the University of Bern, Switzerland. Dr. Taghizadeh
has authored numerous publications and received many honors. He is certified by the American Board of Otolaryngology-Head and Neck Surgery.
Dr. Taghizadeh is an expert in facial rejuvenation, having performed over 3,000 face lifts and thousands of laser procedures. He has authored
numerous publications, spoken at many national meetings, and has been involved as a consultant and luminary with various companies in
the facial aesthetic arena. Dr. Taghizadeh holds various patents in the field of personalized skincare and automated aesthetic devices.
He completed the FDA studies for the Vivace, an advanced RF Microneedling technology, and in 2015, founded Aesthetics Biomedical, a thought
leader in the innovation of treatment serums, masks, numbing cream and recovery agents to optimize the results of the treatments they
design. In 2014, Dr. Taghizadeh co-founded Omni Bioceutical Innovations, an innovative skin treatment and care solutions company, which
was a presenter at MEIDAM in 2017. Dr. Taghizadeh also founded Amnioaesthetics, a company launched in 2016, which is dedicated to advancing
amniotic products in the space of regenerative skin and hair care. He has also served as the Chief Medical Director of Arizona Facial
Plastics since 2016. Dr. Taghizadeh’s interest in robotics stems from his 2013 publication outlining the steps to use robots to
conduct facial cosmetic procedures. His recent research focuses on advancing various laser applications, robotics and personalized skincare
solutions.
Alen Sands York who became a Director on
March 1, 2020, has over sixty years of entrepreneurial and international business experience. From managing a third-generation family
home textile company in the USA and Germany to diverse ventures in advertising, public relations, international marketing, automotive
and marine industries, industrial design, motion pictures, restaurants, wine and spirits. He is multilingual, an artist, published author
and poet. He has worked in the USA, Cuba, Mexico, Japan, the UK, Hong Kong, the Philippines, and Germany. His family has a medical background
and for the last ten years has been dedicated to the development of surgical robotics internationally. We believe that Mr. York’s
business experience makes him a valuable member of our Board of Directors.
Mr. Ettore Tomassetti who became
a Director on March 1, 2020, has over fifty-five years of experience in Electromechanical Design and Fabrication, Food Processing, Building
Sciences and Customer Service. After several years of Military Service, he went on to managing/directing a variety of service and manufacturing
companies. His business acumen allowed him to secure contractual agreements with commercial and retail businesses in Germany, Canada,
Mexico, UK and throughout the Caribbean Islands. For the past five years he has been involved in the design and fabrication of medical
robotic instruments and air sanitizing devices. Given his experience, we believe that Mr. Tomassetti is well qualified to serve as a Director
of the Company.
Terms of Office
Our directors are appointed for a one-year term
to hold office until the next annual meeting of our shareholders and until a successor is appointed and qualified, or until their removal,
resignation, or death. Executive officers serve at the pleasure of the board of directors.
Director Independence
At present, we believe that our two non-employee
directors (Messrs. York and Tomassetti) are “independent” as defined under Rule 10A-3(b)(1) under the Exchange Act.
Board Committees
Our board of directors does not currently have
an audit committee, a compensation committee, or a corporate governance committee. We plan to establish such committees in the near future,
all the members of which will be “independent” directors.
Code of Ethics
We have adopted a Code of Ethics that applies
to employees, including our principal executive officer, principal financial officer, or persons performing similar functions.
Board of Directors Role in Risk Oversight
Members of the board of directors have periodic
meetings with management and the Company’s independent auditors to perform risk oversight with respect to the Company’s internal
control processes. The Company believes that the board’s role in risk oversight does not materially affect the leadership structure
of the Company.
Medical Advisory Board
The Company has also established a medical advisory
board, whose members meet periodically in person or by telephone with management and/or the board of directors to advise on scientific,
product development and marketing matters. The current members of the medical advisory board are:
Dr. Nikhil L. Shah, D.O., who served as
a director of the Company from October 1, 2016 until March 1, 2018, at which time he stepped down from such position and became the Company’s
Chief Strategy Officer until March 1, 2020, at which time he stepped down as an executive officer of the Company, but continued in the
role of the Company’s Chief Strategy Officer on an advisory basis. Dr. Shah is one of the top global leaders in robotic surgery
and is currently the Chief of Minimal Access and Robotic Surgery at Piedmont Healthcare in Atlanta, GA. He previously served as the Director
of Urology and Urologic Oncology at Piedmont Atlanta Hospital from 2012 to 2016. He holds an Associate Professor (adjunct) at the Georgia
Institute of Technology in the College of Computing — Robotics & Intelligent Machines. Prior positions also include the Section
Chief of Urology, Department of Surgery, Saint Joseph’s Hospital of Atlanta, and the Director of Robotic Surgery, Saint Joseph’s
Hospital of Atlanta. Dr. Shah is founder and board member of the Men’s Health & Wellness Center in Atlanta. This is a 501(3)(c)
non-profit that works to educate men on screening and prevention for all health issues affecting the aging male as well as awareness of
cancer conditions affecting men and their partners. Given his experience, he has been an invited speaker and advisor for organizations
in the financial arena, academia and medical device Industry. Dr. Shah has a Bachelor’s of Science (B.S.) degree in Neurobiology
from the University of Michigan in Ann Arbor, a Master’s in Health Management & Health Policy from the University of Michigan
in Ann Arbor, and his Doctor of Osteopathic Medicine (D.O.) degree from the Kirksville College of Osteopathic Medicine.
Dr. Juan Jose Badimon, Ph.D., is a Professor
of Medicine and Director of the Atherothrombosis Research Unit at the Cardiovascular Institute, Mount Sinai School of Medicine, New York.
His academic appointments include the Mayo Clinic, Massachusetts General Hospital, Harvard University, Boston, and Mount Sinai School
of Medicine, New York. His major research interests are focused on pathogenesis and treatment of atherothrombosis and cardiovascular diseases.
Dr. Badimon has published more than 370 peer-reviewed articles in athero-thrombosis, imaging and cardiovascular diseases. He serves as
reviewer for 10 of the top journals in cardiovascular diseases. Dr. Badimon holds a Pharmacy degree from the University of Barcelona and
a Ph.D. degree in Pharmacology from the University of Barcelona.
Dr. Heywood Y. Epstein, M.D., was Chief
Resident in Radiation Therapy at Montefiore Hospital in the Bronx, NY, Assistant Professor of Radiology at Columbia Physicians and
Surgeons, New York University, Mount Sinai Medical School in New York City, and SUNY at Stony Brook on Long Island. While in the U.S.
Public Health Service (“USPHS”) he was both Director of Staten Island Radiology Residency Program, Director of their Radiology
Technologist Training Program, and USPHS radiation safety officer for the Northeast United States. Dr. Epstein helped establish NYU’s
first ultrasound section in their Radiology Department and has co-authored 25 articles for juried journals. Dr. Epstein has performed
approximately 10,000 angiograms and interventional radiographic procedures, in addition to another 10,000 breast biopsies guided by ultrasound,
and stereotactically Dr. Epstein holds a bachelor’s degree in biology from Harvard University and received his Medical Degree from
State University of New York.
Members of the medical advisory board are compensated
through the grant of a stock option awards under our 2016 Incentive Stock Plan. Except for Dr. Shah, current members each received a five-year
option to purchase 36,000 shares at an exercise price equal to fair market value as of the date of grant, 6,000 shares of which vested
upon grant and the balance of which vest in twelve quarterly installments of 2,500 shares each, subject to continued service. Dr. Shah
received a five-year option to purchase 108,000 shares at an exercise price equal to fair market value as of the date of grant vesting
in thirty-six monthly installments of 3,000 shares each, subject to continued service.
Scientific Advisory Board
The Company has also established a scientific
advisory board, whose members meet periodically in person or by telephone with management and/or the board of directors to advise on scientific,
product development and marketing matters. Set forth below is a brief description of the background and business experience of the current
members of our scientific advisory board.
Andrew M. Economos, Ph.D., initially worked
in the aerospace computing industry in Los Angeles, and after some years moved to Princeton to work in RCA’s Sarnoff Labs. From
there he went to RCA subsidiary company NBC in New York, where he was Vice President of Management Information Services, managing the
immense computing needs of NBC. From there he founded and led a highly successful broadcast software company, Radio Computing Services,
which he sold in 2006 to Clear Channel Communications (now iHeartMedia). He has served on The New York Botanical Garden’s Science
Committee and Corporation Board, the Board of Selby Gardens in Sarasota, and the Board of the Science Committee of Westchester Community
College. Dr. Economos earned his M.S in Mathematics at the University of Florida and his Ph.D. in Mathematical Statistics at UCLA.
Fred Nazem, Ph.D., has been building highly
disruptive, industry-leading healthcare and technology companies since the late 1970’s. He is best known as the turnaround specialist
who, as Chairman, led the successful reorganization of Oxford Health Plans, which was later sold to United Healthcare for more than $6
billion. A number of his start-up ventures, including Cirrus Logic Inc., Bluebird Bio, and Genesis Health Ventures, have grown to become
billion-dollar enterprises and more than a dozen of them have achieved multi-billion-dollar revenue status. A scientist turned financier,
Mr. Nazem holds a bachelor’s degree in biochemistry from Ohio University, a master’s degree in physical chemistry from the
University of Cincinnati, and an MBA in finance from Columbia University.
Members of the scientific advisory board are compensated
through the grant of a stock option awards under our 2016 Incentive Stock Plan. Current members each received a five-year option to purchase
shares at an exercise price equal to fair market value as of the date of grant, subject to continued service.
Item 11. Executive Compensation.
Summary Compensation Table
The table below summarizes all compensation awarded
to, earned by, or paid to our Chief Executive Officer and our other executive officers for the years ended December 31, 2022, December
31, 2021, and December 31, 2020.
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards (#) | | |
Option Awards (#) | | |
Option Awards ($) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Nonqualified Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Barry F. Cohen, | |
| 2022 | | |
| 292,700 | | |
| 0 | | |
| 2,060,000 | | |
| 5,400,000 | | |
| 358,429 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 651,129 | |
Chairman and | |
| 2021 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
Chief Executive Officer(1) | |
| 2020 | | |
| 180,000 | | |
| 0 | | |
| 0 | | |
| 1,000,000 | | |
| 145,050 | | |
| 0 | | |
| 0 | | |
| 6,000 | | |
| 331,050 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Farhan Taghizadeh, M.D., | |
| 2022 | | |
| 0 | | |
| 0 | | |
| 60,000 | | |
| 850,000 | | |
| 41,019 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 41,019 | |
Chief Medical Officer(2) | |
| 2021 | | |
| 0 | | |
| 0 | | |
| 60,000 | | |
| 29,167 | | |
| 653 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 653 | |
| |
| 2020 | | |
| 0 | | |
| 0 | | |
| 76,000 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
(1) | Per
Mr. Cohen’s renewed employment agreement dated July 1, 2021, he was granted an option for 1,000,000 shares all vesting immediately.
On September 22, 2021, Mr. Cohen agreed to convert $50,000 of his accrued but unpaid salary from prior years in shares at $0.13 per share.
On October 1, 2021, Mr. Cohen agreed to convert all his accrued but unpaid salary and the balance of his 2021 salary thru the end of
the calendar year in shares at $0.10 per share. As a performance bonus and in return for foregoing all of his calendar year 2022 salary,
Mr. Cohen was issued an option for 5,400,000 common shares with an exercise price of $0.10 per share all vesting immediately. In December
2022 the Board issued 2,060,000 shares as a performance bonus to Mr. Cohen and the Company canceled its employment agreement dated July
1, 2020, with Mr. Cohen, by paying him the balance of payments due per such agreement through the end of the agreement’s term. |
(2) | Dr.
Taghizadeh became the Company’s Chief Medical Officer on September 15, 2017, at which time he was awarded a grant of 20,000 shares
of common stock under our 2016 Incentive Stock Plan and a grant of 5,000 shares under our 2016 Incentive Stock Plan for each subsequent
month in which he serves in such capacity. As of May 1, 2019, the 5,000 shares per month was increased to 7,000 shares per month. As
of September 15, 2020 the number of shares per month was reduced to 5,000 per month. On October 1, 2021, Dr. Taghizadeh was awarded an
option for 350,000 shares, vesting in equal monthly installments over 36 months. On July 1, 2022, Dr. Taghizadeh was awarded an option
for 500,000 shares, vesting in equal monthly installments over 36 months. All his options’ vesting accelerated due to the pending
merger with SS Innovations, Inc. |
Employment and Service Agreements
The Company was party to an employment agreement with Barry F. Cohen,
its Chief Executive Officer. Mr. Cohen’s employment agreement was set to expire in June 30, 2024 and provided for a base salary
of $15,000 per month. The employment agreement also provided for reimbursement of other reasonable business expenses incurred by Mr. Cohen
in the performance of his duties and contains confidentiality and non-competition provisions. In December 2022 the Board cancelled the
employment agreement with Mr. Cohen and in return paid him the balance of payments due per such agreement through the end of its term.
Mr. Cohen agreed to continue to act and perform fully in his role of CEO through the closing of the planned merger with CardioVentures,
Inc. We are also party to “at will” service agreements with our Chief Medical Officer, Dr. Farhan Taghizadeh and our
Chief Operating Officer, Ray Powers.
Outstanding Equity Awards at Fiscal Year-End
Table
The table below summarizes all unexercised options,
stock that has not vested, and equity incentive plan awards for each of our executive officers outstanding as of December 31, 2022.
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable |
|
|
Option
Exercise
Price |
|
|
Option
Expiration
Date |
|
Number of
Shares that
have not vested |
|
|
Market
value of
shares of
stock that
have not
vested* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry F. Cohen |
|
|
750,000 |
|
|
|
750,000 |
|
|
$ |
1.00 |
|
|
12/1/2024 |
|
|
0 |
|
|
|
0 |
|
Barry F. Cohen |
|
|
389,000 |
|
|
|
389,000 |
|
|
$ |
0.25 |
|
|
3/1/2025 |
|
|
0 |
|
|
|
0 |
|
Barry F. Cohen |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
$ |
0.25 |
|
|
7/1/2025 |
|
|
0 |
|
|
|
0 |
|
Barry F. Cohen |
|
|
390,000 |
|
|
|
390,000 |
|
|
$ |
0.25 |
|
|
12/22/2025 |
|
|
0 |
|
|
|
0 |
|
Barry F. Cohen |
|
|
390,000 |
|
|
|
390,000 |
|
|
$ |
0.25 |
|
|
10/1/2026 |
|
|
0 |
|
|
|
0 |
|
Barry F. Cohen |
|
|
5,400,000 |
|
|
|
5,400,000 |
|
|
$ |
0.10 |
|
|
7/1/2027 |
|
|
0 |
|
|
|
0 |
|
Farhan Taghizadeh, M.D. |
|
|
350,000 |
|
|
|
350,000 |
|
|
$ |
0.25 |
|
|
10/01/2026 |
|
|
0 |
|
|
|
0 |
|
Compensation of Directors
On October 1, 2021 both of our Independent Directors
received on Option for 50,000 restricted common shares of our Company with an exercise price of $0.25 per share and vesting equally over
36 months.
During the quarter ended December 31, 2022, 25,000 shares of restricted
common stock were issued to each of Ettore Tomassetti and Alen York, in consideration for their services as members of the Board.
2016 Incentive Stock Plan
Our 2016 Incentive Stock Plan (the “2016
Plan”) provides for equity incentives to be granted to our employees, executive officers or directors or to key advisers or
consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying
shares as determined pursuant to the 2016 Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing.
The 2016 Plan is administered by the compensation committee, or alternatively, if there is no compensation committee, the board of directors.
3,000,000 shares of our common stock were originally reserved for issuance pursuant to the exercise of awards under the 2016 Plan. In
August 2019, our board of directors and our majority shareholders approved an increase in the number of shares reserved under the 2016
Plan to 10,000,000 shares of our common stock. Our board of directors and majority shareholders in July 2022, approved a subsequent increase
in the number of shares of our common stock reserved under the 2016 Plan to 20,000,000 shares of common stock. As of the date of this
report, we have granted options to purchase 14,986,000 shares under the 2016 Plan, exercisable at prices ranging from of $0.10 to $2.00
per share and 3,008,239 shares in stock grants. As of December 31, 2022, the Company has granted options to purchase 14,966,000 shares
under the 2016 Plan, exercisable at prices ranging from of $0.10 to $2.00 per share and 3,003.239 shares in stock grants.
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.
The following table sets forth, as of the date
of this report, the beneficial ownership of our common stock by each director and executive officer, by each person known by us to beneficially
own 5% or more of our common stock and by directors and executive officers as a group. Unless otherwise stated, the address
of the persons set forth in the table is c/o the Company, 3259 Progress Drive, Suite 114, Orlando, FL 32826.
Names and addresses of beneficial owners | |
Number of shares of common stock* | | |
Percentage of class (%)* | |
Barry F. Cohen (1) | |
| 24,591,311 | | |
| 37.64 | |
Ray Power (2) | |
| 89,400 | | |
| ** | |
Farhan Taghizadeh , M.D.(3) | |
| 1,276,000 | | |
| 1.95 | |
Alen Sands York(4) | |
| 253,744 | | |
| ** | |
Ettore Tomasetti(5) | |
| 161,200 | | |
| ** | |
All directors and executive officers as a group (five persons) | |
| 26,371,655 | | |
| 40.37 | |
* | Includes
shares issuable upon the exercise of options within sixty (60) days of the date of this prospectus. |
(1) | Includes
23,707,611 shares owned by Mr. Cohen directly, and 883,700 shares held by Avra Acquisitions, LLC of which Mr. Cohen is managing member
and over which shares Mr. Cohen exercises voting and dispositive control. |
(2) | Includes
89,444 shares owned by Dr. Powers directly. |
(3) | Includes
1,276,000 shares owned by Dr. Taghizadeh directly of which 850,000 are shares issuable upon the exercise of stock options. |
(4) | Includes
253,744 shares owned by Mr. York directly of which 86,000 are shares issuable upon the exercise of stock options. |
(5) | Includes
161,200 shares owned by Mr. Tomassetti directly of which 86,000 are shares issuable upon the exercise of stock options. |
The persons named above have full voting and investment
power with respect to the shares indicated. Under the rules of the SEC, a person (or group of persons) is deemed to be a “beneficial
owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security,
or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial
owner of the same security.
Securities Authorized for Issuance under Equity
Compensation Plans
Plan category | |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | |
Weighted-average exercise price of outstanding options, warrants and rights | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
Equity compensation plans approved by security holders | |
14,818,777 shares | (1) |
$ | 0.269 | | |
| 5,181,223shares | (1) |
Equity compensation plans not approved by security holders | |
0 shares | |
| None issued | | |
| 0 shares | |
Total | |
14,818,777 shares | (1) |
$ | 0.269 | | |
| 5,181,223
shares | (1) |
(1) | Represents
shares of common stock under the 2016 Plan. |
Item 13. Certain
Relationships and Related Transactions, and Director Independence.
Related Party Transactions
We describe below transactions since January 1,
2021, to which we were a party or will be a party, in which the amounts involved exceeded or will exceed the lesser of $120,000 or one
percent of the average of our total assets at year-end for the last two completed fiscal years ending December 31, 2022; and any of our
directors, nominees for director, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate family
member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material
interest.
We have granted stock options to our named executive
officers and certain of our directors. See the section titled “Executive Compensation — Outstanding Equity Awards at Year-End”
for a description of these stock options.
We are party to an employment agreement with our
Chief Executive Officer, which, among other matters, provides for certain severance and change in control benefits. See the section titled
“Executive Compensation— Employment Agreement” for a description of this agreement.
In July 2021 the Company issued a total of 90,987
shares to Dr, Nikhil Shah, Chief Strategy Officer, with an exercise price of $0.15 per option as a result of a ‘cashless’
exercise of an option for 102,361 shares.
In July 2021 the Company issued a total of 32,000
shares to Dr. Farhan Taghizadeh, Chief Medical Officer, with an exercise price of $0.15 per option as a result of a ‘cashless’
exercise of an option for 36,000 shares.
In July 2021 the Company issued a total of 69,444
shares to Dr. Ray Powers, Chief Operating Officer, with an exercise price of $0.15 per option as a result of a ‘cashless’
exercise of an option for 75,000 shares.
In October 2021 the Company issued a total of 390,000
stock options to the Company’s CEO with an exercise price of $0.25 per option for the extension of loans.
In October 2021 the Company issued a total of 350,000
stock options to the Company’s Chief Medical Officer with an exercise price of $0.25 per option.
In October 2021 the Company issued a total of 200,000
stock options to the Company’s Chief Strategy Officer with an exercise price of $0.25 per option.
In October 2021 the Company issued a total of 50,000
stock options to the Company’s Independent Director, Alen York, with an exercise price of $0.25 per option.
In October 2021 the Company issued a total of 50,000
stock options to the Company’s Independent Director, Ettore Tomassetti, with an exercise price of $0.25 per option.
Per Mr. Cohen’s renewed employment agreement
dated July 1, 2021, he was granted an option for 1,000,000 shares all vesting immediately. On September 22, 2021, Mr. Cohen agreed to
convert $50,000 of his accrued but unpaid salary from prior years in shares at $0.13 per share. On October 1, 2021, Mr. Cohen agreed to
convert all his accrued but unpaid salary and the balance of his 2021 salary thru the end of the calendar year in shares at $0.10 per
share. As a performance bonus and in return for foregoing all of his calendar year 2022 salary, Mr. Cohen was issued an option for 5,400,000
common shares with an exercise price of $0.10 per share all vesting immediately. In December 2022 the Board issued 2,060,000 shares as
a performance bonus to Mr. Cohen and the Company canceled its employment agreement dated July 1, 2020 with Mr. Cohen, by paying him the
balance of payments due per such agreement through the end of the agreement’s term.
Review, Approval and Ratification of Related
Party Transactions
Given our small size and limited financial resources,
we had not adopted formal policies and procedures for the review, approval or ratification of transactions with our executive officers,
directors and significant shareholders. However, we intend that such transactions will, on a going-forward basis, be subject
to the review, approval or ratification of our board of directors, or an appropriate committee thereof.
Item 14. Principal Accounting Fees
and Services.
BF Borgers CPA PC. (“Borgers”)
is our current independent registered public accounting firm and was such for the years ended December 31, 2022 and December 31, 2021.
Audit Fees
Aggregate audit fees billed by Borgers for the years ended December
31, 2022 and December 31, 2021 were $68,400 and $41,160, respectively.
Audit-Related Fees
There were no audit-related fees billed by Borgers
for the years ended December 31, 2022 and December 31, 2021.
Tax Fees
There were no tax fees billed by Borgers for the
years ended December 31, 2022 and December 31, 2021.
Pre-Approval Policy
We do not currently have a standing audit committee.
Provision of the above services was approved by our board of directors.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – FINANCIAL STATEMENTS
Organization
AVRA Medical Robotics, Inc. (the “Company”
or “AVRA”) 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. The Company was established to develop advanced
medical surgical devices. The Company is structured to invest in four principal areas – surgical robotic systems, surgical tools,
implantable devices and surgical robotic training.
Basis of Presentation
The accompanying financial statements are prepared
on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development-stage
enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products
which may become part of the Company’s product portfolio. The Company has not realized sales through December 31, 2021. A development
stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even if planned principal
operations have commenced, revenues are insignificant.
Going Concern
The accompanying financial statements have been
prepared assuming the continuation of the Company as a going concern. At December 31, 2022, the Company’s stockholders’ equity
was $320,231 which raises substantial doubt about the Company. The Company has not yet established an ongoing source of revenues sufficient
to cover its operating costs and is dependent on debt and equity financing to fund its operations. The management of the Company is making
efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While management
of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance
that the Company will be able to raise additional equity capital or be successful in the development and commercialization of the products
it develops or initiates collaboration agreements thereon. 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
Estimates
The preparation of financial statements in conformity
with GAAP 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 financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates made by management.
Cash and Cash Equivalents
The Company considers all cash on hand, cash accounts
not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months
or less to be cash and cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of cash. The Company maintains its principal cash balance in a financial
institution. These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December
31, 2022 and 2021, $0 and $147,460, respectively, were in excess of the FDIC insured limit.
Equipment
Equipment is recorded at cost and depreciated
using the straight-line method at rates determined to estimate the useful lives of the assets. The annual rates used in calculating depreciation
are as follows:
Equipment -5 years straight-line
The Company originally purchased medical equipment
for a total cost of $75,000 which was 100% financed by the seller. After making several payments, the Company settled with the vendor
due to issues with the equipment and was relieved of the $25,000 balance owed as of first quarter 2020. The total amount paid of $50,000
represents the actual cost. During the year 2022, there is no addition.
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.
Stock Compensation Expense
The Company accounts for equity instruments issued
in exchange for the receipt of goods or services from other than employees in accordance with Accounting Standards Codification (“ASC”)
Topic 505, “Equity.” Costs 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. The value
of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or
completion of performance by the provider of goods or services as defined by ASC Topic 505.
Income Taxes
The Company accounts for income taxes pursuant
to ASC Topic 740 “Income Taxes.” Under ASC Topic 740, deferred tax assets and liabilities are determined based on temporary
differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets
and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company applies the provisions of ASC Topic
740-10-05 “Accounting for Uncertainty in Income Taxes.” The ASC clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods, disclosure and transition.
Basic and Diluted Loss per Share
In accordance with ASC Topic 260 “Earnings
Per Share,” basic loss per common share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted loss per common share gives effect to dilutive convertible
securities, options, warrants and other potential common stock outstanding during the period, only in periods in which such effect is
dilutive. The Company only has stock options and convertible promissory notes that may be converted to outstanding potential common shares.
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.
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.
Recent Accounting Pronouncements
Compensation- Stock Compensation
In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock
Compensation (Topic 718): Scope of Modification Accounting,” that provides guidance about which changes to the terms or conditions
of a share-based payment award require an entity to apply modification accounting. The new guidance became effective for the Company on
January 1, 2018 and was applied on a prospective basis, as required. The adoption of this standard did not have an impact on the financial
statements or the related disclosures.
Leases
In February 2016, the FASB issued ASU
2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and
comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information
about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to
existing GAAP for sales-type leases, direct financing leases and operating
leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability
of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will
be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts
becomes probable. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted,
and must be adopted using a modified retrospective transition. The Company did not adopt the standard effective January 1, 2019,
utilizing the lessor practical expedient. On November 15, 2019, the FASB issued ASU 2019-10 which amended the effective dates for ASC
842, to give implementation relief. Under the FASB’s new framework, two “buckets” were defined, bucket 1 includes public companies
that are SEC filers but excludes “Small Reporting Companies” (SRC’s). Bucket 2 includes all other entities, including SRC’s.
Bucket 2 entities have to apply ASC 842 for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning
after December 15, 2022.
NOTE 3 – INVESTMENT
Investment in Avra Air- LLC was reduced by $12,150
in the second quarter of 2021 as a result of an investor’s follow-on investment. An impairment charge of $77,392 was then taken
in the last quarter of 2021. As the $26,000 remaining balance was paid for in the original investment using Avra Medical shares this remaining
balance is considered a buy-back of Avra Medical common shares and are thus treated as treasury shares shown in the equity section of
the balance sheet. This results in a $0 cost on the books for this investment.
NOTE 4 – NOTES PAYABLE – RELATED PARTY
On September 22, 2021, the Company’s CEO,
converted a total of $50,000 of notes payable into 384,615 shares of common stock.
NOTE 5 – PROMISSORY NOTES
During the years ended 2021 and 2022, 1,175,000
and zero warrants with a price of $0.78 per warrant for 2021, were valued at $912,489 and $0.00 using a black-scholes pricing model and
expensed as stock compensation, respectively.
NOTE 6 – MERGER
On August 5, 2022, AVRA entered into a non-binding
letter of intent with Dr. Sudhir Srivastava (“Dr. Sudhir”), Cardio Ventures Pvt. Ltd., a Bahamian private limited company
of which Dr. Sudhir is the sole stockholder(“Cardio”), Otto Pvt, Ltd., a Bahamian private limited company and direct
subsidiary of Cardio (“Otto”) and Sudhir Srivastava Innovations Pvt. Ltd., an Indian private limited company and indirect
subsidiary of Cardio (“SSI,” and together with Cardio and Otto, the “SSI Parties”) with respect
to a business combination between AVRA and the SSI Parties (the “Transaction”). SSI, based in Haryana, India is engaged
in the development, commercialization, manufacturing and sale of medical and surgical robotic systems utilizing patents, trademarks and
other intellectual property held by Dr. Sudhir (the “SSI Intellectual Property”).
If and when the transaction is consummated, the
business of the SSI Parties, including the SSI Intellectual Property will be owned by AVRA. The shareholders of the SSI Parties will own
95% of the common stock of post-transaction AVRA and the current shareholders of AVRA will own 5% of the common stock of post-transaction
AVRA. In addition, there will be changes in composition of the board of directors, implementation of corporate governance policies and
changes in management, all with a view to listing the common stock of AVRA on the Nasdaq Stock Market, LLC or another National Securities
Exchange. In addition, AVRA will change its name to “SS Innovations, Inc.”
Consummation of the Transaction is subject to,
among other matters, the negotiation and execution of definitive agreements and documentation, containing, in addition to the above terms,
terms and conditions customary for agreements of this type and nature, including, without limitation, representations, warranties, and
indemnities of the parties.
Consummation of the Transaction is also subject
to completion of a due diligence review by each party of the other, the results of which shall be satisfactory to the reviewing parties
in their sole discretion.
Given the foregoing, there can be no assurance
given that the Company will be able to successfully complete the Transaction.
In connection with executing the letter of intent,
we advanced the SSI Parties, the amount of $4,000,000 (the “Interim Financing”). Interim Financing is evidenced by
six notes - $1,000,000, $100,000, $500,000, $500,000, $900,000, and $1,000,000. All are one-year Automatically Convertible Notes made
in favor of the Company by Cardio, Otto and Dr Sudhir, jointly and severally (the “Cardio Notes”). Interest on the
Cardio Notes shall accrue at the rate of 7% per annum, payable together with the principal amount at maturity. The Cardio Notes have an
original issue discount of 10% on $2,000,000 and 6% on the balance. If the Cardio Notes are not repaid in full on or at maturity, they
will automatically convert into a percentage equity interest in Cardio determined by dividing the principal amount of and accrued interest
on the Cardio Notes divided by $100 million. The Cardio Notes contains customary default provisions and other typical terms and condition.
We may make additional advances to the SSI Parties
of up to an aggregate principal amount of $5,000,000 of Interim Financing, evidenced by additional Cardio Notes. These Cardio Notes will
be substantially similar in form and substance to the first Cardio Notes, provided, however, that Cardio Notes issued in
excess of an aggregate principal amount of $2,000,000, will have an original issue discount of 6% as opposed to 10%, and the valuation
for determining conversion may be $250 million as opposed to $100 million.
In order to fund the Interim Financing, the Company
offered and sold one-year convertible promissory notes (the “Convertible Notes”) of $1,000,000 (maturity date 08-15-2023),
$500,000 (maturity date 10-26-2023), and $500,000 (maturity date 12-01-2023) to one accredited investor and $100,000 (maturity date 09-10-2023),
$900,000 (maturity date 11-23-2023), and $1,000,000 (maturity date 12-29-2023) to another. The Convertible Notes will have the same interest
rate and payment terms as the Cardio Notes and otherwise be substantially similar to the Cardio Notes, provided, however,
that the Convertible Notes do not have an original issue discount. Further, upon consummation of the Transaction (if and when it is consummated)
the Convertible Notes will automatically convert into a number of AVRA Shares determined by dividing the principal amount of the Convertible
Notes by $100 million and multiplying such number expressed as a percentage by the number of AVRA Shares issued to Dr. Sudhir and the
other shareholders of the SSI Parties (if any) upon closing of the Transaction. The Company may offer and sell up to an aggregate principal
amount of $5,000,000 in Convertible Notes in order to fund the Interim Financing.
The Convertible Notes were issued in a private
transaction pursuant to the exemptions from registration under the Section 4(a)2 of the Securities Act of 1933, as amended (the “Securities
Act”) and the rules and regulations promulgated thereunder.
NOTE 7 – INCOME TAXES
The Company’s deferred tax assets at December
31, 2022 consist of net operating loss carry forwards of $4,393,785. Using a new federal statutory tax rate of 21%, the valuation allowance
balance as of December 31, 2020 total of $0. The increase in the valuation allowance balance for the year ended December 31, 2020 of $221,827
is entirely attributable to the net operating loss.
Due to the uncertainty of their realization, no
income tax benefits have been recorded by the Company for these loss carry forwards as valuation allowances have been established for
any such benefits. The increase in the valuation allowance was the result of increases in the net operating losses discussed above. Therefore,
the Company’s provision for income taxes is $-0- for the years ended December 31, 2022 and 2021.
At December 31, 2022 and 2021, the Company had
no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that
its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related
to uncertain tax positions in general and administrative expense. At December 31, 2022 and 2021, the Company has not recorded any provisions
for accrued interest and penalties related to uncertain tax positions.
The Company files U.S. federal and state income
tax returns in jurisdictions with varying statutes of limitations.
NOTE 8 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue up to 100,000,000 shares of common
stock, $0.0001 par value per share plus 5,000,000 shares of preferred stock, par value $0.0001.
During the first quarter 2021, 1,025,00 shares
at a value ranging from $0.89-$1.07 per share were issued for services rendered.
During the second quarter 2021, 378,378 shares
at a value ranging from $0.89-$1.02 per share were issued for services rendered.
In July, 2021 several holders of stock options
elected to exercise their stock options with a cashless exercise provision resulting in the issuance of 629,375 shares of common stock.
During the last quarter 2021, 3,619,817 shares
at a value ranging from $0.13-$0.89 per share were issued for services rendered.
On October 1, 2021 the Company issued a total
of 174,553 shares of common stock to several consultants.
On October 1, 2021 the Company issued 25,000 shares
of common stock to its Chief Medical Officer.
On December 1, 2022, 10,000 shares of restricted
common stock are issued for services to Farhan Taghizadeh, per his employment agreement dated September 15, 2020.
Holders are entitled to one vote for each share
of common stock. No preferred stock has been issued.
NOTE 9 – 2016 INCENTIVE STOCK PLAN
On August 1, 2016, the Company adopted the 2016
Incentive Stock Plan (the “Plan”). The Plan provides for the granting of options to employees, directors, consultants and
advisors to purchase up to 3,000,000 shares of the Company’s common stock. The Board is responsible for the administration of the
Plan. The Board determines the term of each option, the option exercise price, the number of shares for which each option is granted and
the rate at which each option is exercisable. Incentive stock options may be granted to any officer or employee at an exercise price per
share of not less than the fair market value per common share on the date of the grant. On August 1, 2019, the Board increased the plan
to 10,000,000 shares of common stock. Our board of directors and majority shareholders in July 2022, approved a subsequent increase in
the number of shares of our common stock reserved under the 2016 Plan to 20,000,000 shares of common stock.
Stock options are accounted for in accordance
with FASB ASC Topic 718-10-55-136., Compensation –Stock Compensation, with option expense amortized over the vesting period
based on the Black-Scholes option-pricing model fair value on the grant date, which includes a number of estimates that affect the amount
of expense. During the years ended December 31, 2022 and 2021, $679,612 and $159,949, respectively, of expensed stock options has been
recorded as stock-based compensation and classified in general and administrative expense on the Statement of Operations.
On October 1, 2021 the Company issued a total
of 1,500,000 of stock options to consultants with an exercise price of $0.25 per option.
On October 1, 2021 the Company issued 50,000
stock options to each of its two independent Directors with an exercise price of $0.25 per option.
On October 1, 2021 the Company issued 350,000 stock
options to its Chief Medical Officer with an exercise price of $0.25 per option.
On October 1, 2021 the Company issued a total
of 390,000 stock options to the Company’s CEO with an exercise price of $0.25 per option for the extension
of loans.
On June, 2022 the Company issued 150,000 stock
options to a consultant with an exercise price of $0.10 per option. This option ceased vesting upon the departure of the consultant
in September 2022.
On July 1, 2022 the Company issued 500,000 stock
options to its Chief Medical Officer with an exercise price of $0.10 per option.
On July 1, 2022 the Company issued 3,020,000 stock
options to consultants with an exercise price of $0.10 per option.
On July 1, 2022 the Board issued 5,400,000 stock
options to the CEO as a performance bonus and in return for his foregoing all of his 2002 calendar year salary.
Expected volatilities are based on the average
volatilities of six similar companies; fair market values are calculated using the implied share values of recent company financings or
OTC closing prices for that day, whichever is more suitable; risk-free rate used was 2%.
NOTE 10 – COMMITMENTS
Employment Agreements
In December 2022 the Company canceled its employment agreement dated
July 1, 2021 with Mr. Cohen, by paying him the balance of payments due per such agreement through the end of the agreement’s term.
Mr. Cohen agreed to continue in an active role as Chairman and CEO of the Company thru the date of closing of its planned merger with
SS Innovations, Inc.
Lease
On July 17, 2020, the Company signed a lease that
was effective August 1, 2020 through July 31, 2021, which provides that the Company pay insurance, maintenance and taxes with a monthly
lease expense of $1,474.17 plus applicable sales tax.
Effective January 1, 2021, the Company signed
an amendment which modified the August 1, 2020 agreement, increasing the monthly lease expense to $1,964.74 plus applicable sales
tax.
Effective November 1, 2022 the Company signed
and amendment which further modified the August 1, 2020 agreement, reducing the monthly lease expense to $404.68 including applicable
sales tax.
Either party may cancel the agreement at any time
with 30 days’ notice.
NOTE 11 – SUBSEQUENT EVENTS
As described earlier in this filing, $4,000,000
was raised as part of the Interim Financing Notes in 2022. An additional $1,000,000 in Notes from one of the two existing Note Holders
was raised on February 2, 2023.
From January 1, 2023, through the date of this
filing, the Company sold 670,000 shares of common stock at a price ranging from $0.25 to $0.45 per share receiving proceeds of $189,500.
On January 27, 2023, the CEO and one individual
exercised their stock options via a net cashless exercise resulting in the issuance of 9,678,437 shares.
On January 27, 2023, the CEO exercised his warrant
via a net cashless exercise resulting in the issuance of 595,562 shares.
On February 24, 2023, two investors exercised
their warrants resulting in the issuance of 600,000 shares and proceeds of $240,000 to the Company.
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