SS Innovations International Inc

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – COMPANY AND BASIS OF PRESENTATION

Organization

SS Innovations International, Inc. (the “Company” or “SSII”) was incorporated as AVRA Surgical Microsystems, Inc. in the State of Florida on February 4, 2015. Effective November 5, 2015, the Company’s corporate name was changed to Avra Medical Robotics, Inc. The Company was established and is continuing to develop advanced medical and surgical robotic systems.

On April 14, 2023, AVRA-SSI Merger corporation a wholly owned subsidiary of the Company merged with Cardio Ventures, Inc., a Delaware corporation (“CardioVentures”), which is the indirect parent of Sudhir Srivastava Innovations Pvt. Ltd., an Indian private limited company engaged in the business of developing innovative surgical robotic technologies. As a result of such a transaction, a “change in control” of the Company took place. In addition, among other matters, the Company changed its name to “SS Innovations International, Inc.” and implemented aone for ten reverse stock split. The financial statements, financial information and share and per share information contained in this report reflect the operations of the newly formed merged entity and Cardio Ventures and give actual effect to the reverse stock split.

The significant accounting policies of SSII were described in Note 1 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There has been an internal review and revision of some of the Company’s accounting policies retrospectively and accordingly some of the financial statement balances as of December 31, 2023 are restated while for the quarterly period ended September 30, 2024, the revised accounting policies have been applied.

Basis of Presentation

The consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of SS Innovations International, Inc. and all of its subsidiaries.

The standalone financial statements of subsidiaries are fully consolidated on a line-by-line basis. Intra-group balances and transactions, and gains and losses arising from intra-group transactions, are eliminated while preparing consolidated financial statements.

Accounting policies of the respective individual subsidiaries are aligned wherever necessary, so as to ensure consistency with the accounting policies that are adopted by the Company under U.S. GAAP.

In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2024 and the results of operations and cash flows for the periods presented. The results of operations for the quarterly period ended September 30,2024, are not necessarily indicative of the operating results for the full fiscal year or any future period.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued.

The Company had a working capital surplus of US$7,722,657 and an accumulated deficit of $41,901,082 as of September 30, 2024. The Company incurred a net loss of $11,699,076 for the nine months ended September 30, 2024 and $6,119,381 for the three months ended September 30,2024

The Company launched the commercial sale of its “SSI Mantra” surgical robotic system in India in the last quarter of 2022 and sold three systems in 2022. During the year ended 2023, the Company sold 12 more surgical robotic systems which included its first export sale to Dubai, UAE and also installed 4 systems on pay-per-use basis.

During the nine months period ended September 30, 2024, the Company has further sold 25 systems (including three systems exported, one each to Nepal, Indonesia and Ecuador) and installed another system on revenue share basis in a leading training robotic training center in India. As of September 30, 2024, the Company has sold 40 systems and has installed 5 systems on pay-per-use/revenue share basis. During the same period as above, there has also been an intra-group sale of one system which has been exported by SSI India to its parent company, SSII USA and the same system is being currently utilized for demonstration purposes only and not for any clinical use in USA. For the purpose of reporting consolidated financial statements, this intra-group sale of one surgical robotic system and 2 systems which were invoiced towards the end of the quarter ended September 30, 2024, but were in transit have also been eliminated from the revenues from sale of systems. As of September 30, 2024, the Company also had two systems installed at two of the prominent hospital chains in India for clinical evaluation purposes. As of September 30, 2024, the Company had an overall network of 47 systems including 2 systems which were in transit to their respective hospitals.

As of September 30, 2024, a total of 2,129 surgical robotic procedures have been successfully completed in India on the surgical robotic systems installed by the Company with Urology and General surgery procedures constituting almost 70% of the total procedures and also included 125 cardiac surgeries. There has been a consistent increase in system utilization resulting in gradual increase in recurring revenues from the sale of surgical robotic instruments and allied accessories. As the installed base of Company’s surgical robotic systems increases in the coming years, these recurring revenues are also likely to grow further.

In order to augment its working capital resources to keep its production and its sales momentum going, during the nine months period ended September 30, 2024, the Company has raised short term funds to the extent of $4.95 Million which comprise of US$2.45 Million through issuances of 7% One-year Convertible Promissory Notes (“CPNs”) to five investors including US$1.0 Million from Sushruta Pvt Ltd. (“SPL”), the Bahamian holding company owned by Dr. Sudhir Srivastava, our Chairman, Chief Executive Officer and principal shareholder. The principal amount of these CPNs along with accrued interest @7% p.a. thereon would be repayable one year from the date of their respective issuances. The CPN holders also have the option to convert these CPNs into common shares of the Company at US$4.45 per share any time prior to their respective maturity dates.

During April 2024 and July 2024, the Company also raised an additional US$2 Million and US$0.50 respectively Million through 7% One-Year Promissory Notes issued to SPL. These 7% One-Year Promissory Notes are not convertible and mature for payment of principal with interest on their respective due dates in April 2025 and July 2025.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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. Significant estimates included deferred revenue, costs incurred related to deferred revenue, stock-based compensation, leases, the useful lives of property and equipment

The Company considers all highly liquid investments purchased with original maturity of ninety days or less to be cash equivalents.

Restricted cash includes any cash and cash equivalents that are legally restricted as to withdrawal or usage for the Company’s operations. For the purposes of the statements of cash flows, the Company includes in its cash and cash-equivalent balances those amounts that have been classified as restricted cash and restricted cash equivalents.

Accounts receivables are recorded as net of allowances for expected credit losses. The Company evaluates the credit risk of its customers based on a combination of various financial and qualitative factors that may affect the ability of each customer to pay. The Company considered current and anticipated future economic conditions relating to the industries of the Company’s customers and the countries where it operates. In calculating expected credit loss, the Company also considered past payment trends, credit rating and other related credit information for its significant customers to estimate the probability of default in the future. Accounts receivable balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential for recovery is considered remote.

Contributions to defined contribution plans are charged to the consolidated statements of income in the period in which services are rendered by the covered employees. Current service costs for defined benefit plans are recognized in the period to which they relate. The liability in respect of defined benefit plans is calculated annually by the Company using the projected unit credit method. The Company records annual amounts relating to its defined benefit plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return on plan assets, future compensation increases and attrition rates. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in other comprehensive income (loss) (“OCI”) and amortized to net periodic benefit cost over the expected remaining period of service of the covered employees using the corridor method. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions. These assumptions may not be within the control of the Company and accordingly it is reasonably possible that these assumptions could change in future periods. The Company includes the service cost component of the net periodic benefit cost in the same line item or items as other compensation costs arising from services rendered by the respective employees during the period. The interest cost, expected return on plan assets and amortization of actuarial gains/loss, are included in “Other income/(expense), net.”.

The functional currency of each entity in the group is the currency of the primary economic environment in which it operates. Transactions in foreign currencies are initially recorded into functional currency at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured into functional currency at the rates of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are remeasured to the functional currency at exchange rates that prevailed on the date of inception of the transaction. All foreign exchange gains and losses arising on re-measurement are recorded in the Company’s consolidated statements of income.

The assets and liabilities of the subsidiaries for which the functional currency is other than the U.S. dollar are translated into U.S. dollars, the reporting currency, at the rate of exchange prevailing on the balance sheet date. Revenues and expenses are translated into U.S. dollars at the exchange rates prevailing on the last business day of each month, which approximates the average monthly exchange rate. Share capital and other equity items are translated at exchange rates that prevailed on the date of inception of the transaction. Resulting translation adjustments are included in “Accumulated other comprehensive income/(loss)” in the consolidated balance sheets.

The relevant translation rates are as follows: for the three months ended September 30, 2024, closing rate at INR 83.71 to one US$ and average rate at 83.38 INR to one US$

The Company’s inventory consists of finished goods in the form of fully assembled and tested surgical robotic systems, semi-finished goods in the form of various sub-systems of the surgical robotic systems in various stages of assembly and manufacturing and raw material in the form of various mechanical, electrical, and other material components, parts, motors, encoders etc. which are not yet assembled/manufactured. The inventory is valued at the lower of cost (first-in, first-out) or estimated net realizable value. As of September 30, 2024, the Company valued the inventory at $9,190,414

ASC Topic 820,Fair Value Measurements and Disclosures defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk. The fair value hierarchy consists of the following three levels:

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash. The Company maintains its principal cash balance in United States financial institutions, where deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company also maintains cash balances maintained with banks in India, where balances are insured by Deposit Insurance and Credit Guarantee Corporation of India (DICGC) to the extent of approximately $6,100 per account and in the Bahamas, where deposits are insured by the Deposit Insurance Corporation Bahamas up to B$50,000 (equivalent to $50,000) per account. As of September 30, 2024, the Company hadnone of its deposits in excess of overall insurance coverage limits.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. A disclosure for a contingent liability is made when there is a possible obligation that may require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Legal costs incurred in connection with such liabilities are expensed as incurred. Capital commitments are disclosed in the financial statements.

The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized:

The Company accounts for revenues when both parties to the contract have approved of the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Product type and payment terms vary by client.

i. System Sales:

The Company recognizes revenue when the “transfer of control” occurs, which typically takes place upon the delivery of the system to the customer. In cases where a deferred payment arrangement exists, revenue is recognized at the present value of the consideration receivable, adjusted by the present value of any extended warranty obligations.

Key Terms of Customer Contracts

The Company enters into binding contracts with customers through either an agreement or a sales order, with all terms and conditions mutually agreed upon by both parties. The key terms and conditions include:

ii. Instrument and Accessories Sales:

We also sell instruments for use by surgeons in conjunction with the use of our surgical robotic systems. These instruments are consumable items for our hospital customers, and we recognize the revenues from the sale of instruments as and when the instruments are dispatched to the customer.

iii. Warranty and Annual Maintenance Contract Sales:

Under ASC 606, the portion of the equipment sales value attributable to annual maintenance contracts is recorded separately as Warranty sales, which are recognized at their present value. Once the warranty periods expire, the maintenance contracts commence, and the revenue generated from these maintenance contracts is recognized as a distinct revenue stream.

Property Plant & Equipment

Property and equipment are stated at cost, which is generally comprised of the purchase price for such property or equipment, non-refundable duties and taxes, Installation cost, freight, other associated costs, but excludes any discounts and/or rebates, less accumulated depreciation and impairment. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

Property Plant & Equipment depreciated using the straight-line method at rates determined as per estimated useful lives of the assets. The estimated useful lives used in calculating depreciation are as follows:

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 goods or services from non-employees in accordance with ASC Topic 505, “Equity.” The costs associated with these equity instruments are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of these equity instruments is determined on the earlier of either (1) the achievement of a performance commitment or (2) the completion of performance by the provider of goods or services, as outlined by ASC Topic 505.

As of September 30, 2024, the Company has issued two types of equity incentives:

Stock Options: These provide employees with the right, but not the obligation, to purchase shares of the Company’s stock at a specified price, within a defined period, as per the terms of the stock option agreement.

Stock Units (Restricted Stock Units, or RSUs): These do not require the employee to exercise any options. Each stock unit automatically converts into a specified number of shares upon vesting.

The Company recognizes stock-based compensation expense in the consolidated statements of income for both employees and non-employee directors based on the grant-date fair value of the awards. These costs are recognized on a straight-line basis over the requisite service period, or until the date at which the recipient becomes eligible for retirement, if shorter. Forfeitures of equity awards are accounted for as they occur.

Additionally, under the Company’s 2016 Stock Incentive Plan, the Company grants performance-based stock awards to executive officers, key employees, and advisors. These awards are tied to the achievement of specified performance criteria, and the associated compensation costs are recognized when it becomes probable that the performance conditions will be met. These grants shall vest as to 20% of the Restricted Shares covered thereunder as of the Grant Date, with the balance of the Restricted Shares covered thereunder vesting in 4 equal annual installments on the first, second, third and fourth anniversaries of the Grant Date, subject to the Grantee’s continued employment by the Company, as provided for in the Plan.

The fair value of each stock units is determined based on the market price of one share of our common stock on the day prior to the date of grant. The grant date fair value for the Stock option is determined using Black Scholes model. The Black Scholes model involves the use of key assumptions i.e. expected term, risk free interest rate. We periodically assess the reasonableness of our assumptions and update our estimates as required. If actual results differ significantly from our estimates, stock-based compensation expense and our results of operations could be materially affected.

*Employees:*Based on the past post vesting behavior of employees Company has determined the expected term as the full contractual term i.e., till end of the expiry of exercise period. For multiple awards each vesting portion of the award is computed separately. Further, there are no blackout periods applicable as per the award agreements.

*Non-employees:*Practical expedient is available to consider the full contractual term (i.e., the last day on which option can be exercised) as expected term for non-employees on an award-by-award basis. The company opted for the practical expedient.

Income Taxes

The Company accounts for income taxes using the asset and liability method of accounting for income taxes. The Company calculates and provides income taxes in each of the tax jurisdictions in which it operates. The deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases and all operating losses carried forward, if any. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which the applicable temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or tax status is recognized in the statements of income in the period in which the change is identified. The Company releases (reclassifies) the tax effects from AOCI to the consolidated statements of income for amortization of deferred actuarial gain/loss) on retirement benefits. Deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company establishes provisions for uncertain tax provisions and related interest and penalties when the Company believes those tax positions are not more likely than not of being sustained, if challenged.

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 an effect is dilutive. The Company has stock options, warrants, 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 has 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.

Leases

The Company determines if an arrangement is a lease at inception of the contract. The Company’s assessment is based on whether: (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company has the right to direct the use of the asset. A lease is classified as a finance lease if any one of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.

Operating leases are presented within “Operating lease right-of-use assets,” “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company’s consolidated balance sheets

ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs, and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date. The Company determines the incremental borrowing rate by adjusting the benchmark reference rates with appropriate financing spreads applicable to the respective geographies where the leases are entered and lease specific adjustments for the effects of collateral, if applicable. Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost. The Company evaluates lease agreements to determine lease and non-lease components, which are accounted for separately.

Lease payments that depend on factors other than an index or rate are considered variable lease payments and are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. Lease payments include payments for common area maintenance, utilities such as electricity, heating and water, among others, and property taxes, and other similar payments paid to the landlord, which are treated as non-lease component.

The Company accounts for lease-related concessions in accordance with guidance in Topic 842, Leases, to determine, on a lease-by-lease basis, whether the concession provided by lessor should be accounted for as a lease modification.

The Company accounts for a modification as a separate contract when it grants an additional right of use not included in the original lease and the increase is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as of the effective date of the modification based on its modified terms and conditions and the facts and circumstances as of that date. Upon modification, the Company remeasures the lease liability to reflect changes to the remaining lease payments and discount rates and recognizes the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in consolidated statements of income.

The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

Segment reporting

The Company operates in one segment only. The chief operating decision maker regularly reviews the operating results of the Company on a consolidated basis as part of making decisions for allocating resources and evaluating performance. As of both September 30, 2024, and December 31, 2023100% of long-lived assets were in India. Revenue from external customers is attributed to individual countries based on customer location.

NOTE 3 – PROPERTY AND EQUIPMENT

The Company’s property and equipment relating to continuing operations consisted of the following as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):

Depreciation expenses for the nine months ended September 30, 2024, and 2023 amounted to $274,939 and $110,663 respectively.

NOTE 4 – REVERSE RECAPITALIZATION

The Transaction

SS Innovations International, Inc. (the “Company” or “SSII”) was incorporated as AVRA Surgical Microsystems, Inc. (“AVRA”) 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 and is continuing to develop advanced medical and surgical robotic systems.

On April 14, 2023, we consummated the acquisition of CardioVentures, Inc., a Delaware corporation (“CardioVentures”), pursuant to a Merger Agreement dated November 7, 2022 (the “Merger Agreement”), by and among AVRA-SSI Merger corporation, a wholly owned subsidiary of the Company, (“Merger Sub”), CardioVentures and Dr. Sudhir Srivastava, who, through his holding company, owned a controlling interest in CardioVentures. Pursuant to the Merger Agreement, at Closing, Merger Sub merged with and into CardioVentures (the “CardioVentures Merger”).

The Transaction was accounted for as a reverse recapitalization in accordance with GAAP with AVRA treated as the accounting acquiree and CardioVentures treated as the accounting acquiror for financial reporting purposes.

CardioVentures was determined to be the accounting acquirer based on the following predominant factors:

The Restructuring

In connection with the Transaction, the following Restructuring transactions were consummated prior to, and as a condition to, the Closing, based on the Merger Agreement dated November 7, 2022*,* entered among Cardio Ventures and AVRA.

Pursuant to the Merger Agreement, at Closing, the holders of CardioVentures common stock also received shares of newly designated Series A Non-Convertible Preferred Stock (the “Series A Preferred Shares”).The Series A Preferred Shares vote together with shares of SSII common stock as a single class on all matters presented to a vote of shareholders, except as required by law, and entitle the holders of the Series A Preferred Shares to exercise 51% 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 will be automatically redeemed by the Company for nominal consideration at such time as the holders of the Series A Preferred Shares own less than 50% of the shares of SSII common stock received in the CardioVentures Merger.

NOTE 5 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following as of September 30, 2024, (unaudited) and December 31, 2023 (unaudited):

The Company performed an analysis of the trade receivables related to SSI India and as of September 30,2024, determined, based on the deferred payment terms of the contracts, that $2,382,830 may not be due and collectible within one year and thus the Company classified these receivables as long-term receivables.

NOTE 6 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

For the purpose of statement of cash flows, cash, cash equivalents and restricted cash (Current) & (Non-Current) consisted of the following as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):

We have reclassified Fixed Deposits (FDs), which are subject to withdrawal restrictions, as Restricted Cash. Additionally, Time Deposits with a maturity of over one year have been reclassified as non-current.

HDFC Bank has sanctioned overdraft facilities subject to operational terms and conditions, including payment on demand, comprehensive insurance coverage against all risks of primary security, periodic inspections of the plant by the bank, and submission of monthly stock and financial records to the bank within 30 days after each month-end. Security for this facility includes current assets, plant and machinery, furniture and fixtures, and a personal guarantee from Mr. Sudhir Prem Shrivastava.

The cash credit facility is sanctioned at an interest rate of 9.20% per annum on the working capital overdraft limit and 9.50% per annum on the cash credit limit, with interest payable monthly on the first day of the subsequent month.

Overdraft facility against fixed deposits is sanctioned with an interest rate linked to HDFC Bank’s 3-year MCLR, payable at monthly intervals on the first day of the following month.

The company has secured a bank overdraft facility from HDFC Bank, collateralized by a fixed deposit held with HDFC Bank. This facility includes a withdrawal restriction tied to the fixed deposit.

NOTE 7 – PREPAID, CURRENT AND NON- CURRENT ASSETS

Prepaid, Current and Non-Current Assets consisted of the following as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):

NOTE 9 - NOTES PAYABLE

In February 2024, the Company raised $2.45 million through a private offering of 7% One-Year Convertible Promissory Notes (the “7% Notes”) from two affiliates ($1,000,000 each), including Sushruta Pvt Ltd. (“Sushruta”) and $450,000 from three other investors to finance its ongoing working capital requirements. The 7% Notes are payable in full after 12 months from the respective dates of issuance of these 7% Notes and are convertible at the election of the noteholder at any time through the maturity date at a per share price of $4.45. Sushruta is a Bahamian holding company, whose principal shareholder is Dr. Sudhir Srivastava, the Chairman, Chief Executive Officer and principal shareholder of SSi.

In April 2024, the Company borrowed $2.0 million from Sushruta to meet working capital needs. The loan is evidenced by two one-year promissory notes (the “One-Year Notes”), in the principal amount of $1.0 million each. The One Year Notes accrue interest at the rate of 7% per annum, which is payable together with principal one year from the date of issuance. In July 2024, the Company borrowed an additional l$500,000 from Sushruta, evidenced by a One-Year Note in such principal amount.

NOTE 10 – BANK OVERDRAFT

Bank Overdraft consisted of the following as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):.

The HDFC Bank OD against FDs of US $4,570,345 is secured by Fixed Deposits of US $5,529,676 provided by the Company. The HDFC Bank WCOD is secured by all the current assets of the Company. Both HDFC Bank OD against FDs as well as HDFC Bank WCOD facilities are additionally secured by personal guarantees provided by Dr Sudhir Srivastava. As of September 30, 2024, and December 31, 2023, all financial and non-financial covenants under the bank overdraft facility agreement were compiled with by the company.

HDFC Bank has sanctioned overdraft facilities subject to operational terms and conditions, including payment on demand, comprehensive insurance coverage against all risks of primary security, periodic inspections of the plant by the bank, and submission of monthly stock and financial records to the bank within 30 days after each month-end. Security for this facility includes current assets, plant and machinery, furniture and fixtures, and a personal guarantee from Dr. Sudhir Shrivastava.

The cash credit facility is sanctioned at an interest rate of 9.20% per annum on the working capital overdraft limit and 9.50% per annum on the cash credit limit, with interest payable monthly on the first day of the subsequent month.

Overdraft facility against fixed deposits is sanctioned with an interest rate linked to HDFC Bank’s 3-year MCLR, payable at monthly intervals on the first day of the following month.

NOTE 11 – DEFERRED REVENUE:

Contract liabilities (deferred revenue) consist of advance billings and billings in excess of revenues recognized. Deferred revenue also includes the amount for which services have been rendered but other conditions of revenue recognition are not met, for example, where the Company does not have an enforceable contract.

The revenues attributable to the warranty is recognized over the period to which it relates. The revenues attributable to warranty for the agreed warranty period in respect of each of the sales contract is deferred for recognition over the period to which it relates.

In case of systems sold on a deferred payment basis, the present value of the invoiced system sales, realizable over the deferred payment period, is recognized as system sales. The difference between the invoiced amount and its present value is adjusted (reduced) in the accounts receivable balance. This difference is recorded as interest income under other income, with a corresponding impact on accounts receivable over the collection period of contract.

Deferred revenue related to the access to our System Sales consisted of the following as of September 30, 2024, (unaudited) and December 31, 2023 (unaudited):

NOTE 12 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue up to 250,000,000 shares of common stock, $0.0001 par value per share and 5,000,000 shares of preferred stock, par value $0.0001.

On February 13, 2024, the Company granted 3,350,221 stock options to Dr Sudhir Srivastava to purchase common stock of the Company under the Company’s Incentive Stock Plan. These options vested as of the grant date and can be exercised at a price of $5.00 per Share subject to adjustment pursuant to the terms of the Plan. The options to the extent vested and not exercised expire five years from the date of grant or earlier as provided for in the Incentive Stock Plan.

On March 1, 2024, the Company issued 15,000 shares of common stock to PCG Advisory Inc. in terms of their contract for advisory services to be rendered for a period of eight months commencing on March 1, 2024, and terminating on October 31, 2024. Effective July 1, 2024, this contract was terminated.

In September 2024, the Company issued 125,000 shares of common stock to 5 Doctors/Proctors in India for their ongoing contributions for providing surgeons training support and proctoring surgeries on our recently installed Mantra surgical robotic systems thus helping Company’s expansion plans,

As of September 30, 2024, there were 170,864,381 issued and outstanding common shares. Holders of common stock are entitled toone vote for each share of common stock.

NOTE 13 – RELATED PARTY TRANSACTIONS

As of September 30, 2024 (unaudited) and December 31, 2023 (unaudited), there was US $1,160,649 and $1,567,559 in amounts due from related parties, respectively. The advances are unsecured, non-interest bearing and due on demand.

In addition to the net balances resulting from transactions between various related parties during the normal course of business, the following additional transactions took place as related party transactions:

In February 2024, the Company raised $2.45 million through a private offering of 7% One-Year Convertible Promissory Notes (the “7% Notes”) from two affiliates ($1,000,000 each), including Sushruta Pvt Ltd. (“Sushruta”) and $450,000 from three other investors to finance its ongoing working capital requirements. The 7% Notes are payable in full after 12 months from the respective dates of issuance of these 7% Notes and are convertible at the election of the noteholder at any time through the maturity date at a per share price of $4.45. Sushruta is a Bahamian holding company, whose principal shareholder is Dr. Sudhir Srivastava, the Chairman, Chief Executive Officer and principal shareholder of the Company.

In April 2024, the Company borrowed $2.0 million from Sushruta to meet working capital needs. The loan is evidenced by two one-year promissory notes (the “One-Year Notes”), in the principal amount of $1.0 million each. The One Year Notes accrue interest at the rate of 7% per annum, which is payable together with principal one year from the date of issuance. In July 2024, the Company borrowed an additional $500,000 from Sushruta, evidenced by a One-Year Note in such principal amount.

In September 2024, with a view to simplify the Company’s corporate structure, CardioVentures and Otto Pvt. Ltd., a Bahamian company (“Otto”), downstream subsidiaries of the Company, entered into an agreement (the “Transfer Agreement”), pursuant to which Otto agreed to transfer to CardioVentures, the ownership interest held by Otto in SSI-India, the Company’s Indian operating subsidiary. As of September 30, 2024, Otto’s ownership interest in SSI-India had been transferred to CardioVentures. However, as a result of the pending litigation regarding Otto in the Bahamas described in Note 15, the Company was unable to execute the transfer in the Bahamas. Accordingly, CardioVentures and Otto cancelled the transfer Agreement and in October 2024, the ownership interest in SSI-India was transferred back to Otto.

NOTE 14 – LEASES

The Company conducts its operations using facilities leased under operating lease agreements that expire at various dates.

The following is a summary of operating lease assets and liabilities as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited):

NOTE 15 – SUBSEQUENT EVENTS

Notwithstanding the foregoing, Dr. Srivastava and the Company have entered into an Indemnification Agreement on October 12, 2024, pursuant to which Dr. Srivastava has agreed to fully indemnify the Company for any claims, damages and costs (including legal fees) which it incurs in connection with this litigation or in relation to any of his ventures prior to consummation of the CardioVentures Merger in April 2023.