December 11, 2023

Technology Development

Technology Development, TheBest You Can Get!

AVRA MEDICAL ROBOTICS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

When used in this report, unless otherwise indicated, the terms “Avra,” “the
Company,” “we,” “us” and “our” refer to Avra Medical Robotics, Inc.

Note Regarding Forward Looking Statements

This report contains forward-looking statements that reflect our current views
about future events. We use the words “anticipate,” “assume,” “believe,”
“estimate,” “expect,” “will,” “intend,” “may,” “plan,” “project,” “should,”
“could,” “seek,” “designed,” “potential,” “forecast,” “target,” “objective,”
“goal” or the negatives of such terms or other similar expressions. These
statements relate to future events or our future financial performance and
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.



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.



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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.



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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 a
graduate to join Avra’s engineering development team. Effective October 11th,
2021
Avra executed a Sponsored Student Project Agreement which included two
payments of $8,030 each covering Fall semester in 2021 and Spring semester in
2022.

On September 10, 2019, we entered into a collaborative research and development
agreement with Infinite Mind, LLC, now known as Avra Air, LLC (“Avra Air“). Avra
Air
is in the business of developing computerized systems for robot operation
and automation employing software and AI for applications in various industries
and has more recently expanded to the development of air sanitizing devices to
help address such pathogens as COVID-19. Our CEO is also an owner of Avra Air.
Avra Air, with the use of Avra’s facilities and cooperation of Avra personnel,
will seek to develop software and AI systems for robots that are relevant to the
field of medical treatment or diagnostics. As part of the collaboration, Avra
Air
has granted Avra an exclusive, worldwide, full paid-up, perpetual,
royalty-free license to commercialize any technology (including any patents)
developed by Avra Air individually or jointly with Avra during the term of the
agreement as well as existing technology of AVRA AIR in the field of medical
robotics. This license survives termination of the agreement.

On November 6, 2020, AVRA made an investment of $210,000 in Avra Air which was
made with $40,000 in cash and the balance by the issuance to Avra Air of 472,222
restricted shares of our common stock valued at $0.36 per share. In exchange for
the investment. Avra received (a) a 49.8% limited liability company membership
interest in Avra Air; and (b) the remaining 50% of a vehicular air sterilization
provisional patent that Avra did not yet control. In addition, Avra also agreed
to pay Avra Air a royalty payment of $1.50 per vehicular air sterilization kit
for two years from the date that a first kit that uses the patent is sold. On
December 22, 2020, the Company issued 472,222 shares of its common stock towards
the acquisition of its interest in Avra Air. Avra Air has recently built a
prototype portable air de-contaminant system which it plans to market soon.

Our senior leadership team and advisory boards have broad and deep experience in
clinical practice, medical research, innovation and development in the medical
robotics field. We believe that our team, which has been active in the medical
robotics field for many years, brings the necessary skills and experience to
develop and commercialize intelligent medical robotic systems, as well as in
marketing, supply chain management, and the implementation of all other aspects
of our planned business operations.



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We believe we can rapidly develop and commercialize its initial medical robotic
system in the aesthetic skin resurfacing market because of the following
advantages and progress made to date, including:



  ? Our team is experienced in medical robotic engineering.




    ?   We are working in conjunction with preeminent physicians, engineers and
        scientific institutions.




    ?   We have substantially completed the design phase and are ready to complete
        a final, integrated prototype for the regulatory approval process which
        has been initiated.




    ?   Our robotic arm was built under the required medical device standards of
        the FDA and has already received a CE Mark in Europe.




    ?   Our strategy is to integrate the robotic arm with FDA approved devices for
        skin resurfacing, which we anticipate will allow for a more expedited
        regulatory approval, with the FDA approval process primarily focused upon
        validation of the medical robotic system's software control. We held a
        pre-collaboration meeting with the FDA in August 2019, which should allow
        us to better focus on only the meaningful required activities, saving both
        resources and time.




    ?   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 AVRA's medical robotic system. MDSAP, which we
        plan to employ, is a single inspection that, when completed, is expected
        to support market access to the six most important medical device
        marketplaces.




    ?   We believe that our treatment-independent medical robotics platform system
        will be compatible with currently and yet to be approved end-effectors
        and/or surgical tools enabling rapid entry into the skin resurfacing and
        other markets with new and improved devices.




Results of Operations



Introduction


The financial statements appearing elsewhere in this report 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 balance sheet data for our Company at June
30, 2021
(unaudited) and December 31, 2020:



Balance Sheet Data:              As of            As of
                               June 30,        December 31,
                                 2021              2020

Cash                          $   307,565     $      160,709
Total Assets                  $   440,038     $      317,870
Total Liabilities             $ 1,297,971     $    1,186,919
Total Stockholders' Deficit   $  (857,933 )   $     (869,049 )



To date, the Company has relied on debt and equity raised in private offerings
and shareholder loans to finance operations and no other sources of capital has
been identified. If we experience a shortfall in operating capital, we could be
faced with having to limit our research and development activities.



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Three months ended June 30, 2021, as compared to three months ended June 30,
2020

Revenues. We had no revenues during either the three months ended June 30, 2021
or the three months ended June 30, 2020.

Research and Development Expenses. Research and development expenses during the
three months ended June 30, 2021 and June 30, 2020 were $1,000 and 0.

General and Administrative Expenses. We incurred $85,316 and $68,501 in general
and administrative expenses during the three months ended June 30, 2021 and June
30, 2020
, respectively. 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”).

Compensation Expense. We had compensation expense of $326,035 and $151,487
during three months ended June 30, 2021 and June 30, 2020, respectively. This
include compensation for the management staff and stock-based compensation
expense related to the Company’s 2016 Stock Incentive Plan.

Other Income/Expenses. We have $38 interest earned in three months ended June
2021
as compare to $313 of interest expenses during the three months ended June
30, 2020
.

Net Loss. We incurred a net loss of $412,314 for the three months ended June 30,
2021
, as compared to a net loss of $220,301 for the three months ended June 30,
2020
. The decrease in net loss from the 2020 quarter to the 2021 quarter is in
large part due to increase in stock-based compensation expense.

Six months ended June 30, 2021, as compared to six months ended June 30, 2020

Revenues. We had no revenues during either the six months ended June 30, 2021 or
the six months ended June 30, 2020.

Research and Development Expenses. Research and development expenses during the
six months ended June 30, 2021 were $1,000, as compared to $2,000 for the six
months ended June 30, 2020. 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.

General and Administrative Expenses. We incurred $165,794 and $149,227 in
general and administrative expenses during the six months ended June 30, 2021
and June 30, 2020, respectively. 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”).

Compensation Expense. We had compensation expense of $545,636 and $375,432
during the six months ended June 30, 2021 and June 30, 2020, respectively. This
includes compensation for the management staff and stock-based compensation
expenses related to the Company’s 2016 Stock Incentive Plan.

Other Income/Expenses. We have $60 interest earned in six months ended June 2021
as compare to $657 of interest expenses during the six months ended June 30,
2020
.

Net Loss. We incurred a net loss of $712,369 for the six months ended June 30,
2021
, as compared to a net loss of $527,316 for the six months ended June 30,
2020
. The decrease in net loss from the 2020 period to the 2021 period is in
large part due to decreases in stock-based compensation expense.



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Liquidity and Capital Resources

The Company expects to require substantial funds for research and development,
to continue to develop, secure marketing approval for and ultimately manufacture
and market its initial medical robotic system. Until the Company is able to
generate revenues from the sale of its initial medical robotic system, it
expects to meet its operating cash flow requirements from the net proceeds of
this Offering and if necessary, from future public or private sales of its
securities and, if possible, on favorable terms, by entering into development
partnerships to assist the Company with its technology development activities.

During the period from inception (February 4, 2015) through June 30, 2021, the
Company raised (a) $1,900 from an initial private offering of its common stock
in February 2017; (b) $480,000 from the private offering of the convertible
notes completed in June 2017; (c) $135,000 from a private offering of 135,000
shares of common stock at a price of $1.00 per share completed in February 2017;
(d) $542,260 from a private offering of 433,808 shares of stock in a private
offering at a price of $1.25 per share completed in September 2017; and (e)
$20,000 from the private sale of 16,000 shares of our common stock at a price of
$1.25 per share in August 2018.

In March 2019, the Company sold 7.5 Units in a private offering of ten (10)
units (“Units”), each Unit consisting of a $10,000 principal amount six-month
promissory note bearing interest at the rate of 5% per annum and a three-year
warrant to purchase 5,000 shares of common stock at an exercise price of $1.25
per share.

In addition to the foregoing, from December 2018 thru June 2021, the Company
obtained fourteen loans from Barry F. Cohen, our Chief Executive Officer
totaling $468,500. The loans were due 12 months from funding date and did not
bear interest. With the exception of two loans totaling $145,000, all of these
loans were subsequently repaid in full via conversions into restricted company
shares or Units including one loan for $100,000 which was used to exercise a
stock option for 1,000,000 shares held by Mr. Cohen.

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.



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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.

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