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Table of Contents




Washington, D.C. 20549








For the quarterly period ended September 30, 2021






For the transition period from                       to 


Commission File Number 0-19437




(Exact name of registrant as specified in its charter)





(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


1 TW Alexander Drive, Suite 160, Durham, NC 27703

(Address of principal executive offices) (Zip Code)


Registrants telephone number, including area code: (919) 765-8400


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 (§ 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 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.


Large accelerated filer


Accelerated Filer

Non-accelerated filer


Smaller reporting company


Emerging Growth Company


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  ☒


Securities registered pursuant to Section 12(b) of the Act:


Title of each class


Trading symbol


Name of each exchange on which registered

Common Stock
$0.001 par value per share




NYSE American


The number of shares outstanding of the registrant’s common stock, as of October 29, 2021 was 234,389,729.













Item 1.

Financial Statements


Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)



Condensed Consolidated Balance Sheets (unaudited)



Condensed Consolidated Statements of Stockholders Equity (unaudited)



Condensed Consolidated Statements of Cash Flows (unaudited)



Notes to Condensed Consolidated Financial Statements (unaudited)


Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations


Item 3.

Quantitative and Qualitative Disclosures About Market Risk


Item 4.

Controls and Procedures







Item 1.

Legal Proceedings


Item 1A.

Risk Factors


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


Item 3.

Defaults Upon Senior Securities


Item 4.

Mine Safety Disclosures


Item 5.

Other Information


Item 6.











In addition to historical financial information, this report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that concern matters that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this report, including statements regarding future events, our future financial performance, our future business strategy and the plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “in the event that,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements, including the impact of the coronavirus (COVID-19) pandemic on our operating results. Readers are urged to carefully review and consider the various disclosures made by us, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business, operating results, financial condition and stock price, including without limitation the disclosures made under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Financial Statements,” “Notes to Condensed Consolidated Financial Statements “and “Risk Factors” in this report, as well as the disclosures made in the Asensus Surgical, Inc. Annual Report on Form 10-K for the year ended December 31, 2020 (the “Fiscal 2020 Form 10-K”), and other filings we make with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations except as required by applicable law. To the extent that our business is negatively impacted due to a variety of factors, including the impact of COVID-19 on our operating results, we may implement longer-term cost reduction efforts in order to mitigate such impact. References in this report to “we,” “our,” “us,” or the “Company” refer to Asensus Surgical, Inc., including its subsidiaries Asensus Surgical US, Inc., SafeStitch LLC, Asensus International, Inc., Asensus Surgical Italia S.r.l., Asensus Surgical Europe S.à.r.l., Asensus Surgical Taiwan Ltd., Asensus Surgical Japan K.K., Asensus Surgical Israel Ltd., Asensus Surgical Netherlands B.V., and Asensus Surgical Canada, Inc.


Any disclosure in this report regarding the receipt of CE Mark or Section 510(k) clearance for any of the Company’s products does not mean or infer any endorsement of the Company’s products by any government agency including, without limitation, the U.S. Food and Drug Administration, or FDA.





Item 1. Financial Statements



Asensus Surgical, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands except per share amounts)




Three Months Ended


Nine Months Ended


September 30,


September 30,













 $2,176  $436  $4,576  $992 


  395   378   1,180   1,076 

Total revenue

  2,571   814   5,756   2,068 

Cost of revenue:



  2,659   720   6,517   2,353 


  691   703   2,292   2,220 

Total cost of revenue

  3,350   1,423   8,809   4,573 

Gross loss

  (779)  (609)  (3,053)  (2,505)

Operating Expenses:


Research and development

  4,469   4,673   12,773   12,867 

Sales and marketing

  3,551   3,136   10,166   10,291 

General and administrative

  5,557   3,462   13,397   10,426 

Amortization of intangible assets

  2,804   2,780   8,533   7,964 

Change in fair value of contingent consideration

  278   502   1,013   1,770 

Restructuring and other charges

  -   -   -   858 

Total Operating Expenses

  16,659   14,553   45,882   44,176 

Operating Loss

  (17,438)  (15,162)  (48,935)  (46,681)

Other Income (Expense)


Gain on extinguishment of debt

  -   -   2,847   - 

Change in fair value of warrant liabilities

  -   63   (1,981)  (206)

Interest income

  122   3   253   34 

Interest expense

  (65)  -   (77)  - 

Employee retention tax credit

  1,311   -   1,311   - 

Other income (expense), net

  33   16   (3)  (54)

Total Other Income (Expense), net

  1,401   82   2,350   (226)

Loss before income taxes

  (16,037)  (15,080)  (46,585)  (46,907)

Income tax (expense) benefit

  (32)  (2)  4   1,386 

Net loss

  (16,069)  (15,082)  (46,581)  (45,521)

Deemed dividend related to beneficial conversion feature of preferred stock

  -   -   -   (412)

Deemed dividend related to conversion of preferred stock into common stock

  -   -   -   (299)

Net loss attributable to common stockholders

  (16,069)  (15,082)  (46,581)  (46,232)

Comprehensive loss:


Net loss

  (16,069)  (15,082)  (46,581)  (45,521)

Foreign currency translation (loss) gain

  (931)  2,101   (2,397)  2,191 

Unrealized loss on available-for-sale investments

  (53)  -   (53)  - 

Comprehensive loss

 $(17,053) $(12,981) $(49,031) $(43,330)

Net loss per common share attributable to common stockholders - basic and diluted

 $(0.07) $(0.15) $(0.21) $(0.77)

Weighted average number of shares used in computing net loss per common share - basic and diluted

  234,337   97,538   224,300   59,737 


See accompanying notes to unaudited condensed consolidated financial statements.




Asensus Surgical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)




September 30, 2021


December 31, 2020




Current Assets:


Cash and cash equivalents

 $59,779  $16,363 

Short-term investments, available-for-sale

  57,972   - 

Accounts receivable, net

  955   1,115 


  11,954   10,034 

Prepaid expenses

  2,209   3,535 

Employee retention tax credit receivable

  1,311   - 

Other current assets

  627   2,966 

Total Current Assets

  134,807   34,013 

Restricted cash

  1,153   1,166 

Long-term investments, available-for-sale

  30,142   - 

Inventories, net of current portion

  5,963   8,813 

Property and equipment, net

  9,911   10,342 

Intellectual property, net

  12,820   22,267 

Net deferred tax assets

  287   307 

Operating lease right-of-use assets, net

  4,328   1,164 

Other long-term assets

  348   186 

Total Assets

 $199,759  $78,258 

Liabilities and Stockholders' Equity


Current Liabilities:


Accounts payable

 $3,231  $1,965 

Accrued expenses

  4,841   5,615 

Operating lease liabilities - current portion

  671   686 

Deferred revenue

  678   789 

Notes payable - current portion, net of debt discount

  -   1,228 

Total Current Liabilities

  9,421   10,283 

Long-Term Liabilities:


Contingent consideration

  4,949   3,936 

Noncurrent operating lease liabilities

  3,888   628 

Notes payable, less current portion

  -   1,587 

Warrant liabilities

  -   255 

Total Liabilities

  18,258   16,689 

Commitments and Contingencies (Note 11)


Stockholders' Equity:

Common stock $0.001 par value, 750,000,000 shares authorized at September 30, 2021 and December 31, 2020; 234,370,083 and 116,231,072 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively  234   116 
Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020  -   - 

Additional paid-in capital

  950,242   781,397 

Accumulated deficit

  (769,493)  (722,912)

Accumulated other comprehensive income

  518   2,968 

Total Stockholders' Equity

  181,501   61,569 

Total Liabilities and Stockholders' Equity

 $199,759  $78,258 


See accompanying notes to unaudited condensed consolidated financial statements.




Asensus Surgical, Inc.

Condensed Consolidated Statements of Changes in Stockholders Equity

(in thousands)




Common Stock


Preferred Stock


Treasury Stock














Additional Paid-in Capital


Accumulated Deficit


Accumulated Other Comprehensive Income (Loss)


Total Stockholders' Equity


Balance, December 31, 2020

    116,231     $ 116       -     $ -       -     $ -     $ 781,397     $ (722,912 )   $ 2,968     $ 61,569  

Stock-based compensation

    -       -       -       -       -       -       1,786       -       -       1,786  

Issuance of common stock, net of issuance costs

    70,666       71       -       -       -       -       129,251       -       -       129,322  

Exercise of stock options and warrants

    45,114       45       -       -       -       -       32,687       -       -       32,732  

Award of restricted stock units

    706       1       -       -       -       -       -       -       -       1  

Return of common stock to pay withholding taxes on restricted stock

    -       -       -       -       67       -       (214 )     -       -       (214 )

Cancellation of treasury stock

    -       -       -       -       (67 )     -       -       -       -       -  

Other comprehensive loss

    -       -       -       -       -       -       -       -       (1,938 )     (1,938 )

Net loss

    -       -       -       -       -       -       -       (17,340 )     -       (17,340 )

Balance, March 31, 2021

    232,717       233       -       -       -       -       944,907       (740,252 )     1,030     $ 205,918  

Stock-based compensation

    -       -       -       -       -       -       1,842       -       -       1,842  

Issuance of common stock, net of issuance costs

    332       -       -       -       -       -       992       -       -       992  

Exercise of stock options and warrants

    508       -       -       -       -       -       337       -       -       337  

Award of restricted stock units

    674       1       -       -       -       -       -       -       -       1  

Return of common stock to pay withholding taxes on restricted stock

    -       -       -       -       246       -       (829 )     -       -       (829 )

Cancellation of treasury stock

    -       -       -       -       (246 )     -       -       -       -       -  

Other comprehensive loss

    -       -       -       -       -       -       -       -       472       472  

Net loss

    -       -       -       -       -       -       -       (13,172 )     -       (13,172 )

Balance, June 30, 2021

    234,231     $ 234       -     $ -       -     $ -     $ 947,249     $ (753,424 )   $ 1,502     $ 195,561  

Stock-based compensation

    -       -       -       -       -       -       2,961       -       -       2,961  

Issuance of common stock, net of issuance costs

    21       -       -       -       -       -       47       -       -       47  

Exercise of stock options and warrants

    5       -       -       -       -       -       2       -       -       2  

Award of restricted stock units

    113       -       -       -       -       -       -       -       -       -  

Return of common stock to pay withholding taxes on restricted stock

    -       -       -       -       6       -       (17 )     -       -       (17 )

Cancellation of treasury stock

    -       -       -       -       (6 )     -       -       -       -       -  

Other comprehensive loss

    -       -       -       -       -       -       -       -       (984 )     (984 )

Net loss

    -       -       -       -       -       -       -       (16,069 )     -       (16,069 )

Balance, September 30, 2021

    234,370     $ 234       -     $ -       -     $ -     $ 950,242     $ (769,493 )   $ 518     $ 181,501  

Balance, December 31, 2019

    20,691     $ 21       -     $ -       -       -     $ 720,484     $ (663,600 )   $ (1,370 )   $ 55,535  

Stock-based compensation

    -       -       -       -       -       -       1,923       -       -       1,923  

Issuance of common stock, preferred stock and warrants under 2020 financing, net of issuance costs

    14,122       14       7,937       79       -       -       13,432       -       -       13,525  

Issuance of common stock, net of issuance costs

    7,030       7       -       -       -       -       11,205       -       -       11,212  

Conversion of preferred stock to common stock

    3,053       3       (3,053 )     (30 )     -       -       27       -       -       -  

Exchange of shares for Series B Warrants

    2,041       2       -       -       -       -       2,468       -       -       2,470  

Award of restricted stock units

    141       -       -       -       -       -       -       -       -       -  

Return of common stock to pay withholding taxes on restricted stock

    -       -       -       -       28       -       (33 )     -       -       (33 )

Cancellation of treasury stock

    -       -       -       -       (28 )     -       -       -       -       -  

Other comprehensive loss

    -       -       -       -       -       -       -       -       (872 )     (872 )

Net loss

    -       -       -       -       -       -       -       (16,598 )     -       (16,598 )

Balance, March 31, 2020

    47,078       47       4,884       49       -       -       749,506       (680,198 )     (2,242 )   $ 67,162  

Stock-based compensation

    -       -       -       -       -       -       1,933       -       -       1,933  

Exercise of warrants

    4,913       5       -       -       -       -       3,335       -       -       3,340  

Conversion of preferred stock to common stock

    4,884       5       (4,884 )     (49 )     -       -       44       -       -       -  

Award of restricted stock units

    28       -       -       -       -       -       -       -       -       -  

Other comprehensive loss

    -       -       -       -       -       -       -       -       962       962  

Net loss

    -       -       -       -       -       -       -       (13,840 )     -       (13,840 )

Balance, June 30, 2020

    56,903     $ 57       -     $ -       -     $ -     $ 754,818     $ (694,038 )   $ (1,280 )   $ 59,557  

Stock-based compensation

    -       -       -       -       -       -       1,944       -       -       1,944  

Award of restricted stock units

    119       -       -       -       -       -       -       -       -       -  

Issuance of common stock, net of issuance costs

    42,857       43       -       -       -       -       13,606       -       -       13,649  

Other comprehensive loss

    -       -       -       -       -       -       -       -       2,101       2,101  

Net loss

    -       -       -       -       -       -       -       (15,082 )     -       (15,082 )

Balance, September 30, 2020

    99,879     $ 100       -     $ -       -     $ -     $ 770,368     $ (709,120 )   $ 821     $ 62,169  


See accompanying notes to unaudited condensed consolidated financial statements.




Asensus Surgical, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)




Nine Months Ended September 30,






Operating Activities:


Net loss

 $(46,581) $(45,521)

Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:



  2,416   2,015 

Amortization of intangible assets

  8,533   7,964 

Amortization of discounts and premiums on investments, net

  65   - 

Stock-based compensation

  6,589   5,800 

Gain on extinguishment of debt

  (2,847)  - 

Deferred tax benefit

  (4)  (1,386)

Write down of inventory

  377   - 

Change in fair value of warrant liabilities

  1,981   206 

Change in fair value of contingent consideration

  1,013   1,770 

Changes in operating assets and liabilities:


Accounts receivable

  113   (252)


  (1,941)  (4,410)

Operating lease right-of-use assets

  (3,174)  (1,045)

Prepaid expenses

  1,220   1,269 

Employee retention tax credit receivable

  (1,311)  - 

Other current and long-term assets

  2,098   2,009 

Accounts payable

  1,376   (706)

Accrued expenses

  (588)  (1,772)

Deferred revenue

  (81)  (56)

Operating lease liabilities

  3,259   1,115 

Other long-term liabilities

  -   (910)

Net cash and cash equivalents used in operating activities

  (27,487)  (33,910)

Investing Activities:


Purchase of available-for-sale investments

  (88,232)  - 

Purchase of property and equipment

  (838)  (3)

Net cash and cash equivalents used in investing activities

  (89,070)  (3)

Financing Activities:


Proceeds from issuance of common stock, preferred stock and warrants under 2020 financing, net of issuance costs

  -   13,525 

Proceeds from issuance of common stock, net of issuance costs

  130,361   24,861 

Proceeds from notes payable, net of issuance costs

  -   2,815 

Taxes paid related to net share settlement of vesting of restricted stock units

  (1,058)  (33)

Payment of contingent consideration

  -   (74)

Proceeds from exercise of stock options and warrants

  30,838   3,340 

Net cash and cash equivalents provided by financing activities

  160,141   44,434 

Effect of exchange rate changes on cash and cash equivalents

  (181)  30 

Net increase in cash, cash equivalents and restricted cash

  43,403   10,551 

Cash, cash equivalents and restricted cash, beginning of period

  17,529   10,567 

Cash, cash equivalents and restricted cash, end of period

 $60,932  $21,118 

Supplemental Schedule of Non-cash Investing and Financing Activities:


Transfer of inventories to property and equipment

 $2,156  $5,839 

Reclass of warrant liability to common stock and additional paid-in-capital

 $2,236  $- 

Lease liabilities arising from obtaining right-of-use assets

 $3,857  $- 

Exchange of common stock for Series B Warrants

 $-  $2,470 

Transfer of in-process research and development to intellectual property

 $-  $2,425 

Conversion of preferred stock to common stock

 $-  $79 


See accompanying notes to unaudited condensed consolidated financial statements.



Asensus Surgical, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)




Organization and Capitalization


Asensus Surgical, Inc. (formerly known as TransEnterix, Inc.) (the "Company") is a medical device company that is digitizing the interface between the surgeon and the patient to pioneer a new era of Performance-Guided Surgery™ by unlocking clinical intelligence for surgeons to enable consistently superior outcomes and a new standard of surgery. The Company is focused on the market development for and commercialization of the Senhance® Surgical System, which digitizes laparoscopic minimally invasive surgery, or MIS. The Senhance System is the first and only digital, multi-port laparoscopic platform designed to maintain laparoscopic MIS standards while providing digital benefits such as haptic feedback, robotic precision, comfortable ergonomics, advanced instrumentation including 3 mm microlaparoscopic instruments, eye-sensing camera control and fully-reusable standard instruments to help maintain per-procedure costs similar to traditional laparoscopy.


The Senhance System is available for sale in Europe, the United States, Japan, Taiwan, Russia and select other countries.



The Senhance System has a CE Mark in Europe for adult and pediatric laparoscopic abdominal and pelvic surgery, as well as limited thoracic surgeries excluding cardiac and vascular surgery.



In the United States, the Company has received 510(k) clearance from the FDA for use of the Senhance System in general laparoscopic surgical procedures and laparoscopic gynecologic surgery in a total of 31 indicated procedures, including benign and oncologic procedures, laparoscopic inguinal, hiatal and paraesophageal hernia, sleeve gastrectomy and laparoscopic cholecystectomy (gallbladder removal) surgery.



In Japan, the Company has received regulatory approval and reimbursement for 98 laparoscopic procedures.



The Senhance System has received its registration certificate by the Russian medical device regulatory agency, Roszdravnadzor, allowing for its sale and utilization throughout the Russian Federation.


In 2020, the Company obtained regulatory clearance for the Senhance ultrasonic system in Taiwan and Japan. On February 12, 2020, the Company expanded its claims in the EU for the Senhance System to include pediatric patients, allowing accessibility to more surgeons and patients, as well as expanding its potential market to include pediatric hospitals in Europe. The Company anticipates the robotic precision provided by the Senhance System, coupled with the already available 3 mm diameter instruments, will prove to be an effective tool in surgery with smaller patients. 


On March 13, 2020, the Company announced that it received FDA clearance for the Intelligent Surgical Unit™ (ISU™) for use with the Senhance System. The Company believes it is the first such FDA submission seeking clearance for machine vision technology in abdominal robotic surgery. On September 23, 2020, the Company announced the first surgical procedures successfully completed using the ISU. On September 1, 2021, the Company announced that it received FDA clearance for an expansion of machine vision capabilities. On January 19, 2021, the Company announced that it received CE Mark for the ISU. Lastly, on July 28, 2021, the Company announced that it received FDA clearance for 5 mm diameter articulating instruments, offering better access to difficult-to-reach areas of the anatomy by providing two additional degrees of freedom. These instruments have previously received CE Mark for use in the EU.


On October 31, 2018, the Company acquired the assets, intellectual property and highly experienced multidisciplinary personnel of MST Medical Surgical Technologies, Inc., or MST, an Israeli-based medical technology company.  Through this acquisition the Company acquired MST’s AutoLap™ assets and technology, one of the only image-guided robotic scope positioning systems with FDA clearance and CE Mark.  The Company believes MST’s image analytics technology will accelerate and drive meaningful Senhance System developments and allow the Company to expand the Senhance System to add augmented, intelligent vision capability. The Company sold the AutoLap assets in October 2019, while retaining the core technology.



At-the-Market Offering

On May 19, 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), Robert W. Baird & Co. Incorporated (“Baird”) and Oppenheimer & Co. Inc. (“Oppenheimer”). Each of Cantor, Baird and Oppenheimer are individually an “Agent” and collectively are the “Agents” under the Agreement. Also on May 19, 2021, the Company filed a prospectus supplement relating to an at-the-market offering (the “2021 ATM Offering”) by the Company of up to an aggregate of $100,000,000 of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), which shares of Common Stock are registered under the Registration Statement on Form S-3 ASR (File No. 333-256284) and automatically effective on May 19, 2021.




Summary of Significant Accounting Policies


Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its direct and indirect wholly owned subsidiaries. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q contain all adjustments, consisting only of normal recurring adjustments, except as otherwise indicated, necessary for a fair statement of its financial position, results of operations, and cash flows of the Company for all periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire year. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Fiscal 2020 Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying interim condensed consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.



The Company had an accumulated deficit of $769.5 million and working capital of $125.4 million as of September 30, 2021. The Company has not established sufficient sales revenues to cover its operating costs and believes it may require additional capital in the future to proceed with its operating plan.


The Company believes the COVID-19 pandemic will continue to negatively impact its operations and ability to implement its market development efforts, which will have a negative effect on its financial condition.


In the first quarter of 2021, the Company raised additional capital through equity offerings, including raising net proceeds of $73.4 million in a January 2021 public offering, $28.6 million in a January 2021 registered direct offering, and $27.3 million in an at-the-market offering launched in 2020 (the “2020 ATM Offering”). Also, outstanding Series B, C and D warrants were exercised in the nine months ended September 30, 2021 for aggregate proceeds to the Company of $30.6 million.


In the second quarter of 2021, the Company launched the 2021 ATM Offering and raised proceeds, net of legal costs and commissions, of $1.2 million under this offering in the nine months ended September 30, 2021.


As of September 30, 2021, the Company had cash, cash equivalents, short-term and long-term investments, excluding restricted cash, of approximately $147.9 million.


While the Company believes that its existing cash, cash equivalents, and short-term investments as of September 30, 2021 will be sufficient to sustain operations for at least the next 12 months from the issuance of these financial statements, the Company believes it may need to obtain additional financing in the future to proceed with its business plan. Management's plan to obtain additional resources for the Company may include additional sales of equity under the 2021 ATM Offering or otherwise, traditional financing, such as loans, entry into a strategic collaboration, entry into an out-licensing arrangement or provision of additional distribution rights in some or all of our markets. However, management cannot provide any assurance that the Company will be successful in accomplishing any or all of its plans.



Risk and Uncertainties

The Company is subject to risks similar to other similarly sized companies in the medical device industry. These risks include, without limitation: potential negative impacts on the Company's operations caused by the COVID-19 pandemic; the historical lack of profitability; the Company’s ability to raise additional capital; the success of its market development efforts, the liquidity and capital resources of its partners; its ability to successfully develop, clinically test and commercialize its products; the timing and outcome of the regulatory review process for its products; changes in the health care and regulatory environments of the United States, the United Kingdom, the European Union, Japan, Taiwan and other countries in which the Company operates or intends to operate; its ability to attract and retain key management, marketing and scientific personnel; its ability to successfully prepare, file, prosecute, maintain, defend and enforce patent claims and other intellectual property rights; its ability to successfully transition from a research and development company to a marketing, sales and distribution company; competition in the market for robotic surgical devices; and its ability to identify and pursue development of additional products.


Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. Significant items subject to such estimates and assumptions include impairment considerations for long- term intangible assets, fair value estimates related to contingent consideration, warrant liabilities, stock compensation expense, revenue recognition, accounts receivable reserves, short-term and long-term investments, excess and obsolete inventory reserves, inventory classification between current and non-current, measurement of lease liabilities and corresponding right-of-use (“ROU”) assets, and deferred tax asset valuation allowances.


The COVID-19 pandemic has caused significant social and economic restrictions that have been imposed in the United States and abroad, which has resulted in significant volatility in the global economy and led to reduced economic activity. In the preparation of these financial statements and related disclosures, the Company has assessed the impact that COVID-19 has had on its estimates, assumptions, forecasts, and accounting policies. The Company continues to monitor closely the COVID-19 pandemic impact on its estimates, assumptions and forecasts used in the preparation of its financial statements. As the COVID-19 situation is unprecedented and ever evolving, future events and effects related to COVID-19 cannot be determined with precision, and actual results could significantly differ from estimates or forecasts.


Principles of Consolidation and Foreign Currency Considerations

The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries, Asensus Surgical US, Inc., SafeStitch LLC, Asensus International, Inc., Asensus Surgical Italia S.r.l., Asensus Surgical Europe S.à.r.l., Asensus Surgical Taiwan Ltd., Asensus Surgical Japan K.K., Asensus Surgical Israel Ltd., Asensus Surgical Netherlands B.V., and Asensus Surgical Canada, Inc. All inter-company accounts and transactions have been eliminated in consolidation.


The functional currency of the Company’s operational foreign subsidiaries is predominantly the Euro. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effect for a subsidiary using a functional currency other than the U.S. dollar is included in accumulated other comprehensive income or loss as a separate component of stockholders’ equity.


The Company’s intercompany accounts are denominated in the functional currency of the foreign subsidiary. Gains and losses resulting from the remeasurement of intercompany receivables that the Company considers to be of a long-term investment nature are recorded as a cumulative translation adjustment in accumulated other comprehensive income or loss as a separate component of stockholders’ equity, while gains and losses resulting from the remeasurement of intercompany receivables from a foreign subsidiary for which the Company anticipates settlement in the foreseeable future are recorded in the condensed consolidated statements of operations and comprehensive loss. The net gains and losses included in net loss in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020 were not significant.


Cash and Cash Equivalents, Restricted Cash, and Investments

The Company considers all highly liquid investments with original maturities of 90 days or less at the time of purchase to be cash equivalents.


Restricted cash as of September 30, 2021 and December 31, 2020 includes $1.2 million and $1.2 million, respectively, in cash accounts held as collateral primarily under the terms of an office operating lease, credit cards, and automobile leases.



The Company’s investments as of September 30, 2021 consisted of corporate money market funds, commercial paper and corporate bonds and were classified as available-for-sale. Investments classified as available-for-sale are measured at fair value, and net unrealized gains and losses are recorded as a component of accumulated other comprehensive income (loss) on the balance sheet until realized. Realized gains and losses on sales of investment securities are determined based on the specific-identification method and are recorded in interest expense, net. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method. Such amortization and accretion is included in interest expense, net. The Company held no investments as of December 31, 2020. There were no gross realized gains or losses for the three or nine months ended September 30, 2021, and September 30, 2020. There have been no unrealized gains or losses reclassified from accumulated other comprehensive income (loss). Investments with remaining maturities at date of purchase greater than 90 days and remaining maturities as of the reporting period less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments.


Concentrations and Credit Risk

The Company’s principal financial instruments subject to potential concentration of credit risk are cash and cash equivalents, and investments, including amounts held in money market funds, commercial paper, and corporate bonds. The Company places cash deposits with a federally insured financial institution. The Company maintains its cash at banks and financial institutions it considers to be of high credit quality; however, the Company’s domestic cash deposits may at times exceed the Federal Deposit Insurance Corporation’s insured limit. Balances in excess of federally insured limitations may not be insured. The Company has not experienced losses on these accounts, and management believes that the Company is not exposed to significant risks on such accounts. Investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s investments consist of various major corporations, financial institutions, and government agencies of high credit standing.


The Company’s accounts receivable are derived from sales and leases to customers located throughout the world. The Company evaluates its customers’ financial condition and, generally, requires no collateral from its customers. The Company provided reserves for potential credit losses and recorded no bad debt charges during the three and nine months ended September 30, 2021 and 2020. The Company had four customers who constituted 58% of the Company’s net accounts receivable as of September 30, 2021. The Company had seven customers who constituted 68% of the Company’s net accounts receivable at December 31, 2020. The Company had one customer who accounted for 61% of revenue in the three months ended September 30, 2021 and nine customers who accounted for 57% of revenue in the three months ended September 30, 2020. The Company had two customers who accounted for 50% of revenue in the nine months ended September 30, 2021 and nine customers who accounted for 58% of revenue in the nine months ended September 30, 2020.


Accounts Receivable

Accounts receivable are recorded at net realizable value, which includes an allowance for estimated uncollectible accounts. The allowance for uncollectible accounts was determined on a customer specific basis based on deemed collectability. The allowance for doubtful accounts was $1.7 million and $1.8 million as of September 30, 2021 and December 31, 2020, respectively.



Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or net realizable value. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The Company records reserves, when necessary, to reduce the carrying value of inventory to its net realizable value. Management considers forecast demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining excess and obsolescence and net realizable value adjustments. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and any subsequent improvements in facts and circumstances do not result in the restoration or increase in that newly established cost basis.


Any inventory on hand at the measurement date in excess of the Company's current requirements based on anticipated levels of sales is classified as long-term on the Company's condensed consolidated balance sheets. The Company's classification of long-term inventory requires it to estimate the portion of on hand inventory that can be realized over the upcoming twelve months.


Intellectual Property

Intellectual property consists of purchased patent rights and developed technology acquired as part of previous business acquisitions. Amortization of the patent rights is recorded using the straight-line method over the estimated useful life of the patents of 10 years. Amortization of the developed technology is recorded using the straight-line method over the estimated useful life of 5 to 7 years.


The Company periodically evaluates intellectual property for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To determine the recoverability, the Company evaluates the probability that future estimated undiscounted net cash flows will be less than the carrying amount of the assets. If such estimated cash flows are less than the carrying amount of the assets, then such assets are written down to their fair value. No impairment of intellectual property was identified during the three and nine months ended September 30, 2021 and 2020.



Property and Equipment

Property and equipment consists primarily of operating lease Senhance System assets, machinery, manufacturing equipment, demonstration equipment, computer equipment, furniture, leasehold improvements, and purchased software which are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows:


Operating lease assets – Senhance System leasing (in years)


Machinery, manufacturing and demonstration equipment (in years)


Computer equipment (in years)


Furniture (in years)


Leasehold improvements

 Lesser of lease term or 3 to 10 years 

Purchased Software



Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred.


The Company reviews its property and equipment assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine the recoverability, the Company evaluates the probability that future estimated undiscounted net cash flows will be less than the carrying amount of the assets. If such estimated cash flows are less than the carrying amount of the assets, then such assets are written down to their fair value. The Company did not identify any impairment during the three and nine months ended September 30, 2021 and 2020.


Other Receivable Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) included an Employee Retention Tax Credit (“ERTC”) provision designed to encourage employers to keep employees on their payroll. The ERTC is a refundable tax credit against certain payroll taxes paid by employers for eligible wages paid between March 13, 2020 and December 13, 2020 that meet requirements of the ERTC provision. On March 11, 2021, the American Rescue Plan Act was enacted extending the deadline of the ERTC to December 31, 2021 and expanded who is eligible to claim the credit. For the three and nine months ended September 30, 2021 we submitted an ERTC refund for $1.3 million and recorded the amount into Other Income (Expense) on the condensed consolidated statements of operations and comprehensive loss. The Company believes there is a reasonable assurance that it will comply with the relevant conditions of the employee retention credit provision of the CARES Act and that it will receive the credit.


Notes Payable Payroll Protection Program

The Company’s policy is to account for forgivable loans received through the U.S. Small Business Administration (the “SBA”) under the CARES Act Payroll Protection Program (“PPP”), as debt in accordance with ASC 470, Debt, and other related accounting pronouncements. The forgiveness of debt, in whole or part, is recognized once the debt is extinguished, which occurs when the Company is legally released from the liability by the SBA. Any portion of debt forgiven, adjusted for accrued interest forgiven and unamortized debt issuance costs, is recorded as a gain on extinguishment of debt, and presented in the condensed consolidated statements of operations and comprehensive loss. On June 10, 2021, the Company received notification from the SBA that the principal amount of its PPP loan of $2.8 million and related interest had been forgiven.


Contingent Consideration

Contingent consideration is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. Contingent consideration is measured at fair value using a discounted cash flow model utilizing significant unobservable inputs including the probability of achieving each of the potential milestones, future Euro-to-USD exchange rates, and an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones. Significant increases or decreases in any of the probabilities of success or changes in expected achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. The contingent consideration is revalued at each reporting period and changes in fair value are recognized in the condensed consolidated statements of operations and comprehensive loss.



On September 21, 2015, the Company completed the strategic acquisition, through its wholly owned subsidiary TransEnterix International, from Sofar S.p.A., an Italian company (“Sofar”), of all of the assets, employees and contracts related to the advanced robotic system for minimally invasive laparoscopic surgery now known as the Senhance System. Under the terms of the Purchase Agreement, as amended in 2016, as of September 30, 2021, the Company has accrued $4.9 million of estimated fair value of remaining contingent consideration related to a milestone of €15.0 million which shall be payable upon achievement of trailing revenues from sales or services contracts of the Senhance System of at least €25.0 million over a calendar quarter or in the event that (i) the Company or Asensus International is acquired, (ii) the Company significantly reduce or suspends selling efforts of the Senhance System, or (iii) the Company acquires a business that offers alternative products that are directly competitive with the Senhance System.


Warrant Liabilities

The Company’s Series B Warrants (see Note 9) were measured at fair value using a simulation model which took into account, as of the valuation date, factors including the current exercise price, the expected life of the warrant, the current price of the underlying stock, its expected volatility, holding cost and the risk-free interest rate for the term of the warrant (see Note 3). The warrant liability was revalued at each reporting period and changes in fair value were recognized in the condensed consolidated statements of operations and comprehensive loss. The selection of the appropriate valuation model and the inputs and assumptions that are required to determine the valuation requires significant judgment and requires management to make estimates and assumptions that affect the reported amount of the related liability and reported amounts of the change in fair value. Actual results could differ from those estimates, and changes in these estimates are recorded when known. All remaining outstanding Series B Warrants were exercised in the first quarter 2021.


Revenue Recognition

The Company’s revenue consists of product revenue resulting from the sale and lease of Systems, System components, instruments and accessories, and service revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company's revenues are measured based on consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities. The Company’s System sale arrangements generally include a five-year service period; the first year of service is generally free and included in the System sale arrangement and the remaining four years are generally included at a stated service price.


The Company’s System sale arrangements generally contain multiple products and services. For these consolidated sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are distinct, which is if a product or service is separately identifiable from other items in the consolidated package, and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company’s System sale arrangements may include a combination of the following performance obligations: system(s), system components, instruments, accessories, and system services.


For arrangements that contain multiple performance obligations, revenue is allocated to each performance obligation based on its relative estimated standalone selling price. When available, standalone selling prices are based on observable prices at which the Company separately sells the products or services; however due to limited sales to date, standalone selling prices generally are not directly observable. The Company estimates the standalone selling price using the market assessment approach considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services, geographies, type of customer, and market conditions. The Company regularly reviews estimated standalone selling prices and updates these estimates if necessary.


The Company recognizes revenues when or as the performance obligations are satisfied by transferring control of the product or service to a customer. The Company generally recognizes revenue for the performance obligations as follows:



System sales. For Systems and System components sold directly to end customers (including those arising from System purchases under lease rights to purchase), revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. For Systems sold through distributors, for which distributors are responsible for installation, revenue is recognized generally at the time of shipment. The Company’s System arrangements generally do not provide a right of return. The Systems are generally covered by a one-year warranty. Warranty costs were not material for the periods presented.



Instruments and accessories. Revenue from sales of instruments and accessories is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but also occurs at the time of delivery depending on the customer arrangement.



Service. Service revenue is recognized ratably over the term of the service period as the customers benefit from the service throughout the service period. Revenue related to services performed on a time-and-materials basis is recognized when performed. 



The following table presents revenue disaggregated by type and geography:



Three Months Ended September 30,


Nine Months Ended September 30,









  (in thousands)  (in thousands) 




 $78  $101  $262  $176 

Instruments and accessories

  60   82   201   149 


  105   106   307