asxc20230930_10q.htm
0000876378 ASENSUS SURGICAL, INC. false --12-31 Q3 2023 0.001 0.001 750,000,000 750,000,000 264,111,257 264,111,257 236,895,440 236,895,440 0.01 0.01 25,000,000 25,000,000 0 0 0 0 1 4 0.2 1.6 December 31, 2032 December 31, 2032 0 0 0 0 4.5 5 0.7 1 10 Includes investments that are readily convertible to cash with original maturities of 90 days or less. 00008763782023-01-012023-09-30 xbrli:shares 00008763782023-11-10 thunderdome:item iso4217:USD 0000876378us-gaap:ProductMember2023-07-012023-09-30 0000876378us-gaap:ProductMember2022-07-012022-09-30 0000876378us-gaap:ProductMember2023-01-012023-09-30 0000876378us-gaap:ProductMember2022-01-012022-09-30 0000876378us-gaap:ServiceMember2023-07-012023-09-30 0000876378us-gaap:ServiceMember2022-07-012022-09-30 0000876378us-gaap:ServiceMember2023-01-012023-09-30 0000876378us-gaap:ServiceMember2022-01-012022-09-30 0000876378asxc:LeaseMember2023-07-012023-09-30 0000876378asxc:LeaseMember2022-07-012022-09-30 0000876378asxc:LeaseMember2023-01-012023-09-30 0000876378asxc:LeaseMember2022-01-012022-09-30 00008763782023-07-012023-09-30 00008763782022-07-012022-09-30 00008763782022-01-012022-09-30 iso4217:USDxbrli:shares 00008763782023-09-30 00008763782022-12-31 0000876378us-gaap:IntellectualPropertyMember2023-09-30 0000876378us-gaap:IntellectualPropertyMember2022-12-31 0000876378us-gaap:CommonStockMember2022-12-31 0000876378us-gaap:TreasuryStockCommonMember2022-12-31 0000876378us-gaap:AdditionalPaidInCapitalMember2022-12-31 0000876378us-gaap:RetainedEarningsMember2022-12-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-31 0000876378us-gaap:CommonStockMember2023-01-012023-03-31 0000876378us-gaap:TreasuryStockCommonMember2023-01-012023-03-31 0000876378us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-31 0000876378us-gaap:RetainedEarningsMember2023-01-012023-03-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-31 00008763782023-01-012023-03-31 0000876378us-gaap:CommonStockMember2023-03-31 0000876378us-gaap:TreasuryStockCommonMember2023-03-31 0000876378us-gaap:AdditionalPaidInCapitalMember2023-03-31 0000876378us-gaap:RetainedEarningsMember2023-03-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-31 00008763782023-03-31 0000876378us-gaap:CommonStockMember2023-04-012023-06-30 0000876378us-gaap:TreasuryStockCommonMember2023-04-012023-06-30 0000876378us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0000876378us-gaap:RetainedEarningsMember2023-04-012023-06-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-30 00008763782023-04-012023-06-30 0000876378us-gaap:CommonStockMember2023-06-30 0000876378us-gaap:TreasuryStockCommonMember2023-06-30 0000876378us-gaap:AdditionalPaidInCapitalMember2023-06-30 0000876378us-gaap:RetainedEarningsMember2023-06-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-30 00008763782023-06-30 0000876378us-gaap:CommonStockMember2023-07-012023-09-30 0000876378us-gaap:TreasuryStockCommonMember2023-07-012023-09-30 0000876378us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-30 0000876378us-gaap:RetainedEarningsMember2023-07-012023-09-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-30 0000876378us-gaap:CommonStockMember2023-09-30 0000876378us-gaap:TreasuryStockCommonMember2023-09-30 0000876378us-gaap:AdditionalPaidInCapitalMember2023-09-30 0000876378us-gaap:RetainedEarningsMember2023-09-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-30 0000876378us-gaap:CommonStockMember2021-12-31 0000876378us-gaap:TreasuryStockCommonMember2021-12-31 0000876378us-gaap:AdditionalPaidInCapitalMember2021-12-31 0000876378us-gaap:RetainedEarningsMember2021-12-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31 00008763782021-12-31 0000876378us-gaap:CommonStockMember2022-01-012022-03-31 0000876378us-gaap:TreasuryStockCommonMember2022-01-012022-03-31 0000876378us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-31 0000876378us-gaap:RetainedEarningsMember2022-01-012022-03-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-31 00008763782022-01-012022-03-31 0000876378us-gaap:CommonStockMember2022-03-31 0000876378us-gaap:TreasuryStockCommonMember2022-03-31 0000876378us-gaap:AdditionalPaidInCapitalMember2022-03-31 0000876378us-gaap:RetainedEarningsMember2022-03-31 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-31 00008763782022-03-31 0000876378us-gaap:CommonStockMember2022-04-012022-06-30 0000876378us-gaap:TreasuryStockCommonMember2022-04-012022-06-30 0000876378us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-30 0000876378us-gaap:RetainedEarningsMember2022-04-012022-06-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-30 00008763782022-04-012022-06-30 0000876378us-gaap:CommonStockMember2022-06-30 0000876378us-gaap:TreasuryStockCommonMember2022-06-30 0000876378us-gaap:AdditionalPaidInCapitalMember2022-06-30 0000876378us-gaap:RetainedEarningsMember2022-06-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-30 00008763782022-06-30 0000876378us-gaap:CommonStockMember2022-07-012022-09-30 0000876378us-gaap:TreasuryStockCommonMember2022-07-012022-09-30 0000876378us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-30 0000876378us-gaap:RetainedEarningsMember2022-07-012022-09-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-30 0000876378us-gaap:CommonStockMember2022-09-30 0000876378us-gaap:TreasuryStockCommonMember2022-09-30 0000876378us-gaap:AdditionalPaidInCapitalMember2022-09-30 0000876378us-gaap:RetainedEarningsMember2022-09-30 0000876378us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-30 00008763782022-09-30 0000876378asxc:SystemsMembercountry:US2023-07-012023-09-30 0000876378asxc:SystemsMembercountry:US2022-07-012022-09-30 0000876378asxc:SystemsMembercountry:US2023-01-012023-09-30 0000876378asxc:SystemsMembercountry:US2022-01-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMembercountry:US2023-07-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMembercountry:US2022-07-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMembercountry:US2023-01-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMembercountry:US2022-01-012022-09-30 0000876378us-gaap:ServiceMembercountry:US2023-07-012023-09-30 0000876378us-gaap:ServiceMembercountry:US2022-07-012022-09-30 0000876378us-gaap:ServiceMembercountry:US2023-01-012023-09-30 0000876378us-gaap:ServiceMembercountry:US2022-01-012022-09-30 0000876378asxc:LeaseMembercountry:US2023-07-012023-09-30 0000876378asxc:LeaseMembercountry:US2022-07-012022-09-30 0000876378asxc:LeaseMembercountry:US2023-01-012023-09-30 0000876378asxc:LeaseMembercountry:US2022-01-012022-09-30 0000876378country:US2023-07-012023-09-30 0000876378country:US2022-07-012022-09-30 0000876378country:US2023-01-012023-09-30 0000876378country:US2022-01-012022-09-30 0000876378asxc:SystemsMemberus-gaap:NonUsMember2023-07-012023-09-30 0000876378asxc:SystemsMemberus-gaap:NonUsMember2022-07-012022-09-30 0000876378asxc:SystemsMemberus-gaap:NonUsMember2023-01-012023-09-30 0000876378asxc:SystemsMemberus-gaap:NonUsMember2022-01-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMemberus-gaap:NonUsMember2023-07-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMemberus-gaap:NonUsMember2022-07-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMemberus-gaap:NonUsMember2023-01-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMemberus-gaap:NonUsMember2022-01-012022-09-30 0000876378us-gaap:ServiceMemberus-gaap:NonUsMember2023-07-012023-09-30 0000876378us-gaap:ServiceMemberus-gaap:NonUsMember2022-07-012022-09-30 0000876378us-gaap:ServiceMemberus-gaap:NonUsMember2023-01-012023-09-30 0000876378us-gaap:ServiceMemberus-gaap:NonUsMember2022-01-012022-09-30 0000876378asxc:LeaseMemberus-gaap:NonUsMember2023-07-012023-09-30 0000876378asxc:LeaseMemberus-gaap:NonUsMember2022-07-012022-09-30 0000876378asxc:LeaseMemberus-gaap:NonUsMember2023-01-012023-09-30 0000876378asxc:LeaseMemberus-gaap:NonUsMember2022-01-012022-09-30 0000876378us-gaap:NonUsMember2023-07-012023-09-30 0000876378us-gaap:NonUsMember2022-07-012022-09-30 0000876378us-gaap:NonUsMember2023-01-012023-09-30 0000876378us-gaap:NonUsMember2022-01-012022-09-30 0000876378asxc:SystemsMember2023-07-012023-09-30 0000876378asxc:SystemsMember2022-07-012022-09-30 0000876378asxc:SystemsMember2023-01-012023-09-30 0000876378asxc:SystemsMember2022-01-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMember2023-07-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMember2022-07-012022-09-30 0000876378asxc:InstrumentsAndAccessoriesMember2023-01-012023-09-30 0000876378asxc:InstrumentsAndAccessoriesMember2022-01-012022-09-30 00008763782023-10-012023-09-30 utr:Y 0000876378srt:MinimumMember2023-10-012023-09-30 0000876378srt:MaximumMember2023-10-012023-06-30 xbrli:pure 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-09-30 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberasxc:CustomerOneMember2023-01-012023-09-30 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberasxc:CustomerTwoMember2023-01-012023-09-30 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberasxc:CustomerThreeMember2023-01-012023-09-30 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberasxc:CustomerFourMember2023-01-012023-09-30 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-12-31 0000876378us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberasxc:OneCustomerMember2022-01-012022-12-31 0000876378us-gaap:FairValueInputsLevel1Member2023-09-30 0000876378us-gaap:FairValueInputsLevel2Member2023-09-30 0000876378us-gaap:FairValueInputsLevel3Member2023-09-30 0000876378us-gaap:FairValueInputsLevel1Member2022-12-31 0000876378us-gaap:FairValueInputsLevel2Member2022-12-31 0000876378us-gaap:FairValueInputsLevel3Member2022-12-31 0000876378asxc:The2015SenhanceAcquisitionMember2022-12-31 0000876378asxc:The2015SenhanceAcquisitionMember2023-01-012023-03-31 0000876378asxc:The2015SenhanceAcquisitionMember2023-03-31 0000876378asxc:The2015SenhanceAcquisitionMember2023-04-012023-06-30 0000876378asxc:The2015SenhanceAcquisitionMember2023-06-30 0000876378asxc:The2015SenhanceAcquisitionMember2023-07-012023-09-30 0000876378asxc:The2015SenhanceAcquisitionMember2023-09-30 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberasxc:MilestoneDateYearMember2023-09-30 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberasxc:MilestoneDateYearMember2022-12-31 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputDiscountRateMember2023-09-30 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputDiscountRateMember2022-12-31 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2022-12-31 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberasxc:MeasurementInputCurrencyExchangeRateMember2023-09-30 0000876378asxc:The2015SenhanceAcquisitionMemberus-gaap:FairValueInputsLevel3Memberasxc:MeasurementInputCurrencyExchangeRateMember2022-12-31 0000876378us-gaap:WarrantMember2022-12-31 0000876378us-gaap:WarrantMember2023-01-012023-09-30 0000876378us-gaap:WarrantMember2023-09-30 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2023-07-31 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputPriceVolatilityMember2023-09-30 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-07-31 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-30 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputExpectedTermMember2023-07-31 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputExpectedTermMember2023-09-30 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-07-31 0000876378us-gaap:WarrantMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-09-30 0000876378us-gaap:CommercialPaperMember2023-09-30 0000876378us-gaap:CorporateDebtSecuritiesMember2023-09-30 0000876378us-gaap:USTreasurySecuritiesMember2023-09-30 0000876378us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-09-30 0000876378us-gaap:CommercialPaperMember2022-12-31 0000876378us-gaap:CorporateDebtSecuritiesMember2022-12-31 0000876378us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-31 0000876378us-gaap:DevelopedTechnologyRightsMember2023-09-30 0000876378us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-30 0000876378us-gaap:DevelopedTechnologyRightsMember2022-12-31 0000876378us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-31 0000876378us-gaap:DevelopedTechnologyRightsMembersrt:WeightedAverageMember2023-09-30 0000876378us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2023-09-30 0000876378us-gaap:DevelopedTechnologyRightsMembersrt:WeightedAverageMember2022-12-31 0000876378us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2022-12-31 0000876378us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-30 0000876378us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-30 0000876378us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-30 0000876378us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-30 0000876378srt:ScenarioForecastMember2023-10-012023-12-31 0000876378asxc:IncentiveCompensationPlanMember2023-06-062023-06-06 0000876378asxc:IncentiveCompensationPlanMember2023-06-06 00008763782022-01-012022-12-31 0000876378srt:MinimumMember2023-01-012023-09-30 0000876378srt:MaximumMember2023-01-012023-09-30 0000876378srt:MinimumMember2022-01-012022-09-30 0000876378srt:MaximumMember2022-01-012022-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2022-12-31 0000876378us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2023-09-30 0000876378us-gaap:EmployeeStockOptionMember2023-07-012023-09-30 0000876378us-gaap:EmployeeStockOptionMember2022-07-012022-09-30 0000876378us-gaap:EmployeeStockOptionMember2023-01-012023-09-30 0000876378us-gaap:EmployeeStockOptionMember2022-01-012022-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-30 0000876378asxc:PerformanceRestrictedStockUnitMember2023-07-012023-09-30 0000876378asxc:PerformanceRestrictedStockUnitMember2022-07-012022-09-30 0000876378asxc:PerformanceRestrictedStockUnitMember2023-01-012023-09-30 0000876378asxc:PerformanceRestrictedStockUnitMember2022-01-012022-09-30 0000876378us-gaap:EmployeeStockOptionMember2023-09-30 0000876378asxc:The2022AtmOfferingMember2022-03-18 0000876378asxc:The2022AtmOfferingMember2023-07-012023-09-30 0000876378asxc:The2022AtmOfferingMember2023-01-012023-09-30 0000876378srt:ArithmeticAverageMemberasxc:The2022AtmOfferingMember2023-07-012023-09-30 0000876378srt:ArithmeticAverageMemberasxc:The2022AtmOfferingMember2023-01-012023-09-30 0000876378asxc:CommonStockIssuedInRegisteredDirectOfferingMember2023-07-232023-07-23 0000876378asxc:WarrantsIssuedInRegisteredDirectOfferingMember2023-07-23 0000876378asxc:WarrantsIssuedInRegisteredDirectOfferingMember2023-07-232023-07-23 0000876378asxc:WarrantsIssuedInRegisteredDirectOfferingMember2023-07-012023-09-30 0000876378asxc:WarrantsIssuedInRegisteredDirectOfferingMember2023-01-012023-09-30 0000876378us-gaap:EmployeeStockOptionMember2023-01-012023-09-30 0000876378us-gaap:EmployeeStockOptionMember2022-01-012022-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-30 0000876378us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-30 0000876378us-gaap:WarrantMember2023-01-012023-09-30 0000876378us-gaap:WarrantMember2022-01-012022-09-30 0000876378asxc:LicenseAndSupplyAgreementMember2023-09-30 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:US2023-01-012023-09-30 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembercountry:US2022-01-012022-12-31 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2023-01-012023-09-30 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2022-01-012022-12-31 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2023-01-012023-09-30 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2022-01-012022-12-31 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2023-01-012023-09-30 0000876378asxc:LongLivedAssetsMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2022-01-012022-12-31 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembercountry:US2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembercountry:US2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembercountry:US2023-01-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembercountry:US2022-01-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2023-01-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:EMEAMember2022-01-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2023-01-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMembersrt:AsiaMember2022-01-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2023-01-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:GeographicConcentrationRiskMemberasxc:AllCountriesMember2022-01-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberasxc:OneCustomerMember2023-07-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberasxc:OneCustomerMember2022-07-012022-09-30 0000876378us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberasxc:OneCustomerMember2022-01-012022-09-30 0000876378asxc:AsensusSurgicalEuropeSrlMemberasxc:ServiceSupplyAgreementMemberasxc:OneMedSaMember2023-07-012023-09-30 0000876378asxc:AsensusSurgicalEuropeSrlMemberasxc:ServiceSupplyAgreementMemberasxc:OneMedSaMember2022-07-012022-09-30 0000876378asxc:AsensusSurgicalEuropeSrlMemberasxc:ServiceSupplyAgreementMemberasxc:OneMedSaMember2023-01-012023-09-30 0000876378asxc:AsensusSurgicalEuropeSrlMemberasxc:ServiceSupplyAgreementMemberasxc:OneMedSaMember2022-01-012022-09-30
 

 

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________

FORM 10-Q

_________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to

 

Commission File Number 0-19437

_________________________________________________

ASENSUS SURGICAL, INC.

(Exact name of registrant as specified in its charter)

_________________________________________________

Delaware

 

11-2962080

(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 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

 

ASXC

 

NYSE American

 

The number of shares outstanding of the registrant’s common stock, as of November 10, 2023 was 264,316,749.

 

 

 

 

 

ASENSUS SURGICAL, INC.

 

TABLE OF CONTENTS FOR FORM 10-Q

 

PART I.

FINANCIAL INFORMATION

2
     

Item 1.

Financial Statements

2
 

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

2
 

Condensed Consolidated Balance Sheets (unaudited)

3
 

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

4
 

Condensed Consolidated Statements of Cash Flows (unaudited)

5
 

Notes to Condensed Consolidated Financial Statements (unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

24
     

PART II.

OTHER INFORMATION

24
     

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26
     
 

SIGNATURES

27

 

 

 

PART 1. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Asensus Surgical, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

(unaudited)

 

 
  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Revenue:

                

Product

 $301  $1,964  $892  $2,565 

Service

  295   335   779   1,067 

Lease

  493   264   1,475   991 

Total revenue

  1,089   2,563   3,146   4,623 
                 

Cost of revenue:

                

Product

  1,171   3,057   4,008   4,316 

Service

  581   365   1,849   1,506 

Lease

  1,117   982   3,033   2,752 

Total cost of revenue

  2,869   4,404   8,890   8,574 

Gross loss

  (1,780)  (1,841)  (5,744)  (3,951)
                 

Operating expenses:

                

Research and development

  9,290   6,741   28,409   20,422 

Sales and marketing

  4,138   3,615   13,140   10,936 

General and administrative

  4,571   4,853   15,163   15,378 

Amortization of intangible assets

  114   2,398   340   7,601 

Change in fair value of contingent consideration

  366   (416)  674   (1,168)

Impairment of property and equipment

  -   -   -   432 

Total operating expenses

  18,479   17,191   57,726   53,601 

Operating loss

  (20,259)  (19,032)  (63,470)  (57,552)
                 

Other income (expense), net

                

Change in fair value of warrant liabilities

  2,278   -   2,278   - 

Interest income

  406   291   1,276   806 

Interest expense

  -   (99)  -   (440)

Other expense, net

  (686)  (29)  (1,146)  (261)

Total other income, net

  1,998   163   2,408   105 
                 

Loss before income taxes

  (18,261)  (18,869)  (61,062)  (57,447)

Income tax expense

  57   55   136   224 

Net loss

  (18,318)  (18,924)  (61,198)  (57,671)
                 

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

 $(0.07) $(0.08) $(0.25) $(0.24)

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

  256,184   236,713   244,744   236,373 
                 

Comprehensive loss:

                

Net loss

  (18,318)  (18,924)  (61,198)  (57,671)

Foreign currency translation (loss) gain

  (640)  (1,655)  84   (4,018)

Unrealized gain (loss) on available-for-sale investments

  67   86   473   (610)

Comprehensive loss

 $(18,891) $(20,493) $(60,641) $(62,299)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Asensus Surgical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

(unaudited)

 

 
  

September 30, 2023

  

December 31, 2022

 

Assets

        

Current Assets:

        

Cash and cash equivalents

 $21,669  $6,329 

Short-term investments, available-for-sale

  11,420   64,195 

Accounts receivable, net

  662   2,256 

Inventory, net

  6,683   8,284 

Prepaid expenses

  4,174   3,584 

Employee retention tax credit receivable

  -   554 

Other current assets

  1,324   1,671 

Total Current Assets

  45,932   86,873 
         

Restricted cash

  1,615   1,141 

Long-term investments, available-for-sale

  -   3,865 

Inventory, net of current portion

  5,640   5,469 

Property and equipment, net

  9,237   9,542 

Intellectual property, net

  1,278   1,576 

Deferred tax assets, net

  150   174 

Operating lease right-of-use assets, net

  5,004   4,950 

Other noncurrent assets

  1,871   2,463 

Total Assets

 $70,727  $116,053 
         

Liabilities and Stockholders' Equity

        

Current Liabilities:

        

Accounts payable

 $4,526  $3,348 

Accrued employee compensation and benefits

  4,967   4,508 

Accrued expenses and other current liabilities

  1,258   1,293 

Operating lease liabilities, current

  916   800 

Deferred revenue

  456   465 

Total Current Liabilities

  12,123   10,414 
         

Long-Term Liabilities:

        

Warrant liabilities

  4,842   - 

Contingent consideration

  1,930   1,256 

Operating lease liabilities, noncurrent

  4,579   4,738 

Total Liabilities

  23,474   16,408 
         

Stockholders' Equity:

        

Common stock $0.001 par value, 750,000,000 shares authorized at September 30, 2023 and December 31, 2022; 264,111,257 and 236,895,440 issued and outstanding at September 30, 2023 and December 31, 2022, respectively

  264   237 

Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022

  -   - 

Additional paid-in capital

  970,952   962,731 

Accumulated deficit

  (922,133)  (860,935)

Accumulated other comprehensive loss

  (1,830)  (2,388)

Total Stockholders' Equity

  47,253   99,645 

Total Liabilities and Stockholders' Equity

 $70,727  $116,053 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Asensus Surgical, Inc.

Condensed Consolidated Statements of Changes in Stockholders Equity

(in thousands)

(unaudited)

 

 
  

Common Stock

  

Treasury Stock

  

Additional Paid-

  

Accumulated

  

Accumulated Other Comprehensive Income

  

Total Stockholders'

 
  

Shares

  

Amount

  

Shares

  

Amount

  in Capital  Deficit  (Loss)  Equity 

Balance, December 31, 2022

  236,895  $237   -  $-  $962,731  $(860,935) $(2,388) $99,645 

Stock-based compensation

  -   -   -   -   1,916   -   -   1,916 

Exercise of stock options

  13   -   -   -   5   -   -   5 

Issuance of common stock related to vesting of restricted stock units

  2,434   2   -   -   -   -   -   2 

Shares withheld related to net share settlement of equity awards

  -   -   649   1   (490)  -   -   (489)

Cancellation of treasury stock

  -   -   (649)  (1)  -   -   -   (1)

Other comprehensive income

  -   -   -   -   -   -   857   857 

Net loss

  -   -   -   -   -   (22,218)  -   (22,218)

Balance, March 31, 2023

  239,342   239   -  $-  $964,162  $(883,153) $(1,531) $79,717 

Stock-based compensation

  -   -   -   -   1,978   -   -   1,978 

Issuance of common stock related to vesting of restricted stock units

  273   -   -   -   -   -   -   - 

Issuance of common stock, net of issuance costs

  355   1   -   -   195   -   -   196 

Other comprehensive income

  -   -   -   -   -   -   274   274 

Net loss

  -   -   -   -   -   (20,662)  -   (20,662)

Balance, June 30, 2023

  239,970  $240   -  $-  $966,335  $(903,815) $(1,257) $61,503 

Stock-based compensation

  -   -   -   -   2,019   -   -   2,019 

Issuance of common stock related to vesting of restricted stock units

  253   -   -   -   -   -   -   - 

Shares withheld related to net share settlement of equity awards

  -   -   8   -   (7)  -   -   - 
cancellation of treasury stock  -   -   (8)  -   -   -   -   - 

Issuance of common stock, net of issuance costs

  23,888   24   -   -   2,598   -   -   2,622 

Other comprehensive income

  -   -   -   -   -   -   (573)  (573)

Net loss

  -   -   -   -   -   (18,318)  -   (18,318)

Balance, September 30, 2023

  264,111  $264   -  $-  $970,952  $(922,133) $(1,830) $47,253 
                                 

Balance, December 31, 2021

  235,219  $235   -  $-  $954,649  $(785,374) $(264) $169,246 

Stock-based compensation

  -   -   -   -   2,245   -   -   2,245 

Exercise of stock options

  30   -   -   -   12   -   -   12 

Issuance of common stock related to vesting of restricted stock units

  1,166   1   -   -   -   -   -   1 

Shares withheld related to net share settlement of equity awards

  -   -   436   -   (349)  -   -   (349)

Cancellation of treasury stock

  -   -   (436)  -   -   -   -   - 

Other comprehensive loss

  -   -   -   -   -   -   (1,202)  (1,202)

Net loss

  -   -   -   -   -   (19,128)  -   (19,128)

Balance, March 31, 2022

  236,415  $236   -  $-  $956,557  $(804,502) $(1,466) $150,825 

Stock-based compensation

  -   -   -   -   2,083   -   -   2,083 

Exercise of stock options

  13   -   -   -   6   -   -   6 

Issuance of common stock related to vesting of restricted stock units

  192   1   -   -   -   -   -   1 

Other comprehensive loss

  -   -   -   -   -   -   (1,857)  (1,857)

Net loss

  -   -   -   -   -   (19,619)  -   (19,619)

Balance, June 30, 2022

  236,620  $237   -  $-  $958,646  $(824,121) $(3,323) $131,439 

Stock-based compensation

  -   -   -   -   2,033   -   -   2,033 

Issuance of common stock related to vesting of restricted stock units

  163   -   -   -   -   -   -   - 

Shares withheld related to net share settlement of equity awards

  -   -   7   -   (3)  -   -   (3)

Cancellation of treasury stock

  -   -   (7)  -   -   -   -   - 

Other comprehensive loss

  -   -   -   -   -   -   (1,569)  (1,569)

Net loss

  -   -   -   -   -   (18,924)  -   (18,924)

Balance, September 30, 2022

  236,783  $237   -  $-  $960,676  $(843,045) $(4,892) $112,976 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Asensus Surgical, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 
   

Nine Months Ended September 30,

 
   

2023

   

2022

 

Cash Flows from Operating Activities:

               

Net loss

  $ (61,198 )   $ (57,671 )

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

               

Depreciation

    2,405       2,481  

Amortization of intangible assets

    340       7,601  

Amortization of discounts and premiums on investments, net

    (454 )     556  

Stock-based compensation

    5,913       6,361  

Deferred tax expense

    136       224  

Bad debt expense

          9  

Change in inventory reserves

    297       386  

Property and equipment impairment

            432  

Loss on disposal of property and equipment

          97  

Change in fair value of warrant liabilities

    (2,278 )        

Change in fair value of contingent consideration

    674       (1,168 )
                 

Changes in operating assets and liabilities:

               

Accounts receivable

    1,587       (1,735 )

Inventory

    536       (535 )

Operating lease right-of-use assets

    (142 )     237  

Prepaid expenses

    (590 )     (693 )

Employee retention tax credit receivable

    554       164  

Other current and long-term assets

    310       (2,123 )

Accounts payable

    1,236       449  

Accrued employee compensation and benefits

    566       236  

Accrued expenses and other current liabilities

    (97 )     -  

Deferred revenue

    (5 )     (139 )

Operating lease liabilities

    (43 )     (53 )

Net cash and cash equivalents used in operating activities

    (50,253 )     (44,884 )
                 

Cash Flows from Investing Activities:

               

Purchase of available-for-sale investments

    (12,268 )     (25,588 )

Proceeds from maturities of available-for-sale investments

    69,835       67,702  

Purchase of property and equipment

    (488 )     (904 )

Net cash and cash equivalents provided by investing activities

    57,079       41,210  
                 

Cash Flows from Financing Activities:

               

Proceeds from issuance of common stock and warrants, net of issuance costs

    9,946       -  

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

    (497 )     (350 )

Proceeds from exercise of stock options

    5       18  

Net cash and cash equivalents provided by (used in) financing activities

    9,454       (332 )
                 

Effect of exchange rate changes on cash and cash equivalents

    (466 )     (300 )

Net increase (decrease) in cash, cash equivalents and restricted cash

    15,814       (4,306 )

Cash, cash equivalents and restricted cash, beginning of period

    7,470       19,283  

Cash, cash equivalents and restricted cash, end of period

  $ 23,284     $ 14,977  
                 

Supplemental Disclosure for Cash Flow Information

               

Cash paid for leases

  $ 1,067     $ 729  

Cash paid for taxes

 

230

    $ 79  
                 

Supplemental Schedule of Non-cash Investing and Financing Activities:

               

Transfer of inventory to property and equipment

  $ 2,227     $ 1,293  

Lease liabilities arising from obtaining right-of-use assets

  $ 796     $ 316  

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Asensus Surgical, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

 

1.

Description of Business

 

Asensus Surgical, 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. Based upon the foundations of digital laparoscopy and the Senhance® Surgical System, the Company is developing the LUNA™ Surgical System, a next generation robotic and instrument system as a foundation of its digital surgery solution. These systems will be powered by the Intelligent Surgical Unit™ (ISU™) to increase surgeon’s control and reduce variability of surgical outcomes. With the addition of machine vision, augmented intelligence, and deep learning capabilities throughout the surgical experience, the Company intends to holistically address the current clinical, cognitive, and economic shortcomings that drive surgical outcomes and value-based healthcare. The Company continues market development for and commercialization of the Senhance 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 3mm microlaparoscopic instruments, 5mm articulating instruments, eye-sensing camera control and fully reusable standard instruments to help maintain per-procedure costs similar to traditional laparoscopy.

 

 

2.

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. All inter-company accounts and transactions have been eliminated in consolidation. The results reported in these unaudited interim 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 consolidated financial statements and the notes thereto included in the Fiscal Year 2022 Form 10-K. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying interim condensed consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements 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.

 

Going Concern

The Company's condensed consolidated financial statements are prepared using U.S. GAAP applicable to a going concern basis of accounting, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had an accumulated deficit of $922.1 million and working capital of $33.8 million as of September 30, 2023. The Company has not established sufficient sales revenues to cover its operating costs and requires additional capital to proceed with its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.

 

The Company will need to obtain additional financing to execute its business plan. Management's plans to obtain additional resources for the Company may include additional sales of equity, traditional financing, such as loans, entry into strategic collaborations, entry into an out-licensing arrangement or provision of additional distribution rights in some or all of its markets. However, management cannot provide any assurance that the Company will be successful in accomplishing any or all of its plans. The ability to successfully resolve these factors raises substantial doubt about the Company’s ability to meet its existing obligations, and to continue as a going concern for one year from the date that these financial statements are issued. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries, Asensus Surgical US, Inc., 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.

 

6

 

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: the historical lack of profitability; the Company’s ability to raise additional capital; its ability to successfully develop, clinically test, obtain regulatory clearance for and commercialize its products and products in development; negative impacts on the Company's operations caused by the hostilities in the Middle East, the COVID-19 pandemic and other geopolitical factors; the success of its market development efforts; the timing and outcome of the regulatory review process for its products in development; changes in the healthcare regulatory environments of the United States, 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-lived assets, fair value estimates related to contingent consideration, stock-based compensation expense, revenue recognition, 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, measurement of warrant liabilities and deferred tax asset valuation allowances.

 

Significant Accounting Policies

With the exception of the Company’s warrant policy (please see next section), there have been no new or material changes to the significant accounting policies discussed in the Company’s audited financial statements and the notes thereto included in the Fiscal Year 2022 Form 10-K.

 

Warrant Liabilities

The Company’s warrants (see Note 12) are measured at fair value using a simulation model which takes 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 4). The warrant liability is revalued at each reporting period and changes in fair value are recognized in the 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.

 

Impact of Recently Issued Accounting Standards

The Company has evaluated issued Accounting Standards Updates (“ASUs”) not yet adopted and believes the adoption of these standards will not have a material impact on its consolidated financial statements.

 

 

3.

Revenue Recognition

 

The following table presents revenue disaggregated by type and geography:

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 

(In thousands)

 

2023

  

2022

  

2023

  

2022

 

U.S.

                

Systems

 $-  $-  $-  $- 

Instruments and accessories

  71   60   169   142 

Services

  77   75   228   225 

Leases

  40   46   130   211 

Total U.S. revenue

  188   181   527   578 
                 

Outside of U.S. ("OUS")

                

Systems

  -   1,227   -   1,228 

Instruments and accessories

  230   677   723   1,195 

Services

  218   260   551   842 

Leases

  453   218   1,345   780 

Total OUS revenue

  901   2,382   2,619   4,045 
                 

Total

                

Systems

  -   1,227   -   1,228 

Instruments and accessories

  301   737   892   1,337 

Services

  295   335   779   1,067 

Leases

  493   264   1,475   991 

Total revenue

 $1,089  $2,563  $3,146  $4,623 

 

7

 

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which the revenue has not yet been recognized. A significant portion of this amount relates to service obligations performed under the Company's system sales contracts that will be invoiced and recognized as revenue in future periods. The transaction price allocated to remaining performance obligations as of September 30, 2023 was $0.7 million, which is expected to be recognized over one to four years. 

 

Contract Assets and Liabilities

Deferred revenue for the periods presented was primarily related to service obligations, for which the service fees are billed up-front, generally annually. The associated deferred revenue is generally recognized ratably over the service period. The Company did not have any significant impairment losses on its contract assets (included in accounts receivable, net in the condensed consolidated balance sheets) for the periods presented.

 

Revenue recognized for the three months ended September 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.2 million. Revenue recognized for the nine months ended September 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.5 million and $0.7 million, respectively.

 

The following information summarizes the Company’s contract assets and liabilities:

 

  

September 30, 2023

  

December 31, 2022

  December 31, 2021 

(In thousands)

            

Contract Assets

 $54  $116  $91 

Deferred Revenue

 $456  $465  $543 

 

Senhance System Leasing

The Company enters into lease arrangements with certain qualified customers. Revenue related to arrangements including lease elements are allocated to lease and non-lease elements based on their relative standalone selling prices. Lease elements generally include a Senhance System, while non-lease elements generally include instruments, accessories, and services. For some lease arrangements, the customers are provided with the right to purchase the leased Senhance System at some point during and/or at the end of the lease term. In some arrangements, lease payments are based on the usage of the Senhance System. For the three and nine months ended September 30, 2023, and 2022, variable lease revenue related to usage-based arrangements was not material.

 

Accounts Receivable

Accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses. The allowance for expected credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The allowance for expected credit losses was $1.6 million as of September 30, 2023 and December 31, 2022. The Company recorded immaterial amounts for expected credit losses during the three and nine months ended September 30, 2023 and 2022.

 

The Company had four customers that accounted for 18%, 16%, 15% and 14%, respectively, of the Company’s net accounts receivable as of September 30, 2023. The Company had one customer that accounted for 69% of the Company’s net accounts receivable as of December 31, 2022.

 

 

4.

Fair Value Measurements

 

The Company records certain assets and liabilities at fair value. Accounting Standards Codification (“ASC”) 820 – Fair Value Measurement states that fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. As such, the fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy that prioritizes the inputs used in measuring fair value, is comprised of:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than Level 1, that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities;

Level 3 - Unobservable inputs that are supported by little or no market data, and that are significant to the fair value of the assets and liabilities.

 

8

 

As of September 30, 2023 and December 31, 2022, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

 

   

September 30, 2023

 

(In thousands)

 

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Cash and cash equivalents (1)

  $ 21,669     $ -     $ -     $ 21,669  

Restricted cash

    1,615       -       -       1,615  

Short-term investments

    -       11,420       -       11,420  

Total assets

  $ 23,284     $ 11,420     $ -     $ 34,704  

Liabilities:

                               

Contingent consideration

  $ -     $ -     $ 1,930     $ 1,930  

Warrant liabilities

    -       -       4,842       4,842  

Total liabilities

  $ -     $ -     $ 6,772     $ 6,772  

 

(1) Includes investments that are readily convertible to cash with original maturities of 90 days or less.

 

   

December 31, 2022

 

(In thousands)

 

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Cash and cash equivalents (1)

  $ 6,329     $ -     $ -     $ 6,329  

Restricted cash

    1,141       -       -       1,141  

Short-term investments

    -       64,195       -       64,195  

Long-term investments

    -       3,865       -       3,865  

Total assets

  $ 7,470     $ 68,060     $ -     $ 75,530  

Liabilities:

                               

Contingent consideration

  $ -     $ -     $ 1,256     $ 1,256  

Total liabilities

  $ -     $ -     $ 1,256     $ 1,256  

 

(1) Includes investments that are readily convertible to cash with original maturities of 90 days or less.

 

As of September 30, 2023 and December 31, 2022, carrying amounts reported on the Company’s balance sheet for cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses, employee retention tax credit receivable, other current assets, accounts payable, accrued employee compensation and benefits, accrued expenses and other current liabilities, and deferred revenue approximate their respective fair value due to liquidity and short-term nature of these items.

 

At September 30, 2023, the Company’s financial liabilities consisted of contingent consideration and warrant liability:

 

Contingent Consideration

Contingent consideration represents a liability related to the Company’s 2015 acquisition of the Senhance System (the “Senhance Acquisition”). Adjustments associated with changes in fair value of contingent consideration are included in the Company’s condensed consolidated statements of operations and comprehensive loss. The following table summarizes changes in estimated fair value of the contingent consideration for the nine months ended September 30, 2023:

 

(In thousands)

 

Fair Value

 

Balance at December 31, 2022

  $ 1,256  

Change in fair value

    105  
Balance at March 31, 2023     1,361  
Change in fair value     203  
Balance at June 30, 2023     1,564  
Change in fair value     366  

Balance at September 30, 2023

  $ 1,930  

 

The following table presents quantitative information about the inputs and valuation methodologies used for fair value measurement of contingent consideration liability utilizing a Monte-Carlo simulation method as of September 30, 2023 and December 31, 2022:

 

   

Valuation

Methodology

 

Significant Unobservable

Inputs

 

September 30, 2023

   

December 31, 2022

 
                         

Contingent consideration

 

Probability weighted income approach

 

Milestone date

 

2032

   

2032

 
       

Revenue discount rate

    11.0%       16.5%  
       

Revenue volatility

    37.5%       45.0%  
       

EUR-to-USD exchange rate

    1.06       1.07  

 

9

 

Warrant Liabilities

During the three months ended September 30, 2023, the Company recorded warrant liabilities related to common stock warrants issued in the registered direct offering in July 2023 (for additional information about the offering, please refer to Note 12 -Equity Offerings).

 

Warrant liabilities were recorded at their initial estimated fair value. Adjustments associated with changes in fair value of the warrant liabilities are included in the Company’s condensed consolidated statements of operations and comprehensive loss. The following table summarizes changes in estimated fair value of the warrant liabilities for the warrants issued in July 2023 as of September 30, 2023:

 

(In thousands)

 

Fair Value

 

Balance at June 30, 2023

  $ -  

Issuance of warrants

    7,120  

Change in fair value

    (2,278 )

Balance at September 30, 2023

  $ 4,842  

 

The fair value of the warrant liabilities were estimated using the Black-Scholes option pricing model, which is based on unobservable inputs and is designated as Level 3 in the fair value hierarchy. The following table summarizes the assumptions used in determining fair value of warrant liabilities:

 

  

As of July 31,

2023

  

As of September 30,

2023

 

Expected volatility

  115%  115%

Risk-free interest rate

  4.2%  4.6%

Expected life (in years)

  5.0   4.8 

Expected dividend yield

  0%  0%

 

During the nine months ended September 30, 2023, there were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 fair value categories.

 

 

5.

Investments, Available for Sale

 

The aggregate fair values of investment securities along with cumulative unrealized gains and losses determined on an individual investment security basis and included in accumulated other comprehensive loss in the condensed consolidated balance sheets are as follows:

 

  

September 30, 2023

 
                  

Balance Sheet Classification

 

(In thousands)

 

Amortized

Cost

  

Unrealized

Gain

  

Unrealized

Loss

  

Fair Value

  

Short-term investments

  

Long-term investments

 

Commercial Paper

 $-  $-  $-  $-  $-  $- 

Corporate Bonds

  4,960   -   (28)  4,932   4,932   - 

US Treasuries

  5,491   -   -   5,491   5,491   - 

U.S. Government Agencies

  1,000   -   (3)  997   997   - 

Total Investments

 $11,451  $-  $(31) $11,420  $11,420  $- 

 

  

December 31, 2022

 
                  

Balance Sheet Classification

 

(In thousands)

 

Amortized

Cost

  

Unrealized

Gain

  

Unrealized

Loss

  

Fair Value

  

Short-term investments

  

Long-term investments

 

Commercial Paper

 $12,364  $-  $(49) $12,315  $12,315  $- 

Corporate Bonds

  55,201   -   (447)  54,754   50,889   3,865 

U.S. Government Agencies

  999   -   (8)  991   991   - 

Total Investments

 $68,564  $-  $(504) $68,060  $64,195  $3,865 

 

As of September 30, 2023, contractual maturities of available-for-sale investments were one year or less. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations. There were no sales of investments or gross realized gains or losses for the three or nine months ended September 30, 2023 or 2022.

 

10

 

 

6.

Inventory

 

The components of inventory are as follows:

 

  

September 30, 2023

 

(In thousands)

 

Gross

Carrying

Amount

  

Reserve

Balance

  

Net Carrying

Amount

 

Finished goods

 $11,750  $(2,324) $9,426 

Raw materials

  5,308   (2,411)  2,897 

Total inventories

 $17,058  $(4,735) $12,323 
             

Current portion

 $7,380  $(697) $6,683 

Long-term portion

  9,678   (4,038)  5,640 

Total inventories

 $17,058  $(4,735) $12,323 

 

  

December 31, 2022

 

(In thousands)

 

Gross

Carrying

Amount

  

Reserve

Balance

  

Net Carrying

Amount

 

Finished goods

 $15,337  $(4,129) $11,208 

Raw materials

  4,718   (2,173)  2,545 

Total inventory

 $20,055  $(6,302) $13,753 
             

Current portion

 $9,399  $(1,115) $8,284 

Long-term portion

  10,656   (5,187)  5,469 

Total inventory

 $20,055  $(6,302) $13,753 

 

 

7.

Intellectual Property

 

The components of gross intellectual property, accumulated amortization, and net intellectual property are as follows:

 

  

September 30, 2023

 

(In thousands)

 

Gross

Carrying

Amount

  

Accumulated Amortization

  

Foreign

Currency

Translation

Impact

  

Net

Carrying

Amount

 

Developed technology

 $68,838  $(66,872) $(830) $1,136 

Technology and patents purchased

  400   (269)  11   142 

Total intellectual property

 $69,238  $(67,141) $(819) $1,278 

 

  

December 31, 2022

 

(In thousands)

 

Gross

Carrying

Amount

  

Accumulated Amortization

  

Foreign

Currency

Translation

Impact

  

Net

Carrying

Amount

 

Developed technology

 $68,838  $(