Asensus Surgical(US:ASXC)2023-08-09 16:00Financial Performance - The company reported an accumulated deficit of $903.8 million as of June 30, 2023, raising substantial doubt about its ability to continue as a going concern [95]. - Revenue for the three months ended June 30, 2023, remained constant at approximately $0.3 million for product sales, while service revenue decreased to $0.3 million from $0.4 million in the same period of 2022 [98]. - Lease revenue increased to $0.5 million for the three months ended June 30, 2023, compared to $0.3 million for the same period in 2022, primarily due to an increase in the number of lease placements [98]. - The company had an accumulated deficit of $903.8 million and working capital of $44.3 million as of June 30, 2023, indicating a need for additional capital to continue operations [118]. - Cash used in operating activities for the six months ended June 30, 2023 was $35.2 million, compared to $30.2 million for the same period in 2022 [123]. - Net cash provided by investing activities for the six months ended June 30, 2023 was $36.3 million, an increase from $23.2 million for the same period in 2022 [125]. - The company recognized $0.1 million income tax expense for the six months ended June 30, 2023, down from $0.2 million for the same period in 2022 [117]. Expenses - Research and development expenses increased by 23% to $9.0 million for the three months ended June 30, 2023, compared to $7.3 million in the same period of 2022 [102]. - Sales and marketing expenses rose by 22% to $4.4 million for the three months ended June 30, 2023, compared to $3.6 million in the same period of 2022 [103]. - Product cost for the six months ended June 30, 2023 increased to $2.8 million, up from $1.3 million for the same period in 2022, representing a 115% increase [111]. - R&D expenses for the six months ended June 30, 2023 increased 39% to $19.1 million compared to $13.7 million for the same period in 2022, driven by increased contract engineering services and personnel costs [113]. - Sales and marketing expenses for the six months ended June 30, 2023 increased 23% to $9.0 million compared to $7.3 million for the same period in 2022, primarily due to increased employee-related costs [114]. - General and administrative expenses for the six months ended June 30, 2023 slightly increased to $10.6 million from $10.5 million for the same period in 2022 [114]. - Lease cost increased to $0.9 million for the three months ended June 30, 2023, compared to $0.8 million for the same period in 2022, reflecting the growth in lease placements [101]. Regulatory and Product Developments - The company received FDA clearance for the LUNA Surgical System and the ISU, enhancing its digital surgery capabilities [90][92]. - The Senhance System is available for sale in multiple countries, including the U.S., Europe, Japan, and Taiwan, with regulatory approvals for various surgical procedures [89]. - The company anticipates that the robotic precision of the Senhance System will enhance surgical outcomes, particularly in pediatric hospitals following recent FDA clearance for pediatric indications [91]. Internal Controls and Compliance - As of June 30, 2023, the company’s disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting [135]. - The identified material weakness relates to the design and implementation of information technology general controls (ITGCs) for the new global enterprise resource planning system (ERP) [136]. - No misstatements were identified in the consolidated interim financial statements, which fairly present the company's financial position in accordance with U.S. GAAP [137]. - Remediation efforts are ongoing, focusing on improving user access controls and enhancing training for personnel regarding ITGC objectives [138]. - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2023, that could materially affect the controls [136]. - The material weakness will not be considered remediated until effective controls are designed, implemented, and tested over a sufficient period [138]. - The certifications of the Chief Executive Officer and Chief Financial Officer were filed in compliance with the Sarbanes-Oxley Act of 2002 [140]. Legal and Risk Factors - The company has not disclosed any legal proceedings or material changes to risk factors since the last report [139]. - No unregistered sales of equity securities or defaults upon senior securities were reported during the period [139]. - The company issued a Common Stock Purchase Warrant on July 31, 2023, as part of its financing activities [140]. Shareholder Activities - The company generated net proceeds of $0.2 million from the sale of 355,072 shares of common stock during the three months ended June 30, 2023 [96].