Q2 2024 Asensus Surgical Inc Earnings Call and Business Update

Speaker Change: Bye.

Operator: Mark Klausner, Shameze Rampertab, Ross Osborn, Swayampula Rampertab, Good afternoon, ladies and gentlemen, and welcome to Asensus Surgical, Inc.'s second quarter financial and opening operating results call. At this time, all lines are in listen-only mode.

Operator: Good afternoon, ladies and gentlemen, and welcome to Asensus Surgical Incorporated, second quarter financial and opening operating results call. At this time, all lines are in listen-only mode. If at any time during this call you require immediate assistance, please press star, followed by a zero for the operator.

Speaker Change: Good afternoon, ladies and gentlemen, and welcome to ACENSYS Surgical Incorporated second quarter financial and opening operating results call.

Operator: If at any time during this call you require immediate assistance, please press star followed by zero for the operator. This call is being recorded on August 13th, 2024. I would now like to turn the conference over to Mark Klausner from Westwick Partners. Please go ahead.

Speaker Change: At this time, all lines are in listen-only mode. If at any time during this call you require immediate assistance, please press star followed by zero for the operator.

Operator: This call has been recorded on August 13th, 2024.

Speaker Change: This call is being recorded on August 13th, 2024.

Mark Klausner: I would now like to turn the conference over to Mark Klausner from Westwick Partners.

Speaker Change: I would now like to turn the conference over to Mark Klausner from Westwick Partners. Please go ahead.

Mark Klausner: Please go ahead. Good afternoon, everyone, and thank you for joining us for the Asensus Surgical, second quarter financial update conference call. On the call with me today, are Anthony Fernando, President and Chief Executive Officer, and Shameze Rampertab, Chief Financial Officer.

Mark Klausner: Good afternoon, everyone, and thank you for joining us for the Asensus Surgical second quarter financial update conference call. On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shameze Rampertab, Chief Financial Officer. In addition to the financial updates, we are also going to provide an up-to-date proposed merger with Carl Storch. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guided forward-looking statements, is covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Mark Klausner: Good afternoon, everyone, and thank you for joining us for the Assensus Surgical second quarter financial update conference call.

Mark Klausner: On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shameze Rampertab, Chief Financial Officer. In addition to the financial updates, we are also going to provide an up-to-stat proposed merger with Carl Stortz.

Mark Klausner: In addition to the financial updates, we are also going to provide an up-the-staff proposed merger with Carl Stortz. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guided forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the companies, including statements about the company's pursuit of stockholder approval for the merger agreement and merger, and whether the company will be successful in securing the requisite vote of its stockholders, or meet all of the other required closing conditions and the actual consummation of the merger.

Mark Klausner: Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company, including statements about the company's pursuit of stockholder approval for the merger agreement and merger and whether the company will be successful in securing the requisite vote of its stockholders or meet all of the other required closing conditions and the actual consummation of the merger. The company undertakes no obligation to update information provided on this call for discussion of risks and uncertainties related to the Asensus Surgical business.

Speaker Change: Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guided forward-looking statements cover under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Actual results could differ materially from those stated or implied by our forward-looking statements.

Speaker Change: due to risks and uncertainties associated with the company's

Speaker Change: including statements about the company's pursuit of stockholder approval for the merger agreement and merger and whether the company will be successful in securing the requisite vote of its stockholders or meet all of the other required closing conditions and the actual consummation of the merger.

Mark Klausner: The company undertakes no obligation to update information provided on this call, or a discussion of risks and uncertainties associated with the Assensus Surgical business.

Speaker Change: The company undertakes no obligation to update information provided on this call.

Speaker Change: for discussion of risks and uncertainties related with the Ascensis surgical business.

Mark Klausner: I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10-K filed in March 2024 and the Form 10-Q expected to be filed later today, and any other filings we make with the SEC. The call will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per share attributable to common stockholders. Management believes non-GAAP financial measures taking in conjunction with U.S. gap financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the coordinating results.

Mark Klausner: I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10-K, filed in March 2024, and the Form 10-Q, expected to be filed later today, and any other filings we make with the SEC. Call.

Speaker Change: I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10-K, filed in March 2024, and the Form 10-Q, expected to be filed later today, and any other filings we make with the SEC.

Mark Klausner: We will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per share attributable to common stockholders. Management believes non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the coordinating results. Management uses non-GAAP financial measures to compare our performance relative to forecasts and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions.

Speaker Change: In this call, we will also present certain non-GAAP financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per share attributable to common stockholders.

Speaker Change: Management believes non-GAAP financial measures, taking in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the coordinating results.

Mark Klausner: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. Reconciliation from U.S.

Speaker Change: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions.

Mark Klausner: Reconciliations from U.S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the Investor Relations section of our website. With that, it's my pleasure to turn the call over to Asensus Surgical's President and Chief Executive Officer, Anthony Fernando. Thank you, Mark. Good afternoon, everyone.

Mark Klausner: Gap to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the industrial relations section of our website.

Anthony Fernando: Reconciliations from U.S. GAAP to non-GAAP results are presented in the tables accompanying our earnings release, which can be found in the investor relations section of our website. With that, it's my pleasure to turn the call over to Ascensus Surgical's President and Chief Executive Officer, Anthony Fernando.

Anthony Fernando: With that, it's my pleasure to turn the call over to Ascensus Surgical's President and Chief Executive Officer, Anthony Fernando. Thank you, Mark. Good afternoon, everyone. Thank you for joining us.

Anthony Fernando: Swayampakula Ramakanth,

Anthony Fernando: Thank you Mark. Good afternoon everyone. Thank you for joining us. On today's call, Shameze will begin by reviewing our second quarter financials.

Anthony Fernando: Thank you for joining us. On today's call, Shameze will begin by reviewing our second quarter financials. I'd then like to focus my discussion on the status of our proposed merger with Karl Storch. This potential transaction is significant, and I want to walk you through the key aspects of this proposal and the potential impact on our company's future. Given where we are in the merger process, we will not be taking questions at the end of today's call. Thanks, Anthony.

Anthony Fernando: On today's call, Sommies will begin by reviewing our second court of finance. I then like to focus my discussion on the status of our proposed merger with Karl Stortz. This potential transaction is significant, and I want to walk you through the key aspects of this proposal and the potential impacts on our company's future.

Speaker Change: I'd then like to focus my discussion on the status of our proposed merger with Karl Storz. This potential transaction is significant and I want to walk you through the key aspects of this proposal and the potential impacts on our company's future.

Anthony Fernando: Even where we are in the merger process, we will not be taking questions at the end of today's call.

Speaker Change: Given where we are in the merger process, we will not be taking questions at the end of today's call.

Shameze Rampertab: Thanks Anthony, started with a review of our financials for three months and a June 30th, 2024, the company reprised revenue of $2.2 million as compared to revenue of $1.1 million in the three months and a June 30th, 2023. Revenue in the second quarter of 2024 included $0.8 million in system revenue, $0.6 million in lease revenue, $0.6 million in interest and accessories, and $0.2 million in services.

Shameze Rampertab: Starting with a review of our financials for the three months ended June 30, 2024, the company reported revenue of $2.2 million as compared to revenue of $1.1 million for the three months ended June 30, 2023. Revenue in the second quarter of 2024 included $0.8 million in system revenue, $0.6 million in lease revenue, $0.6 million in instruments and accessories, and $0.2 million in service. For the three months ended June 30, 2024, total operating expenses were $23.1 million, as compared to $18.9 million for the three months ended June 30, 2023.

Speaker Change: Shameze?

Shameze: Thanks, Anthony. Starting with a review of our financials for the three months ended June 30, 2024, the company reported revenue of $2.2 million as compared to revenue of $1.1 million in the three months ended June 30, 2023.

Shameze: Revenue in the second quarter of 2024 included 0.8 million dollars in system revenue, 0.6 million dollars in lease revenue, 0.6 million dollars in instruments and accessories, and 0.2 million dollars in services.

Shameze Rampertab: For the three months and a June 30th, 2024 total operating expenses, $23.1 million that's compared to $8.9 million in the three months and is a June 30th, 2023. For the three months and a June 30th, 2024, that loss attributable to common stockholders was $25.7 million, or $9 per share. That's compared to a net loss attributable to common stockholders of $20.7 million, or $9 per share, in the three months and a June 30th, 2023. For the three months and a June 30th, 2024, the adjusted net loss attributable to common stockholders was $8.1 million. $7 per share is compared to an adjusted net loss of $20.3 million, or $9 per share in the three months and a June 30th, 2023.

Shameze: For the three months ended June 30, 2024, total operating expenses $23.1 million dollars as compared to $18.9 million dollars in the three months ended June 30, 2023.

Shameze Rampertab: For the three months ended June 30, 2024, the net loss attributable to common stockholders was $25.7 million, or $0.09 per share, as compared to a net loss attributable to common stockholders of $20.7 million, or $0.09 per share, for the three months ended June 30, 2023. For the three months ended June 30, 2024, the adjusted net loss attributable to common stockholders was $18.1 million, seven cents per share, as compared to an adjusted net loss of $20.3 million, or nine cents per share, for the three months ended June 30, 2023.

Shameze: For the three months ended June 30th, 2024, net loss attributable to common stockholders was $25.7 million, or $0.09 per share.

Shameze: as compared to a net loss attributable to common stockholders of $20.7 million, or $0.09 per share, in the three months ended June 30, 2023.

Shameze: For the three-month end of June 30, 2024, the adjusted net loss attributable to common stockholders was $18.1 million.

Shameze: $0.07 per share as compared to an adjusted net loss of $20.3 million, or $0.09 per share in the three months ended June 30, 2023.

Shameze Rampertab: Adjusted net loss, a GAAP net loss, adjusted for the following items: amortization of intangible assets, change in fair value of contingent consideration, and change in fair value of one of my abilities, all of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non-GAAP financial measure. For reconciliation from gaps, non-GAAP measures can be found in our earnings release.

Shameze Rampertab: Adjusted Net Loss, Gapped Net Loss, Adjusted for the following items: amortization of intangible losses, and Fair Value Contingent Consideration, and Change and Fair Value of Warmer Liabilities, all of which are non-cash charges. Trusted net loss attributable to common stockholders is a non-GAAP financial measure. Reconciliation from GAAP to non-GAAP measures can be found in our earnings report. Turning to the balance sheet, the company had cash and cash equivalents, excluding restricted cash, of approximately $7.8 million as of June 30, 2024. I will turn it back to Anthony. Thank you, Shameze.

Speaker Change: Adjusted net loss, gaped net loss. Adjusted for the following items. Amortization of intangible assets.

Speaker Change: change in fair value of contingent consideration and change in fair value of warrant liabilities, all of which are non-cash charges.

Speaker Change: Trusted net loss attributable to common stockholders is a non-GAAP financial measure. Reconciliation from GAAP to non-GAAP measures can be found in our earnings release.

Shameze Rampertab: Turning to the balance sheet, the company had cash and cash equivalents, excluding restricted cash, of approximately $7.8 million as of June 30th, 2024.

Speaker Change: Turning to the balance sheet, the company had cash and cash equivalents, excluding restricted cash, of approximately $7.8 million as of June 30, 2024.

Shameze Rampertab: I'll turn it back to Anthony. Thank you, Shemes.

Speaker Change: I will turn it back to Anthony.

Anthony Fernando: On August 7, 2024, we adjourned our special meeting of stockholders, which was scheduled to vote on the proposed merger with Karl Storch. Unfortunately, the merger proposer has not yet received proxies representing the votes necessary to proceed, so we have adjourned the meeting until August 20. To date, we have only received proxies to vote for approximately 55% of our outstanding shares. This is a very low turnout for a matter of such importance.

Anthony Fernando: On August 7th, 2024, we adjourned our special meeting of stockholders, which was scheduled to vote on the proposed merger with Karl Stortz. Unfortunately, the merger proposal has not yet received proxies representing the votes necessary to proceed, so we have adjourned the meeting until August 20th. Today, we have only received proxies to vote for approximately 55% of our outstanding shares. This is a very low turnout for a matter of such importance. Regardless of whether you support the merger or not, we encourage you to exercise your right as stockholders and vote your shares to make your voice heard.

Anthony Fernando: Thank you, Shameze.

Speaker Change: On August 7, 2024, we adjourned our special meeting of stockholders, which was scheduled to vote on the proposed merger with Carl Sturz.

Speaker Change: Unfortunately the merger proposer has not yet received proxies representing the votes necessary to proceed so we have adjourned the meeting until August 20th.

Speaker Change: To date we have only received proxies to vote for approximately 55% of our outstanding shares. This is a very low turnout for a matter of such importance.

Anthony Fernando: Regardless of whether you support the merger or not, we encourage you to exercise your rights as stockholders and vote your shares to make your voice heard. The company has adjourned the special meeting to allow its retail stockholders additional time to consider and vote on each of the proposals which are described in the proxy statement. As a reminder, there are three proposals to consider.

Speaker Change: Regardless of whether you support the merger or not, we encourage you to exercise your rights as stockholders and vote your shares to make your voice heard.

Anthony Fernando: The company has adjourned the special meeting to allow its retail stockholders additional time to consider and vote on each of the proposals, which are described in the proxy statement.

Speaker Change: The company has adjourned the special meeting to allow its retail stockholders additional time to consider and vote on each of the proposals which are described in the proxy statement.

Anthony Fernando: As a reminder, there are three proposals to consider. The first is the approval and adoption of the agreement and plan of merger with Karl Stortz and Dorskipy America Hink. This proposal seeks stockholder approval for a company to be acquired by way of a merger with and into a subsidiary of Karl Stortz and Dorskipy America, as outlined in a proxy statement filed with the SEC on July 5th, 2024. To pass this proposal requires a yes vote from a majority of all outstanding shares, not just a majority of those shares that have been voted. The second is an advisory vote on the approval of certain compensation that may be paid or become payable to unnamed executive officers in connection with the merger.

Speaker Change: As a reminder, there are three proposals to consider.

Anthony Fernando: The first is the approval and adoption of the Agreement and Plan of Merger with Karl Stoltz Endoscopy America, Inc. This proposal seeks stockholder approval for our company to be acquired by way of a merger with and into a subsidiary of Karl Stoltz Endoscopy America, Inc., as outlined in our proxy statement filed with the SEC on July 5, 2024. To pass this proposal, it requires a yes vote from a majority of all outstanding shares, not just a majority of those shares that have been voted.

Speaker Change: The first is the approval and adoption of the agreement and plan of merger with Carl Stotz Endoscopy America, Inc.

Anthony Fernando: The second is an advisory vote on the approval of certain compensation that may be paid or become payable to unnamed executive officers in connection with the merger. Unlike the first proposal, this advisory vote requires approval from a majority of the shares that are voted, provided that a quorum is present. The third vote is for the approval of one or more adjournments of the special meeting to a later date or dates, if necessary.

Speaker Change: This proposal seeks

Speaker Change: stockholder approval for our company to be acquired by way of a merger with and into a subsidiary of Karl Stoltz Endoscopy America as outlined in our proxy statement filed with the SEC on July 5th 2024.

Speaker Change: To pass this proposal requires a yes vote from a majority of all outstanding shares, not just a majority of those shares that have been voted.

Speaker Change: The second is an advisory vote on the approval of certain compensation that may be paid or become payable to our named executive officers in connection with the merger.

Anthony Fernando: Unlike the first proposal, this advisory vote requires approval from a majority of the shares that are voted, provided that a quorum is present. The third vote is for the approval of one or more adjournments of the special meeting to a later date or dates, if necessary. This allows postponement of the meeting to solicit additional proxies to reach the required vote threshold for the proposal to approve and adopt the merger agreement. Like the second proposal, this proposal only requires approval from a majority of the shares that have been actually voted, rather than a majority of all outstanding shares.

Speaker Change: Unlike the first proposal, this advisory vote requires approval from a majority of the shares that are voted, provided that a quorum is present.

Speaker Change: The third vote is for the approval of one or more adjournments of the special meeting to a later date or dates if necessary.

Anthony Fernando: This allows postponement of the meeting to solicit additional proxies to reach the required vote threshold for the proposal to approve and adopt the merger agreement. Like the second proposal, this proposal only requires approval from a majority of the shares that have been actually voted rather than a majority of all outstanding shares. Because we had the necessary votes, this proposal passed, and we were able to adjourn the special meeting to Tuesday, August 20th at 10 a.m. Eastern Time.

Speaker Change: This allows postponement of the meeting to solicit additional proxies to reach the required vote threshold for the proposal to approve and adopt the merger agreement.

Speaker Change: Like the second proposal, this proposal only requires approval from a majority of the shares that have been actually voted, rather than a majority of all outstanding shares.

Anthony Fernando: Because we had the necessary votes, this proposal passed, and we were able to adjourn the special meeting to Tuesday, August 20th, at 10 a.m. Eastern time. After shares that have voted on the merger proposal, over 80% majority have voted to approve the merger, including all shares, helped by significant large institutional investors. This is in line with the recommendations from ISS and Glass Lewis, who recommend stockholders vote in favor of the merger. ISS and Glass Lewis are widely recognized as the leading independent voting and corporate governance advisory firms. Their analysis and recommendations are meaningful for many major institutional investment firms, mutual funds, and fiduciaries globally.

Speaker Change: Because we had the necessary votes this proposal passed and we were able to adjourn the special meeting to Tuesday August 20th at 10 a.m. Eastern Time

Anthony Fernando: Of the shares that have voted on the merger proposal, over 80% of the shares have voted to approve the merger, including all shares held by significant large institutional investors. This is in line with the recommendations from ISS and Glass-Lewis, who recommend stockholders vote in favor of the money. ISS and Glass-Lewis are widely recognized as the leading independent voting and corporate governance advisory.

Speaker Change: Of the shares that have voted on the merger proposal, over 80% majority have voted to approve the merger, including all shares held by significant large institutional investors.

Speaker Change: This is in line with the recommendations from ISS and Glass Lewis, who recommend stockholders vote in favor of the merger.

Speaker Change: ISS and Glass-Lewis are widely recognized as the leading independent voting and corporate governance advisory firms.

Anthony Fernando: Their analysis and recommendations are meaningful for many major institutional investment firms, mutual funds, and fiduciaries globally. We would highly encourage stockholders who have not yet voted to consider the potential outcome. If the merger is not approved, we face significant near-term financial obligations, including a repayment to Karl Stotz of their $20 million securitized note, plus interest and payment premiums, as well as transaction expenses we have incurred in connection with the pending merger. The sum of these obligations exceeds the available capital on our balance sheet. We do not believe we are in a position to raise the capital needed to fund these expenses and also to continue funding operations.

Speaker Change: Their analysis and recommendations are meaningful for many major institutional investment firms, mutual funds, and fiduciaries globally.

Anthony Fernando: We would highly encourage stockholders who have not yet voted to consider the potential outcomes. If the merger is not approved, we face significant near-term financial obligations, including a repayment to call stores of their 20 million securitized note, plus interest and payment premiums, as well as transaction expenses we have incurred in connection with the pending merge. The sum of these obligations exceeds the available capital on our balance sheet. We do not believe we are in a position to raise the capital needed to fund these expenses and also to continue funding operations.

Speaker Change: We would highly encourage stockholders who have not yet voted to consider the potential outcomes.

Anthony Fernando: Therefore, if the merger is not approved, we expect to seek bankruptcy protection. It is important to note that Karl Stoltz has a security interest in all of our assets. This means that Karl Storz holds a legal claim over our company's assets as collateral for the debt we owe them. In a bankruptcy scenario, this security interest would give Karl Storz priority over other creditors and stockholders in claims against Asensus. As a result, in the event of a bankruptcies, we believe our common stockholders will receive less than the merger consideration and may not receive distributions at all in a bankruptcy setting.

Speaker Change: If the merger is not approved, we face significant near-term financial obligations, including a repayment to Karl Storz.

Speaker Change: of their $20 million securitized note, plus interest and payment premiums as well as transaction expenses we have incurred in connection with the pending merger.

Speaker Change: The sum of these obligations exceeds the available capital on our balance sheet.

Speaker Change: We do not believe we are in a position to raise the capital needed to fund these expenses and also to continue funding operations.

Anthony Fernando: Therefore, if the merger is not approved, we expect to seek bankruptcy protection. It's important to note that Karl Stoats has a security interest in all of our assets. This means that Karl Stoats holds a legal claim over a company's assets as collateral for the debt we owe them. In a bankruptcy scenario, the security interest would give Karl Stoats priority over other creditors and stockholders in claims against assets. As a result, in the event of a bankruptcy, we believe our common stockholders will receive less than the merger consideration and may not receive distributions at all in a bankruptcy setting.

Speaker Change: Therefore, if the merger is not approved, we expect to seek bankruptcy protection.

Speaker Change: It's important to note that Carl Stotz has a security interest in all of our assets. This means that Carl Stotz holds a legal claim over our company's assets as collateral for the debt we owe them.

Speaker Change: In a bankruptcy scenario, this security interest would give Karl Stoltz priority over other creditors and stockholders in claims against our assets.

Speaker Change: As a result, in the event of a bankruptcy, we believe our common stockholders will receive less than the merger consideration and may not receive distributions at all in a bankruptcy setting.

Anthony Fernando: We have heard from stockholders that they would like us to get a higher price than 35 cents per share. I want to emphasize that we have exhausted all reasonable options available to us to get a higher price, and our directors believe 35 cents per share is the best price reasonably obtainable for stockholders. Before accepting the Karl Stoats deal, we explored various alternatives, including partnerships and potential acquisitions. As described more fully in the proxy statement, we solicited interest from other potential partners and acquires, but none of these discussions led to a proposal other than the proposal from Karl Stoats.

Anthony Fernando: We have heard from stockholders that they would like us to get a higher price than $0.35 per share. I want to emphasize that we have exhausted all reasonable options available to us to get a higher price, and our directors believe that $0.35 per share is the best price reasonably obtainable for Stockholm. Before accepting the Karl Storz deal, we explored various alternatives, including partnerships and potential acquisitions. As described more fully in the proxy statement, we solicited interest from other potential partners and acquirers. But none of these discussions led to a proposal other than the proposal from Karl Stoltz.

Speaker Change: We have heard from stockholders that they would like us to get a higher price than 35 cents per share.

Speaker Change: I want to emphasize that we have exhausted all reasonable options available to us to get a higher price and our directors believe 35 cents per share is the best price reasonably obtainable for stockholders.

Speaker Change: Before accepting the Karl Stokes deal, we explored various alternatives, including partnerships and potential acquisitions.

Speaker Change: As described more fully in the proxy statement, we solicited interest from other potential partners and acquirers, but none of these discussions led to a proposal other than the proposal from Karl Stotz.

Anthony Fernando: Since the announcement of this transaction on April 3rd, 2024, no other company has expressed interest in offering a higher price than Karl Stoats. The 35 cents per share offered by Karl Stoats, while likely lower than many stockholders' initial investment, represents the best available price reasonably available given our current circumstances. We understand this price is disappointing, especially for long-term investors who have seen higher valuations in the past. However, it is crucial to recognize that this offer provides some return, whereas the bankruptcy scenario would likely result in stockholders receiving little or no consideration for their shares. I cannot overstate the importance of every single stockholder's participation in this world; whether you support the merger or not, your vote matters.

Anthony Fernando: Since the announcement of this transaction on April 3rd, 2024, no other company has expressed interest in offering a higher price than Karlsdorf. The $0.35 per share offered by Karl Stoltz, while likely lower than many stockholders' initial investment, represents the best available price reasonably available given our current circumstances. We understand this price is disappointing, especially for long-term investors who have seen higher valuations in the past. However, it is crucial to recognize that this offer provides some return, whereas a bankruptcy scenario would likely result in stockholders receiving little or no consideration for their shares.

Speaker Change: Since the announcement of this transaction on April 3rd, 2024, no other company has expressed interest in offering a higher price than Karl Stoltz.

Speaker Change: The $0.35 per share offered by Carl Stortz, while likely lower than many stockholders' initial investment, represents the best available price reasonably available given our current circumstances.

Speaker Change: We understand this price is disappointing, especially for long-term investors who have seen higher valuations in the past.

Speaker Change: However, it is crucial to recognize that this offer provides some return, whereas a bankruptcy scenario would likely result in stockholders receiving little or no consideration for their shares.

Anthony Fernando: I cannot overstate the importance of every single stockholder's participation in this war. Whether you support the merger or not, your vote matters. If you haven't voted yet, please review the information we've provided today and in our proxy statement, which was filed with the SEC on July 5th, 2024, and cast your vote as soon as possible. You can access the proxy statement at www.scc.gov or on our website at as

Operator: In closing, I want to express my deepest gratitude to our dedicated employees who continue to work tirelessly to advance our mission. As we face this crucial vote, we ask for your support in securing the best possible outcome for all stakeholders. Ladies and gentlemen, this conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: I cannot overstate the importance of every single stockholder's participation in this war. Whether you support the merger or not, your vote matters.

Anthony Fernando: If you haven't voted yet, please review the information we've provided today and in our proxy statement, which was filed with the SEC on July 5th, 2024, and cast your vote as soon as possible. You can access the proxy statement at www.acc.gov or on our website asensors.com/backslash investors.

Speaker Change: If you haven't voted yet, please review the information we've provided today and in our proxy statement, which was filed with the SEC on July 5th, 2024, and cast your vote as soon as possible.

Speaker Change: You can access the proxy statement at www.sec.gov or on our website at census.com backslash investors.

Anthony Fernando: In closing, I want to express my deepest gratitude to our dedicated employees who continue to work tirelessly to advance our mission.

Speaker Change: In closing, I want to express my deepest gratitude to our dedicated employees who continue to work tirelessly to advance our mission. As we face this crucial vote, we ask for your support in securing the best possible outcome for all stakeholders.

Anthony Fernando: As we face this crucial vote, we ask for your support in securing the best possible outcome for all stakeholders.

Operator: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation.

Speaker Change: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: You may now disconnect.

Operator: Good afternoon, ladies and gentlemen, and welcome to Asensus Surgical Incorporated, Second Quarter Financial and Opening Operating Results Call. At this time, all lines are in listen only mode. If at any time during this call you require immediate assistance, please press star, followed by a zero for the operator. This call has been recorded on August 13th, 2024.

Mark Klausner: I would now like to turn the conference over to Mark Klausner from Westwick Partners. Please go ahead.

Mark Klausner: Good afternoon, everyone, and thank you for joining us for the Asensus Surgical, Second Quarter Financial Update Conference Call. On the call with me today, our Anthony Fernando, President and Chief Executive Officer and Shameze Rampertab, Chief Financial Officer. In addition to the financial updates, we are also going to provide an up-the-staff proposed merger with Carl Stortz.

Mark Klausner: Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guided forward-looking statements covered under the safe harbor provisions of the private securities litigation reform act of 1905. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the companies, including statements about the company's pursuit of stockholder approval for the merger agreement and merger, and whether the company will be successful in securing the requisite vote of its stockholders, or meet all of the other required closing conditions and the actual consummation of the merger. The company undertakes no obligation to update information provided on this call, or a discussion of risks and uncertainties associated with the Assensus Surgical business.

Mark Klausner: I encourage you to review the company's filings with the Securities and Exchange Commission, including the 2023 Form 10K file in March 2024 and the Form 10Q expected to be filed later today and any other filings we make with the SEC. The call will also present certain non-gap financial information related to adjusted net loss attributable to common stockholders and the adjusted net loss per share attributable to common stockholders. Management believes non-gap financial measures taking in conjunction with U.S, gap financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of the coordinating results.

Mark Klausner: Management uses non-gap financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliation from U.S, gap to non-gap results are presented in the tables accompanying our earnings release, which can be found in the industrial relations section of our website.

Anthony Fernando: With that, it's my pleasure to turn the call over to Ascences, Surgical's President and Chief Executive Officer Anthony Fernando. Thank you, Mark. Good afternoon, everyone. Thank you for joining us. On today's call, Sommies will begin by reviewing our second court of finance. I then like to focus my discussion on the status of our proposed merger with Karl Stortz. This potential transaction is significant and I want to walk you through the key aspects of this proposal and the potential impacts on our company's future. Even where we are in the merger process, we will not be taking questions at the end of today's call.

Shameze Rampertab: Thanks Anthony, started with a review of our financials for three months and a June 30th, 2024, the company reprised revenue of $2.2 million as compared to revenue of $1.1 million in the three months and a June 30th, 2023. Revenue in the second quarter of 2024 included $0.8 million in system revenue, $0.6 million in lease revenue, $0.6 million in interest and accessories, and $0.2 million in services.

Shameze Rampertab: For the three months and a June 30th, 2024 total operating expenses, $23.1 million that's compared to $8.9 million in the three months and is a June 30th, 2023. For the three months and a June 30th, 2024, that loss attributable to common stockholders was $25.7 million, or $9 per share. That's compared to a net loss attributable to common stockholders of $20.7 million, or $9 per share in the three months and a June 30th, 2023.

Shameze Rampertab: For the three months and a June 30th, 2024, the adjusted net loss attributable to common stockholders was $8.1 million. $7 per share is compared to an adjusted net loss of $20.3 million, or $9 per share in the three months and a June 30th, 2023. Adjusted net loss, a gap net loss, adjusted for the following items. Amortization of intangible assets, change in fair value of contingent consideration, and change in fair value of one of my abilities, all of which are non-cash charges. Adjusted net loss attributable to common stockholders is a non-gap financial measure. For reconciliation from gaps non-gap measures can be found in our earnings release.

Shameze Rampertab: Turning to the balance sheet, the company had cash and cash equivalents, excluding restricted cash, of approximately $7.8 million as of June 30th, 2024.

Anthony Fernando: I'll turn it back to Anthony. Thank you, Shemes.

Anthony Fernando: On August 7th, 2024, we adjourned our special meeting of stockholders, which was scheduled to vote on the proposed merger with Karl Stortz. Unfortunately, the merger proposal has not yet received proxies representing the votes necessary to proceed, so we have adjourned the meeting until August 20th. Today, we have only received proxies to vote for approximately 55% of our outstanding shares.

Anthony Fernando: This is a very low turnout for a matter of such importance. Regardless of whether you support the merger or not, we encourage you to exercise your right as stockholders and vote your shares to bank your voice heard. The company has adjourned the special meeting to allow its retail stockholders additional time to consider and vote on each of the proposals which are described in the proxy statement. As a reminder, there are three proposals to consider.

Anthony Fernando: The first is the approval and adoption of the agreement and plan of merger with Karl Stortz and Dorskipy America Hink. This proposal seeks stockholder approval for a company to be acquired by way of a merger with and into a subsidiary of Karl Stortz and Dorskipy America as outlined in a proxy statement filed with the SEC on July 5th, 2024. To pass this proposal requires a yes vote from a majority of all outstanding shares, not just a majority of those shares that have been voted.

Anthony Fernando: The second is an advisory vote on the approval of certain compensation that may be paid or become payable to unnamed executive officers in connection with the merger. Unlike the first proposal, this advisory vote requires approval from a majority of the shares that are voted, provided that a quorum is present. The third vote is for the approval of one or more adjournments of the special meeting to a later date or dates if necessary.

Anthony Fernando: This allows postponement of the meeting to solicit additional proxies to reach the required vote threshold for the proposal to approve and adopt the merger agreement. Like the second proposal, this proposal only requires approval from a majority of the shares that have been actually voted rather than a majority of all outstanding shares. Because we had the necessary votes, this proposal passed and we were able to adjourn the special meeting to Tuesday, August 20th, at 10 a.m. Eastern time.

Anthony Fernando: After shares that have voted on the merger proposal, over 80% majority have voted to approve the merger, including all shares, helped by significant large institutional investors. This is in line with the recommendations from ISS and Glass Lewis, who recommends stockholders vote in favor of the merger. ISS and Glass Lewis are widely recognized as the leading independent voting and corporate governance advisory firms. Their analysis and recommendations are meaningful for many major institutional investment firms, mutual funds and fiduciaries globally.

Anthony Fernando: We would highly encourage stockholders who have not yet voted to consider the potential outcomes. If the merger is not approved, we face significant near-term financial obligations, including a repayment to call stores of their 20 million securitized note, plus interest and payment premiums, as well as transaction expenses we have incurred in connection with the pending merge. The sum of these obligations exceed the available capital on our balance sheet. We do not believe we are in a position to raise the capital needed to fund these expenses and also to continue funding operations.

Anthony Fernando: Therefore, if the merger is not approved, we expect to seek bankruptcy protection. It's important to note that Karl Stoats has a security interest in all of our assets. This means that Karl Stoats holds a legal claim over a company's assets as collateral for the debt we owe them. In a bankruptcy scenario, the security interest would give Karl Stoats priority over other creditors and stockholders in claims against assets.

Anthony Fernando: As a result, in the event of a bankruptcy, we believe our common stockholders will receive less than the merger consideration and may not receive distributions at all in a bankruptcy setting. We have heard from stockholders that they would like us to get a higher price than 35 cents per share. I want to emphasize that we have exhausted all reasonable options available to us to get a higher price and our directors believe 35 cents per share is the best price reasonably obtainable for stockholders.

Anthony Fernando: Before accepting the Karl Stoats deal, we explored various alternatives including partnerships and potential acquisitions. As described more fully in the proxy statement, we solicited interest from other potential partners and acquires, but none of these discussions led to a proposal other than the proposal from Karl Stoats. Since the announcement, of this transaction on April 3rd, 2024, no other company has expressed interest in offering a higher price than Karl Stoats. The 35 cents per share offered by Karl Stoats while likely lower than many stockholders' initial investment represents the best available price reasonably available given our current circumstances.

Anthony Fernando: We understand this price is disappointing, especially for long-term investors who have seen higher valuations in the past. However, it is crucial to recognize that this offer provides some return, whereas the bankruptcy scenario would likely result in stockholders receiving little or no consideration for their shares.

Anthony Fernando: I cannot overstate the importance of every single stockholder's participation in this world, whether you support the merger or not your vote matters. If you haven't voted yet, please review the information we've provided today and in our proxy statement, which was filed with the SEC on July 5th, 2024, and cast your vote as soon as possible.

Anthony Fernando: You can access the proxy statement at www.acc.gov or on our website asensors.com Backslash Investors.

Anthony Fernando: In closing, I want to express my deepest gratitude to our dedicated employees who continue to work tirelessly to advance our mission. As we face this crucial vote, we ask for your support in securing the best possible outcome for all stakeholders.

Operator: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.