Asensus Surgical, Inc. Reports Operating and Financial Results for the Third Quarter 2021

Asensus Surgical, Inc. (NYSE American: ASXC), a medical device company that is digitizing the interface between the surgeon and the patient to pioneer a new era of Performance-Guided Surgery™, today announced its operating and financial results for the third quarter 2021.

Recent Highlights

  • Record quarter for procedures performed using Senhance® Surgical Systems, growing 47% over the prior year
  • Four Senhance Surgical Programs recently initiated, three in Japan and one in Russia
  • Received FDA 510(k) clearance for expanded capabilities of the Intelligent Surgical UnitTM (ISUTM), including first-of-its-kind 3D measurement, digital tagging, image enhancement, and enhanced camera control
  • Received FDA 510(k) clearance for 5 mm articulating instruments
  • Six Senhance programs initiated year to date

“We are very proud of our recent performance as we continued to make significant progress towards our strategic focus areas despite the meaningful challenges we faced during the quarter as a result of the most recent COVID spike which impacted all of our key geographies. We have seen a recent acceleration of new system installations as well as strong system utilization trends, which we believe reinforces that there is strong demand in the market for an innovative surgical platform that brings new capabilities to the operating room, and that surgeons who have adopted Senhance are finding its unique combination of surgical intelligence and foundational laparoscopic movements both compelling and advantageous for themselves and their patients,” said Anthony Fernando, President and CEO of Asensus Surgical. “As we look to the balance of 2021 and into 2022, we plan to continue this momentum to drive increased global adoption and advance the capabilities of Senhance to deliver on the promise of Performance-Guided Surgery.”

Commercial and Clinical Update

Procedure Volume Trends

During the third quarter of 2021, procedure volumes increased by over 47% compared to the prior year quarter, primarily driven by growth in Europe and the United States. Sequentially, compared to the second quarter of 2021, procedure volumes increased by 5%. Over 1,500 procedures have been completed year to date, bringing total Senhance procedures to over 5,500 globally.

New Senhance Program Initiations

The Company recently announced four new Senhance Robotic Surgery Program initiations. Three Japanese hospitals entered into agreements to lease a Senhance Surgical System, bringing the total number of Senhance programs in Japan to seven. The fourth program initiation was in Russia, following a hospital’s purchase of a Senhance Surgical System. This represents the first Senhance Surgical System to be utilized in Russia.

Year to date, six new Senhance programs have been initiated. For the full year 2021, the Company continues to expect to initiate 10 - 12 new Senhance programs.

Expanded Global ISU Machine Vision Capabilities

In September, the Company announced that it received 510(k) clearance from the FDA for an expansion of machine vision capabilities on the previously cleared Intelligent Surgical Unit (ISU). The ISU is utilized with the Company’s Senhance Surgical System which enables Digital Laparoscopy. The initial features of the ISU enable machine vision-driven control of the camera for a surgeon by responding to commands and recognizing certain objects and locations in the surgical field, and allow a surgeon to change the visualized field of view using the movement of their instruments. The newest ISU features expand upon these capabilities and introduce more advanced features including: 3D measurement, digital tagging, image enhancement, and enhanced camera control based on real-time data from anatomical structures while performing surgery. This will be the first time any of these features will be clinically available in soft-tissue abdominal surgery.

Articulating Instrument Clearance

In July, the Company announced that it had received 510(k) clearance for 5 mm articulating instruments, which offer better access to difficult-to-reach areas of the anatomy.

Third Quarter Financial Results

For the three months ended September 30, 2021, the Company reported revenue of $2.6 million as compared to revenue of $0.8 million in the three months ended September 30, 2020. Revenue in the third quarter of 2021 included $1.4 million in Senhance system revenue, $0.8 million in instruments and accessories, and $0.4 million in services.

For the three months ended September 30, 2021, total operating expenses were $16.7 million, as compared to $14.6 million in the three months ended September 30, 2020.

For the three months ended September 30, 2021, net loss was $16.1 million, or $0.07 per common share, as compared to a net loss of $15.1 million, or $0.15 per common share, in the three months ended September 30, 2020.

For the three months ended September 30, 2021, the adjusted net loss of $14.3 million, or $0.06 per common share, as compared to an adjusted net loss of $11.9 million, or $0.12 per common share in the three months ended September 30, 2020, after adjusting for the following charges: amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, and employee retention tax credit, all of which are non-cash charges. Adjusted net loss is a non-GAAP financial measure. See the reconciliation from GAAP to Non-GAAP Measures below.

Balance Sheet Updates

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

Conference Call

Asensus Surgical, Inc. will host a conference call on Wednesday, November 3, 2021, at 4:30 PM ET to discuss its third quarter 2021 operating and financial results. To listen to the conference call on your telephone, please dial 1-855-327-6837 for domestic callers and 1-631-891-4304 for international callers, and reference conference ID 10016621 approximately ten minutes prior to the start time. To access the live audio webcast or archived recording, use the following link https://ir.asensus.com/events-and-presentations. The replay will be available on the Company’s website.

About Asensus Surgical, Inc.

Asensus Surgical, Inc. is digitizing the interface between the surgeon and patient to pioneer a new era of Performance-Guided Surgery by unlocking the clinical intelligence to enable consistently superior outcomes and a new standard of surgery. This builds upon the foundation of Digital Laparoscopy with the Senhance Surgical System powered by the Intelligent Surgical Unit (ISU) to increase surgeon control and reduce surgical variability. With the addition of machine vision, augmented intelligence, and deep learning capabilities throughout the surgical experience, we intend to holistically address the current clinical, cognitive and economic shortcomings that drive surgical outcomes and value-based healthcare. Learn more about Performance-Guided Surgery and Digital Laparoscopy with the Senhance Surgical System here: www.senhance.com. Now available for sale in the US, EU, Japan, Russia, and select other countries. For a complete list of indications for use, visit: www.senhance.com/indications. For more information, visit www.asensus.com.

Non-GAAP Measures

The adjusted net loss and adjusted net loss per share presented in this press release are non-GAAP financial measures. The adjustments relate to amortization of intangible assets, change in fair value of contingent consideration, change in fair value of warrant liabilities, gain on extinguishment of debt, employee retention tax credit and for 2020, restructuring and other charges, deemed dividend related to beneficial conversion feature of preferred stock, and deemed dividend relating to conversion of preferred stock into common stock. These financial measures are presented on a basis other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). In the tables that follow under "Reconciliation of Non-GAAP Measures,” we present adjusted net loss and adjusted net loss per share, reconciled to their comparable GAAP measures. These items are adjusted because they are not operational or because these charges are non-cash or non-recurring and management believes these adjustments are meaningful to understanding the Company's performance during the periods presented. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

Forward-Looking Statements

This press release includes statements relating to the current market development and operational plans for the Senhance Surgical System, as well as 2021 third quarter results and plans for the balance of 2021 and into 2022. These statements and other statements regarding our future plans and goals constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations and include whether the recent acceleration of new system installations, as well as strong utilization trends reinforces that there is strong demand in the market for an innovative surgical platform that brings new capabilities to the operating room, whether we can continue with our current momentum to drive increased global adoption and advance capabilities of the Senhance Surgical System to deliver on the promise of Performance-Guided Surgery and whether we are able install 10-12 new Senhance Surgical Systems for the full year 2021. For a discussion of the risks and uncertainties associated with Asensus Surgical's business, please review our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2020, which we filed with the SEC on March 11, 2021. You are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the origination date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

2,176

 

 

$

436

 

 

$

4,576

 

 

$

992

 

Service

 

 

395

 

 

 

378

 

 

 

1,180

 

 

 

1,076

 

Total revenue

 

 

2,571

 

 

 

814

 

 

 

5,756

 

 

 

2,068

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

2,659

 

 

 

720

 

 

 

6,517

 

 

 

2,353

 

Service

 

 

691

 

 

 

703

 

 

 

2,292

 

 

 

2,220

 

Total cost of revenue

 

 

3,350

 

 

 

1,423

 

 

 

8,809

 

 

 

4,573

 

Gross loss

 

 

(779

)

 

 

(609

)

 

 

(3,053

)

 

 

(2,505

)

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,469

 

 

 

4,673

 

 

 

12,773

 

 

 

12,867

 

Sales and marketing

 

 

3,551

 

 

 

3,136

 

 

 

10,166

 

 

 

10,291

 

General and administrative

 

 

5,557

 

 

 

3,462

 

 

 

13,397

 

 

 

10,426

 

Amortization of intangible assets

 

 

2,804

 

 

 

2,780

 

 

 

8,533

 

 

 

7,964

 

Change in fair value of contingent consideration

 

 

278

 

 

 

502

 

 

 

1,013

 

 

 

1,770

 

Restructuring and other charges

 

 

 

 

 

 

 

 

 

 

 

858

 

Total Operating Expenses

 

 

16,659

 

 

 

14,553

 

 

 

45,882

 

 

 

44,176

 

Operating Loss

 

 

(17,438

)

 

 

(15,162

)

 

 

(48,935

)

 

 

(46,681

)

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

 

 

 

 

 

 

 

2,847

 

 

 

 

Change in fair value of warrant liabilities

 

 

 

 

 

63

 

 

 

(1,981

)

 

 

(206

)

Interest income

 

 

122

 

 

 

3

 

 

 

253

 

 

 

34

 

Interest expense

 

 

(65

)

 

 

 

 

 

(77

)

 

 

 

Employee retention tax credit

 

 

1,311

 

 

 

 

 

 

1,311

 

 

 

 

Other income (expense), net

 

 

33

 

 

 

16

 

 

 

(3

)

 

 

(54

)

Total Other Income (Expense), net

 

 

1,401

 

 

 

82

 

 

 

2,350

 

 

 

(226

)

Loss before income taxes

 

 

(16,037

)

 

 

(15,080

)

 

 

(46,585

)

 

 

(46,907

)

Income tax (expense) benefit

 

 

(32

)

 

 

(2)

 

 

 

4

 

 

 

1,386

 

Net loss

 

 

(16,069

)

 

 

(15,082

)

 

 

(46,581

)

 

 

(45,521

)

Deemed dividend related to beneficial conversion feature of preferred stock

 

 

 

 

 

 

 

 

 

 

 

(412

)

Deemed dividend related to conversion of preferred stock into common stock

 

 

 

 

 

 

 

 

 

 

 

(299

)

Net loss attributable to common stockholders

 

 

(16,069

)

 

 

(15,082

)

 

 

(46,581

)

 

 

(46,232

)

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(16,069

)

 

 

(15,082

)

 

 

(46,581

)

 

 

(45,521

)

Foreign currency translation (loss) gain

 

 

(931)

 

 

 

2,101

 

 

 

(2,397

)

 

 

2,191

 

Unrealized loss on available-for-sale investments

 

 

(53)

 

 

 

 

 

 

(53

)

 

 

 

Comprehensive loss

 

$

(17,053

)

 

$

(12,981

)

 

$

(49,031

)

 

$

(43,330

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(0.07

)

 

$

(0.15

)

 

$

(0.21

)

 

$

(0.77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

234,337

 

 

 

97,538

 

 

 

224,300

 

 

 

59,737

 

 

 

 

 

 

 

Asensus Surgical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,779

 

 

$

16,363

 

Short-term investments, available-for-sale

 

 

57,972

 

 

 

 

Accounts receivable, net

 

 

955

 

 

 

1,115

 

Inventories

 

 

11,954

 

 

 

10,034

 

Prepaid expenses

 

 

2,209

 

 

 

3,535

 

Employee retention tax credit receivable

 

 

1,311

 

 

 

 

Other current assets

 

 

627

 

 

 

2,966

 

Total Current Assets

 

 

134,807

 

 

 

34,013

 

Restricted cash

 

 

1,153

 

 

 

1,166

 

Long-term investments, available-for-sale

 

 

30,142

 

 

 

 

Inventories, net of current portion

 

 

5,963

 

 

 

8,813

 

Property and equipment, net

 

 

9,911

 

 

 

10,342

 

Intellectual property, net

 

 

12,820

 

 

 

22,267

 

Net deferred tax assets

 

 

287

 

 

 

307

 

Operating lease right-of-use assets, net

 

 

4,328

 

 

 

1,164

 

Other long-term assets

 

 

348

 

 

 

186

 

Total Assets

 

$

199,759

 

 

$

78,258

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,231

 

 

$

1,965

 

Accrued expenses

 

 

4,841

 

 

 

5,615

 

Operating lease liabilities – current portion

 

 

671

 

 

 

686

 

Deferred revenue

 

 

678

 

 

 

789

 

Notes payable – current portion, net of debt discount

 

 

 

 

 

1,228

 

Total Current Liabilities

 

 

9,421

 

 

 

10,283

 

Long Term Liabilities:

 

 

 

 

 

 

 

 

Contingent consideration

 

 

4,949

 

 

 

3,936

 

Noncurrent operating lease liabilities

 

 

3,888

 

 

 

628

 

Notes payable, less current portion

 

 

 

 

 

1,587

 

Warrant liabilities

 

 

 

 

 

255

 

Total Liabilities

 

 

18,258

 

 

 

16,689

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock $0.001 par value, 750,000,000 shares authorized at September 30, 2021 and December 31, 2020; 234,370,083 and 116,231,072 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

234

 

 

 

116

 

Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

950,242

 

 

 

781,397

 

Accumulated deficit

 

 

(769,493

)

 

 

(722,912

)

Accumulated other comprehensive income

 

 

518

 

 

 

2,968

 

Total Stockholders’ Equity

 

 

181,501

 

 

 

61,569

 

Total Liabilities and Stockholders’ Equity

 

$

199,759

 

 

$

78,258

 

 
 

Asensus Surgical, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(46,581

)

 

$

(45,521

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

2,416

 

 

 

2,015

 

Amortization of intangible assets

 

 

8,533

 

 

 

7,964

 

Amortization of discounts and premiums on investments, net

 

 

65

 

 

 

 

Stock-based compensation

 

 

6,589

 

 

 

5,800

 

Gain on extinguishment of debt

 

 

(2,847

)

 

 

 

Deferred tax benefit

 

 

(4

)

 

 

(1,386

)

Write down of inventory

 

 

377

 

 

 

 

Change in fair value of warrant liabilities

 

 

1,981

 

 

 

206

 

Change in fair value of contingent consideration

 

 

1,013

 

 

 

1,770

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

113

 

 

 

(252

)

Inventories

 

 

(1,941

)

 

 

(4,410

)

Operating lease right-of-use assets

 

 

(3,174

)

 

 

(1,045

)

Prepaid expenses

 

 

1,220

 

 

 

1,269

 

Employee retention tax credit receivable

 

 

(1,311)

 

 

 

 

Other current and long term assets

 

 

2,098

 

 

 

2,009

 

Accounts payable

 

 

1,376

 

 

 

(706

)

Accrued expenses

 

 

(588

)

 

 

(1,772

)

Deferred revenue

 

 

(81)

 

 

 

(56

)

Operating lease liabilities

 

 

3,259

 

 

 

1,115

 

Other long term liabilities

 

 

 

 

 

(910

)

Net cash and cash equivalents used in operating activities

 

 

(27,487

)

 

 

(33,910

)

Investing Activities:

 

 

 

 

 

 

 

 

Purchase of available-for-sale investments

 

 

(88,232

)

 

 

 

Purchase of property and equipment

 

 

(838

)

 

 

(3

)

Net cash and cash equivalents used in investing activities

 

 

(89,070

)

 

 

(3

)

Financing Activities:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

13,525

 

Proceeds from issuance of common stock, net of issuance costs

 

 

130,361

 

 

 

24,861

 

Proceeds from notes payable, net of issuance costs

 

 

 

 

 

2,815

 

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

 

 

(1,058

)

 

 

(33

)

Payment of contingent consideration

 

 

 

 

 

(74

)

Proceeds from exercise of stock options and warrants

 

 

30,838

 

 

 

3,340

 

Net cash and cash equivalents provided by financing activities

 

 

160,141

 

 

 

44,434

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(181

)

 

 

30

 

Net increase in cash, cash equivalents and restricted cash

 

 

43,403

 

 

 

10,551

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

17,529

 

 

 

10,567

 

Cash, cash equivalents and restricted cash, end of period

 

$

60,932

 

 

$

21,118

 

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Non-cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Transfer of inventories to property and equipment

 

$

2,156

 

 

$

5,839

 

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

 

$

2,236

 

 

$

 

Lease liabilities arising from obtaining right-of-use assets

 

$

3,857

 

 

$

 

Exchange of common stock for Series B Warrants

 

$

 

 

$

2,470

 

Transfer of in-process research and development to intellectual property

 

$

 

 

$

2,425

 

Conversion of preferred stock to common stock

 

$

 

 

$

79

 

 

Asensus Surgical, Inc.

Reconciliation of Non-GAAP Measures

Adjusted Net Loss and Net Loss per Share

(in thousands except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

 

Net loss attributable to common stockholders (GAAP)

$

(16,069)

$

(15,082)

$

(46,581)

$

(46,232)

 

Adjustments

Amortization of intangible assets

2,804

2,780

8,533

7,964

Change in fair value of contingent consideration

278

502

1,013

1,770

Change in fair value of warrant liabilities

(63)

1,981

206

Restructuring and other charges

 

 

858

Gain on extinguishment of debt

 

 

 

 

 

(2,847)

 

 

Employee retention tax credit

 

(1,311)

 

 

 

 

(1,311)

 

 

Deemed dividend related to beneficial conversion feature of preferred stock

 

 

 

 

 

 

 

412

Deemed dividend related to conversion of preferred stock into common stock

299

Adjusted net loss attributable to common stockholders (Non-GAAP)

$

(14,298)

$

(11,863)

$

(39,212)

$

(34,723)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net loss per share attributable to common stockholders (GAAP)

$

(0.07)

$

(0.15)

$

(0.21)

$

(0.77)

 

Adjustments

Amortization of intangible assets

0.01

0.03

0.04

0.13

Change in fair value of contingent consideration

0.01

0.00

0.01

0.03

Change in fair value of warrant liabilities

0.00

0.01

0.00

Restructuring and other charges

 

 

 

 

 

 

 

0.01

Gain on extinguishment of debt

 

 

 

 

 

(0.01)

 

 

Employee retention tax credit

 

(0.01)

 

 

 

 

(0.01)

 

 

Deemed dividend related to beneficial conversion feature of preferred stock

 

 

 

 

 

 

 

0.01

Deemed dividend related to conversion of preferred stock into common stock

0.01

Adjusted net loss per share attributable to common stockholders (Non-GAAP)

$

(0.06)

$

(0.12)

$

(0.17)

$

(0.58)

 

The non-GAAP financial measures for the three and nine months ended September 30, 2021 and 2020 provide management with additional insight into the Company’s results of operations from period to period without non-recurring and non-cash charges, and are calculated using the following adjustments:

a) Intangible assets that are amortized consist of developed technology and purchased patent rights recorded at cost and amortized over 5 to 10 years.

b) Contingent consideration in connection with the acquisition of the Senhance System in 2015 is recorded as a liability and is the estimate of the fair value of potential milestone payments related to business acquisitions. Contingent consideration is measured at fair value using a discounted cash flow model utilizing significant unobservable inputs including the probability of achieving each of the potential milestones, an estimated discount rate associated with the risks of the expected cash flows attributable to the various milestones, and volatility. Significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of these milestones would result in a significantly higher or lower fair value of these milestones, respectively, and commensurate changes to the associated liability. The contingent consideration is revalued at each reporting period and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.

c) The Company’s Series B Warrants 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. The warrant liability is revalued at each reporting period or upon exercise and changes in fair value are recognized in the consolidated statements of operations and comprehensive loss.

d) Beginning in the fourth quarter of 2019 and continuing into the first quarter of 2020, we implemented a restructuring plan to reduce operating expenses as we continue the global market development of the Senhance platform. During the first quarter of 2020, the Company continued the restructuring efforts with additional headcount reductions, which resulted in $0.9 million in severance costs in the nine months ended September 30, 2020.

e) During the second quarter of 2021, the Company received notification from the U.S. Small Business Administration (the “SBA”) that the principal amount of its Paycheck Protection Program loan (“PPP loan”) of $2.8 million and related interest had been forgiven. Gain on extinguishment of debt of $2.8 million was recognized for the three and nine months ended September 30, 2021 in the condensed consolidated statement of operations and comprehensive loss.

f) During the third quarter of 2021, the Company submitted a refund for incurred employee payroll taxes of $1.3 million under the Employee Retention Tax Credit provision as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). A corresponding tax credit receivable of $1.3 million was recorded on the condensed consolidated balance sheet at September 30, 2021.

g) During the first quarter of 2020, the Company closed an underwritten public offering under which it issued, as part of units and the exercise of an over-allotment option, 25,367,646 Series C Warrants, each to acquire one share of Common Stock at an exercise price of $0.68 per share, and 25,367,646 Series D Warrants, each to acquire one share of Common Stock at an exercise price of $0.68 per share. The Company concluded that the Series C Warrants and Series D Warrants are considered equity instruments. The fair value of the Series C and Series D Warrants on the issuance date was determined using a Black-Scholes Merton model. The unit proceeds were then allocated to the Series A preferred stock, Series C Warrants, and Series D Warrants, respectively, based on their relative fair values. As a result, the Company determined that a beneficial conversion feature was created by the difference between the effective conversion price of the Series A preferred stock of $0.37 and the fair value of the Company's common stock as of the issuance date of $0.42. The Company therefore recorded a beneficial conversion charge of $0.4 million as an immediate charge to loss available to common stockholders for the nine months ended September 30, 2020. Upon conversion of the Series A preferred stock to common stock during the three months ended September 30, 2020, an additional deemed dividend of $0.3 million was recorded as an immediate charge to loss available to common stockholders for the three and nine months ended September 30, 2020.

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