Asensus Surgical, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ascensus Surgical First Quarter Financial and Operating Results Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 14, 2024. I would now like to turn the conference over to Mark Klausner from Westwick Partners. Please go ahead.

Good afternoon, everyone, and thank you for joining us for the Ascensus Surgical First Quarter Business and Financial Update Conference Call. On the call with me today are Anthony Fernando, President and Chief Executive Officer, and Shamiz Rampertab, Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call, including any guidance provided, are forward-looking statements provided 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 company's business, including any geopolitical factors beyond our control and the uncertainty of whether a definitive merger agreement can be successfully negotiated with Karl Storz and, if executed, will be approved by our stockholders. The company undertakes no obligation to update the information provided on this call. For discussion of risks and uncertainties associated with the Ascensus surgical business, 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. During 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. Management believes that these 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 company's core operating results. 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. 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.

Thanks, Mark, and thank you all for joining with us today. To start, I'll give a summary of our recent performance and notable accomplishments in the first quarter of 2024. Then, Shamice will dive into our financial results. Following that, I'll discuss what lies ahead of us in 2024, and finally, we'll open the floor for any questions you may have. First, I'd like to provide an update on a recent development for the company. In early April, we entered into a non-binding letter of intent with Karl Stotz regarding a potential acquisition of a census. Under the proposed terms, Karl Stotz would acquire 100% of our outstanding common stock for $0.35 per share in cash. As a reminder, Karl Stotz is a global leader in the medical technology industry, offering state-of-the-art endoscopes, medical instruments, and devices for minimally invasive procedures across various surgical specialties. Karl Storz is an independent family-owned company with a strong global presence and is committed to visionary design, precision craftsmanship, and clinical effectiveness. We believe that this potential acquisition by Karl Storz provides an attractive opportunity to deliver unmatched clinical value coupled with state-of-the-art robotics and digital solutions to the operating room. Carstor's global presence and scale, resources, and commercial capabilities could enable broader adoption of our combined digital surgery solutions and maximize the potential of Luna and the ISU. As previously disclosed, we have granted Carstor a 10-week exclusivity period to conduct due diligence and negotiate a definitive merger agreement. This exclusivity period started on March 28, 2024, and is ongoing. During the exclusivity period, Carl Storz is providing us with up to $10 million in financing through a fully secured promissory note to support our operations. And if a definitive merger agreement is successfully negotiated and executed, an additional $10 million will be available to us as we pursue all necessary approvals. Since announcing the potential transaction on April 3rd, we have been working closely with Carl Storch to facilitate their due diligence process. As of today, we have drawn the first $7 million of the $10 million a tranche of the note which has provided liquidity for operations. To evaluate the potential terms of the transaction and make a recommendation to stockholders, our board has formed a transaction committee. While there is no assurance a transaction will be completed, we believe exploring this opportunity with Carl Storz is in the best interest of the company and our stockholders. If we are able to finalize the definitive merger agreement with Carl Storch, we will move expeditiously to secure stockholder approval for the proposed acquisition. Further updates will be provided as appropriate. Despite the ongoing diligence activities, we remain focused on our business and in particular the continued growth of the Senhan system and ongoing development of the Luna system and ISU. In the first quarter, the Sennheis system was used in nearly 900 procedures worldwide. By continually capturing data from these surgeries, our machine learning capabilities improved, allowing us to provide increasingly valuable clinical insights to surgeons through the intelligent surgical unit in the future. With specialized 3mm and 5mm instruments, the Sennheis surgical system is uniquely designed for the delicate nature of pediatric procedures. As more pediatric surgeons recognize Ascensor's unique system design, which not only preserves minimally invasive surgery, but also advances laparoscopy and robotics with digital surgery solutions, we expect the number of pediatric procedures performed using SennHands and the ISU to continue to grow. Moving to new program initiations. In April, we announced that Sendai Tokushikai Hospital in Japan entered into an agreement to lease and utilize one of our Senhan surgical systems. This represents the second institution within one of Japan's largest private hospital systems to adopt our technology. I view this as further validation of the growing trust in our Senhan system in the Japanese market. In summary, the first quarter saw steady growth in the adoption of our digital surgery solutions and continued progress in enhancing the capabilities of the Senhance platform. We are excited about the potential opportunity to join forces with Karl Storz to accelerate our mission of digitizing the surgical environment. While we work towards a potential transaction, our team remains focused on executing against our key initiatives, including driving further adoption through new program initiations, increasing procedure volumes, expanding our clinical registry, and advancing our Luna platform development. We believe we are well positioned for continued momentum in 2024. With that, I would like to turn the call over to Shamis for a financial update.