criminal prosecution; and

disgorgement of profits.

the efficacy, safety and reliabilityRegulation of our products;Business.

our ability

Risks Related to commercialize and market our cleared or approved products;

the completionOperation of our development efforts and receipt of regulatory clearance or approval for instruments and accessories to support the use of the Senhance System;

the cost of ownership and use of our products in relation to alternative devices;

the timing and scope of regulatory clearances or approvals, including any expansion of the indications of use for our products;

whether our competitors substantially reduce the cost of ownership and use of an alternative device;

our ability to protect and defend intellectual property rights related to our products;

our ability to have our partners manufacture and sell commercial quantities of any cleared or approved products to the market;

the availability of adequate coverage and reimbursement by third-party payors for the procedures in which our products are used;

the effectiveness of our sales and marketing efforts; and

acceptance of future products by physicians and other health care providers.

challenges associated with managing geographically diverse operations, which require an effective organizational structure and appropriate business processes, procedures and controls;

the increased cost of doing business in foreign jurisdictions, including compliance with international and U.S. laws and regulations that apply to our international operations;

changes in a specific country’s or region’s political or economic environment;

trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments;

potentially adverse tax consequences;

complexities and difficulties in obtaining protection and enforcing our intellectual property;

compliance with additional regulations and government authorities in a highly regulated business;

difficulties associated with staffing and managing foreign operations, including differing labor relations; and

general economic and political conditions outside of the U.S.

the announcement of favorable or unfavorable news regarding us, including our product development efforts and regulatory clearance activities;

the achievement of commercial sales of our products;

the announcement of new products or product enhancements by us or our competitors;

developments concerning intellectual property rights and regulatory approvals;

variations in our and our competitors’ results of operations;

changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts;

developments in surgical robotics;

the results of product liability or intellectual property lawsuits;

future issuances of common stock or other securities;

the addition or departure of key personnel;

announcements by us or our competitors of acquisitions, investments or strategic alliances; and

general market conditions and other factors, including factors unrelated to our operating performance.

the costs of our Senhance System commercialization and development activities;

the costs and timing of seeking and obtaining FDA and other non-U.S. regulatory clearances and approvals for our products in development;

the costs associated with establishing a sales force and commercialization capabilities;

the costs associated with the expansion of our manufacturing capabilities;

our need to expand our research and development activities;

the costs of acquiring, licensing or investing in businesses, products and technologies;

the economic and other terms and timing of our existing licensing arrangement and any collaboration, licensing or other arrangements into which we may enter in the future;

our need and ability to hire additional management, scientific, medical and sales and marketing personnel;

the effect of competing technological and market developments;

our need to implement additional internal systems and infrastructure, including financial and reporting systems, quality systems and information technology systems; and

our ability to maintain, expand and defend the scope of our intellectual property portfolio.

restrictions on theour products, manufacturers or manufacturing process;

adverse inspectional observations (Form 483) warning letters, non-warning, Warning Letters, Untitled Letters, letters incorporating inspectional observations;

observations, or consent decrees; civil or criminal penalties or fines;

injunctions;

product seizures, detentions or import bans;

voluntary or mandatory product recalls and publicity requirements;

suspension limitation or withdrawal of regulatory clearances, approvals, or approvals;

certifications; total or partial suspension of production;

imposition of restrictions on operations, including costly new manufacturing requirements;

refusal to clear or approve pending applications or premarket notifications; and

import and export restrictions.

Any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition. Furthermore,

Our future success depends on our key component suppliers may not currentlyability to develop, receive regulatory clearance, approval for, and introduce new products that will be accepted by the market in a timely manner. There is no guarantee that the FDA will grant 510(k) clearance, de-novo authorization or may not continue PMA approval, or that a Notified Body will issue the relevant CE Certificates of Conformity, of/to be in compliance with all applicable regulatory requirements, which could result in our failure to produce ourfuture products on a timely basis, and in the required quantities, if at all.all, and failure to obtain necessary clearances, approvals or certifications for our future products would adversely affect our ability to grow our business.

In addition, theWhen a 510(k) notice, de novo request, or PMA is submitted for a new product or for a change to an existing product, there is no guarantee that it will receive FDA and other non-U.S. regulatory authorities may change their policies and additional regulations may be enacted that could prevent or delay regulatoryauthorization. Failure to receive clearance or approval offor our products. We cannot predict the likelihood, naturenew products or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are not ableindications for use would have an adverse effect on our ability to maintain regulatory compliance, we would likely not be permitted to marketexpand our future products and we may not achieve or sustain profitability.

The regulatory approval and clearance processes are expensive, time-consuming and uncertain and may prevent us from obtaining approvals or clearances, as the case may be, for the commercialization of some or all of our products.

Regulatory approval of a PMA, PMA supplement or clearance pursuant to a 510(k) premarket notification is not guaranteed, and the approval or clearance process, as the case may be, is expensive, uncertain and may, especially in the case of the PMA application, take several years. The FDA also has substantial discretion in the medical device clearance process or approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to repeat or perform additional development, standardized testing, pre-clinical studies and clinical trials. The number of pre-clinical studies and clinical trials that will be required for FDA clearance or approval varies depending on the medical device candidate, the disease or condition that the medical device candidate is designed to address, and the regulations applicable to any particular medical device candidate. The FDA or other non-U.S. regulatory authorities can delay, limit or deny clearance or approval of a medical device candidate for many reasons, including:

The laws governing the regulatory approval or clearance pathways in jurisdictions outside of the United States are complex.  We need to ensure that our activities, and the activities of our distributors and agents, comply with such laws.business. If we do not comply withreceive clearance for any device enhancements, modifications or expanded indication, we will not be able to market the modified device in the U.S. or other foreign countries until such laws,clearance, approval, authorization or certification is obtained.

Our products are subject to international regulatory processes and approval or certification requirements. If we maydo not obtain and maintain the necessary international regulatory approvals or certifications, we will not be able to sell our products including the Senhance System, in all jurisdictions we have targeted, which could have an adverse effect on our business operations and financial condition.  other countries.

OnceTo be able to sell our products are clearedin other countries, we or approved, modifications to our products may require new 510(k) clearances, premarketdistributor must obtain regulatory approvals or new or amended CE Certificates of Conformity,certifications and may require us to cease marketing or recall the modified products until clearances, approvals or the relevant CE Certificates of Conformity are obtained.

Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review such determinations. The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary. If the FDA disagrees with our determinations for any future changes, or prior changes to previously marketed products, as the case may be, we may be required to cease marketing or to recall the modified products until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.

Furthermore, the FDA’s ongoing review of the 510(k) program may make it more difficult for us to make modifications to our products, either by imposing more strict requirements on when a new 510(k) for a modification to a previously cleared product must be submitted, or applying more onerous review criteria to such submissions. In October 2017, the FDA issued guidance documents addressing when to submit a new 510(k) due to modifications to 510(k) cleared products and the criteria for evaluating substantial equivalence. The interpretation of the guidance document by the FDA staff could lead to instances where the FDA disagrees with the Company’s decision regarding a change, and could result in warning letters and other enforcement actions.

Even after clearance or approval for our products is obtained, we are subject to extensive post-market regulation by the FDA. Our failure to meet strict regulatory requirements could require us to pay fines, incur other costs or even close our facilities.

Even after we have obtained the proper regulatory clearance or approval to market a product, the FDA has the power to require us to conduct post-market studies. These studies can be very expensive and time-consuming to conduct. Failure to complete such studies in a timely manner could result in the revocation of clearance or approval and the recall or withdrawal of the product, which could prevent us from generating sales from that product in the United States. The FDA has broad enforcement powers, and any regulatory enforcement actions or inquiries, or other increased scrutiny on us, could dissuade some surgeons from using our products and adversely affect our reputation and the perceived safety and efficacy of our products.

We are also required to comply with the FDA’s QSR,regulations of those countries, which coversmay differ substantially from those of the methods used in,U.S. These regulations, including the requirements for approvals or certifications and the facilitiestime required for regulatory review, vary from country to country. Obtaining and controls used for,maintaining foreign regulatory approvals or certifications is complex, and timing to obtain clearances or certifications in those countries varies; therefore, we cannot be certain that we will receive regulatory approvals or certifications in any other country in which we plan to market our products or obtain such approvals or certifications on a favorable schedule. The time required to obtain marketing authorization in other countries might differ from that required to obtain FDA authorization. If we or our distributor fail to obtain or maintain regulatory approval or certification in any other country in which we plan to market our products, our ability to generate revenue will be harmed. Regulatory authorization of a product in one country does not ensure regulatory authorization in another, but a failure or delay in obtaining marketing authorization in one country may negatively impact the design, manufacture, quality assurance, labeling, packaging, sterilization, storage, shipping, installationregulatory process in others.

One of the most significant moving targets related to the regulatory landscape is in the EU; more specifically, the medical devices regulation has recently evolved. Regulation (EU) 2017/745 on medical devices (the MDR) became applicable in the European Union on May 26, 2021. The MDR, which replaced the MDD in May 2021 (subject to certain transitional provisions) imposes significant additional premarket and servicingpost-market certification requirements on medical devices marketed in the EU. European Economic Area (EEA) Member State legislation may also restrict or impose limitations on our ability to advertise our products directly to the general public. In addition, voluntary EU and national codes of conduct provide guidelines on the advertising and promotion of our marketed products. The FDA enforcesproducts to the QSR through periodic announcedgeneral public and unannounced inspections of manufacturing facilities. In addition, in the future, regulatory authorities and/or customers may require specific packaging of sterile products, which could increaseimpose limitations on our costs and the price of our products. Later discovery of previously unknown problemspromotional activities with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affecthealthcare providers harming our business, operating results and prospects.

financial condition. If one ofwe are unable to obtain timely certifications for our products under the MDR, or experience difficulty scheduling with a malfunction of one ofNotified Body, our business prospects in the EU could be materially adversely affected, which could have a material adverse effect on our financial results.

Our products causesmay cause or contributescontribute to a deathadverse events or a serious injury, we will be subject to medical device reporting regulations, whichfailures or malfunctions that we are required to report to the FDA or comparable foreign regulatory authorities and can result in voluntary corrective actions or agency enforcement actions.

Under the FDA’s medical device reporting, or MDR, regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death, serious health threat or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. Repeated adverse events or product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost-effective and timely manner, and have an adverse effect on our reputation, results of operations and financial condition. We are also required to follow detailed recordkeeping requirements for all firm-initiated medical device corrections and removals, and to report such corrective and removal actions to the FDA if they are carried out in response to a risk to health and have not otherwise been reported under the MDR regulations.

All manufacturers bringing medical devices to market in the European Economic Area, or EEA are legally bound to report any incident that directly or indirectly led, might have led or might have ledlead to the death or serious deterioration in the state of health of a patient, user or other person, or to a serious public health threat, and which the manufacturer’s device is suspected to have caused,be a contributory cause, to the competent authority in whose jurisdiction the incident occurred. In such case, the manufacturer must file an initial report with the relevant competent authority, which would be followed by further evaluation or investigation of the incident and a final report indicating whether further action is required. Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Adverse events involving our products have been reported to us in the past, and we cannot guarantee that they will not occur in the future. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us.

The FDA and similar foreign governmental authorities such as the competent authorities of the EEA countries have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.

Any future recalls of any of our products would divert managerial and financial resources and could have an adverse effect on our reputation, results of operations and financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.

Our employees, consultants, third-party vendors and collaborators may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employee, consultant, third-party vendor or collaborator fraud or other misconduct. Misconduct by our employees, consultants, third-party vendors or collaborators could include, among other things, intentional failures to comply with FDA, EU or other regulations, provide accurate information to the FDA or other regulators, comply with manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a material adverse effect on our business, financial condition and results of operations, and result in the imposition of significant fines or other sanctions against us.

Clinical trials may be necessary to support our future product submissions to the FDA or Notified Bodies and such trials are lengthy, regulatory nuanced, interactive and involve working with third parties. These and other factors may affect our ability to complete clinical trials and may lead to delays or failures that would affect our business and financial prospects.

Initiating and completing clinical trials necessary to support any future products, including those that may require PMAs, and additional safety and efficacy data beyond that typically required for a 510(k) clearance, for our possible future product candidates, will be time-consuming and expensive and the outcome uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in later clinical trials. The results of preclinical studies and clinical trials of our products and product candidates conducted to date and ongoing or future studies and trials of our current, planned or future products may not be predictive of the results of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Our interpretation of data and results from our clinical trials do not ensure that we will achieve similar results in future clinical trials. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in preclinical studies and earlier clinical trials have nonetheless failed to replicate results in later clinical trials. Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials. Failure can occur at any stage of clinical testing. Our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.

U.S. legislative, FDA regulatory reforms or FDAglobal regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained.

Legislative changes could significantly alter the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products. In addition, FDA regulations and guidance could be revised or reinterpreted by the FDA in ways that could significantly affect our business and our products. AnyFor example, the FDA just finalized a rule to replace the QSR by adopting ISO 13485. Companies are required to come into compliance with this new rule by February 2026. This, and any new regulations or revisions, or reinterpretations of existing regulations, may impose additional costs or lengthen review times of future products. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations will be changed, and what the impact of such changes, if any, may be.

Even if we receive We anticipate that future regulatory clearancerequirements may focus on artificial intelligence or approval to marketclinical decision support products, such as our ISU, which may subject our products to additional regulations.

Disruptions at the marketFDA and other government agencies or Notified Bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent products from being developed, cleared, certified, approved, or commercialized in a timely manner or at all, which may not be receptive toadversely affect our products, which could undermine our financial viability.business.

Even if our products obtain regulatory clearance or approval, resulting products may not gain market acceptance amongThe delivery of healthcare by hospitals, health systems, and physicians patients, health care payors and/or the medical community. We have experienced minimal sales of our Senhance System, to date. We believe that the degree of market acceptance will dependdepends on a number of factors, including:

If applicable, availability of coverage and reimbursement from governmenteffectively deliver healthcare, including attempts to reduce payments and other third-party payorsreimbursements to hospitals by federal healthcare programs. These situations could adversely affect our customers’ ability to perform procedures with our devices and/or their decisions to purchase additional products from us. In addition, the review and clearance, approval, or certification of new products can also impact the acceptancebe affected by a variety of our product offerings.

If we failfactors globally, including government budget and funding levels, global health concerns, ability to attracthire and retain key managementpersonnel and professional personnel, we may be unable to successfully commercialize or develop our products.

We will need to effectively manage our operational, salesaccept the payment of user fees, and marketing, developmentstatutory, regulatory, and policy changes. In addition, government funding of other resources in order to successfully pursue our commercialization andgovernment agencies that fund research and development activities is subject to unpredictable and ever-changing political processes. Disruptions at the FDA and other agencies or Notified Bodies for any of these or other reasons may cause significant regulatory delays and, therefore, delay our efforts for our existingto seek clearances, approvals, or certifications from the FDA, foreign authorities, and future products. Our success dependsnotified bodies and adversely affect business travel and import and export of products, all of which could have a material adverse effect on our continued abilitybusiness, financial condition, results of operations, or cash flows. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to attract, retainfurlough critical FDA employees and motivate highly qualified personnel.   If we are not successful in retaining and recruiting highly qualified personnel, our business may be harmed as a result.stop critical activities.

We may be subject, directly or indirectly, to federal and state anti-kickback, fraud and abuse, false claims, privacy and security and physician payment transparency laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

Our business activities are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business. SuchRestrictions under applicable federal and state healthcare laws and regulations that may affect our operations (including our marketing, promotion, educational programs, pricing, and relationships with healthcare providers or other entities, among other things) and expose us to areas of risk are described in the “Business-Health Care Regulation” section of this Annual Report.

Additionally, some state privacy laws, may include without limitation, stateprivate rights of action and federal anti-kickback,can lead to class action litigation. Other laws, such as the FCA, can be enforced through qui tam actions brought by individuals on behalf of the government. Efforts to ensure that our business arrangements with third parties are compliant with applicable healthcare laws and regulations will involve the expenditure of appropriate, and possibly significant, resources. Nonetheless, it is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse false claims, privacyor other healthcare laws and security and physician payment transparency laws.regulations. If our operations are found to be in violation of any of such laws that apply to us, we may be subject to significant penalties, including, without limitation, civil, criminal, and criminaladministrative penalties, damages, fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs such as Medicare and Medicaid, and imprisonment, any of which could adversely affect our ability to operate our business and our financial results.

Current legislation and future legislative

Failure of our customers to obtain adequate reimbursement for procedures using our current or regulatory reform of the health care system may affectnew products could limit our ability to sell ourmarket those products profitably.

In the United States, there have been, and we expect there to continue to be, a number of legislative and regulatory initiatives, at both the federal and state government levels, to change the healthcare system in ways that, if approved, could affectdecrease our ability to sell our products profitably. While many of the proposed policy changes require congressional approval to implement, we cannot assure you that reimbursement payments under governmental and private third-party payor programs to health care providers will remain at levels comparable to present levels or will be sufficient to cover the costs allocable to patients eligible for reimbursement under these programs. Any changes that lower reimbursement rates under Medicare, Medicaid or private payor programs could negatively affect our business.generate revenue.

To the extent that any of ourOur products are deemedsold or leased to befacilities, such as hospitals, and are not for use in the home such that they are not durable medical equipment, or DME, they may be subject to distribution under Medicare’s Competitive Acquisition regulations, which could adversely affect the amount that we can seek from payors. Non‑DME devicesequipment. Devices such as ours used in surgical procedures are normally paid directly by the hospital or health care provider and not reimbursedpaid separately by payers, but are reimbursed by third-party payors.payors as part of the payment made for the performed surgical procedure when performed on an outpatient basis, or as part of the payment made for the inpatient stay when the patient undergoing the procedure is an inpatient of a hospital. As a result, these types of devices are subject to intensesignificant price competition that can place a small manufacturer at a competitive disadvantage as hospitals and health care providersfacilities attempt to negotiate lower prices for products such as the ones we develop and sell.

With the continued uncertainty regarding the status

The pricing of the 2010 Health Care Reform Legislation, at this time, the Company is not certainproducts and procedures have come under increasing scrutiny as part of a global trend toward healthcare cost containment. Resulting changes in healthcare law and policy, including changes to theMedicare, may impact of federal health care legislation on its business.  

The 2010 Health Care Reform Legislation subjects manufacturers of medical devices to an excise tax of 2.3% on certain U.S. sales of medical devices beginningour business in January 2013. This excise tax was suspended in December 2017 for two additional years, however, if eventually implemented, this excise tax will likely increase our expenses in the future.

Further, the 2010 Health Care Reform Legislation includes the Open Payments Act (formerly referred to as the Physician Payments Sunshine Act),ways that we cannot currently predict, which in conjunction with its implementing regulations, requires certain manufacturers of certain drugs, biologics, and devices that are reimbursed by Medicare, Medicaid and the Children’s Health Insurance Program to report annually certain payments or “transfers of value” provided to physicians and teaching hospitals and to report annually ownership and investment interests held by physicians and their immediate family members during the preceding calendar year. We provided reports under the Open Payments Act to the Centers for Medicare & Medicaid Services, or CMS. The failure to report appropriate data accurately, timely, and completely could subject us to significant financial penalties. Other countries and several states currently have similar laws and more may enact similar legislation.

We are unable to predict what additional legislation or regulation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such legislation or regulation would have on our business. Any cost containment measures or other health care system reforms that are adopted could have a material and adverse effect on our business and financial condition.

The United States is considering, or has already enacted or implemented, a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to commercializesell our existingproducts profitably, described in a streamlined manner below and are described in the “Business-Health Care Regulation” section of this Annual Report Form 10-K. We expect to experience pricing pressures in connection with the sale of any products that we develop, and the procedures in which they are used, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative and regulatory measures.

The U.S. government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls and restrictions on reimbursement. If healthcare policies or reforms intended to curb healthcare costs are adopted, the prices that we charge for our products may be limited, our commercial opportunity may be limited and/or our revenues from sales of our product and any future products, successfully.if approved, may be negatively impacted.

Because

We are subject to an evolving set of complex laws and regulations relating to privacy, data protection and information collection matters.

There are numerous state, federal, and foreign laws, regulations, decisions, and directives regarding privacy rights and the processing of information relating to identified or identifiable persons (“Personal Information”) and other categories of data, the scope of which is continually evolving and subject to differing interpretations. We also must comply with the policies, procedures and business requirements of our design, developmentcustomers relating to data privacy and manufacturingsecurity, which can vary based upon the customer, the customer’s industry or location, and the product the customer selects, and which may be more restrictive than the privacy and security measures required by law or regulation. Around the world, the privacy and data protection legal landscape is rapidly changing, which may require us to adjust aspects of our operations or expend significant time and resources to come into compliance with new laws or regulatory obligations.

In particular, the European Economic Area (“EEA”), the United Kingdom and Switzerland have stringent privacy laws and regulations, which may impact our ability to profitably operate in certain European countries or to offer products that meet the needs of customers subject to EU privacy laws and regulations. For example, the General Data Protection Regulation (the “GDPR”) provides that EEA Member States may make their own further laws and regulations limiting the processing of genetic, biometric, or health data, which could limit our ability to use and share Personal Information or could cause our costs to increase and harm our business and financial condition. Non-compliance with the GDPR and the applicable EEA Member State laws may result in fines of up to 4% of the total worldwide annual turnover of the preceding financial year and other administrative penalties, as well as adverse publicity. It also confers the right for data subjects to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the GDPR.

Global laws such as the GDPR are increasingly restricting and regulating the cross-border transfer of Personal Information, which may require us to implement additional and, potentially, costly safeguards to receive Personal Information from overseas customers or transfer such data, including to our vendors. l For example,, in June 2021, the European Commission adopted a new set of Standard Contractual Clauses (“SCCs”), aimed at enabling lawful transfers of Personal Information to non-adequate countries outside the EEA,and on July 10, 2023 the European Commission adopted its adequacy decision for the EU-US Data Privacy Framework, meaning that personal data can now flow freely from the EEA to US companies that participate in the Data Privacy Framework. A lack of valid transfer mechanisms for Personal Information subject to GDPR could increase exposure to enforcement actions as described above, and may affect our business operations and require commercial cost (including potentially limiting our ability to collaborate/work with certain third parties and/or requiring an increase in our data processing capabilities in the EU/U.K.). Further, the EEA/U.K., and Swiss data protection laws (including laws on data transfers as set out above) may also be updated/revised, accompanied by new guidance and/or judicial/regulatory interpretations, which could entail further impacts on our compliance efforts and increased cost.

In addition to the laws specifically discussed, numerous other federal and state laws and regulations govern privacy and security, including state data breach notification laws, state health information and/or genetic privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act, new state consumer protection laws), many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Compliance with these laws is difficult, constantly evolving, time consuming, and requires a flexible privacy framework and substantial resources. Compliance efforts will likely be an increasing and substantial cost in the future. Federal regulators, state attorneys general, and plaintiffs’ attorneys have been and will likely continue to be active in this space.

The costs of compliance with, and other burdens imposed by, our customers’ own requirements, the privacy and security laws and regulations, as well as self-regulatory standards that are limited,applicable to us and our customers’ businesses may limit the use and adoption of our products, reduce overall demand and may incur substantial cost or require us to change our business practices. Non-compliance with our customers’ specific requirements may lead to termination of contracts with these customers or liabilities to the customers.

ITEM1.B.UNRESOLVED STAFF COMMENTS

None.

ITEM1.C.CYBERSECURITY

We are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we may relycollect, store, process, and transmit sensitive corporate, personal, and other information, including intellectual property, proprietary business information, customer data including PII, and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such information.

Risk Management and Strategy

We maintain a cybersecurity risk management program designed to identify, assess, manage, mitigate, and respond to cybersecurity threats. This program is integrated within our enterprise risk management system and addresses the corporate information technology environment, the data we collect through our products and retain in the TRUST registry and Asensus Cloud, and customer information.

The underlying controls of the cybersecurity risk management program are based on recognized best practices and standards for cybersecurity and information technology, including the National Institute of Standards and Technology, or NIST, Cybersecurity Framework, or CSF, and the International Organization Standardization, or ISO, 27001 Information Security Management System Requirements. We have an annual assessment, performed by a third party, of the Company’s cyber risk management program against the NIST CSF.

We monitor our global cybersecurity environment constantly and coordinate the investigation and remediation of any alerts. We have developed a program for incident response, including drills, to prepare support teams in the event of a significant incident. We have engaged third-party consultants to assist us with designing controls and our cybersecurity risk management framework, and to perform penetration testing. We also retain third parties to design, develop, manufactureassist us with the monitoring and detection of cybersecurity threats and responding to any cybersecurity threats or supply someincidents.

With respect to third parties that manage or use our information technology or data, we obtain reports to assess the security of their systems and processes. We engage in ongoing monitoring of all third-party providers to ensure compliance with our products. An inability to find additional or alternate sources for these services and products could materially and adversely affect our financial condition and results of operations.cybersecurity standards.

We have used third-party design and development sourcesnot encountered cybersecurity threats or incidents that have had a material impact on our business. We face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation. See “RISK FACTORS – Risks Related to assist in the design and developmentOperation of our medical device products. In the future, we may choose to use additional third-party sources for the design and developmentBusiness – Significant disruptions of our products. If these design and development partners are unable to provide their services in the timeframeinformation technology systems or to the performance level that we require, we may not be able to establish a contract and obtain a sufficient alternative supply from another supplier on a timely basis and in the manner that we require.

Our products require precise, high quality manufacturing. We and our contract manufacturers will be subject to ongoing periodic unannounced inspection by the FDA and non-U.S. regulatory authorities to ensure strict compliance with the quality systems regulations, current “good manufacturing practices” and other applicable government regulations and corresponding standards. If we or our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance with QSR, we may experience manufacturing errors resulting in patient injury or death, product recalls or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval of marketing applications for our products, cost overruns or other problems that could seriously harm our business.

Any performance failure by us or on the part of our design and development partners or contract manufacturers could delay product development or regulatory clearance or approval of our products, or commercialization of our products and future products, depriving us of potential product revenue and resulting in additional losses. In addition, our dependence on any third party for design, development or manufacturing could adversely affect our future profit margins. Our ability to replace any then-existing manufacturer may be difficult because the number of potential manufacturers is limited and, in the case of Class III devices, the FDA must approve any replacement manufacturer before manufacturing can begin. It may be difficult or impossible for us to identify and engage a replacement manufacturer on acceptable terms in a timely manner, or at all.

We may become subject to potential product liability claims, and we may be required to pay damages that exceed our insurance coverage.

Our business exposes us to potential product liability claims that are inherent in the design, testing, manufacture, sale and distribution of our products and each of our product candidates that we are seeking to introduce to the market. Surgical medical devices involve significant risks of serious complications, including bleeding, nerve injury, paralysis, infection, and even death. Any product liability claim brought against us, with or without merit, could result in the increase of our product liability insurance rates or in our inability to secure coverage in the future on commercially reasonable terms, if at all. In addition, if our product liability insurance proves to be inadequate to pay a damage award, we may have to pay the excess of this award out of our cash reserves, which could significantly harm our financial condition. If longer-term patient results and experience indicate that our products or any component of a product causes tissue damage, motor impairment or other adverse effects, we could be subject to significant liability. A product liability claim, even one without merit,data security incidents could harm our reputation, cause us to modify our business practices, and otherwise adversely affect our business and subject us to liability.”

Our Manager of Data and Information Technology and Vice President of Customer Excellence, with consultation and collaboration with senior management lead our cybersecurity efforts. The cybersecurity team is responsible for assessing and managing our cyber risk management program, informing executive management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. The cybersecurity team has experience selecting, deploying, and operating cybersecurity technologies, initiatives, and processes, and relies on threat intelligence as well as other information obtained from governmental, public or private sources, including external consultants engaged by us.

Governance

The Corporate Governance and Nominating Committee of the Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The cybersecurity team briefs the Corporate Governance and Nominating Committee on the effectiveness of our cyber risk management program on a regular basis. We believe locating this oversight function in the industry, leadCorporate Governance and Nominating Committee is appropriate given that the reach of our cybersecurity risk monitoring programs are not limited to significant legal fees, and result in the diversionfinancial programs or functions. In addition, cybersecurity risks are reviewed by our Board of management’s attention from managingDirectors, at least annually.

ITEM2.PROPERTIES

Effective March 10, 2021, our business.

None.

Our principal corporate office is located at 635 Davis1 TW Alexander Drive, Suite 300, Morrisville,160, Durham, North Carolina. We lease this facility, which consists of 37,32827,807 square feet, for a five-yearten year and five month term under a lease that commenced on April 1, 2010. An amendment to this lease was signed on June 13, 2014, extending the lease term until June 30, 2018. Pursuant to a lease entered into on October 24, 2013, we also lease 24,000 square feet of warehouse and office spaceending in Durham, North Carolina. That lease commenced in January 2014 and expired in January 2018.August 2031.

Our Italian research and development and demonstration facilities are located at Viale dell'Innovazione 3, 20126 Milan, Italy. We lease these facilities, which consist of 11,27311,733 square feet, for a six-yearseven-year and three month term ending on JulyDecember 31, 2022,2028, under a lease that commenced on October 1, 2021.

Our Israeli research and development facilities are located at Ha Kadima 9, Fibernet Building, 4^th Floor, Yokne'am Illit, Israel. We lease these facilities, which consist of 8,471 square feet, for a five-year term ending on June 30, 2026, under a lease that commenced on July 1, 2021.

Our Japanese office is located at Gotenyama Trust Tower 12F, 4 Chome-7-35 Kitashinagawa, Shinagawa City, Toyko 140-0001, Japan. We lease this facility, which consists of 911 square feet, for a three-year term ending on August 31, 2025, under a lease that commenced on September 1, 2022.

Our Swiss administrative office is located at Via Serafino Balestra 12, Lugano, Switzerland. We lease this facility, which consists of 3,208 square feet, for a five-year renewal term ending on May 12, 2016.31, 2025, under a lease that commenced on July 1, 2018.

None.

Not applicable.

PART II

Since April 2, 2014, our common stock has been listed on the NYSE American under theAmerican. Our trading symbol “TRXC.is “ASXC,” The table below sets forth, for the respective periods indicated, the high and low bid prices forwhich changed from “TRXC” on March 5, 2021, when we changed our common stock on the NYSE American. The bid prices represent inter-dealer transactions, without adjustments for retail mark-ups, mark-downs or commissions and may not necessarily represent actual transactions.name from TransEnterix Surgical, Inc. to Asensus Surgical, Inc.

Holders

As of March 1, 2018,15, 2024, there were approximately 22867 record holders of our common stock (counting all shares held in single nominee registration as one stockholder).

Dividends

We have never declared or paid noany cash dividends or made any other distributionson our common stock. We intend to retain earnings for use in respectthe operation and expansion of our common stock during our fiscal years ended December 31, 2017, 2016 and 2015, and we have no plans to pay any dividends or make any other distributions in the future. In addition, the terms of the Innovatus Loan Agreement prohibit the Company from paying any dividends without the consent of the Lender.business.

Securities Authorized for Issuance Under Equity Compensation Plans.

The Company currently has one equity compensation plan under which it makes awards, the TransEnterix, Inc. Amended and Restated Incentive Compensation Plan, (the “Plan”). The Plan was originally approved by the Board of Directors and adopted by the majority of our stockholders on November 13, 2007, and amended and restated and approved by the Board of Directors and approved by the majority of our stockholders on May 7, 2015 to increase the number of shares of common stock authorized under the Plan to 11,940,000 shares, and to make other changes. The Plan was amended on June 8, 2016 to increase the number of shares reserved for issuance under the Plan to 18,940,000 shares. The Plan was amended on May 25, 2017 to increase the number of shares reserved for issuance under the Plan to 25,940,000 shares. The Plan is used for plan-based awards for officers, other employees, consultants, advisors and non-employee directors. In connection with the 2013 merger transaction with SafeStitch Medical, Inc., or the Merger, we assumed all of the options that were issued and outstanding immediately prior to the Merger as issued by TransEnterix Surgical, and adjusted based on the Merger at the exchange ratio, which are now exercisable for approximately 1,203,825 shares of common stock. Such options were granted under the TransEnterix, Inc. 2006 Stock Plan (the “2006 Plan”) which was assumed by the Company in the Merger. The 2006 Plan is maintained solely for the purpose of the stock options granted under such 2006 Plan that remain outstanding; no future awards are authorized to be made under the 2006 Plan.

The following table gives information about the Company’s common stock that may be issued upon the exercise of options and other equity awards as of December 31, 2017:

The graph below matches TransEnterix, Inc.'s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the NYSE American index and the RDG SmallCap Medical Devices index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2012 to December 31, 2017.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Recent Sales of EquityUnregistered Securities and Use of Proceeds.

None.

Issuer Purchases of Equity Securities

None.

On September 7, 2017, the Board of Directors approved the issuance of common stock warrants to purchase 950,000 shares to a service provider to the Company.  The issuance of the foregoing securities were exempt from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, afforded by Section 3(a)(9) or 4(a)(2) thereof and Regulation D promulgated thereunder, which exception we believe is available because the securities were not offered pursuant to a general solicitation and such issuances were otherwise made in compliance with the requirements of Regulation D and Rule 506. The securities issued in this transaction may not be resold except pursuant to an effective registration statement filed under the Securities Act or pursuant to a valid exemption from the registration requirements of the Securities Act.ITEM 6.RESERVED

On May 5, 2017, the Board of Directors approved the issuance of a common stock warrant to purchase 1,244,746 shares at $1.00 per share to Innovatus Life Sciences Lending Fund I, LP, a new Lender under a Loan Agreement entered into on May 10, 2017. The issuance of the foregoing securities were exempt from the registration requirements of the Securities Act afforded by Section 3(a)(9) or 4(a)(2) thereof, which exception we believe is available because the securities were not offered pursuant to a general solicitation.  The securities issued in this transaction may not be resold except pursuant to an effective registration statement filed under the Securities Act or pursuant to a valid exemption from the registration requirements of the Securities Act.  

On September 14, 2016, the Board of Directors approved the issuance of up to 150,000 shares of common stock to a vendor of the Company in lieu of a cash payment.  To date, the Company has issued a total of 95,678 shares of the Company’s common stock to such vendor. The issuance of the foregoing securities were exempt from the registration requirements of the Securities Act afforded by Section 3(a)(9) or 4(a)(2) thereof and Regulation D promulgated thereunder, which exception we believe is available because the securities were not offered pursuant to a general solicitation and such issuances were otherwise made in compliance with the requirements of Regulation D and Rule 506. The securities issued in this transaction may not be resold except pursuant to an effective registration statement filed under the Securities Act or pursuant to a valid exemption from the registration requirements of the Securities Act.

The Company did not purchase any of its common stock during the quarter ended December 31, 2017.ITEM7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The table below shows selected consolidated financial data. The statements of operations and comprehensive loss data for the years ended December 31, 2017, 2016 and 2015 and the balance sheet data at December 31, 2017 and 2016 are derived from our financial statements included elsewhere in this Annual Report. The statements of operations and comprehensive loss data for the years ended December 31, 2014 and 2013 and the balance sheet data at December 31, 2015, 2014 and 2013 are derived from our financial statements not included in this Annual Report. The historical results presented below are not necessarily indicative of financial results to be achieved in future periods.

The following discussion of our financial condition and results of operations should be read in conjunction with our “Risk Factors”“Risk Factors” and our consolidated financial statements and the related notes to our consolidated financial statements included in this Annual Report. The following discussion contains forward-looking statements. See cautionary note regarding “Forward-Looking Statements”“Forward-Looking Statements” at the beginning of this Annual Report.

Overview

TransEnterix

Asensus Surgical, Inc. (along with its subsidiaries, the “Company”) is a medical device company that is digitizing the interface between the surgeon and the patient to improvepioneer a new era called “Performance-Guided Surgery™”, or PGS, by unlocking clinical intelligence for surgeons to enable consistently superior outcomes to patients. Built upon the foundations of digital laparoscopy and laparoscopic minimally invasive surgery by addressing(which remains the gold standard of surgery today), the Company is pioneering PGS to increase surgeon control and reduce surgical variability. With the addition of machine vision, Augmented Intelligence and deep learning capabilities throughout the surgical experience delivered via the Senhance® Surgical System, combined with the Intelligent Surgical Unit™ (ISU™) the Company intends to holistically address the current clinical, surgeon performance (fatigue and ergonomics) and economic challenges associated with current laparoscopic and robotic optionsshortcomings that impact surgical outcomes in today'sa value-based healthcare environment. The Company is focused onalso working to incorporate all of this in its next generation robotic system we call the commercialization of the Senhance™LUNA™ Surgical System, which digitizes laparoscopic minimally invasive surgery. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing and improved ergonomics while offering responsible economics.System.

The Senhance System has been granted a CE Mark in Europe for laparoscopic abdominal and pelvic surgery, as well as limited thoracic operations excluding cardiac and vascular surgery. In April 2017, the Company submitted a 510(k) application to the FDA for the Senhance System. On October 13, 2017, the Company received 510(k) clearance from the FDA for use in laparoscopic colorectal and gynecologic surgery.  These indications cover 23 procedures, including benign and oncologic procedures.  We anticipate expanding the indications for use in the middle of 2018.

The Senhance System is available for sale in Europe, the U.S.,United States, Japan, Taiwan, Russia (to the EUextent lawful), and select other countries.

The Company also enters into lease arrangements with certain qualified customers. For some lease arrangements, the customers are provided with the right to purchase the leased Senhance System is a multi-portduring or at the end of the lease term ("Lease Buyout").

During 2023, the Company focused its research and development, or R&D, activities on advancing the LUNA Surgical System, its next generation robotic surgery system, which allows multiple robotic arms to control instruments and a camera. The system features advanced technology to enable surgeons with haptic feedback and the ability to moveongoing developments in the camera via eye movement.ISU and digital surgery offerings.

We believe the LUNA System we are developing will be a “best in class” robot that will use 3mm and 5mm instruments (as contrasted with most current systems available that use 8mm instruments), including TrueWrist™ fully wristed 5mm instruments. The LUNA System will also feature monopolar and bipolar electrosurgery capabilities, rapid instrument exchange with the Company’s proprietary instrument drive system, replicates laparoscopic motion that is familiar to experienced surgeons, and integrates three-dimensional high definition vision technology. The Senhance System also offers responsible economics to hospitals by offering robotic technologyan open platform with reusable instruments thereby reducing additional costs per surgery whena smaller footprint in the OR (as compared to other robotic solutions.the Senhance System), up to four-arm configuration with enhanced manipulation and dexterity, a surgeon console with 4K-3D capabilities and unconstrained handles with improved digital features while retaining haptic feedback.

The Company has also developed the SurgiBot System, a single-port, robotically enhanced laparoscopic surgical platform. On

In December 18, 2017,2023, the Company announced that it hadsuccessfully hosted a surgeon lab to conduct an in vivo evaluation of the LUNA System’s hardware, software and instruments in porcine models. The lab allowed nine participating independent surgeons to evaluate the LUNA System’s functionality through thirteen surgical procedures across gynecology, urology and general surgery.

Also, to prepare for pilot manufacturing of the LUNA System, in 2023 the Company entered into an agreement with Great Belief International Limited, or GBIL,Flextronics Medical Sales and Marketing, Ltd. for the design and manufacturing support.

The LUNA System will continue the Company’s tradition of providing instruments that are reusable and can be re-sterilized and reprocessed, and, with improvements in manufacturing, are expected to advancehave lower costs per procedure compared to competitive robotic options.

The Company’s 2023 development efforts for digital surgery with the SurgiBot System towards global commercialization.  TheISU included:

During 2023 the Company entered into an agreement transfers ownershipwith NVIDIA to allow the Company to enhance the capabilities of the SurgiBot System assets, whileISU. Using a suite of NVIDIA tools, the Company retainswill refine ISU features like digital tags, 3D measurement and enhanced intra-operative camera control. The Company believes that the option to distribute or co-distribute the SurgiBot System outsidecollection and analysis of China. Upon completion of the transfer of all SurgiBot System assets, GBILsurgical data transformed into insights, and when shared with our physicians, will have the SurgiBot System manufactured in Chinaenhance surgical planning, surgeon education and obtain Chinese regulatory clearance from the China Foodtraining, and Drug Administration, or CFDA, while entering into a nationwide distribution agreement with China National Scientific and Instruments and Materials Company, or CSIMC, for the Chinese market.  The agreement providespromote better patient outcomes.

During 2023, the Company announced a multi-year collaboration with proceeds of at least $29 million, of which $7.5 million was receivedGoogle Cloud to integrate Google Cloud’s secure cloud data architecture and machine learning technologies to further expand cloud capabilities. The Asensus Cloud is being designed to enable customer access to a web portal and/or mobile application that can provide data, analytics and/or insights to assist in December 2017. An additional $7.5 millionpre-operative surgical planning, post-operative surgical analysis and best practices guidance.

The Company is expectedalso developing an ISU that can be utilized on a stand-alone basis apart from robotic surgery. The Company believes, given the market opportunity in traditional laparoscopic procedures, the data collected from such stand-alone units will add significantly to be received by March 31, 2018, including a $3.0 million equity investment at $2.33 per share. The remaining $14 million, representing minimum royalties, will be paid beginning at the earlier of receipt of Chinese regulatory approval or five years.

We believe that future outcomes of minimally invasive surgery will be enhanced through our combination of more advanced toolsits cumulative digital database and robotic functionality, which are designed to: (i) empower surgeons with improved precision, dexterity and visualization; (ii) improve patient satisfaction and enable a desirable post-operative recovery; and (iii) provide a cost-effective robotic system, comparedhelp to existing alternatives today, for a wide range of clinical applications. Our strategy is to focus on the commercialization and furtheraccelerate development of innovative solutions across the Senhance System.surgical continuum to reduce complications and improve efficiency.

From our inception, we devoted a substantial percentage of our resources to research and development and start-up activities, consisting primarily of product design and development, clinical studies, manufacturing, recruiting qualified personnel and raising capital. We expect to continue to invest in research and development and market development as we implement our strategy.

Since inception, we have been unprofitable. As of December 31, 2017,2023, we had an accumulated deficit of $447.6 million.

We expect$939.4 million, and there is substantial doubt about our ability to continue to invest in research and development and sales and marketing and increase selling, general and administrative expenses as we grow. As a result, we will need to generate significant revenue in order to achieve profitability.

going concern. We operate in one business segment.

Debt Refinancing

On May 10, 2017, the Company and its domestic subsidiaries, as co-borrowers, entered into a Loan and Security Agreement, or the Innovatus Loan Agreement with Innovatus Life Sciences Lending Fund I, LP, as Lender and Collateral Agent, or the Lender.  Under the Innovatus Loan Agreement, the Lender has agreed to make certain term loans in the aggregate principal amount of up to $17,000,000. Funding of the first $14,000,000 tranche occurred on May 10, 2017. The Company will be eligible to draw on the second tranche of $3,000,000 upon achievement of certain milestones. So long as the Company meets each Interest-Only Milestone (as defined below), the Company is entitled to make interest-only payments for up to twenty-four (24) months. At the end of the interest-only period, the Company will be required to repay the term loans over a two-year period, based on a twenty-four (24) month amortization schedule, with a final maturity date occurring on the fourth anniversary of the initial funding date.  However, the interest-only period will end if the Company fails to meet any Interest-Only Milestone. Commencing on the first day of the month following such failure to achieve an Interest-Only Milestone, the Company will be required to repay the term loans over a two year period, based on a twenty-four (24) month amortization schedule.  The Interest-Only Milestones require the Company to (i) achieve certain twelve month revenue targets, measured quarterly, commencing with quarter ending March 31, 2018, (ii) meet a minimum capital raising threshold through the sale and issuance of equity securities during the period from April 10, 2017 through May 31, 2018 and (iii) obtain clearance for commercialization of the Senhance System by the U.S. Food and Drug Administration, or the Senhance Clearance, by May 30, 2018.  Each such milestone is referred to as an Interest-Only Milestone. In connection with its entrance into the Innovatus Loan Agreement, the Company repaid its existing credit facility with Silicon Valley Bank and Oxford Finance LLC under the SVB Loan Agreement.

The term loans bear interest at a fixed rate equal to 11% per annum,As of which 2.5% can be paid in-kind and added to the outstanding principal amount of the term loans until the earlier of (i) the first anniversary following the funding date and (ii) the Company’s failure to achieve an Interest-Only Milestone.  The Company will be required to repay the term loans if they are accelerated following an event of default.  In addition, the Company is permitted to prepay the term loans in full at any time upon five (5) business days’ written notice to the Lender.  Upon the earliest to occur of the maturity date, acceleration of the term loan, or prepayment of the term loan, the Company is required to make a final payment equal to the total term loan commitment multiplied by four percent (4%); provided, however, that in the event the Company refinances its obligations with the Lender after Senhance Clearance, no final fee or prepayment fee described below will be due; and provided, further, that if the Company elects to refinance its obligations prior to the funding of the second tranche, the final fee with respect to the second tranche shall be paid in full on the date of this filing, the Company continues to manage cash prudently and believes it has cash into early June 2024. We are actively pursuing a number of financing options, including collaborations, contractual relationships and strategic transactions. However, we are aware that such refinancing. Any prepaymentalternatives are and may continue to be time consuming and that successful consummation of a transaction or transactions is not assured. We may need to pursue alternative pathways, including, but not limited to, debt financing, sale of assets or equity-based financing. If none of these alternatives are consummated, we may need to suspend our product development programs, including the term loans in full, whether mandatoryLUNA System, and take other actions to preserve cash. We may also need to seek bankruptcy if these measures are insufficient or voluntary, must include (i) the final fee, (ii) interest at the default rate (which is the rate otherwise applicable plus five percent (5%)) with respect to any amounts past due, (iii) the Lender’s expenses and all other obligations that are due and payable to the Lender and (iv) a prepayment fee of three percent (3%) if the term loan is paid in full on or before the first anniversary of the effective date, two percent (2%) if paid off after the first anniversary but on or before the second anniversary of the effective date and one percent (1%) if paid off after the second anniversary but on or before the third anniversary of the effective date.unsuccessful.

In connection with the funding,Recent Financing Transactions

2022 At-the -Market Offering

On March 18, 2022, the Company paidentered a facility fee of $170,000 on the date of funding of the first tranche.  In addition,Controlled Equity OfferingSales Agreement (the “2022 Sales Agreement”), with Cantor Fitzgerald & Co., and Oppenheimer & Co. Inc. The Company commenced an at-the-market offering (the “2022 ATM Offering”) pursuant to which the Company issued warrantscould sell from time to the Lendertime, at its option, up to purchasean aggregate of $100.0 million shares of the Company’s common stock. AdditionalSales during the year ended December 31, 2023, under the 2022 ATM Offering are as follows (in thousands except for share and per share amounts):

2023 Registered Direct Offering

On July 27, 2023, the Company sold, in a registered direct offering, an aggregate of 23,809,524 shares of common stock, and warrants will be issued on the funding date of each subsequent tranche and will expire five (5) years from such issue date. The warrants issued in connection with funding of the first tranche entitle the Lender to purchase up to 1,244,746 shares23,809,524 of the Company’s common stock shares at an exercise price of $1.00$0.42 per share.

The Company’s obligations under the Innovatus Loan Agreement are secured by a security interest in all of the assets of the Company and its current and future domestic and material foreign subsidiaries, including a security interest in the intellectual property.  The Innovatus Loan Agreement contains customary representations and covenants that, subject to exceptions, restrict the Company’s ability to do the following things: declare dividends or redeem or repurchase equity interests; incur additional liens; make loans and investments; incur additional indebtedness; engage in mergers, acquisitions, and asset sales; transact with affiliates; undergo a change in control; add or change business locations; and engage in businesses that are not related to its existing business. Under the terms of the Innovatus Loan Agreement, the Company is required to maintain minimum unrestricted cash in an amount equal to (x) six million dollars ($6,000,000) at all times prior to Senhance Clearance; and (y) at all times thereafter, the lesser of (i) $6,000,000, (ii) the Company’s trailing three (3) months’ cash used to fund operating activities, as determined as of the most recent month end and (iii) the then outstanding principal amount of the term loans, together with accrued but unpaid interest.

Public Offering of Units

On April 28, 2017, we entered into an underwriting agreement with Stifel, Nicolaus & Company, Incorporated, or the Underwriter, relating to an underwritten public offering ofcommon share (the "warrants”), for an aggregate of 24,900,000 Units, each consisting of one share of the Company’s Common Stock, a Series A Warrant to purchase one share of Common Stock and a Series B Warrant to purchase 0.75 shares of Common Stock at an offering price to the public of $1.00 per Unit. Certain of the Company’s officers, directors and existing stockholders purchased approximately $2.5 million of Units in the public offering. The closing of the public offering occurred on May 3, 2017.

Each Series A Warrant had an initial exercise price of $1.00 per share and was able to be exercised$10.0 million. Warrants are exercisable at any time beginning on or after the date of issuance and from time to time thereafter, through and includingwill expire five years after the first anniversarydate of issuance. Based on the assessment of the issuance date, unless terminated earlierwarrants’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815, the Company determined that warrants do not meet the requirements for equity classification. Accordingly, warrants are recorded as provided ina liability on the Series A Warrant. Receipt of 510(k) clearance for the Senhance System on October 13, 2017, triggered the acceleration of the expiration date of the Series A Warrants to October 31, 2017.  As of December 31, 2017, all of the Series A Warrants had been exercised.

Each Series B Warrant has anCompany’s balance sheet at their initial exercise price of $1.00 per share and may be exercised at any time beginningestimated fair value on the date of issuance and from timeissuance. For additional information regarding the fair value of warrant liability, please refer to time thereafter through and including the fifth anniversary of the issuance date, or by May 3, 2022. As of December 31, 2017, Series B Warrants representing approximately 8.9 million shares had been exercised.Note 6 – Fair Value Measurements.

The exercise prices and the number of shares issuable upon exercise of the outstanding Series B Warrants are subject to adjustment upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of assets, similar recapitalization transactions, or other similar transactions. The Series B Warrants are subject to adjustment in the event that the Company issues or is deemed to issue shares of common stock for less than the then applicable exercise price of the Series B Warrants. The exercisability of the Series B Warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99% of our common stock. If, at any time Series B Warrants are outstanding, any fundamental transaction occurs, as described in the Series B Warrants and generally including any consolidation or merger into another corporation, the consummation of a transaction whereby another entity acquires more than 50% of the Company’s outstanding voting stock, or the sale of all or substantially all of its assets, the successor entity must assume in writing all of the obligations to the Series B Warrant holders. Additionally, in the event of a fundamental transaction, each Series B Warrant holder will have the right to require the Company, or its successor, to repurchase the Series B Warrants for an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such Series B Warrants.

The underwriting agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the underwriting agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties.

The net proceeds to the Company from the offering were approximately $23.2allocated $7.1 million prior to any exercise of the Series A Warrants or Series B Warrants, after deducting underwriting discounts and commissions and estimated offering expenses paid by the Company. The net proceeds to the Company from the exercise of all of the Series A Warrants and the Series B Warrants exercised prior to December 31, 2017 were approximately $33.6 million.

The Units were issued pursuant to a prospectus supplement dated April 28, 2017 and an accompanying base prospectus dated June 22, 2016 that form a part of the registration statement on Form S-3 that the Company filed with the SEC on November 7, 2014 and was declared effective on December 19, 2014 (File No. 333-199998), and post-effectively amended pursuant to Post-Effective Amendment No. 1 on Form S-3, as filed with the SEC on March 8, 2016 and declared effective on June 22, 2016 and a related registration statement filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933.

On December 15, 2017, we filed a registration statement on Form S-3 (File No. 333-222103) to register shares of common stock underlying outstanding Series B Warrants previously issued as part of the Company’s May 3, 2017 public offering.  The new registration statement replaced the registration statement on Form S-3 that expired on December 19, 2017 with respect to these securities.  On January 26, 2018, we filed an Amendment No. 1 to such registration statement on Form S-3 to update the information, in the registration statement.  The registration statement covers up to 9,579,884 shares of common stock underlying the outstanding Series B Warrants.  This registration statement on Form S-3 was declared effective on January 29, 2018.  

Lincoln Park Purchase Agreement

On December 16, 2016, we entered into a purchase agreement, or the LPC Purchase Agreement, with Lincoln Park Capital Fund, LLC, an Illinois limited liability company, or Lincoln Park, pursuant to which we had the right to sell to Lincoln Park up to an aggregate of $25,000,000 in shares of our common stock, subject to certain limitations and conditions set forth in the LPC Purchase Agreement.  Effective April 27, 2017, we terminated the LPC Purchase Agreement. The LPC Purchase Agreement provided us with an election to terminate the Purchase Agreement for any reason or for no reason by delivering a notice to Lincoln Park, and we did not incur any early termination penalties in connection with the termination of the LPC Purchase Agreement. Prior to termination, we sold shares of our common stock to Lincoln Park under the LPC Purchase Agreement for gross proceeds of approximately $5.7 million.

At-the-Market Offerings

On February 9, 2016, we entered into a Controlled Equity Offering SM Sales Agreement, or the “2016 Sales Agreement, with Cantor Fitzgerald & Co., or Cantor, under which we could offer and sell, through Cantor, up to approximately $43.6 million in shares of common stock in an at-the market offering, or the 2016 ATM Offering. The 2016 Sales Agreement was terminated, effective September 10, 2017. On February 20, 2015, we had entered into a Controlled Equity Offering SM Sales Agreement, or the 2015 Sales Agreement, with Cantor, as sales agent, pursuant to which we offered and sold, through Cantor, $25.0 million in shares of common stock in an at-the-market offering from February 2015 through February 2016, or the 2015 ATM Offering. All sales of shares under these offerings were made pursuant to an effective shelf registration statement on Form S-3 filed with the SEC. We paid Cantor a commission of approximately 3% of the aggregate gross proceeds received from all salesto warrants based on their estimated fair value, with the residual amount of $2.9 million allocated to common stock. Offering related issuance costs were approximately $1.0 million and consisted primarily of placement agent’s fees and legal expenses. Issuance costs were allocated to common stock underand warrant liability proportionally to the 2015 Sales Agreement and the 2016 Sales Agreement.

On August 31, 2017, we entered into an At-the-Market Equity Offering Sales Agreement, or the 2017 Sales Agreement, with Stifel, Nicolaus & Company, Incorporated, or Stifel, under which we could offer and sell, through Stifel, up to approximately $50.0 million in shares of common stock in an at-the-market offering, or the 2017 ATM Offering. All sales of shares were made pursuant to an effective shelf registration statement on Form S-3 filed with the SEC. We paid Stifel a commission of approximately 3%allocation of the aggregate gross proceeds received from all salespurchase price. For the year ended December 31, 2023, the Company recorded $0.7 million of common stock underother expense in the 2017 Sales Agreement. Asstatement of October 31, 2017, the 2017 ATM Offering was completed.operations related to issuance costs allocated to warrant liability.

The following table summarizes the total sales under the 2015 Sales Agreement, 2016 Sales Agreement and 2017 Sales Agreement

Results of Operations for the periods indicated (in thousands, except per share amounts):Years Ended December 31, 2023 and 2022

Revenue

Senhance AcquisitionBoth in 2023 and Related Transactions

Membership Interest Purchase Agreement and Amendment

On September 21, 2015, the Company announced that it had entered into a Membership Interest Purchase Agreement, dated September 18, 2015 with Sofar S.p.A., as the Seller, Vulcanos S.r.l., as the acquired company, and TransEnterix International, Inc., a wholly owned subsidiary of the Company as the Buyer. The closing of the transactions contemplated by the Purchase Agreement occurred on September 21, 2015.  The Buyer acquired all of the membership interests of the acquired company from the Seller, and changed the name of the acquired company to TransEnterix Italia S.r.l. On the closing date, pursuant to the Purchase Agreement, the Company completed the strategic acquisition from Sofar S.p.A. of all of the assets, employees and contracts related to the advanced robotic system for minimally invasive laparoscopic surgery now known as the Senhance System, or the Senhance Acquisition.

Under the terms of the Purchase Agreement, the consideration2022, revenue consisted of the issuancesales of 15,543,413 sharesSenhance Systems, ongoing System leasing payments, sales of the Company’s common stock, or the Securities Consideration, and approximately $25,000,000 U.S. Dollars and €27,500,000 Euro in cash consideration, or the Cash Consideration. The Securities Consideration was issued in full at closing of the acquisition; the Cash Consideration was or will be paid in four tranches, with US $25,000,000 paid at closing and the remaining Cash Consideration of €27,500,000 to be paid in three additional tranches based on achievement of negotiated milestones. On December 30, 2016, the Company and Sofar entered into an Amendment to the Purchase Agreement to restructure the terms of the second tranche of the Cash Consideration. Under the Amendment, the second tranche was restructured to reduce the contingent cash consideration by €5.0 million in exchange for the issuance of 3,722,685 shares of the Company’s common stock with an aggregate fair market value of €5.0 million, which were issued on January 4, 2017. The price per share was $1.404 and was calculated based on the average of the closing prices of the Company’s common stock on ten consecutive trading days ending one day before the execution of the Amendment. 

The issuance of the initial Securities Consideration was effected as a private placement of securities under Section 4(a)(2) of the Securities Act, and Regulation D promulgated thereunder.  The issuance of the additional shares in January 2017 was made under an existing shelf registration statement on Form S-3.

As of December 31, 2017, the Company has paid all Cash Consideration due under the second tranche and €1.8 million due under the fourth tranche.

The Purchase Agreement contains customary representations and warranties of the parties and the parties have customary indemnification obligations, which are subject to certain limitations described further in the Purchase Agreement.

Registration Rights and Lock-Up Agreements

In connection with the Senhance Acquisition, we also entered into a Registration Rights Agreement, dated as of September 21, 2015, with the Seller, pursuant to which we agreed to register the Securities Consideration shares for resale following the end of the lock-up periods described below. The resale Registration Statement has been filed and is effective.

In connection with the Senhance Acquisition, Sofar entered into a Lock-Up Agreement with us pursuant to which Sofar agreed, subject to certain exceptions, not to sell, transfer or otherwise convey any of the Securities Consideration over a two-year period following the Closing Date. As of September 21, 2017, all of the Securities Consideration was released from the lock-up restrictions and is eligible to be resold under the effective resale registration statement.  

2015 Public Offering

On June 11, 2015, we sold 16,666,667 shares of common stock at a public offering price of $3.00 per share for aggregate gross proceeds of $50.0 million in an underwritten firm commitment public offering. We granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 2,500,000 shares of common stock to cover over-allotments. The common stock was offered and sold pursuant to our shelf registration statement on Form S-3 (File No. 333-199998) registering an aggregate of $100.0 million of our designated securities. The closing of the public offering occurred on June 17, 2015. On July 10, 2015, the underwriters exercised a portion of their over-allotment option to acquire an additional 2,075,000 shares at the public offering price of $3.00 per share for aggregate additional gross proceeds of $6.2 million. The purchase of the over-allotment shares closed on July 15, 2015. Total proceeds were $52.2 million, net of issuance costs of $4.0 million.

Results of Operations

Our results of operations include the operations of TransEnterix Italia from the Senhance Acquisition date of September 21, 2015 forward.

Revenue

In 2017, our revenue consisted of product and service revenue resulting from a total of four Senhance Systems: Europe (two), Asia (one) and the United States (one), and related instruments, accessories and services. In 2016, our revenue consisted of product and service revenue resulting from the sale in Europe of a Senhance System, instruments and accessories, and related services. We recognizeservices revenue when persuasive evidence that an arrangement exists, delivery has occurredfor Senhance Systems sold or service has been rendered,placed in Europe, Asia, and the price is fixed or determinable, and collectability is reasonably assured. Amounts billedU.S. in excess of the associated revenue recognized are deferred.prior periods.

We expect to experience some unevenness in the number and trend, and average selling price, of units sold on a quarterly basis given the early stage of commercialization of our products.

Product and service revenue for the year ended December 31, 20172023 increased to $7.1$5.5 million compared to $1.5$4.3 million for the year ended December 31, 2016.2022. The $5.6$1.2 million increase was primarily the result of three Senhance System sales in the revenue recognized oncurrent year compared to two Senhance System sales in the sale of four Senhance Systems, net of deferred revenue.prior year.

Product and service

Service revenue for the year ended December 31, 2016 increased2023 decreased to $1.5$1.1 million compared to $0$1.4 million for the year ended December 31, 2015.2022. The $1.5$0.3 million decrease was due to a decrease in the number of Senhance Systems under service contracts.

Lease revenue for the year ended December 31, 2023 increased to $2.0 million compared to $1.4 million for the year ended December 31, 2022. The $0.6 million increase was the result of the revenue recognized on the saleadditional lease placements in 2023.

Cost of one Senhance System, net of deferred revenue, during the third quarter of 2016.Revenue

Cost of Revenue

Costrevenue consists of revenues consists primarily of costs related to contract manufacturing, materials, labor, and manufacturing overhead. We expenseoverhead incurred internally to produce the products. Shipping and handling costs incurred by the Company are included in cost of revenue. The Company expenses all inventory excess and obsolescence provisions as cost of revenues.revenue. The manufacturing overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment depreciation and operations supervision and management. We expect overhead costs as a percentage of revenues to become less significant as our production volume increases. We expect

Product cost of revenues to increase in absolute dollars to the extent our revenues grow and as we continue to invest in our operational infrastructure to support anticipated growth.

Cost of revenue for the year ended December 31, 20172023 increased to $6.7$6.9 million as compared to $1.1$5.3 million for the year ended December 31, 2016. This2022. The $1.6 million increase overconsists of a $0.9 million increase in materials costs primarily related to three Senhance System sales in the current year compared to two Senhance System sales in the prior year, period was the result of increased salesa $0.5 million increase in personnel costs, a $0.1 million increase in supplies and costs for manufacturing overhead and field service.a $0.1 million increase in consulting expenses.

Cost of revenue

Service cost for the year ended December 31, 20162023 increased to $1.1$2.3 million as compared to $0$2.2 million for the year ended December 31, 2015. This2022. The $0.1 million increase overprimarily relates to a $0.2 million increase in supplies and a $0.1 million increase in personnel costs partially offset by a $0.1 million decrease in material costs and a $0.1 million decrease in consulting expenses. Service cost typically exceeds revenue primarily due to part replacements under maintenance plans, which are expensed when incurred, along with salaries for the priorfield service teams.

Lease cost for the year period wasended December 31, 2023 increased to $4.0 million as compared to $3.4 million for the year ended December 31, 2022. The $0.6 million increase primarily relates to a $0.3 million increase in material costs as a result of the costs recognizeda higher number of systems under lease and a $0.3 million increase in connection with the sale of one Senhance System during the third quarter of 2016. The $1.1 million cost of revenue primarily represents the fair value of the Senhance System determined using the acquisition method of accounting at the Senhance Acquisition date.depreciation.

Research and Development

Research and development, or R&D, expenses primarily consist of engineering, product development and regulatory expenses incurred in the design, development, testing and enhancement of our products and legal services associated with ourthe Company’s efforts to obtain and maintain broad protection for the intellectual property related to ourits products. In future periods, we expectthe Company expects R&D expenses to remain consistent or be modestly lower as we continue to transition our investments into commercial activities.substantially increase as it invests in the LUNA™ Surgical System and digital laparoscopy platform. R&D expenses are expensed as incurred.

R&D expenses for the year ended December 31, 2017 decreased 25%2023 increased 28% to $22.0$37.0 million as compared to $29.3$28.9 million for the year ended December 31, 2016.2022 as the Company continues to invest in basic research, clinical studies, and product development in the areas of robotics and digital technologies supporting the LUNA System and its digital laparoscopy platform. All activities are in the effort of building the future for Performance-Guided Surgery. The $7.3$8.1 million decrease resultedincrease primarily from decreasedrelates to a $2.9 million increase in personnel costs, of $4.0a $2.3 million decreased supplies expense of $1.9 million, decreasedincrease in contract engineering services, consulting, and other outside services, an $1.4 million increase in IT costs, an $1.3 million increase in supplies costs and a $0.2 million increase in testing and enhancement of $2.0 million and decreased other costs of $0.1 million, offset by increased stock compensation costs of $0.7 millionour products.

R&D expenses for the year ended December 31, 2016 decreased 1% to $29.3 million as compared to $29.7 million for the year ended December 31, 2015. The $0.4 million decrease resulted primarily from decreased supplies expense of $3.7 million and decreased contract engineering services, consulting and other outside services of $3.6 million, offset by increased preclinical lab expense of $3.8 million, increased facility costs of $0.9 million, increased stock compensation costs of $0.8 million, increased travel related expenses of $0.5 million, increased other costs of $0.6 million and increased personnel related costs of $0.3 million.

Sales and Marketing

Sales and marketing expenses include costs for sales and marketing personnel, travel, demonstration product, market development, physician training, tradeshows, marketing clinical studies and consulting expenses. We expect sales and marketing expenses to increase significantly in 2018 in support of our Senhance System commercialization.

Sales and marketing expenses for the year ended December 31, 20172023 increased 90%14% to $17.5$16.9 million compared to $9.2$14.8 million for the year ended December 31, 2016.2022. The $8.3$2.1 million increase was primarily related to increaseda $2.7 million increase in personnel related costs of $3.0and a $0.2 million increased consulting and outside service costs of $1.8 million, increased depreciation expense $1.0 million, increased travel related expenses of $0.8 million, increased stock compensation costs of $0.5 million, increased demonstration product costs of $0.5 million, increased tradeshow costs ofincrease in supplies, partially offset by a $0.4 million decrease in consulting expenses, $0.2 million decrease in depreciation and increased$0.2 million decrease in other costs of $0.3 million, as we increased our U.S. sales and marketing team following receipt of 510(k) clearance for the Senhance System.

Sales and marketing expenses for the year ended December 31, 2016 increased 217% to $9.2 million compared to $2.9 million for the year ended December 31, 2015. The $6.3 million increase was primarily related to increased personnel related costs of $2.6 million, increased travel related expenses of $1.0 million, increased consulting costs of $0.9 million, increased tradeshow costs of $0.5 million, increased stock compensation costs of $0.5 million, increased other costs of $0.6 million and increased depreciation expense of $0.2 million.costs.

General and Administrative

General and administrative expenses consist of personnel costs related to the executive, finance, legal, IT and human resource functions, as well as professional service fees, legal fees, accounting fees, insurance costs, and general corporate expenses. In future periods, we expect general and administrative expenses to increase to support our sales, marketing, and research and development efforts.

General and administrative expenses for the year ended December 31, 2017 increased 14%2023 decreased 5% to $12.3$19.2 million compared to $10.8$20.2 million for the year ended December 31, 2016.2022. The $1.5$1.0 million decrease was primarily related to a $1.1 million reduction in IT costs, an $0.8 million decrease in personnel costs and an $0.2 million decrease in corporate insurance expenses, partially offset by an $0.8 million increase was primarily due to increased stock compensationin amortization of the implementation costs of $0.7 million, increased personnel costs of $0.5 millionthe enterprise resource planning system and increased other costs of $1.0 million offset by decreased legal, accounting, and investor relationsoftware licensing fees, and other public company costs of $0.7 million.

General and administrative expenses for the year ended December 31, 2016 increased 38% to $10.8 million compared to $7.8 million for the year ended December 31, 2015. The $3.0a $0.3 million increase was primarily due to increased legal, accounting, and investor relation fees and other public company costs of $1.8 million, increased stock compensation costs of $0.5 million, increased personnel costs of $0.4 million, and increased other costs of $0.3 million.in consulting expenses.

Amortization of Intangible Assets

Amortization of intangible assets for the year ended December 31, 2017 increased2023 decreased to $7.9$0.5 million compared to $7.0$7.7 million for the year ended December 31, 2016.2022. The $0.9$7.2 million increase wasdecrease is primarily the result of amortization of developed technology related to the acquisition of the Senhance System on September 21, 2015 and the amortization of in-process research and development transferred to intellectual property in October 2017.

Amortization of intangible assets fordeveloped technologies intangibles that fully depreciated during the year ended December 31, 2016 increased to $7.0 million compared to $2.2 million for the year ended December 31, 2015. The $4.8 million increase was primarily the result of amortization of developed technology related to the acquisition of the Senhance System on September 21, 2015.2022.

Change in Fair Value of Contingent Consideration

The change in fair value of contingent consideration in connection with the Senhance Acquisition was $2.0a $1.0 million increase for the year ended December 31, 2023 compared to a $1.1 million reduction for the year ended December 31, 2022. The increase was primarily due to changes in market assumptions and the discount rate utilized.

Property and Equipment Impairment

During the year ended December 31, 2023, the Company recorded an impairment charge of $0.4 million compared to $1.4 million for the year ended December 31, 20172022, to reduce the carrying value of property and equipment to its estimated fair value. The change was primarily related to the changelower returned Senhance Systems under operating leases and a reduction in Senhance Systems under operating leases that are not expected timelines for the achievementto generate future cash flows sufficient to recover their net book value.

Other Income, net

The change in fair value of contingent consideration in connection with the Senhance Acquisition was $0.5Company recognized $1.3 million other income for the year ended December 31, 2016 primarily related2023, compared to the Amendment to the Purchase Agreement for the second tranche, the change in expected timelines for the achievement of milestones, the effect of the passage of time on the fair value measurement and the impact of foreign currency exchange rates.  

Issuance costs for Warrants

Issuance costs of $0.6 million were allocated to the Series A Warrants and Series B Warrants issued in April 2017.

Inventory write-down related to restructuring

On April 19, 2016, the FDA notified the Company that the SurgiBot System did not meet the criteria for substantial equivalence based on the data submitted in the 510(k) submission. As a result, we reprioritized our near-term regulatory efforts to the 510(k) submission for the Senhance System. Consequently, in May 2016, the Company implemented a restructuring plan.  Under this plan, we recorded a $2.6 million write-down of inventory related to the SurgiBot System.

Restructuring and other charges

Under the restructuring plan executed in May 2016, we recorded $3.1 million in restructuring and other charges. The restructuring charges included: (i) $0.5 million to be paid in cash, of which $0.4 million related to employee severance costs and $0.1 million related to cancellation of certain contracts; and (ii) $2.6 million for other non-cash charges, of which $1.0 million related to the write-off of long-lived assets for the abandonment of certain equipment and tooling and $1.6 million related to the write-off of intellectual property for certain patents.

Goodwill impairment

The Company performs an annual impairment test of goodwill at December 31, or more frequently if events or changes in circumstances indicate that the carrying value of our one reporting unit may not be recoverable. During the second quarter of 2016, we were notified by the FDA that the SurgiBot System did not meet the criteria for substantial equivalency, negatively impacting our market capitalization, and warranting an interim two-step quantitative impairment test.  Based on the impairment test, we recorded goodwill impairment of $61.8 million during the second quarter of 2016.  No charge for goodwill impairment was required as of December 31, 2017.

Acquisition Related Costs

Acquisition related costs consist primarily of legal, accounting and other professional fees related to the Senhance Acquisition. We incurred $4.2 million of acquisition-related expensesincome for the year ended December 31, 2015.

Change in Fair Value of Warrant Liabilities

2022. The change was primarily related to a $1.2 million increase in the fair value of Series A Warrants and Series B Warrants issuedwarrant liabilities recorded in April 2017 was $83.7 million for the year ended December 31, 2017. The2023, a $0.4 million increase was primarily thein interest income and a decrease in interest expense of $0.4 million, partially offset by a $1.1 million increase in other expenses as a result of our increased stock price at the time the warrants were exercised$0.7 million in issuance costs allocated to warrant liability and increased stock price for the remaining outstanding warrants at December 31, 2017.$0.4 million in other expenses.

Interest

Income Tax Expense Net

InterestThe Company recognized $0.3 million income tax expense for the year ended December 31, 2017 increased to $2.1 million compared to $1.9 million for the year ended December 31, 2016. The $0.2 million increase was primarily related to the increase in interest rate on refinanced notes payable.2023 and 2022.

Interest expense for the year ended December 31, 2016 increased to $1.9 million compared to $1.6 million for the year ended December 31, 2015. The $0.3 million increase was primarily related to the increase in notes payable of approximately $10.0 million in August 2015.

Income Tax Benefit

Income tax benefit consists primarily of taxes related to the amortization of purchase accounting intangibles in connection with the Italian taxing jurisdiction for TransEnterix Italia as a result of the acquisition of the Senhance System. We recognized $3.3 million, $5.5 million and $1.0 million of income tax benefit for the year ended December 31, 2017, 2016 and 2015, respectively.

Liquidity and Capital Resources

Sources

Going Concern

The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of Liquidity

Since our inception we have incurred significant lossesassets and asliquidation of December 31, 2017, weliabilities in the normal course of business. The Company had an accumulated deficit of $447.6 million. We have$939.4 million and working capital of $23.8 million as of December 31, 2023. The Company has not yet achieved profitabilityestablished sufficient revenues to cover its operating costs and we cannot assure investors that we will achieve profitability with our existingrequire additional capital resources.to continue as a going concern. As of December 31, 2017,2023, the Company'sCompany had cash, cash equivalents, short-term investments and long-term investments, excluding restricted cash, balance wasof approximately $97.6$21.1 million. We believeThe Company believes that our existing cash, and cash equivalents, short-term investments and long-term investments, together with cash received from sales of our products, will be sufficient to fund operations through at least the next 12 months. We expect to continue to fund salesproduct, service, and marketing, research and development and general and administrative expenses at similar to current or higher levels and, as a result, we will need to generate significant revenues to achieve profitability. Our principal sources of cash to date have been proceeds from public offerings of common stock, private placements of common and preferred stock, incurrence of debt and the sale of equity securities held as investments.

We currently have one effective shelf registration statement on file with the SEC, which registers up to $150.0 million of debt securities, common stock, preferred stock, or warrants, or any combination thereof for future financing transactions.  The shelf registration statement was declared effective by the SEC on May 19, 2017. We have raised $50.0 million in gross proceeds and approximately $48.5 in net proceeds under such shelf registration statement through the sale of all the shares available under the 2017 ATM Offering. As of December 31, 2017, we had $100.0 million available for future financings under such shelf registration statement.  

At December 31, 2017, we had cash and cash equivalents, excluding restricted cash, of approximately $91.2 million.

Consolidated Cash Flow Data

Operating Activities

For the year ended December 31, 2017, cash used in operating activities of $39.8 million consisted of net loss of $144.8 million offset by cash provided by working capital of $3.4 million and non-cash items of $101.6 million. The non-cash items primarily consisted of $83.7 million change in fair value of warrant liabilities, $7.1 million of stock-based compensation expense, $2.5 million of depreciation, $7.9 million of amortization, and $2.0 million change in fair value of contingent consideration, offset by $3.3 million deferred income tax benefit. The increase in cash from changes in working capital included $2.1 million increase in accrued expenses, $7.5 million increase for cash received for the sale of the SurgiBot assets and $1.1 million increase for deferred revenue, offset by $3.0 million increase in inventories, $0.5 million decrease in accounts payable, $3.3 million increase in other current and long term assets and $0.4 million increase in accounts receivable.

For the year ended December 31, 2016, cash used in operating activities of $52.4 million consisted of net loss of $120.0 million and cash used for working capital of $8.5 million, offset by non-cash items of $76.1 million. The non-cash items primarily consisted of $61.8 million goodwill impairment, $2.6 million inventory write-down related to restructuring, $2.6 million non-cash restructuring and other charges, $5.0 million of stock-based compensation expense, $1.9 million of depreciation, $7.1 million of amortization, and $0.5 million change in fair value of contingent consideration, offset by $5.6 million deferred income tax benefit. The decrease in cash from changes in working capital included $6.6 million increase in inventories, $0.4 million decrease in accounts payable, $1.5 million increase in other current and long term assets and $1.0 million increase in accounts receivable, offset by  $1.1 million increase in accrued expenses.

For the year ended December 31, 2015, cash used in operating activities of $38.8 million consisted of net loss of $46.9 million, offset by non-cash items of $5.5 million and cash provided by working capital of $2.6 million. The non-cash items primarily consisted of $3.3 million of stock-based compensation expense, $1.3 million of depreciation, and $2.3 million of amortization, offset by $1.0 million deferred income tax benefit and $0.4 million change in fair value of contingent consideration. The increase in cash from changes in working capital included $1.9 million increase in inventories and $2.0 million increase in other current and long term assets. These amounts were partially offset by $1.1 million increase in accounts payable, $5.4 million increase in accrued expenses and $0.1 million decrease in accounts receivable.

Investing Activities

For the year ended December 31, 2017, net cash used in investing activities was $2.0 million. This amount reflected the purchases of property and equipment and intellectual property.

For the year ended December 31, 2016, net cash used in investing activities was $1.4 million. This amount reflected the purchases of property and equipment.

For the year ended December 31, 2015, net cash used in investing activities was $26.2 million. This amount reflected the $25.0 million payment for the Senhance Acquisition and $1.2 million paid for the purchases of property and equipment.

Financing Activities

For the year ended December 31, 2017, net cash provided by financing activities was $104.4 million. This amount was primarily related to $77.6 million in proceeds from the issuance of common stock and warrants, net of issuance costs, $13.0 million in proceeds from the issuance of debt and $34.5 million proceeds from the exercise of warrants, partially offset by $13.3 million in payments of debt and $7.2 million in payments of contingent consideration.

For the year ended December 31, 2016, net cash provided by financing activities was $49.9 million. This amount was primarily related to $58.0 million in proceeds from the issuance of common stock, net of issuance costs, partially offset by $6.9 million in payments of debt and $1.2 million in payments of contingent consideration.

For the year ended December 31, 2015, net cash provided by financing activities was $68.4 million. This amount was primarily related $58.3 million in proceeds from the issuance of common stock, net of issuance costs, and $9.9 million proceeds from the issuance of debt, and $0.2 million proceeds from the issuance of stock options and warrants.

Operating Capital and Capital Expenditure Requirements

We believe that our existing cash and cash equivalents, together with cash received fromlease sales of our products, will be sufficient to meet ourits anticipated cash needs through at least the next 12 months. We intend to spend substantial amounts on commercial activities, on research and development activities, including product development, regulatory and compliance, clinical studies in support of our future product offerings, the enhancement and protection of our intellectual property, on notes payable payments as they come due, and on contingent consideration payments in connection with the acquisition of the Senhance System. Weinto early June 2024.

The Company will need to obtain additional financing to pursue ourproceed with its business strategy,plan. Management's plan to respond to new competitive pressuresobtain additional resources for the Company may include additional sales of equity, traditional financing, such as loans, entry into a strategic collaboration, entry into an out-licensing arrangement or to take advantageprovision of opportunities that may arise. To meet our capital needs, we are considering multiple alternatives, including, but not limited to, additional equity financings, debt financings, strategic collaborations and other funding transactions. There can be nodistribution rights in some or all of its markets. However, management cannot provide any assurance that wethe Company will be able to completesuccessful in accomplishing any such transactionor all of its plans. If sufficient funds are not received on acceptable terms or otherwise. If we are unable to obtaina timely basis, the necessary capital, we willCompany would then need to pursuepurse a plan to license or sell ourits assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date that these financial statements are issued. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned 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, the success of the Company’s LUNA System development plans and its ability to fund such plans, the Company’s ability to grow its placements and increase utilization of the Senhance System by customers; 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 and other geopolitical factors; the success of its market development efforts; the timing and outcome of the regulatory review process for its products; 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 and digital surgical devices; and its ability to identify and pursue development of additional products.

Sources of Liquidity

Our principal sources of liquidity to date have been cash proceeds from issuance of common stock pursuant to public offerings, incurrence of debt and proceeds from sales and maturities of investments.

Consolidated Cash Flow Data

Operating Activities

For the year ended December 31, 2023, cash used in operating activities of $63.6 million consisted of a net loss of $78.4 million, offset by changes in non-cash items of $11.7 million, and operating assets and liabilities of $3.1 million. The non-cash items primarily consisted of $7.9 million of stock-based compensation expense, $3.3 million of depreciation, $1.0 change in fair value of contingent consideration, $0.4 million of amortization of intangible assets, $0.4 million of property and equipment impairment, $0.3 million change in inventory reserves, and $0.1 million deferred tax expense partially offset by $1.2 million change in fair value of warrant liabilities and $0.5 million in accretion of discounts and premiums on investments. The increase in cash from changes in operating assets and liabilities primarily relates to a $1.2 million decrease in other current and long-term assets, $0.9 million increase in accrued employee compensation and benefits, $0.6 million increase in accounts payable, $0.6 million decrease in employee retention tax credit receivable, $0.4 million decrease in prepaid expenses, $0.4 million increase in accrued expenses, $0.2 million increase in deferred revenue, $0.1 million decrease in inventory net of transfers to property and equipment and $0.1 million decrease in operating lease liabilities, partially offset by $1.2 million increase in accounts receivable and $0.2 million increase in operating lease right-of-use assets.

For the year ended December 31, 2022, cash used in operating activities of $58.9 million consisted of a net loss of $75.6 million, changes in operating assets and liabilities of $4.7 million, offset by non-cash items of $21.4 million. The non-cash items primarily consisted of $8.4 million of stock-based compensation expense, $7.7 million of amortization of intangible assets, $3.4 million of depreciation, $1.4 million of property and equipment impairment, $0.6 million change in inventory reserves, $0.6 million net amortization of discounts and premiums on investments, $0.3 million deferred tax expense, and $0.1 million loss on disposal of property and equipment, offset by $1.1 million of change in fair value of contingent consideration. The decrease in cash from changes in operating assets and liabilities primarily relates to a $3.9 million decrease in accrued expenses, $2.3 million increase in inventory net of transfers to property and equipment, $2.1 million increase in other current and long-term assets, $1.5 million increase in accounts receivable and $0.4 million increase in prepaid expenses, offset by $4.5 million increase in accrued employee compensation and benefits, $0.8 million decrease in employee retention tax credit receivable, and $0.2 million decrease in operating lease right-of-use assets.

Investing Activities

For the year ended December 31, 2023, net cash provided by investing activities was $64.5 million. This amount consists of $77.3 million of proceeds from maturities of available-for-sale investments, offset by $12.3 million of purchases of available-for-sale investments and $0.5 million purchases of property and equipment.

For the year ended December 31, 2022, net cash provided by investing activities was $47.5 million. This amount consists of $82.7 million of proceeds from maturities of available-for-sale investments, offset by $33.9 million of purchases of available-for-sale investments and $1.3 million purchases of property and equipment.

Financing Activities

For the year ended December 31, 2023, net cash used in financing activities was $9.6 million, primarily related to proceeds from issuance of common stock and warrants of $10.1 million, offset by $0.5 million taxes paid for the net share settlement of vesting of restricted stock units.

For the year ended December 31, 2022, net cash used in financing activities was $0.3 million, primarily related to taxes paid for the net share settlement of vesting of restricted stock units.

Operating Capital and Capital Expenditure Requirements

The Company intends to spend substantial amounts on research and development activities, including product development, regulatory and compliance, and clinical studies in support of the development of the LUNA System and its digital solutions platform. The Company intends to use financing opportunities strategically to continue to strengthen its financial position as it looks to extend its available cash for operations.

Cash and cash equivalents held by our foreign subsidiaries totaled $1.8$4.9 million atas of December 31, 2017,2023, including restricted cash. We doThe Company does not intend or currently foresee a need to repatriate cash and cash equivalents held by ourits foreign subsidiary.subsidiaries. If these funds are needed in the U.S., we believeUnited States, the Company believes that the potential U.S. tax impact to repatriate these funds would be immaterial.

Innovatus Loan Agreement

On May 10, 2017, the Company and its domestic subsidiaries, as co-borrowers, entered into the Innovatus Loan Agreement with Innovatus Life Sciences Lending Fund I, LP, as Lender and Collateral Agent.  Please see the description of the Innovatus Loan Agreement above in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations‑Debt Refinancing.  

SVB Loan Agreement

In connection with its entrance into the Innovatus Loan Agreement on May 10, 2017, the Company repaid its existing credit facility with Silicon Valley Bank and Oxford Finance LLC, or the Prior Lenders, under the SVB Loan Agreement, , initially entered into in January 2012, as subsequently amended or amended and restated, or, collectively, the SVB Loan Agreement. A number of the amendments related to the Senhance Acquisition or the growth of our business in non-U.S. jurisdictions. Under the SVB Loan Agreement, our current borrowing capacity was $20.0 million, all of which was borrowed under term loans. We had periods of interest-only payments during the SVB Loan Agreement, and had been making principal payments since January 2016. The maturity date of the term loans was July 1, 2018.

In connection with the entry into the Innovatus Loan Agreement, we were obligated to pay final payment and facility fees under the SVB Loan Agreement. The final payment fee obligation was $1.3 million.

Contractual Obligations and Commercial Commitments

The following table summarizes our contractual obligations as of December 31, 2017 (in millions):