Impact of H1B extension denial on AOS applications

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My last H1B expired in July 2020, the extension petition for which was duly filed in June 2020, which got denied in March 2021. In between I filed AOS application in October 2020 in EB2, while I was awaiting my H1B extension adjudication by USCIS and my I94 was expired but well within 240 days grace period. Is there any adverse impact on my AOS applications due to this denial? Would I be considered in illegal presence status in US?

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