What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-03 compared with 2022-11-02 · 127 added, 163 removed, 358 unchanged (45% of the section changed)

4 unchanged sentences

(In Thousands, Except Per Share Amounts)

September 30,

2023 December 31,

18 unchanged sentences

Accrued liabilities 28,233 33,022

Current maturities of leases 2,031 1,756

Current maturities of debt and leases 10,677 5,472

Total current liabilities 62,471 58,392

15 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In Thousands, Except Per Share Amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Revenue $ 93,494 $ 74,576

1 unchanged sentence

Gross profit 69,609 55,595

Operating expenses (benefit):

Operating expenses:

Research and development expenses 15,327 13,629

Selling, general and administrative expenses 60,064 56,116

Change in fair value of contingent consideration — ( 189,900 ) — ( 184,800 )

Intangible asset impairment — 82,300 — 82,300

Total operating expenses (benefit) 72,436 ( 46,443 ) 219,360 83,137

(Loss) income from operations ( 10,723 ) 98,669 ( 38,533 ) 67,707

Total operating expenses 75,391 69,745

Loss from operations ( 5,782 ) ( 14,150 )

Other income (expense):

2 unchanged sentences

Other 145 ( 93 )

(Loss) income before income tax expense ( 12,226 ) 97,146 ( 42,149 ) 64,075

Loss before income tax expense ( 6,398 ) ( 15,127 )

Income tax expense 78 56

Net (loss) income $ ( 12,272 ) $ 97,108 $ ( 42,296 ) $ 63,940

Net (loss) income per share

Basic net (loss) income per share $ ( 0.27 ) $ 2.15 $ ( 0.93 ) $ 1.42

Diluted net (loss) income per share $ ( 0.27 ) $ 2.11 $ ( 0.93 ) $ 1.39

Weighted average shares outstanding

Basic 45,823 45,258 45,682 44,977

Diluted 45,823 46,100 45,682 45,996

Comprehensive (loss) income:

Unrealized loss on investments $ ( 691 ) $ ( 14 ) $ ( 3,479 ) $ ( 177 )

Net loss $ ( 6,476 ) $ ( 15,183 )

Basic and diluted net loss per share $ ( 0.14 ) $ ( 0.33 )

Weighted average shares outstanding—basic and diluted 46,107 45,528

Comprehensive income (loss):

Unrealized gain (loss) on investments $ 1,041 $ ( 2,339 )

Foreign currency translation adjustment ( 17 ) ( 178 )

Other comprehensive loss ( 951 ) ( 126 ) ( 4,347 ) ( 525 )

Net (loss) income ( 12,272 ) 97,108 ( 42,296 ) 63,940

Comprehensive (loss) income, net of tax $ ( 13,223 ) $ 96,982 $ ( 46,643 ) $ 63,415

Other comprehensive income (loss) 1,024 ( 2,517 )

Net loss ( 6,476 ) ( 15,183 )

Comprehensive loss, net of tax $ ( 5,452 ) $ ( 17,700 )

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In Thousands)

Three-Month Period Ended September 30, 2021

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—June 30, 2021

45,881 $ 46 $ 748,644 $ ( 363,520 ) $ ( 87 ) $ 385,083

Impact of equity compensation plans 52 — 6,404 — — 6,404

Other comprehensive loss — — — — ( 126 ) ( 126 )

Net income — — — 97,108 — 97,108

Balance—September 30, 2021

45,933 $ 46 $ 755,048 $ ( 266,412 ) $ ( 213 ) $ 488,469

Three-Month Period Ended September 30, 2022

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—June 30, 2022

46,423 $ 46 $ 771,185 $ ( 310,177 ) $ ( 4,344 ) $ 456,710

Impact of equity compensation plans 20 — 6,821 — — 6,821

Other comprehensive loss — — — — ( 951 ) ( 951 )

Net loss — — — ( 12,272 ) — ( 12,272 )

Balance—September 30, 2022

46,443 $ 46 $ 778,006 $ ( 322,449 ) $ ( 5,295 ) $ 450,308

Nine-Month Period Ended September 30, 2021

Three-Month Period Ended March 31, 2022

Deficit Accumulated

6 unchanged sentences

Other comprehensive loss — — — — ( 2,517 ) ( 2,517 )

Net income — — — 63,940 — 63,940

Balance—September 30, 2021

Net loss — — — ( 15,183 ) — ( 15,183 )

Balance—March 31, 2022

46,268 $ 46 $ 761,580 $ ( 295,336 ) $ ( 3,465 ) $ 462,825

Nine-Month Period Ended September 30, 2022

Three-Month Period Ended March 31, 2023

Deficit Accumulated

5 unchanged sentences

Impact of equity compensation plans 681 — 3,543 — — 3,543

Other comprehensive loss — — — — ( 4,347 ) ( 4,347 )

Other comprehensive income — — — — 1,024 1,024

Net loss — — — ( 6,476 ) — ( 6,476 )

Balance—September 30, 2022

Balance—March 31, 2023

47,244 $ 47 $ 790,965 $ ( 333,095 ) $ ( 3,072 ) $ 454,845

4 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income (loss) $ ( 42,296 ) $ 63,940

Net loss $ ( 6,476 ) $ ( 15,183 )

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

3 unchanged sentences

Amortization of deferred financing costs 121 128

Loss on disposal of property and equipment 34 68

Amortization of investments 169 559

Change in fair value of contingent consideration — ( 184,800 )

Intangible asset impairment — 82,300

Other non-cash adjustments 160 338

8 unchanged sentences

Cash flows from investing activities:

Purchases of available-for-sale securities ( 24,637 ) ( 160,577 )

Sales and maturities of available-for-sale securities 31,315 23,103

2 unchanged sentences

Cash flows from financing activities:

Payments on debt and leases ( 662 ) ( 2,269 )

Proceeds from stock option exercises and employee stock purchase plan 3,757 10,020

Payments on leases ( 240 ) ( 217 )

Payment of debt fees ( 60 ) —

Proceeds from stock option exercises 522 355

Shares repurchased for payment of taxes on stock awards ( 5,739 ) ( 10,635 )

6 unchanged sentences

Cash paid for interest $ 1,487 $ 866

Cash paid for income taxes, net of refunds 135 153

Net cash (received) paid for income taxes ( 12 ) 50

Non-cash investing and financing activities:

16 unchanged sentences

The accompanying interim financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

There have been no changes in the Company's significant accounting policies for the nine months ended September 30, 2022 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

Except as discussed herein, there have been no changes in the Company's significant accounting policies for the three months ended March 31, 2023 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Use of Estimates —The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including intangible assets, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense.

1 unchanged sentence

Actual results could differ from those estimates.

Segments —The chief operating decision maker for the Company is the Chief Executive Officer.

The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied only by information about revenue by product type and geographic area, for purposes of allocating resources and evaluating financial performance.

Segments —The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis, accompanied only by revenue information by product type and geographic area, for purposes of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has a single operating segment.

The Company’s long-lived assets are located primarily in the United States, except for $ 1,670 as of September 30, 2022 and $ 1,399 as of December 31, 2021 located primarily in Europe.

The Company’s long-lived assets are located in the United States, except for $ 2,859 as of March 31, 2023 and $ 1,616 as of December 31, 2022 located primarily in Europe.

Earnings Per Share —Basic and diluted net loss per share are computed by dividing the net loss by the weighted average number of shares of common shares outstanding during the period.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 1,882 and 1,567 shares as of March 31, 2023 and 2022 because they are anti-dilutive.

Therefore, the number of shares used for basic and diluted net loss per share are the same.

Share-Based Compensation —The Company recognizes share-based compensation expense for all share-based payment awards, including stock options, restricted stock awards, restricted stock units, performance share awards (PSAs) and stock purchases through an employee stock purchase plan, based on estimated fair values.

The value of the portion of an award that is ultimately expected to vest is recognized as expense ratably over the service period.

The Company estimated forfeitures at the time of grant and revises them, as necessary, in subsequent periods as actual forfeitures differ from those estimates.

Effective January 1, 2023, the Company's policy was amended to account for forfeitures as they occur rather than estimating at the time of grant, and the effect on income from continuing operations and retained earnings is not significant.

The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures” (ASC 820), defines fair value as the exchange price that would be received for an asset or paid to settle a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

Earnings Per Share —Basic earnings per share is computed by dividing the net (loss) income by the weighted average number of shares of common shares outstanding during the period.

Diluted earnings per share reflects net income available to common stockholders divided by the weighted average number of common shares outstanding during the period and any dilutive common share equivalents, including shares issuable upon the vesting of restricted stock awards and restricted stock units, exercise of stock options as well as shares issuable under the Company's employee stock purchase plan (ESPP).

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net (loss) income available to common stockholders $ ( 12,272 ) $ 97,108 $ ( 42,296 ) $ 63,940

Basic weighted average common shares outstanding 45,823 45,258 45,682 44,977

Effect of dilutive securities — 842 — 1,019

Diluted weighted average common shares outstanding 45,823 46,100 45,682 45,996

Basic net (loss) income per common share $ ( 0.27 ) $ 2.15 $ ( 0.93 ) $ 1.42

Diluted net (loss) income per common share $ ( 0.27 ) $ 2.11 $ ( 0.93 ) $ 1.39

For the three and nine months ended September 30, 2022, net loss per share excludes the effect of 1,472 shares because the effect would be anti-dilutive.

The computation of diluted earnings per share in the three and nine months periods ended September 30, 2021 excludes 491 and 582 shares because the effect would be anti-dilutive.

The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures” (ASC 820), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

4 unchanged sentences

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of September 30, 2022:

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of March 31, 2023:

Quoted Prices in

11 unchanged sentences

Total assets $ 33,044 $ 123,454 $ — $ 156,498

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and nine months ended September 30, 2022.

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three months ended March 31, 2023.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2022:

14 unchanged sentences

The Company’s contingent consideration arrangements arising from the SentreHEART acquisition obligate the Company to pay certain defined amounts to former shareholders of SentreHEART if specified milestones are met related to the aMAZE™ IDE clinical trial, including pre-market approval (PMA) approval and reimbursement for the therapy involving SentreHEART’s devices.

During the third quarter 2021, the Company was informed that the data from the aMAZE clinical trial did not achieve statistical superiority, and the Company assessed the projected probability of payment to be remote.

The Company recorded a credit to operating expenses of $ 189,900 reflecting the change in fair value of the contingent consideration.

The Company has assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no fair value as of September 30, 2022 and December 31, 2021.

The Company assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no reported fair value as of March 31, 2023 and December 31, 2022.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Investments as of March 31, 2023 consisted of the following:

Cost Basis Unrealized

Losses Fair Value

Corporate bonds $ 47,477 $ ( 1,612 ) $ 45,865

Government and agency obligations 33,985 ( 941 ) 33,044

Commercial paper 2,977 — 2,977

Asset-backed securities 2,298 ( 104 ) 2,194

Total $ 86,737 $ ( 2,657 ) $ 84,080

Investments as of December 31, 2022 consisted of the following:

Cost Basis Unrealized

Losses Fair Value

Corporate bonds $ 69,832 $ ( 2,234 ) $ 67,598

Government and agency obligations 33,971 ( 1,334 ) 32,637

Commercial paper 11,935 — 11,935

Asset-backed securities 2,483 ( 130 ) 2,353

Total $ 118,221 $ ( 3,698 ) $ 114,523

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three months ended March 31, 2023 and 2022.

The cost and fair value of investments in debt securities, by contractual maturity, as of March 31, 2023 were as follows:

Available-for-sale

Amortized Cost Fair Value

Due in 1 year or less

$ 59,947 $ 58,519

Due after 1 year through 5 years

24,492 23,367

Due after 5 years through 10 years

Instruments not due at a single maturity date 2,298 2,194

Total $ 86,737 $ 84,080

Instruments not due at a single maturity date consist of asset-backed securities.

Actual maturities may differ from the contractual maturities due to call or prepayment rights.

Inventories consist of the following:

September 30,

2023 December 31,

9 unchanged sentences

The following table provides a summary of the Company’s intangible assets:

September 30, 2022 December 31, 2021

Estimated Useful Life Cost Accumulated

March 31, 2023 December 31, 2022

Cost Accumulated

Amortization Cost Accumulated

Technology 10 - 15 years

$ 55,712 $ 15,634 $ 55,712 $ 12,720

Amortization expense of intangible assets was $ 971 for both the three months ended September 30, 2022 and 2021 and $ 2,914 and $ 1,936 for the nine months ended September 30, 2022 and 2021.

Technology $ 46,470 $ 7,869 $ 46,470 $ 7,131

Amortization expense of intangible assets was $ 738 and $ 972 for the three months ended March 31, 2023 and 2022.

Future amortization expense is projected as follows:

2022 (excluding the nine months ended September 30, 2022)

2023 (excluding the three months ended March 31, 2023)

2028 and thereafter

Total $ 38,601

During the third quarter 2021, the Company recorded an impairment charge of $ 82,300 to reduce the carrying value of the aMAZE IPR&D asset to $ 0 as a result of data from the aMAZE clinical trial not achieving statistical superiority.

ACCRUED LIABILITIES

Accrued liabilities consist of the following:

September 30,

2023 December 31,

Accrued compensation and employee-related expenses $ 22,300 $ 26,924

Sales returns and allowances 2,802 2,416

Accrued taxes and value-added taxes payable 1,757 1,452

Other accrued liabilities 3,033 3,301

Sales returns and allowances 2,900 2,797

Total $ 28,233 $ 33,022

Credit Facility.

The Company has a Loan and Security Agreement, as amended and modified effective November 1, 2021, (Loan Agreement) with Silicon Valley Bank (SVB).

The Company has a Loan and Security Agreement, as amended and modified effective November 1, 2021, (Loan Agreement).

Our primary banking relationship in the United States was with Silicon Valley Bank.

All deposits and loans of Silicon Valley Bank were purchased by First-Citizens Bank & Trust Company, and our banking relationship is now with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company as of March 31, 2023.

The Loan Agreement provides a $ 60,000 term loan, a $ 30,000 revolving line of credit, and an option for an additional $ 30,000 in term loan borrowings.

3 unchanged sentences

The term loan accrues interest at the Prime Rate plus 1.25 % and is subject to an additional 3.00 % fee on the term loan principal amount at maturity.

The Company is accruing the 3.00 % fee over the term of the Loan Agreement, with $ 330 included in the outstanding loan balance as of September 30, 2022.

The Company is accruing the 3.00 % fee over the term of the Loan Agreement, with $ 510 included in the outstanding loan balance as of March 31, 2023.

Additionally, the unamortized original financing costs related to the term loan of $ 237 are netted against the outstanding loan balance in the Condensed Consolidated Balance Sheets and are amortized ratably over the term of the Loan Agreement.

The revolving line of credit is subject to an annual facility fee of 0.20 %, and any borrowings thereunder bear interest at the Prime Rate.

Borrowing availability under the revolving credit facility is based on the lesser of $ 30,000 or a borrowing base

Borrowing availability under the revolving credit facility is based on the lesser of $ 30,000 or a borrowing base calculation as defined by the Loan Agreement.

As of March 31, 2023, the Company had no borrowings under the revolving credit facility and had borrowing availability of $ 28,750 .

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

calculation as defined by the Loan Agreement.

As of September 30, 2022, the Company had no borrowings under the revolving credit facility and had borrowing availability of $ 28,750 .

The Loan Agreement also provides for certain prepayment and early termination fees, as well as establishes a minimum liquidity covenant and dividend restrictions, along with other customary terms and conditions.

1 unchanged sentence

Future maturities of long-term debt, excluding the term loan final fee, are projected as follows:

2022 (excluding the nine months ended September 30, 2022)

Total long-term debt $ 60,000

2023 (excluding the three months ended March 31, 2023)

Total long-term debt, of which $ 8,333 is current and $ 51,667 is noncurrent

The Company has operating and finance leases for office, manufacturing and warehouse facilities and equipment.

2 unchanged sentences

The weighted average remaining lease term and the discount rate for the reporting periods are as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Operating Leases

4 unchanged sentences

Weighted average discount rate 6.92 % 6.92 %

A $ 1,250 letter of credit issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of September 30, 2022.

A $ 1,250 letter of credit issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of March 31, 2023.

The components of lease expense are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Operating lease cost $ 310 $ 286

3 unchanged sentences

Total finance lease cost $ 430 $ 358

Short-term lease expense was not significant for the three and nine months ended September 30, 2022 and 2021.

Short-term lease expense was not significant for the three months ended March 31, 2023 and 2022.

ATRICURE, INC.

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Nine Months Ended

September 30, 2022 Nine Months Ended

September 30, 2021

Three Months Ended

March 31, 2023 Three Months Ended

March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:

6 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Operating Leases

10 unchanged sentences

Total finance lease liabilities $ 9,899 $ 10,139

Future maturities of lease liabilities as of September 30, 2022 were as follows:

Future maturities of lease liabilities as of March 31, 2023 were as follows:

Operating Leases Finance Leases

2022 (excluding the nine months ended September 30, 2022)

2023 (excluding the three months ended March 31, 2023)

$ 991 $ 1,250

2 unchanged sentences

2026 727 1,671

2027 754 1,703

2028 and thereafter

8 unchanged sentences

License Agreement.

The Company has a license agreement in place with terms that include payment of royalties of 5 % of specified product sales.

The Company has a license agreement that requires royalty payments of 5 % of specified product sales.

The agreement terminates the later of 2023 or upon expiration of the underlying patents or patent applications, which is expected to occur after 2023.

Parties to the license agreement have the right at any time to terminate the agreement immediately for cause.

Royalty expense of $ 804 and $ 792 was recorded for the three months ended September 30, 2022 and 2021 and $ 2,474 and $ 2,356 for the nine months ended September 30, 2022 and 2021 as a component of Cost of Revenue in the accompanying Condensed and Consolidated Statement of Operations.

Royalty expense of $ 901 and $ 794 was recorded for the three months ended March 31, 2023 and 2022 as a component of Cost of Revenue in the accompanying Condensed Consolidated Statement of Operations.

Purchase Agreements.

The Company enters into standard purchase agreements with vendors in the ordinary course of business, generally with terms that allow cancellation.

The Company enters into standard purchase agreements with suppliers in the ordinary course of business, generally with terms that allow cancellation.

The Company may, from time to time, become a party to legal proceedings.

1 unchanged sentence

A liability is established once management determines a loss is probable and an amount can be reasonably estimated.

The Company recognizes income from a favorable resolution of legal proceedings when the associated cash or assets are received.

The Company received a Civil Investigative Demand (CID) from the U.S.

6 unchanged sentences

Although the USDOJ and all of the state and local governments declined to intervene, the relator continues to pursue the case.

During the third quarter, the relator filed a Fourth Amended Complaint, which dropped allegations of off-label promotion and now alleges that the Company paid illegal kickbacks to healthcare providers in exchange for using or referring the Company’s products, in violation of the federal Anti-Kickback Statute and various comparable state and local laws.

During the third quarter of 2022, the relator filed a Fourth Amended Complaint, which dropped allegations of off-label promotion and now alleges that the Company paid illegal kickbacks to healthcare providers in exchange for using or referring the Company’s products, in violation of the federal Anti-Kickback Statute and various comparable state and local laws.

While the Company is contesting the case, it is not possible to predict when this matter may be resolved or what impact, if any, the outcome of this matter might have on our consolidated financial position, results of operations, or cash flows.

1 unchanged sentence

(“IDX”) filed a Demand for Arbitration against the Company with the American Arbitration Association (“AAA”), alleging that the Company breached certain provisions of the License Agreement dated December 9, 2003 among the Company, Clinic and IDX (“License Agreement”).

Clinic and IDX allege the Company did not include the revenues from sales of certain products in its calculation of royalty payments due under the License Agreement.

Clinic and IDX allege the Company did not include the revenues from sales of certain products in its royalty payments due under the License Agreement.

Clinic and IDX also allege that the Company did not provide related notices required under the License Agreement.

The Demand for Arbitration requests a declaration that the termination of the License Agreement shall not occur until the expiration of certain patents and that the Company violated the License Agreement’s non-competition provisions.

Clinic and IDX claim they are entitled to no less than $ 6 million plus interest and costs, fees and expenses associated with their claims and future royalties.

The Company denies the allegations of Clinic and IDX.

Clinic and IDX claim they are entitled to no less than $ 6,000 plus interest and costs, fees and expenses associated with their claims and future royalties.

The Company filed its Answering Statement and Counterclaims to the allegations in September 2022, denying each claim and counterclaiming for breach of contract, correction of inventorship, declaratory judgment, patent prosecution and legal fees.

No dates have been scheduled for this arbitration.

This arbitration has been scheduled for May 2023.

The Company develops, manufactures and sells devices designed primarily for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and blocking pain by temporarily ablating peripheral nerves.

These devices are marketed to a broad base of medical centers globally.

The Company recognizes revenue when control of promised goods is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods.

During the first quarter of 2023, the Company entered into a legal settlement for $ 7,500 in connection with the settlement of claims filed against a competitor.

As of March 31, 2023, the Company recorded a $ 4,000 gain for the proceeds received as a reduction to selling, general and administrative expenses.

In April 2023, the Company collected the remaining $ 3,500 proceeds.

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

The Company develops, manufactures and sells devices designed primarily for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and blocking post-operative pain by temporarily ablating peripheral nerves.

These devices are marketed to a broad base of medical centers globally.

United States revenue by product type is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Open ablation $ 25,142 $ 18,974

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Open ablation $ 7,286 $ 6,492

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

United States $ 78,189 $ 62,272

Europe 9,401 7,237

Asia 5,518 4,734 15,008 11,695

Asia Pacific 5,402 4,557

Other International 502 510

7 unchanged sentences

The Company is unable to estimate the annual effective tax rate with sufficient precision to use the effective tax rate method, which requires a full-year projection of income.

The effective tax rate for the three months ended September 30, 2022 and 2021 was ( 0.38 %) and 0.04 %.

The effective tax rate for the nine months ended September 30, 2022 and 2021 was ( 0.35 %) and 0.21 %.

The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to the valuation allowance.

Federal, state and local returns of the Company are routinely subject to review by various taxing authorities.

The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting net

The effective tax rate for the three months ended March 31, 2023

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

operating losses.

and 2022 was ( 1.2 %) and ( 0.4 %).

The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to its valuation allowances.

The Company's federal, state, local and foreign tax returns are routinely subject to review by various taxing authorities.

The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting net operating losses.

However, if required, the Company will recognize interest and penalties within income tax expense and within the related tax liability.

2 unchanged sentences

the 2014 Stock Incentive Plan (2014 Plan) and the 2018 Employee Stock Purchase Plan (ESPP).

The Company is asking stockholders at the 2023 Annual Meeting of Stockholders to approve the 2023 Stock Incentive Plan, which if adopted, will replace the 2014 Plan.

Stock Incentive Plan

1 unchanged sentence

The Compensation Committee of the Board of Directors, as the administrator of the 2014 Plan, has the authority to determine the terms of any awards, including the number of shares subject to each award, the exercisability of the awards and the form of consideration.

As of September 30, 2022, 13,999 shares of common stock had been reserved for issuance under the 2014 Plan, and 2,188 shares were available for future grants.

As of March 31, 2023, 13,999 shares of common stock had been reserved for issuance under the 2014 Plan, and 1,285 shares were available for future grants.

Employee Stock Purchase Plan

2 unchanged sentences

Participants may not purchase more than $ 25 of the Company’s common stock in a calendar year or more than 3 shares during an offering period.

As of September 30, 2022, there were 228 shares available for future issuance under the ESPP.

As of March 31, 2023, there were 184 shares available for future issuance under the ESPP.

Share-Based Compensation Expense Information

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Cost of revenue $ 443 $ 571

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Total accumulated other comprehensive (loss) income at beginning of period $ ( 4,344 ) $ ( 87 ) $ ( 948 ) $ 312

Total accumulated other comprehensive loss at beginning of period $ ( 4,096 ) $ ( 948 )

Unrealized Gains (Losses) on Investments

Balance at beginning of period $ ( 3,698 ) $ ( 887 )

Other comprehensive loss before reclassifications ( 691 ) ( 14 ) ( 3,407 ) ( 177 )

Amounts reclassified from accumulated other comprehensive loss to other income (expense) — — ( 72 ) —

Other comprehensive income (loss) before reclassifications 1,041 ( 2,339 )

Amounts reclassified to other income (expense) — —

Balance at end of period $ ( 2,657 ) $ ( 3,226 )

1 unchanged sentence

Balance at beginning of period $ ( 398 ) $ ( 61 )

Other comprehensive loss before reclassifications ( 721 ) ( 293 ) ( 1,508 ) ( 555 )

Amounts reclassified from accumulated other comprehensive loss to other income (expense) 461 181 640 207

Other comprehensive income (loss) before reclassifications 125 ( 261 )

Amounts reclassified to other income (expense) ( 142 ) 83

Balance at end of period $ ( 415 ) $ ( 239 )

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements