What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-02 compared with 2023-11-02 · 112 added, 178 removed, 370 unchanged (44% of the section changed)

4 unchanged sentences

(In Thousands, Except Per Share Amounts)

September 30,

2024 December 31,

7 unchanged sentences

Total current assets 245,225 266,246

Long-term investments — 51,509

Property and equipment, net 42,035 42,435

8 unchanged sentences

Accrued liabilities 29,719 44,682

Current maturities of debt and leases 20,702 5,472

Current maturities of lease liabilities 2,542 2,533

Total current liabilities 61,252 74,569

Long-term debt 61,865 60,593

Finance lease liabilities 8,340 9,147

Operating lease liabilities 3,180 3,095

Finance and operating lease liabilities

10,956 11,368

Other noncurrent liabilities 1,242 1,234

14 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Revenue $ 108,851 $ 93,494

9 unchanged sentences

Interest income 952 875

Other ( 62 ) ( 549 ) ( 40 ) ( 753 )

Loss on debt extinguishment

Other income (expense)

Loss before income tax expense ( 13,086 ) ( 6,398 )

4 unchanged sentences

Comprehensive income (loss):

Unrealized gain (loss) on investments $ 701 $ ( 691 ) $ 2,169 $ ( 3,479 )

Unrealized gain on investments $ 539 $ 1,041

Foreign currency translation adjustment ( 243 ) ( 17 )

Other comprehensive income (loss) 425 ( 951 ) 1,912 ( 4,347 )

Other comprehensive income 296 1,024

Net loss ( 13,269 ) ( 6,476 )

5 unchanged sentences

(In Thousands)

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

Three-Month Period Ended September 30, 2023

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—June 30, 2023

47,352 $ 47 $ 803,197 $ ( 338,213 ) $ ( 2,609 ) $ 462,422

Impact of equity compensation plans 40 — 9,041 — — 9,041

Other comprehensive income — — — — 425 425

Net loss — — — ( 9,055 ) — ( 9,055 )

Balance—September 30, 2023

47,392 $ 47 $ 812,238 $ ( 347,268 ) $ ( 2,184 ) $ 462,833

Nine-Month Period Ended September 30, 2022

Three Months 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

Nine-Month Period Ended September 30, 2023

Three Months Ended March 31, 2024

Deficit Accumulated

7 unchanged sentences

Net loss — — — ( 13,269 ) — ( 13,269 )

Balance—September 30, 2023

Balance—March 31, 2024

48,381 $ 48 $ 827,288 $ ( 370,326 ) $ ( 697 ) $ 456,313

4 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

6 unchanged sentences

Amortization of investments 107 169

Loss on debt extinguishment

Other non-cash adjustments 190 160

6 unchanged sentences

Other noncurrent assets and liabilities ( 112 ) 216

Net cash provided by (used in) operating activities 454 ( 22,187 )

Net cash used in operating activities ( 21,016 ) ( 4,079 )

Cash flows from investing activities:

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

Sales and maturities of available-for-sale securities 12,418 31,315

Purchases of property and equipment ( 2,774 ) ( 2,502 )

Acquisition of intellectual property ( 30,000 ) —

Net cash provided by investing activities 9,644 28,813

Cash flows from financing activities:

Payments on leases ( 731 ) ( 662 )

Payment of debt fees ( 60 ) —

Proceeds from stock option exercises and employee stock purchase plan 4,873 3,757

Proceeds from revolving credit facility, net of financing costs

Payments on debt and leases ( 62,065 ) ( 240 )

Payment of financing costs and bank fees

( 860 ) ( 60 )

Proceeds from stock option exercises 390 522

Shares repurchased for payment of taxes on stock awards ( 6,537 ) ( 5,739 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 109 ) 25

Net increase in cash and cash equivalents 22,499 5,169

Net (decrease) increase in cash and cash equivalents

( 19,343 ) 19,242

Cash and cash equivalents—beginning of period 84,310 58,099

2 unchanged sentences

Cash paid for interest $ 726 $ 1,487

Net cash paid for income taxes 228 135

Net cash paid (received) for income taxes 17 ( 12 )

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, 2023 filed with the SEC.

Except as discussed herein, there have been no changes in the Company's significant accounting policies for the nine months ended September 30, 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.

There have been no changes in the Company's significant accounting policies for the three months ended March 31, 2024 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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 inventories, intangible assets, valuation allowance for deferred income tax assets, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense, including share-based compensation expense.

3 unchanged sentences

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

The Company’s long-lived assets are located in the United States, except for $ 2,933 as of September 30, 2023 and $ 1,616 as of December 31, 2022 located primarily in Europe.

The Company’s long-lived assets are located in the United States, except for $ 3,625 as of March 31, 2024 and $ 3,432 as of December 31, 2023 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 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 1,776 and 1,472 shares as of September 30, 2023 and 2022 because they are anti-dilutive.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 2,615 and 1,882 shares as of March 31, 2024 and 2023 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.

Prior to January 1, 2023, the Company estimated forfeitures at the time of grant and revised 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.

Intangible Assets— Technology intangible assets with determinable useful lives are amortized on a straight-line basis over the estimated fifteen year period benefited.

Patent intangible assets with determinable useful lives are amortized over the estimated useful life of five years in a pattern reflecting the estimated economic benefit of the asset to the Company.

Amortization of technology intangible assets is recorded in selling, general and administrative expense, while amortization of patent intangible assets is recorded in cost of revenue.

The Company reviews intangible assets at least annually for impairment using its best estimates based on reasonable and supportable assumptions and projections.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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.

6 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.

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, 2023:

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 March 31, 2024:

Quoted Prices in

10 unchanged sentences

Total assets $ 12,852 $ 83,549 $ — $ 96,401

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, 2023.

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three months ended March 31, 2024.

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, 2023:

7 unchanged sentences

Money market funds $ — $ 77,864 $ — $ 77,864

Commercial paper — 11,935 — 11,935

Government and agency obligations 12,711 — — 12,711

3 unchanged sentences

Contingent Consideration.

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.

The Company assessed the projected probability of payment

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 PMA approval and reimbursement for the therapy involving SentreHEART’s devices.

The PMA approval milestone expired December 31, 2023.

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, 2024 and December 31, 2023.

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

during the contractual achievement periods to be remote, resulting in no reported fair value as of September 30, 2023 and December 31, 2022.

Investments as of September 30, 2023 consisted of the following:

Investments as of March 31, 2024 consisted of the following:

Cost Basis Unrealized

9 unchanged sentences

Government and agency obligations 12,998 ( 287 ) 12,711

Commercial paper 11,935 — 11,935

Asset-backed securities 2,263 ( 32 ) 2,231

Total $ 53,775 $ ( 800 ) $ 52,975

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three and nine months ended September 30, 2023 and 2022.

The cost and fair value of investments in debt securities, by contractual maturity, as of September 30, 2023 were as follows:

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three months ended March 31, 2024 and 2023.

The cost and fair value of investments in debt securities, by contractual maturity, as of March 31, 2024 were as follows:

Available-for-sale

7 unchanged sentences

Inventories consist of the following:

September 30,

2024 December 31,

9 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cost Accumulated

3 unchanged sentences

Total $ 76,470 $ 14,347 $ 76,470 $ 12,484

In May 2023, the Company acquired patents that will be amortized over an estimated useful life of five years .

See Note 9 - Commitments and Contingencies for further information on the asset acquisition.

The following table summarizes the allocation of amortization expense of intangible assets:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cost of revenues $ 1,125 $ —

2 unchanged sentences

Future amortization expense is projected as follows:

2023 (excluding the nine months ended September 30, 2023)

2024 (excluding the three months ended March 31, 2024)

2029 and thereafter

2 unchanged sentences

Accrued liabilities consist of the following:

September 30,

2024 December 31,

3 unchanged sentences

Total $ 29,719 $ 44,682

Credit Facility.

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.

During the first quarter of 2023 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.

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.

The Loan Agreement has a five year term, expiring November 2026.

On January 5, 2024, the Company entered into a credit agreement (Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as bookrunner and lead arranger (JPMCB), and Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company, as Joint Lead Arrangers and Joint Bookrunners, and the lenders party thereto (Lenders).

The Credit Agreement provides for an asset based revolving credit facility (ABL Facility) in an amount of up to $ 125,000 .

Borrowing availability under the ABL Facility is based on the lesser of $ 125,000 or a borrowing base calculation as defined by the Credit Agreement.

The Company may request an increase in the revolving commitment by up to $ 40,000 (not to exceed a total of $ 165,000 ).

A portion of the ABL Facility, limited to $ 5,000 , is available for the issuance of letters of credit by JPMCB or other financial institutions.

JPMCB in its sole discretion, may create swingline loans by advancing floating rate revolving loans requested.

Any such swingline loans will reduce availability under the ABL Facility on a dollar-for-dollar basis.

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

Principal payments under the Loan Agreement are to be made ratably commencing 24 months after inception through the loan's maturity date.

If the Company meets certain conditions, as specified by the Loan Agreement, the commencement of term loan principal payments may be deferred by an additional twelve months .

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 $ 690 included in the outstanding loan balance as of September 30, 2023.

Additionally, the unamortized original financing costs related to the term loan of $ 204 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 calculation as defined by the Loan Agreement.

As of September 30, 2023, 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.

Specified assets have been pledged as collateral.

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

2023 (excluding the nine months ended September 30, 2023)

Total long-term debt, of which $ 18,333 is current and $ 41,667 is noncurrent

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

The Company’s leases have remaining lease terms of less than one year to ten years .

Options to renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities as exercise is not reasonably certain.

At closing, the Company borrowed $ 61,865 .

The proceeds of the ABL Facility were used to terminate the Company’s outstanding indebtedness and final fee under the Loan and Security Agreement with Silicon Valley Bank (SVB Loan Agreement).

Certain prepayment and early termination fees under the SVB Loan Agreement were waived at termination.

The termination of the SVB Loan Agreement was treated as a debt extinguishment and the resulting loss on debt extinguishment is $ 1,362 .

As of March 31, 2024, the Company had borrowings of $ 61,865 and had borrowing capacity of $ 61,885 under the ABL facility.

The Credit Agreement has a three-year term, and all outstanding borrowings are due upon maturity of the Credit Agreement on January 5, 2027.

Through January 2025, the Company's required minimum utilization of the ABL facility is 40 % of the aggregate revolving commitment or $ 50,000 .

Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time thereafter without premium or penalty.

Any voluntary prepayments made will not reduce commitments under the ABL Facility.

The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding under the ABL Facility upon specified events or Availability shortfall.

Future maturities of long-term debt are projected as follows:

2024 (excluding the three months ended March 31, 2024) $ —

Total long-term debt, of which $ 61,865 is noncurrent

The ABL Facility is subject to a facility fee of 0.37 % per annum of the daily available revolving commitment and paid on a quarterly basis.

Outstanding amounts under the Credit Agreement bear interest at a rate per annum equal to, at the Company's election:

(i) an alternate base rate (ABR) plus an applicable margin or (ii) an adjusted term secured overnight financing rate (SOFR) plus an applicable margin.

All swingline loans bear interest at a rate per annum equal to the ABR plus the applicable margin under the Credit Agreement.

Alternate base rate is equal to the greater of Prime, the NYFRB Rate plus 0.50 % or Adjusted Term SOFR Rate plus 1.00 %.

The applicable margin on borrowings will adjust ranging 1.50 % to 1.75 % per annum for ABR borrowings and from 2.50 % to 2.75 % per annum for SOFR term borrowings determined by the average historical excess availability.

Participation and fronting fees are accrued and paid on a quarterly basis.

The ABL Facility is secured by the assets of the Company, consisting of personal, tangible or intangible property, including certain outstanding equity interests of the Company’s direct subsidiaries, subject to limitations specified in the Credit Agreement.

The Credit Agreement contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including but not limited to financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.

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

The Company’s leases have remaining lease terms of less than one year to nine years .

Options to renew or extend leases beyond their initial term have been excluded from measurement of the right-of-use (ROU) assets and lease liabilities as exercise is not reasonably certain.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Operating Leases

4 unchanged sentences

Weighted average discount rate 6.93 % 6.93 %

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, 2023.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

A letter of credit for $ 1,250 issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of March 31, 2024.

The components of lease expense are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating lease cost $ 380 $ 310

3 unchanged sentences

Total finance lease cost $ 412 $ 430

Short-term lease expense was not significant for the three and nine months ended September 30, 2023 and 2022.

Short-term lease expense was not significant for the three months ended March 31, 2024 and 2023.

Supplemental cash flow information related to leases is as follows:

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

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

5 unchanged sentences

Finance leases — —

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Supplemental balance sheet information related to leases is as follows:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Operating Leases

Operating lease right-of-use assets $ 4,199 $ 4,324

Current maturities of leases 1,301 1,147

Operating lease liabilities 3,180 3,095

Current maturities of lease liabilities

Finance and operating lease liabilities

Total operating lease liabilities $ 4,615 $ 4,754

3 unchanged sentences

Property and equipment, net $ 6,260 $ 6,515

Current maturities of leases $ 1,068 $ 992

Finance lease liabilities 8,340 9,147

Current maturities of lease liabilities

$ 1,091 $ 1,086

Finance and operating lease liabilities

Total finance lease liabilities $ 8,883 $ 9,147

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Future maturities of lease liabilities as of September 30, 2023 are as follows:

Future maturities of lease liabilities as of March 31, 2024 are as follows:

Operating Leases Finance Leases

2023 (excluding the nine months ended September 30, 2023)

2024 (excluding the three months ended March 31, 2024)

$ 1,103 $ 1,267

2 unchanged sentences

2027 897 1,703

2028 489 1,725

2029 and thereafter

6 unchanged sentences

In May 2023, the Company entered into an agreement that terminated the license agreement and the Company's obligations to make royalty payments under the license agreement.

See Legal section below for additional information.

Royalty expense of $ 0 and $ 901 was recorded for the three months ended March 31, 2024 and 2023 as a component of Cost of Revenue in the accompanying Condensed Consolidated Statement of Operations.

Purchase Agreements.

4 unchanged sentences

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

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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 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.

During the third quarter of 2022, the relator filed a Fourth Amended Complaint, which dropped allegations of off-label promotion and 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.

On August 23, 2022, the Cleveland Clinic Foundation (Clinic) and IDx Medical, Ltd.

(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 alleged that the Company did not include the revenues from sales of certain products in its royalty payments due under the License Agreement, and the Company did not provide related notices required under the License Agreement.

The Company filed its Answering Statement and Counterclaims to the allegations in September 2022, denying each

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

claim and counterclaiming for breach of contract, correction of inventorship, declaratory judgment, patent prosecution and legal fees.

In May 2023, the Company entered into an Assignment and Agreement Regarding IDx and CCF Intellectual Property (Assignment Agreement) with Clinic and IDx.

Pursuant to the Assignment Agreement, during the second quarter of 2023, the Company made a one-time payment of $ 33,400 to Clinic and IDx for the acquisition of patents and other intellectual property.

The Assignment Agreement also requires dismissal of the arbitration and release of payment for royalty obligations due to Clinic and IDx under the License Agreement after March 31, 2023.

The amount paid, together with transaction costs, was allocated between the acquired intangible asset, the release of payment for royalty obligations and the settlement of the dispute.

The intangible asset was assigned a value of $ 30,000 and is being amortized over an estimated useful life of 5 years.

The release of the royalty obligations was valued at $ 432 .

The remaining $ 3,088 was allocated to the settlement and is included in selling, general and administrative expenses for the nine months ended September 30, 2023.

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.

The Company recorded a $ 7,500 gain for the nine months ended September 30, 2023 for the proceeds received as a reduction to selling, general and administrative expenses.

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

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

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

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Open ablation $ 29,300 $ 25,142

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Open ablation $ 7,902 $ 7,286

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

United States $ 90,249 $ 78,189

10 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, 2023 and 2022 was ( 0.5 %) and ( 0.4 %).

The effective tax rate for the nine months ended September 30, 2023 and 2022 was ( 1.1 %) 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 effective tax rate for the three months ended March 31, 2024 and 2023 was ( 1.4 %) and ( 1.2 %).

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

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

4 unchanged sentences

the 2023 Stock Incentive Plan (2023 Plan) and the 2018 Employee Stock Purchase Plan (ESPP).

Stockholders approved the 2023 Plan at the 2023 Annual Meeting of Stockholders.

Pursuant to its terms, the 2023 Plan supersedes and replaces the 2014 Stock Incentive Plan (Prior Plan).

Stock Incentive Plan

Under the 2023 Plan, the Board of Directors may grant restricted stock awards, restricted stock units, nonstatutory stock options, performance share awards and stock appreciation rights to Company employees, directors and consultants, and may grant incentive stock options to Company employees.

Under the 2023 Plan, the Board of Directors may grant restricted stock awards or restricted stock units (collectively RSAs), nonstatutory stock options, performance share awards (PSAs) or stock appreciation rights to Company employees, directors and consultants, and may grant incentive stock options to Company employees.

The Compensation Committee of the Board of Directors, as the administrator of the 2023 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, 2023, 2,287 shares of common stock have been reserved for issuance under the 2023 Plan, and 2,268 shares were available for future grants.

As of March 31, 2024, 2,287 shares of common stock have been reserved for issuance under the 2023 Plan, and 869 shares were available for future grants.

The Company issues registered shares of common stock for stock option exercises, restricted stock grants and performance share award payments.

Employee Stock Purchase Plan

Under the ESPP, shares of the Company’s common stock may be purchased at a 15 % discount of the lesser of the closing price of the Company’s common stock on the first or last trading days of the offering period.

Under the ESPP, shares of the Company’s common stock may be purchased at a discount ( 15 %) to the lesser of the closing price of the Company’s common stock on the first or last trading day of the offering period.

The offering period (currently six months ) and the offering price are subject to change.

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, 2023, there were 847 shares available for future issuance under the ESPP.

As of March 31, 2024, there were 782 shares available for future issuance under the ESPP.

ATRICURE, INC.

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cost of revenue $ 530 $ 443

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Total accumulated other comprehensive loss at beginning of period $ ( 993 ) $ ( 4,096 )

1 unchanged sentence

Balance at beginning of period $ ( 800 ) $ ( 3,698 )

Other comprehensive income (loss) before reclassifications 701 ( 691 ) 2,169 ( 3,407 )

Amounts reclassified to other income (expense) — — — ( 72 )

Other comprehensive income before reclassifications 539 1,041

Balance at end of period $ ( 261 ) $ ( 2,657 )

1 unchanged sentence

Balance at beginning of period $ ( 193 ) $ ( 398 )

Other comprehensive loss before reclassifications

( 286 ) ( 721 ) ( 133 ) ( 1,508 )

Other comprehensive (loss) income before reclassifications ( 262 ) 125

Amounts reclassified to other income (expense) 19 ( 142 )

2 unchanged sentences

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