UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________to_____________

Commission File Number 000-51470

AtriCure, Inc.

(Exact name of Registrant as specified in its charter)


Delaware			34-1940305
(State or other jurisdiction of incorporation)			(IRS Employer Identification No.)

7555 Innovation Way

Mason, OH 45040

(Address of principal executive offices)

(513) 755-4100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	ATRC	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

x☒

Accelerated Filer

¨☐

Emerging growth company

¨☐

Non-Accelerated Filer

¨☐

Smaller reporting company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES ¨☐ NO x☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class			Outstanding at ~~August 1, 2022~~July 21, 2023
Common Stock, $.001 par value			~~46,424,652~~47,349,899

Table of Contents



		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II. OTHER INFORMATION		2223
Item 1.	Legal Proceedings	2223
Item 1A.	Risk Factors	2223
Item 5.	Other Information	23
Item 6.	Exhibits	2324
Signatures		2425

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)

(Unaudited)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	54,556	$	43,654	Cash and cash equivalents	$	67,240	$	58,099
Short-term investments	Short-term investments	63,898		75,436		Short-term investments	59,785		63,014
Accounts receivable, less allowance for credit losses of $1,096		41,488		33,021
Accounts receivable, less allowance for credit losses of $230						Accounts receivable, less allowance for credit losses of $230	48,362		42,693
Inventories	Inventories	41,292		38,964		Inventories	55,409		45,931
Prepaid and other current assets	Prepaid and other current assets	4,932		5,001		Prepaid and other current assets	7,179		5,477
Total current assets	Total current assets	206,166		196,076		Total current assets	237,975		215,214
Long-term investments	Long-term investments	64,295		104,338		Long-term investments	7,598		51,509
Property and equipment, net	Property and equipment, net	36,053		31,409		Property and equipment, net	40,540		38,833
Operating lease right-of-use assets	Operating lease right-of-use assets	4,241		4,761		Operating lease right-of-use assets	4,353		3,787
Intangible assets, net	Intangible assets, net	41,049		42,992		Intangible assets, net	67,383		39,339
Goodwill	Goodwill	234,781		234,781		Goodwill	234,781		234,781
Other noncurrent assets	Other noncurrent assets	804		955		Other noncurrent assets	1,541		1,985
Total Assets		$	587,389	$	615,312
Total assets						Total assets	$	594,171	$	585,448
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	23,721	$	18,597	Accounts payable	$	23,709	$	19,898
Accrued liabilities	Accrued liabilities	30,775		36,092		Accrued liabilities	31,986		33,022
Current maturities of leases		1,820		1,756
Current maturities of debt and leases						Current maturities of debt and leases	15,715		5,472
Total current liabilities	Total current liabilities	56,316		56,445		Total current liabilities	71,410		58,392
Long-term debt	Long-term debt	59,954		59,741		Long-term debt	47,047		56,834
Finance lease liabilities	Finance lease liabilities	9,603		10,082		Finance lease liabilities	8,614		9,147
Operating lease liabilities	Operating lease liabilities	3,591		4,068		Operating lease liabilities	3,458		3,095
Other noncurrent liabilities	Other noncurrent liabilities	1,215		1,220		Other noncurrent liabilities	1,220		1,226
Total Liabilities		130,679		131,556
Commitments and contingencies (Note 8)		0		0
Total liabilities						Total liabilities	131,749		128,694
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)
Stockholders’ Equity:	Stockholders’ Equity:					Stockholders’ Equity:
Common stock, $0.001 par value, 90,000 shares authorized and 46,423 and 46,016 issued and outstanding		46		46
Common stock, $0.001 par value, 90,000 shares authorized and 47,352 and 46,563 issued and outstanding						Common stock, $0.001 par value, 90,000 shares authorized and 47,352 and 46,563 issued and outstanding	47		47
Additional paid-in capital	Additional paid-in capital	771,185		764,811		Additional paid-in capital	803,197		787,422
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(4,344)		(948)		Accumulated other comprehensive loss	(2,609)		(4,096)
Accumulated deficit	Accumulated deficit	(310,177)		(280,153)		Accumulated deficit	(338,213)		(326,619)
Total Stockholders’ Equity		456,710		483,756
Total Liabilities and Stockholders’ Equity		$	587,389	$	615,312
Total stockholders’ equity						Total stockholders’ equity	462,422		456,754
Total liabilities and stockholders’ equity						Total liabilities and stockholders’ equity	$	594,171	$	585,448

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In Thousands, Except Per Share Amounts)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue	Revenue	$	84,529	$	71,376	$	159,105	$	130,651	Revenue	$	100,918	$	84,529	$	194,412	$	159,105
Cost of revenue	Cost of revenue	21,010		$	17,298	39,991		32,033		Cost of revenue	23,841		21,010		47,726		39,991
Gross profit	Gross profit	63,519		$	54,078	119,114		98,618		Gross profit	77,077		63,519		146,686		119,114
Operating expenses:	Operating expenses:									Operating expenses:
Research and development expenses	Research and development expenses	14,791		12,197		28,420		23,414		Research and development expenses	17,438		14,791		32,765		28,420
Selling, general and administrative expenses	Selling, general and administrative expenses	62,388		56,958		118,504		106,166		Selling, general and administrative expenses	63,783		62,388		123,847		118,504

Total operating expenses	Total operating expenses	77,179		69,155		146,924		129,580		Total operating expenses	81,221		77,179		156,612		146,924
Loss from operations	Loss from operations	(13,660)		(15,077)		(27,810)		(30,962)		Loss from operations	(4,144)		(13,660)		(9,926)		(27,810)
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(1,101)		(1,197)		(2,101)		(2,386)		Interest expense	(1,719)		(1,101)		(3,355)		(2,101)
Interest income	Interest income	76		103		192		237		Interest income	961		76		1,836		192
Other	Other	(111)		(14)		(204)		40		Other	(123)		(111)		22		(204)
Loss before income tax expense	Loss before income tax expense	(14,796)		(16,185)		(29,923)		(33,071)		Loss before income tax expense	(5,025)		(14,796)		(11,423)		(29,923)
Income tax expense	Income tax expense	45		66		101		97		Income tax expense	93		45		171		101
Net loss	Net loss	$	(14,841)	$	(16,251)	$	(30,024)	$	(33,168)	Net loss	$	(5,118)	$	(14,841)	$	(11,594)	$	(30,024)

Basic and diluted net loss per share	Basic and diluted net loss per share	$	(0.32)	$	(0.36)	$	(0.66)	$	(0.74)	Basic and diluted net loss per share	$	(0.11)	$	(0.32)	$	(0.25)	$	(0.66)

Weighted average shares outstanding—basic and diluted	Weighted average shares outstanding—basic and diluted	45,692		45,035		45,610		44,834		Weighted average shares outstanding—basic and diluted	46,266		45,692		46,187		45,610

Comprehensive loss:
Unrealized loss on investments		$	(449)	$	(132)	$	(2,788)	$	(163)
Comprehensive income (loss):										Comprehensive income (loss):
Unrealized gain (loss) on investments										Unrealized gain (loss) on investments	$	427	$	(449)	$	1,468	$	(2,788)
Foreign currency translation adjustment	Foreign currency translation adjustment	(430)		63		(608)		(236)		Foreign currency translation adjustment	36		(430)		19		(608)
Other comprehensive loss		(879)		(69)		(3,396)		(399)
Other comprehensive income (loss)										Other comprehensive income (loss)	463		(879)		1,487		(3,396)
Net loss	Net loss	(14,841)		(16,251)		(30,024)		(33,168)		Net loss	(5,118)		(14,841)		(11,594)		(30,024)
Comprehensive loss, net of tax	Comprehensive loss, net of tax	$	(15,720)	$	(16,320)	$	(33,420)	$	(33,567)	Comprehensive loss, net of tax	$	(4,655)	$	(15,720)	$	(10,107)	$	(33,420)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands)

(Unaudited)


		Three-Month Period Ended June 30, 2021
		Common Stock			Additional Paid-in Capital				Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity
		Shares	Amount
Balance—March 31, 2021		45,623	$	46			$	738,484							$	(347,269)						$	(18)				$	391,243
Impact of equity compensation plans		258	—		10,160				—			—					10,160
Other comprehensive loss		—	—		—				—			(69)					(69)
Net loss		—	—		—				(16,251)			—					(16,251)
Balance—June 30, 2021		45,881	$	46	$	748,644			$	(363,520)		$	(87)				$	385,083

		Three-Month Period Ended June 30, 2022																			Three-Month Period Ended June 30, 2022
		Common Stock			Additional Paid-in Capital				Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity				Common Stock								Additional Paid-in Capital					Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
		Shares	Amount								Shares									Amount
Balance—March 31, 2022	Balance—March 31, 2022	46,268	$	46			$	761,580						$	(295,336)				$	(3,465)				$	462,825	Balance—March 31, 2022		46,268			$	46				$	761,580			$	(295,336)			$	(3,465)			$	462,825
Impact of equity compensation plans	Impact of equity compensation plans	155	—		9,605				—			—					9,605			Impact of equity compensation plans	155					—				9,605					—				—				9,605
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(879)					(879)			Other comprehensive loss	—					—			—					—				(879)				(879)
Net loss	Net loss	—	—		—				(14,841)			—					(14,841)			Net loss	—					—			—					(14,841)				—				(14,841)
Balance—June 30, 2022	Balance—June 30, 2022	46,423	$	46	$	771,185			$	(310,177)		$	(4,344)				$	456,710		Balance—June 30, 2022	46,423					$	46		$	771,185				$	(310,177)			$	(4,344)			$	456,710

		Six-Month Period Ended June 30, 2021																			Three-Month Period Ended June 30, 2023
		Common Stock			Additional Paid-in Capital				Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity				Common Stock								Additional Paid-in Capital					Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
		Shares	Amount								Shares									Amount
Balance—December 31, 2020		45,346	$	45			$	742,389						$	(330,352)				$	312				$	412,394

Balance—March 31, 2023																				Balance—March 31, 2023	47,244					$	47			$	790,965				$	(333,095)			$	(3,072)			$	454,845
Impact of equity compensation plans	Impact of equity compensation plans	535	1		6,255				—			—					6,256			Impact of equity compensation plans	108					—			12,232					—				—				12,232
Other comprehensive loss		—	—		—				—			(399)					(399)
Other comprehensive income																				Other comprehensive income	—					—			—					—				463				463
Net loss	Net loss	—	—		—				(33,168)			—					(33,168)			Net loss	—					—			—					(5,118)				—				(5,118)
Balance—June 30, 2021		45,881	$	46	$	748,644			$	(363,520)		$	(87)				$	385,083
Balance—June 30, 2023																				Balance—June 30, 2023	47,352					$	47		$	803,197				$	(338,213)			$	(2,609)			$	462,422

		Six-Month Period Ended June 30, 2022																			Six-Month Period Ended June 30, 2022
		Common Stock			Additional Paid-in Capital				Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity				Common Stock								Additional Paid-in Capital					Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
		Shares	Amount								Shares									Amount
Balance—December 31, 2021	Balance—December 31, 2021	46,016	$	46			$	764,811						$	(280,153)				$	(948)				$	483,756	Balance—December 31, 2021		46,016			$	46				$	764,811			$	(280,153)			$	(948)			$	483,756

Impact of equity compensation plans	Impact of equity compensation plans	407	—		6,374				—			—					6,374			Impact of equity compensation plans	407					—				6,374					—				—				6,374
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(3,396)					(3,396)			Other comprehensive loss	—					—			—					—				(3,396)				(3,396)
Net loss	Net loss	—	—		—				(30,024)			—					(30,024)			Net loss	—					—			—					(30,024)				—				(30,024)
Balance—June 30, 2022	Balance—June 30, 2022	46,423	$	46	$	771,185			$	(310,177)		$	(4,344)				$	456,710		Balance—June 30, 2022	46,423					$	46		$	771,185				$	(310,177)			$	(4,344)			$	456,710

																					Six-Month Period Ended June 30, 2023
																					Common Stock								Additional Paid-in Capital					Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
																					Shares					Amount
Balance—December 31, 2022																				Balance—December 31, 2022	46,563					$	47					$	787,422					$	(326,619)			$	(4,096)			$	456,754
Impact of equity compensation plans																				Impact of equity compensation plans	789					—			15,775					—				—				15,775
Other comprehensive income																				Other comprehensive income	—					—			—					—				1,487				1,487
Net loss																				Net loss	—					—			—					(11,594)				—				(11,594)
Balance—June 30, 2023																				Balance—June 30, 2023	47,352					$	47		$	803,197				$	(338,213)			$	(2,609)			$	462,422

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(30,024)	$	(33,168)	Net loss	$	(11,594)	$	(30,024)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense	Share-based compensation expense	14,573		13,745		Share-based compensation expense	17,755		14,573
Depreciation	Depreciation	3,861		3,815		Depreciation	4,567		3,861
Amortization of intangible assets	Amortization of intangible assets	1,943		965		Amortization of intangible assets	1,956		1,943
Amortization of deferred financing costs	Amortization of deferred financing costs	255		249		Amortization of deferred financing costs	243		255
Loss on disposal of property and equipment		25		52
Amortization of investments	Amortization of investments	983		1,206		Amortization of investments	294		983
Change in fair value of contingent consideration		—		5,100

Other non-cash adjustments	Other non-cash adjustments	654		472		Other non-cash adjustments	487		679
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(8,757)		(10,799)		Accounts receivable	(5,563)		(8,757)
Inventories	Inventories	(2,727)		(2,707)		Inventories	(9,377)		(2,727)
Other current assets	Other current assets	32		(308)		Other current assets	(1,696)		32
Accounts payable	Accounts payable	4,240		3,571		Accounts payable	2,945		4,240
Accrued liabilities	Accrued liabilities	(5,136)		4,529		Accrued liabilities	(1,084)		(5,136)
Other noncurrent assets and liabilities	Other noncurrent assets and liabilities	(325)		(571)		Other noncurrent assets and liabilities	(1)		(325)
Net cash used in operating activities	Net cash used in operating activities	(20,403)		(13,849)		Net cash used in operating activities	(1,068)		(20,403)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(3,941)		(94,817)		Purchases of available-for-sale securities	—		(3,941)
Sales and maturities of available-for-sale securities	Sales and maturities of available-for-sale securities	51,749		147,884		Sales and maturities of available-for-sale securities	48,315		51,749
Purchases of property and equipment	Purchases of property and equipment	(7,565)		(5,539)		Purchases of property and equipment	(5,582)		(7,565)
Acquisition of intellectual property						Acquisition of intellectual property	(30,000)		—

Net cash provided by investing activities	Net cash provided by investing activities	40,243		47,528		Net cash provided by investing activities	12,733		40,243
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Payments on leases	Payments on leases	(437)		(399)		Payments on leases	(483)		(437)

Payment of debt fees						Payment of debt fees	(60)		—
Proceeds from stock option exercises and employee stock purchase plan	Proceeds from stock option exercises and employee stock purchase plan	3,374		9,010		Proceeds from stock option exercises and employee stock purchase plan	4,058		3,374
Shares repurchased for payment of taxes on stock awards	Shares repurchased for payment of taxes on stock awards	(11,573)		(16,500)		Shares repurchased for payment of taxes on stock awards	(6,038)		(11,573)
Net cash used in financing activities	Net cash used in financing activities	(8,636)		(7,889)		Net cash used in financing activities	(2,523)		(8,636)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(302)		(115)		Effect of exchange rate changes on cash and cash equivalents	(1)		(302)
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	10,902		25,675		Net increase in cash and cash equivalents	9,141		10,902
Cash and cash equivalents—beginning of period	Cash and cash equivalents—beginning of period	43,654		41,944		Cash and cash equivalents—beginning of period	58,099		43,654
Cash and cash equivalents—end of period	Cash and cash equivalents—end of period	$	54,556	$	67,619	Cash and cash equivalents—end of period	$	67,240	$	54,556
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Cash paid for interest	Cash paid for interest	$	1,797	$	2,147	Cash paid for interest	$	3,078	$	1,797
Cash paid for income taxes, net of refunds		132		128
Net cash paid for income taxes						Net cash paid for income taxes	159		132
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Accrued purchases of property and equipment	Accrued purchases of property and equipment	2,562		529		Accrued purchases of property and equipment	1,046		2,562

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

1.DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business—The “Company” or “AtriCure” consists of AtriCure, Inc. and its wholly-owned subsidiaries. The Company is a leading innovator in surgical treatments and therapies for atrial fibrillation (Afib), left atrial appendage (LAA) management and post-operative pain management, and sells its products to medical centers globally through its direct sales force and distributors.

Basis of Presentation—The accompanying interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim financial statements are unaudited, but in the opinion of the Company’s management, contain all normal, recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (GAAP) applicable to interim periods. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted or condensed. The Company believes the disclosures herein are adequate to make the information presented not misleading. Results of operations are not necessarily indicative of the results expected for the full year or for any future period.

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, ~~2021~~2022 filed with the SEC. ~~There~~Except as discussed herein, there have been no changes in the Company's significant accounting policies for the six months ended June 30, ~~2022~~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, ~~2021 filed with the SEC.~~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 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, ~~during the reporting period.~~including share-based compensation expense. Estimates are based on historical experience, where applicable, and other assumptions believed to be reasonable by management. Actual results could differ from those estimates.

Segments—The Company's chief operating decision maker ~~for the Company~~ is ~~the~~its Chief Executive ~~Officer. The Chief Executive~~ Officer, who reviews financial information presented on a consolidated basis, accompanied only by revenue information ~~about revenue~~ 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 ~~$1,516~~$2,934 as of June 30, ~~2022~~2023 and ~~$1,399~~$1,616 as of December 31, ~~2021~~2022 located primarily in Europe.

~~Net Loss~~Earnings Per Share—Basic and diluted net loss per share isare 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 ~~1,548~~1,839 and ~~1,807 stock options, restricted shares, restricted stock units and performance award~~1,548 shares as of June 30, ~~2022~~2023 and ~~2021~~2022 because they are anti-dilutive. Therefore, the number of shares ~~calculated~~used for basic ~~net loss per share is also used for the~~and diluted net loss per share ~~calculation.~~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 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.

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 5 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

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supportable assumptions and projections.

2.FAIR VALUE

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~~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 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:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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•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 June 30, ~~2022:~~2023:


		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets:	Assets:									Assets:
Money market funds	Money market funds	$	—	$	48,832	$	—	$	48,832	Money market funds	$	—	$	62,100	$	—	$	62,100
Commercial paper		—		15,940		—		15,940

Government and agency obligations	Government and agency obligations	31,735		—		—		31,735		Government and agency obligations	24,273		—		—		24,273
Corporate bonds	Corporate bonds	—		66,789		—		66,789		Corporate bonds	—		40,914		—		40,914
Asset-backed securities	Asset-backed securities	—		13,729		—		13,729		Asset-backed securities	—		2,196		—		2,196
Total assets	Total assets	$	31,735	$	145,290	$	—	$	177,025	Total assets	$	24,273	$	105,210	$	—	$	129,483

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and six months ended June 30, ~~2022.~~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, ~~2021:~~2022:


		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets:	Assets:									Assets:
Money market funds	Money market funds	$	—	$	38,360	$	—	$	38,360	Money market funds	$	—	$	54,414	$	—	$	54,414
Commercial paper	Commercial paper	—		22,978		—		22,978		Commercial paper	—		11,935		—		11,935
Government and agency obligations	Government and agency obligations	32,690		—		—		32,690		Government and agency obligations	32,637		—		—		32,637
Corporate bonds	Corporate bonds	—		95,845		—		95,845		Corporate bonds	—		67,598		—		67,598
Asset-backed securities	Asset-backed securities	—		28,261		—		28,261		Asset-backed securities	—		2,353		—		2,353
Total assets	Total assets	$	32,690	$	185,444	$	—	$	218,134	Total assets	$	32,637	$	136,300	$	—	$	168,937

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~~aMAZE™ IDE clinical trial, including ~~PMA~~pre-market approval (PMA) approval and

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reimbursement for the therapy involving SentreHEART’s devices. The Company ~~has~~ assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no ~~remaining~~reported fair value as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

3.INVESTMENTS

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


	Cost Basis		Unrealized Losses		Fair Value
Corporate bonds	$	42,334	$	(1,420)	$	40,914
Government and agency obligations	24,993		(720)		24,273

Asset-backed securities	2,286		(90)		2,196
Total	$	69,613	$	(2,230)	$	67,383

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 and six months ended June 30, 2023 and 2022.

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


	Available-for-sale
	Amortized Cost		Fair Value
Due in 1 year or less	$	59,332	$	57,589
Due after 1 year through 5 years	7,995		7,598
Due after 5 years through 10 years	—		—
Instruments not due at a single maturity date	2,286		2,196
Total	$	69,613	$	67,383

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.

4.INVENTORIES

Inventories consist of the following:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Raw materials	Raw materials	$	14,235	$	12,653	Raw materials	$	26,487	$	19,880
Work in process	Work in process	2,742		2,064		Work in process	3,893		2,959
Finished goods	Finished goods	24,315		24,247		Finished goods	25,029		23,092
Total	Total	$	41,292	$	38,964	Total	$	55,409	$	45,931

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4.5.INTANGIBLE ASSETS

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

June 30, 2022 December 31, 2021
Estimated Useful Life Cost Accumulated
Amortization Cost Accumulated
Amortization
Technology 10 - 15 years $ 55,712 $ 14,663 $ 55,712 $ 12,720


	June 30, 2023				December 31, 2022
	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Technology	$	46,470	$	8,607	$	46,470	$	7,131
Patents	30,000		480		—		—
Total	$	76,470	$	9,087	$	46,470	$	7,131

~~Amortization~~In May 2023, the Company acquired patents that will be amortized over an estimated useful life of 5 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 was $971 and $727 for the three months ended June 30, 2022 and 2021 and $1,943 and $965 for the six months ended June 30, 2022 and 2021.~~ assets:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenues	$	480	$	—	$	480	$	—
Selling, general and administrative expenses	738		971		1,476		1,943
Total	$	1,218	$	971	$	1,956	$	1,943

Future amortization expense is projected as follows:


2022 (excluding the six months ended June 30, 2022)		$	1,710
2023		2,953
2023 (excluding the six months ended June 30, 2023)				2023 (excluding the six months ended June 30, 2023)	$	3,397
2024	2024	2,953		2024	7,453
2025	2025	2,953		2025	8,353
2026	2026	2,953		2026	9,553
2027 and thereafter		27,527
2027				2027	10,453
2028 and thereafter				2028 and thereafter	28,174
Total	Total	$	41,049	Total	$	67,383

5.6.ACCRUED LIABILITIES

Accrued liabilities consist of the following:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Accrued compensation and employee-related expenses	Accrued compensation and employee-related expenses	$	25,197	$	30,990	Accrued compensation and employee-related expenses	$	26,807	$	26,924
Sales returns and allowances	Sales returns and allowances	2,613		2,416		Sales returns and allowances	3,172		2,797
Accrued taxes and value-added taxes payable		1,572		1,452
Other accrued liabilities	Other accrued liabilities	1,393		1,234		Other accrued liabilities	2,007		3,301
Total	Total	$	30,775	$	36,092	Total	$	31,986	$	33,022

6.7.INDEBTEDNESS

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, ~~(SVB).~~a division of First-Citizens Bank & Trust Company as of March 31, 2023. The Loan Agreement ~~includes~~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.

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Principal payments under the Loan Agreement are to be made ratably commencing 24 months after inception through the loan's maturity date. AtIf the ~~option of~~Company meets certain conditions, as specified by the ~~Company,~~Loan Agreement, the commencement of term loan principal payments may be ~~extended~~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 ~~$240~~$600 included in the outstanding loan balance as of June 30, ~~2022.~~2023. Additionally, the unamortized original financing costs related to the term loan of ~~$286~~$220 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 June 30, ~~2022,~~2023, the Company had no borrowings under the revolving credit facility and had borrowing availability of $28,750.

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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:


2022 (excluding the six months ended June 30, 2022)		$	—
2023		3,333
2023 (excluding the six months ended June 30, 2023)				2023 (excluding the six months ended June 30, 2023)	$	3,333
2024	2024	20,000		2024	20,000
2025	2025	20,000		2025	20,000
2026	2026	16,667		2026	16,667
Total long-term debt		$	60,000
Total long-term debt, of which $13,333 is current and $46,667 is noncurrent				Total long-term debt, of which $13,333 is current and $46,667 is noncurrent	$	60,000

7.8.LEASES

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 ~~nine~~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.

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Operating Leases	Operating Leases					Operating Leases
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)	4.8		3.6		Weighted average remaining lease term (years)	5.2		4.4
Weighted average discount rate	Weighted average discount rate	4.66	%	4.69	%	Weighted average discount rate	5.39	%	4.60	%

Finance Leases	Finance Leases					Finance Leases
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)	8.1		8.6		Weighted average remaining lease term (years)	7.1		7.6
Weighted average discount rate	Weighted average discount rate	6.92	%	6.91	%	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 June 30, ~~2022.~~

~~The components of lease expense are as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Operating lease cost $ 284 $ 203 $ 570 $ 481

Finance lease cost:
Amortization of right-of-use assets 338 242 508 484
Interest on lease liabilities 185 200 375 403
Total finance lease cost $ 523 $ 442 $ 883 $ 887

~~Short-term lease expense was not significant for the three and six months ended June 30, 2022 and 2021.~~2023.

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The components of lease expense are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	325	$	284	$	635	$	570

Finance lease cost:
Amortization of right-of-use assets	255		338		510		508
Interest on lease liabilities	170		185		345		375
Total finance lease cost	$	425	$	523	$	855	$	883

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

Supplemental cash flow information related to leases was as follows:


		Six Months Ended June 30, 2022		Six Months Ended June 30, 2021			Six Months Ended June 30, 2023		Six Months Ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	Operating cash flows for operating leases	$	505	$	494	Operating cash flows for operating leases	$	602	$	505
Operating cash flows for finance leases	Operating cash flows for finance leases	375		403		Operating cash flows for finance leases	345		375
Financing cash flows for finance leases	Financing cash flows for finance leases	437		399		Financing cash flows for finance leases	483		437

Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:					Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	—		1,221		Operating leases	1,068		—
Finance leases	Finance leases	—		—		Finance leases	—		—

Supplemental balance sheet information related to leases was as follows:

June 30, 2022 December 31, 2021
Operating Leases
Operating lease right-of-use assets $ 4,241 $ 4,761
Current maturities of leases 884 861
Operating lease liabilities 3,591 4,068
Total operating lease liabilities $ 4,475 $ 4,929
Finance Leases
Property and equipment, at cost $ 14,607 $ 14,607
Accumulated depreciation (6,624) (6,116)
Property and equipment, net $ 7,983 $ 8,491
Current maturities of leases $ 936 $ 895
Finance lease liabilities 9,603 10,082
Total finance lease liabilities $ 10,539 $ 10,977

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

Operating Leases Finance Leases
2022 (excluding the six months ended June 30, 2022) $ 356 $ 817
2023 1,160 1,652
2024 1,164 1,674
2025 920 1,625
2026 592 1,657
2027 and thereafter 868 6,515
Total payments $ 5,060 $ 13,940
Less imputed interest (585) (3,401)
Total $ 4,475 $ 10,539


	June 30, 2023		December 31, 2022
Operating Leases
Operating lease right-of-use assets	$	4,353	$	3,787

Current maturities of leases	1,340		1,147
Operating lease liabilities	3,458		3,095
Total operating lease liabilities	$	4,798	$	4,242

Finance Leases
Property and equipment, at cost	$	14,620	$	14,645
Accumulated depreciation	(7,339)		(7,109)
Property and equipment, net	$	7,281	$	7,536

Current maturities of leases	$	1,042	$	992
Finance lease liabilities	8,614		9,147
Total finance lease liabilities	$	9,656	$	10,139

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Future maturities of lease liabilities as of June 30, 2023 were as follows:


	Operating Leases		Finance Leases
2023 (excluding the six months ended June 30, 2023)	$	663	$	836
2024	1,270		1,689
2025	1,034		1,638
2026	727		1,671
2027	754		1,703
2028 and thereafter	1,169		4,824
Total payments	$	5,617	$	12,361
Less imputed interest	(819)		(2,705)
Total	$	4,798	$	9,656

8.9.COMMITMENTS AND CONTINGENCIES

~~Royalty~~License Agreement. The Company ~~has~~had been a party to a license agreement that required royalty ~~agreement in place with terms that include payment of royalties~~payments of 5% of specified product sales. ~~The~~In May 2023, the Company entered into an agreement ~~terminates~~that terminated the ~~later of 2023 or upon expiration of~~license agreement and the ~~underlying patents or patent applications, which is expected~~Company's obligations to ~~occur after 2023. Parties to~~make royalty payments under the ~~royalty agreement have the right at any time to terminate the agreement immediately~~license agreement. See Legal section below for cause. Royalty expense of $877 and $842 was recorded for the three months ended June 30, 2022 and 2021 and $1,670 and $1,564 for the six months ended June 30, 2022 and 2021 as a component of Cost of Revenue in the accompanying Condensed and Consolidated Statement of Operations.additional information.

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

Legal. The Company may, from time to time, become a party to legal proceedings. Such matters are subject to many uncertainties and to outcomes of which the financial impacts are not predictable with assurance and that may not be known for extended periods of time. 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. Department of Justice (USDOJ) in December 2017 stating that it is investigating the Company to determine whether the Company has violated the False Claims Act, relating to the promotion of certain medical devices related to the treatment of atrial fibrillation for off-label use and submitted or caused to be submitted false claims to certain federal and state health care programs for medically unnecessary healthcare services related to the treatment of atrial fibrillation. The CID covers the period from January 2010 to December 2017 and required the production of documents and answers to written interrogatories. The Company had no knowledge of the investigation prior to receipt of the CID. The Company maintains rigorous policies and procedures to promote compliance with the False Claims Act and other applicable regulatory requirements. The Company provided the USDOJ with documents and answers to the written interrogatories. In March 2021, USDOJ informed the Company that its investigation was based on a lawsuit brought on behalf of the United States and various state and local governments under the qui tam provisions of federal and certain state and local False Claims Acts. 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. While the Company is ~~vigorously~~ 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 (“CCF”) 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

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(Unaudited)

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 three months ended June 30, 2023.

During the first quarter of 2023, the Company ~~received~~entered into a ~~notice~~legal settlement for $7,500 in connection with the settlement of ~~breach under~~claims filed against a license agreement regarding its potential underpayment of royalties. The notice asserts that the Company's calculation of royalties payable under the license agreement throughout the agreement term did not include sales of all products that were subject to royalties.competitor. The Company ~~disputes~~recorded a $3,500 gain for the ~~basis of~~three months ended June 30, 2023 and $7,500 for the ~~claim~~six months ended June 30, 2023 for the proceeds received as a reduction to selling, general and ~~any potential underpayment. While a loss related to this claim is possible, the Company does not believe such loss is probable or estimable at this time.~~administrative expenses.

9.10.REVENUE

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 ~~developed and~~ 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.

United States revenue by product type is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Open ablation	$	27,002	$	22,070	$	52,144	$	41,044
Minimally invasive ablation	11,370		10,154		21,007		18,769
Pain management	12,590		10,210		23,658		18,224
Total ablation	$	50,962	$	42,434	$	96,809	$	78,037
Appendage management	33,941		28,831		66,283		55,500
Total United States	$	84,903	$	71,265	$	163,092	$	133,537

International revenue by product type is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Open ablation	$	7,722	$	6,213	$	15,008	$	12,705
Minimally invasive ablation	1,375		1,271		3,242		2,804
Pain management	439		114		667		254
Total ablation	$	9,536	$	7,598	$	18,917	$	15,763
Appendage management	6,479		5,666		12,403		9,805
Total International	$	16,015	$	13,264	$	31,320	$	25,568

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

~~United States revenue by product type is as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Open ablation $ 22,070 $ 19,503 $ 41,044 $ 36,942
Minimally invasive ablation 10,154 9,702 18,769 18,087
Pain management 10,210 5,709 18,224 9,607
Total ablation $ 42,434 $ 34,914 $ 78,037 $ 64,636
Appendage management 28,831 25,156 55,500 45,743
Total United States $ 71,265 $ 60,070 $ 133,537 $ 110,379

~~International revenue by product type is as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Open ablation $ 6,213 $ 5,526 $ 12,705 $ 9,960
Minimally invasive ablation 1,271 1,575 2,804 2,849
Pain management 114 11 254 11
Total ablation $ 7,598 $ 7,112 $ 15,763 $ 12,820
Appendage management 5,666 4,194 9,805 7,452
Total International $ 13,264 $ 11,306 $ 25,568 $ 20,272

Revenue attributed to customer geographic locations is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
United States	United States	$	71,265	$	60,070	$	133,537	$	110,379	United States	$	84,903	$	71,265	$	163,092	$	133,537

Europe	Europe	7,783		7,015		15,020		12,781		Europe	9,457		7,783		18,858		15,020
Asia		4,933		4,088		9,490		6,961
Asia Pacific										Asia Pacific	6,125		4,933		11,527		9,490
Other International	Other International	548		203		1,058		530		Other International	433		548		935		1,058
Total International	Total International	13,264		11,306		25,568		20,272		Total International	16,015		13,264		31,320		25,568
Total Revenue	Total Revenue	$	84,529	$	71,376	$	159,105	$	130,651	Total Revenue	$	100,918	$	84,529	$	194,412	$	159,105

~~10.~~11.INCOME TAX PROVISION

The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The Company uses the asset and liability method to determine its provision for income taxes. The Company’s provision for income taxes in interim periods is computed by applying the discrete method and is based on financial results through the end of the interim period. The Company determined that using the discrete method is more appropriate than using the annual effective tax rate method. 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 June 30, 2023 and 2022 ~~and 2021~~ was ~~(0.30%~~(1.9%) and ~~(0.41%~~(0.3%). The effective tax rate for the six months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~(0.34%~~(1.5%) and ~~(0.29%~~(0.3%). The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to ~~the Company’s~~its valuation ~~allowance.~~allowances.

~~Federal,~~The Company's federal, state, local and ~~local~~foreign tax 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 operating losses. However, if required, the Company will recognize interest and penalties within income tax expense and within the related tax liability.

~~Table of Contents~~

~~ATRICURE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In Thousands, except per share amounts)~~

~~(Unaudited)~~

~~11.~~12.EQUITY COMPENSATION PLANS

The Company has 2two share-based incentive plans: 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 ~~(2014~~(Prior Plan) ~~and the 2019 Employee Stock Purchase Plan (ESPP)~~.

Stock Incentive Plan

Under the ~~2014~~2023 Plan, the Board of Directors ~~may grant incentive stock options to Company employees and~~ may grant restricted stock awards, restricted stock units, nonstatutory stock options, performance share awards and stock appreciation rights to Company employees, directors and ~~consultants.~~consultants, and may grant incentive stock options to Company employees. The Compensation Committee of the Board of Directors, as the administrator of the ~~2014~~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 June 30, ~~2022, 12,899~~2023, 2,287 shares of common stock ~~had~~have been reserved for issuance under the ~~2014~~2023 Plan, and ~~1,076~~2,269 shares were available for future grants. ~~At the Company's 2022 Annual Meeting of Stockholders, stockholders approved an amendment to the 2014 Plan increasing the shares authorized under the 2014 Plan by 1,100.~~

Employee Stock Purchase Plan

Under the ESPP, shares of the Company’s common stock may be purchased at a 15% discount ~~(15%)~~ of the lesser of the closing price of the Company’s common stock on the first or last trading days 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 June 30, ~~2022,~~2023, there were ~~228~~847 shares available for future issuance under the ESPP.

~~Share-Based Compensation Expense Information~~

~~The following table summarizes the allocation of share-based compensation expense:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Cost of revenue $ 487 $ 598 $ 1,058 $ 1,017
Research and development expenses 1,186 1,083 2,316 2,020
Selling, general and administrative expenses 5,851 5,460 11,199 10,708
Total $ 7,524 $ 7,141 $ 14,573 $ 13,745

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

Share-Based Compensation Expense Information

The following table summarizes the allocation of share-based compensation expense:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenue	$	471	$	487	$	914	$	1,058
Research and development expenses	1,540		1,186		2,844		2,316
Selling, general and administrative expenses	6,984		5,851		13,997		11,199
Total	$	8,995	$	7,524	$	17,755	$	14,573

~~12.~~13.COMPREHENSIVE LOSS AND ACCUMULATED OTHER COMPREHENSIVE LOSS

In addition to net losses, comprehensive loss includes foreign currency translation adjustments and unrealized gains (losses) on investments.

Accumulated other comprehensive loss consisted of the following, net of tax:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Total accumulated other comprehensive (loss) income at beginning of period		$	(3,465)	$	(18)	$	(948)	$	312
Total accumulated other comprehensive loss at beginning of period										Total accumulated other comprehensive loss at beginning of period	$	(3,072)	$	(3,465)	$	(4,096)	$	(948)
Unrealized Gains (Losses) on Investments	Unrealized Gains (Losses) on Investments									Unrealized Gains (Losses) on Investments
Balance at beginning of period	Balance at beginning of period	$	(3,226)	$	23	$	(887)	$	54	Balance at beginning of period	$	(2,657)	$	(3,226)	$	(3,698)	$	(887)
Other comprehensive loss before reclassifications		(377)		(132)		(2,716)		(163)
Amounts reclassified from accumulated other comprehensive loss to other income (expense)		(72)		—		(72)		—
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	427		(377)		1,468		(2,716)
Amounts reclassified to other income (expense)										Amounts reclassified to other income (expense)	—		(72)		—		(72)
Balance at end of period	Balance at end of period	$	(3,675)	$	(109)	$	(3,675)	$	(109)	Balance at end of period	$	(2,230)	$	(3,675)	$	(2,230)	$	(3,675)
Foreign Currency Translation Adjustment	Foreign Currency Translation Adjustment									Foreign Currency Translation Adjustment
Balance at beginning of period	Balance at beginning of period	$	(239)	$	(41)	$	(61)	$	258	Balance at beginning of period	$	(415)	$	(239)	$	(398)	$	(61)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(527)		36		(787)		(262)		Other comprehensive income (loss) before reclassifications	28		(527)		153		(787)
Amounts reclassified from accumulated other comprehensive loss to other income (expense)		97		27		179		26
Amounts reclassified to other income (expense)										Amounts reclassified to other income (expense)	8		97		(134)		179
Balance at end of period	Balance at end of period	$	(669)	$	22	$	(669)	$	22	Balance at end of period	$	(379)	$	(669)	$	(379)	$	(669)
Total accumulated other comprehensive loss at end of period	Total accumulated other comprehensive loss at end of period	$	(4,344)	$	(87)	$	(4,344)	$	(87)	Total accumulated other comprehensive loss at end of period	$	(2,609)	$	(4,344)	$	(2,609)	$	(4,344)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollar amounts referenced in this Item 2 are in thousands, except per share amounts.)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto contained in Item 1 of Part I of this Form 10-Q and our audited financial statements and notes thereto as of and for the year ended December 31, ~~2021~~2022 included in our Form 10-K filed with the Securities and Exchange Commission (SEC) to provide an understanding of our results of operations, financial condition and cash flows.

Forward-Looking Statements

This Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors,” contains forward-looking statements regarding our future performance. All forward-looking information is inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this quarterly report on Form 10-Q, and in our annual report on Form 10-K for the year ended December 31, ~~2021.~~2022. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Forward-looking statements address our expected future business, financial performance, financial condition and results of operations, and often contain words such as “intends,” “estimates,” “anticipates,” “hopes,” “projects,” “plans,” “expects,” “drives,” “seek,” “believes,” “see,” “focus,” “should,” “will,” “would,” “opportunity,” “outlook,” “could,” “can,” “may,” “future,” “predicts,” “target,” “potential,” and similar expressions and the negative versions ~~thereof.~~of those words, and may be identified by the context in which they are used. Such statements are based only upon current expectations of AtriCure. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements include statements that address activities, events, circumstances or developments that AtriCure expects, believes or anticipates will or may occur in the future. Forward-looking statements are based on AtriCure’s experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s ~~control including developments related to the COVID-19 pandemic, as discussed herein.~~control. With respect to the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements speak only as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise unless required by law.

Overview

We are a leading innovator in treatments for atrial fibrillation (Afib), left atrial appendage (LAA) management and post-operative pain management. Afib affects 1-2% of the population in the United States and an estimated 33 million people worldwide. It is the most common cardiac arrhythmia, or irregular heartbeat, encountered in clinical practice and results in high utilization of healthcare services. Patients often progress from being in Afib intermittently (paroxysmal) to being in Afib continuously. The continuous Afib patient population includes persistent Afib, which lasts seven days to one year, and long-standing persistent Afib, which lasts longer than one year. Afib often occurs in conjunction with other cardiovascular diseases, including hypertension, congestive heart failure, left ventricular dysfunction, coronary artery disease and valvular disease. Our ablation and left atrial appendage management (LAAM) products are used by physicians during both open-heart and minimally invasive procedures. In open-heart procedures, the physician is performing heart surgery for other conditions, and our products are used in conjunction with (“concomitant” to) such a procedure. Minimally invasive procedures are performed on a standalone basis, and often include multi-disciplinary or “hybrid” approaches, combining surgical procedures using AtriCure ablation and LAAM products with catheter ~~ablation.~~

~~We believe that we are currently the market leader in the~~ablation procedures performed by an electrophysiologist. Our pain management device is used by physicians to freeze nerves during cardiothoracic or thoracic surgical ~~treatment of Afib. Our Isolator~~® Synergy™ Ablation System is approved by the United States Food and Drug Administration (FDA) for the treatment of persistent and long-standing persistent Afib concomitant to other open-heart surgical procedures. ~~Our EPi-Sense~~® System is approved by FDA to treat patients with long-standing persistent Afib. All of our other ablation devices are cleared for sale in the United States under FDA 510(k) clearances, including our other radio frequency (RF) and cryoablation products, which are indicated for the ablation of cardiac tissue and/or the treatment of cardiac arrhythmias. In addition, certain of our cryoablation probes are cleared for managing pain by temporarily ablating peripheral nerves, or Cryo Nerve Block therapy. Our AtriClip® LAA Exclusion System products are 510(k)-cleared with an indication for the exclusion of the LAA, performed under direct visualization and in conjunction with other cardiac surgical procedures. Direct visualization, in this context, requires that the surgeon is able to see the heart directly, with or without assistance from a camera, endoscope or other appropriate viewing technologies. Studies have demonstrated exclusion of the LAA with AtriClip also results in electrical isolation of the LAA. The LARIAT® system is cleared under the 510(k) process for soft tissue ligation. Several of our products are currently being studied to expand labeling

~~Table of Contents~~

~~claims or to support indications specifically for the treatment of Afib, prophylactic stroke reduction or other arrhythmias. Our Isolator Synergy clamps, Isolator Synergy pens, Coolrail~~® ~~linear pen, cryoablation devices, cryoSPHERE~~® ~~probe, certain products of the AtriClip LAA Exclusion System, the EPi-Sense~~® system and LARIAT Suture Delivery Device bear the CE mark and may be commercially distributed throughout the member states of the European Union and other countries that comply with or mirror the Medical Device Directive. Our Isolator Synergy clamps, Isolator Synergy pens, Coolrail linear pen, cryoablation devices and certain products of the AtriClip LAA Exclusion System are available in select Asia-Pacific countries. We anticipate that substantially all of our revenue for the foreseeable future will relate to products we currently sell or are in the process of developing.

We sell our products to medical centers through our direct sales force in the United States, ~~and in certain international markets, such as~~ Germany, France, the United Kingdom, the Benelux region and Australia. We also sell our products through distributors who in turn sell our products to medical centers in other international markets. Our business is primarily transacted in U.S. ~~Dollars, with certain exceptions. Direct~~Dollars; direct sales transactions outside the United States are transacted in Euros, British Pounds or Australian Dollars.

Recent Developments

~~During 2022,~~In 2023, we ~~continued to experience variability~~realized significant global revenue growth and ~~intermittent demand for~~expanded on our ~~products as non-emergent procedures were deferred in order to preserve resources for COVID-19 patients~~strategic initiatives of product innovation, clinical science and ~~caregivers~~expanding physician awareness and ~~hospital staffing was impacted by the pandemic~~adoption through superior training and related factors. We saw many regions stabilize through the quarter with overall improvements in procedure volumes. However, we expect some variability to continue as we operate in many geographic regions with diverse restrictions that are impacted as new COVID-19 variants emerge. Despite the challenging environment resulting from the pandemic, oureducation. Our worldwide revenue infor the six months ended June 30, ~~2022~~2023 was ~~$159,105,~~$194,412, representing an increase of ~~$28,454,~~$35,307, or ~~21.8%~~22.2%, over the first six months of ~~2021,~~2022, driven by growing adoption across key product lines. ~~We continue to build on our~~Highlights of the strategic ~~initiatives~~and operational advancements include:

Table of ~~product innovation, investing in clinical science and expanding awareness and adoption by providing superior training and education.~~Contents

PRODUCT INNOVATION. During September 2022, the ~~first half of 2022, we launched our ENCOMPASS~~Company received final labeling approval from FDA for the next generation EPi-Sense® ~~clamp, following~~ST device and began a limited launch in the ~~receipt~~fourth quarter of ~~510(k) clearance for ablation~~2022, with a full launch commencing in the second quarter of ~~cardiac tissue during cardiac surgery in July 2021. The ENCOMPASS clamp marks innovation in our core open ablation market and is designed~~2023. We continue to make ~~concomitant surgical ablations more efficient. It is expected~~significant progress on the submission of our products for clearance under the European Medical Device Regulation (EU MDR). As of the second quarter 2023, all of our products have been submitted to ~~drive deeper penetration of cardiac surgery procedures.~~our Notified Body under EU MDR. These activities are in addition to several new product development programs currently underway.

CLINICAL SCIENCE. We ~~continue to~~ invest in studies to expand labeling claims, or support various indications for our products and ~~we also conduct various studies to~~ gather clinical data regarding our products.

~~HEAL-IST.~~ In February 2022, FDA approved the protocol for the Hybrid Epicardial and Endocardial Sinus Node Sparing Ablation Therapy for Inappropriate Sinus Tachycardia (IST) clinical trial (HEAL-IST) . The HEAL-IST clinical trial is designed to study the safety and efficacy of a hybrid sinus node sparing ablation procedure using the Isolator Synergy Surgical Ablation System for the treatment of symptomatic, drug refractory or drug intolerant IST. The trial is a prospective, multicenter, single arm trial that evaluates safety 30 days post-procedure and evaluates primary effectiveness of freedom from IST (as specified) at 12 months post-procedure. The trial provides for enrollment of up to 142 patients at up to 40 sites in the United States, United Kingdom and European Union. We announced the first patient enrollment in the trial in June 2022; site initiation and enrollment is ongoing.

~~LeAAPS.~~ In April 2022, the FDA approved the protocol for the Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) IDE clinical trial. The trial is designed to evaluate the effectiveness of prophylactic LAA exclusion using the AtriClip LAA Exclusion System for the prevention of ischemic stroke or systemic arterial embolism in cardiac surgery patients without pre-operative AF diagnosis who are at risk for these events. ~~The trial is a~~This prospective, multicenter, randomized trial ~~that~~ evaluates safety at 30 days post-procedure to demonstrate no increased risk with LAA exclusion during cardiac surgery. The trial provides for enrollment of up to 6,500 subjects at up to 250 sites worldwide. In January 2023, we announced first patient enrollment in the trial; site initiation and enrollment is ongoing.

Recently, results from our CEASE-AF trial were presented at the European Heart Rhythm Association meeting. CEASE-AF is a prospective, multi-center randomized control trial that demonstrated superior freedom from atrial arrhythmias for staged hybrid ablation compared to endocardial catheter ablation.

Trial enrollment was completed in the second quarter of 2023 for the ICE-AFIB clinical trial, which is designed to study the safety and efficacy of our cryoICE® system for persistent and long-standing persistent Afib treatment during concomitant on-pump cardiac surgery. The ~~Company anticipates~~trial provided for enrollment of up to ~~begin later this year.~~150 patients at up to 20 sites in the United States. Patient follow-up for twelve months post ablation required by the study protocol remains ongoing.

TRAINING. Our professional education and marketing teams conduct a variety of virtual and in-person ~~and mobile~~ training programs for physicians and other healthcare professionals, as well as our sales teams. These training methods ensure invaluable access to continuing education and awareness of our products and related procedures. ~~The 2021 FDA approval~~During 2023, we launched new training courses for Advanced Practice Providers, pain management in pectus procedures, as well as a best practice course for developing arrhythmia programs, with a primary focus on Hybrid therapies. Our professional education courses continue to benefit from the use of inanimate models or synthetic cadavers, known as cadets, for our physician training activities. These reusable cadets provide a sustainable alternative to the ~~EPi-Sense system has enabled us~~use of animals or cadavers, in addition to ~~educate and train physicians~~reducing spend on the benefits of Hybrid AF™ therapy in treating long-standing persistent Afib patients. Our Hybrid Training Course and Advanced Hybrid Ablation Training Course are co-sponsored by the Hearth Rhythm Society (HRS).

training programs.

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Results of Operations

Three months ended June 30, ~~2022~~2023 compared to three months ended June 30, ~~2021~~2022

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:


		Three Months Ended June 30,									Three Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Revenues		Amount		% of Revenues			Amount		% of Revenues		Amount		% of Revenues
Revenue	Revenue	$	84,529	100.0	%	$	71,376	100.0	%	Revenue	$	100,918	100.0	%	$	84,529	100.0	%
Cost of revenue	Cost of revenue	21,010		24.9	%	17,298		24.2	%	Cost of revenue	23,841		23.6		21,010		24.9
Gross profit	Gross profit	63,519		75.1	%	54,078		75.8	%	Gross profit	77,077		76.4		63,519		75.1
Operating expenses:	Operating expenses:									Operating expenses:
Research and development expenses	Research and development expenses	14,791		17.5	%	12,197		17.1	%	Research and development expenses	17,438		17.3		14,791		17.5
Selling, general and administrative expenses	Selling, general and administrative expenses	62,388		73.8	%	56,958		79.8	%	Selling, general and administrative expenses	63,783		63.2		62,388		73.8

Total operating expenses	Total operating expenses	77,179		91.3	%	69,155		96.9	%	Total operating expenses	81,221		80.5		77,179		91.3
Loss from operations	Loss from operations	(13,660)		(16.2)	%	(15,077)		(21.1)	%	Loss from operations	(4,144)		(4.1)		(13,660)		(16.2)
Other expense, net:		(1,136)		(1.3)	%	(1,108)		(1.6)	%
Other income (expense), net:										Other income (expense), net:	(881)		(0.9)		(1,136)		(1.3)
Loss before income tax expense	Loss before income tax expense	(14,796)		(17.5)	%	(16,185)		(22.7)	%	Loss before income tax expense	(5,025)		(5.0)		(14,796)		(17.5)
Income tax expense	Income tax expense	45		0.1	%	66		0.1	%	Income tax expense	93		0.1		45		0.1
Net loss	Net loss	$	(14,841)	(17.6)	%	$	(16,251)	(22.8)	%	Net loss	$	(5,118)	(5.1)	%	$	(14,841)	(17.6)	%

Revenue. The following table sets forth, for the periods indicated, our revenue by product type and geography expressed as dollar amounts and the corresponding change in such revenues between periods, in both dollars and percentages:


		Three Months Ended June 30,				Change					Three Months Ended June 30,				Change
		2022		2021		Amount		%			2023		2022		Amount		%
Open ablation	Open ablation	$	22,070	$	19,503	$	2,567	13.2	%	Open ablation	$	27,002	$	22,070	$	4,932	22.3	%
Minimally invasive ablation	Minimally invasive ablation	10,154		9,702		452		4.7	%	Minimally invasive ablation	11,370		10,154		1,216		12.0
Pain management	Pain management	10,210		5,709		4,501		78.8	%	Pain management	12,590		10,210		2,380		23.3
Appendage management	Appendage management	28,831		25,156		3,675		14.6	%	Appendage management	33,941		28,831		5,110		17.7
Total United States	Total United States	$	71,265	$	60,070	$	11,195	18.6	%	Total United States	$	84,903	$	71,265	$	13,638	19.1
Total International	Total International	13,264		11,306		1,958		17.3	%	Total International	16,015		13,264		2,751		20.7
Total revenue	Total revenue	$	84,529	$	71,376	$	13,153	18.4	%	Total revenue	$	100,918	$	84,529	$	16,389	19.4	%

Worldwide revenue increased ~~18.4% (19.8%~~19.4% (19.3% on a constant currency basis). In the United States, we experienced growth in ~~most of our~~all key product ~~lines. Physician acceptance of our~~lines, led by the EnCompass® clamp in open ablation, cryoSPHERE® probe for post-operative pain management and ~~expanded sales efforts~~AtriClip® Flex⋅V® for appendage management. Additionally, Hybrid AF™ Therapy procedures using the EPi-Sense System drove growth in ~~pain management revenue. Appendage management sales were driven by continuing adoption of our AtriClip® Flex⋅V~~® ~~and Pro⋅V~~® ~~devices, while the launch of the new ENCOMPASS clamp accelerated growth in our open ablation revenue. While~~ minimally invasive ~~procedures continue to experience residual impacts from the pandemic and staffing, we saw growing adoption of the EPi-Sense~~® ~~System in an increasing customer base. The increase in EPi-Sense revenue was largely offset by a decline in revenue from all other minimally invasive ablation products.~~sales. International sales increased ~~17.3% (26.3%~~20.7% (19.9% on a constant currency basis), ~~a result~~across all franchises and major geographic regions, bolstered by strong sales of ~~rebounding procedure volumes in Europe, primarily~~open ablation and LAAM products in the ~~Netherlands~~Asia Pacific market and our direct markets in the United Kingdom and ~~growth in Australia. The increase in international revenue was driven mainly by our appendage management business which grew 35.1%.~~Germany.

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Revenue reported on a constant currency basis is a non-GAAP measure ~~and is~~ calculated by applying previous period foreign currency ~~(Euro)~~ exchange rates, which are determined by the average daily ~~Euro to Dollar~~ exchange rate, to each of the comparable periods. Revenue is analyzed on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a non-operating impact on revenue, we believe that evaluating growth in revenue on a constant currency basis provides an additional and meaningful assessment of revenue to both management and investors.

Cost of revenue and gross margin. Cost of revenue increased ~~$3,712,~~$2,831 primarily reflecting higher sales ~~volumes, while gross~~volumes. Gross margin ~~decreased approximately 70~~increased 130 basis points, ~~reflecting changes in U.S. product mix~~driven by favorable production and strategic sourcing efficiencies and offset partially by cost increases ~~driven by inflationary~~ and ~~supply chain pressures.~~unfavorable geographic and product mix.

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Research and development expenses. Research and development expenses increased ~~$2,594~~$2,647 or ~~21.3%~~17.9%. ~~Personnel costs rose $1,372 from increased headcount as we continue to build our~~Expansion of product development, regulatory and clinical teams resulted in $1,474 of increased personnel costs, including variable compensation, travel and ~~from increased travel costs. Product development and regulatory~~share-based compensation. Clinical trial expenses ~~increased $869 driven mainly by regulatory filings, submissions and consulting related~~contributed a further $1,406 increase due to ~~compliance with~~strong enrollment activity in the ~~European Union Medical Device Regulation (EU MDR). Amortization expense increased $247 following~~LeAAPS clinical trial during the ~~April 2021 PMA resulting from the CONVERGE IDE clinical trial.~~quarter.

Selling, general and administrative expenses. Selling, general and administrative expenses increased ~~$5,430,~~$1,395, or ~~9.5%. Additional~~2.2%, driven by a $4,240 increase in personnel costs as a result of growth in headcount and ~~travel activities~~share-based compensation. This increase was offset by the $1,587 decrease in training costs as a result of ~~$4,058 drove the~~growing efficiencies and enhancements to our training programs globally, and a $567 decrease in professional services, information technology, and consulting costs. The increase in selling, general and administrative expenses ~~primarily reflecting~~was further offset by a net credit to expense of $412 from non-recurring legal settlements, including a $3,500 gain for proceeds received in the ~~expansion~~second quarter for a matter settled during the first quarter of our sales and training teams, while meetings, marketing, trainings and tradeshow activities contributed $2,054 of the increase in expenses as we saw further transition from virtual to in-person events. Other operating costs grew $838 compared with the prior period, which includes consulting, professional services and information systems enhancements. Additionally, 2021 included a $2,6002023, partially offset by $3,088 charge for settlement of an intellectual property matter in the ~~change in fair value~~second quarter of ~~the SentreHEART contingent consideration liability, as well as a reduction in expenses from a one-time tax credit of $759.~~2023. See Note 9 – Commitments and Contingencies for further discussion.

Other income (expense). Other income and expense consists primarily of net interest expense and net foreign currency transaction ~~gains and~~ losses. ~~Net interest expense decreased $69 primarily due to lower interest expense as a result of the November 2021 amendment of our Loan Agreement.~~

Six months ended June 30, ~~2022~~2023 compared to six months ended June 30, ~~2021~~2022

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:


		Six Months Ended June 30,									Six Months Ended June 30,
		2022				2021					2023				2022
		Amount		% of Revenues		Amount		% of Revenues			Amount		% of Revenues		Amount		% of Revenues
Revenue	Revenue	$	159,105	100.0	%	$	130,651	100.0	%	Revenue	$	194,412	100.0	%	$	159,105	100.0	%
Cost of revenue	Cost of revenue	39,991		25.1	%	32,033		24.5	%	Cost of revenue	47,726		24.5		39,991		25.1
Gross profit	Gross profit	119,114		74.9	%	98,618		75.5	%	Gross profit	146,686		75.5		119,114		74.9
Operating expenses:	Operating expenses:									Operating expenses:
Research and development expenses	Research and development expenses	28,420		17.9	%	23,414		17.9	%	Research and development expenses	32,765		16.9		28,420		17.9
Selling, general and administrative expenses	Selling, general and administrative expenses	118,504		74.5	%	106,166		81.3	%	Selling, general and administrative expenses	123,847		63.7		118,504		74.5

Total operating expenses	Total operating expenses	146,924		92.3	%	129,580		99.2	%	Total operating expenses	156,612		80.6		146,924		92.3
Loss from operations	Loss from operations	(27,810)		(17.5)	%	(30,962)		(23.7)	%	Loss from operations	(9,926)		(5.1)		(27,810)		(17.5)
Other expense, net:		(2,113)		(1.3)	%	(2,109)		(1.6)	%
Other income (expense), net:										Other income (expense), net:	(1,497)		(0.8)		(2,113)		(1.3)
Loss before income tax expense	Loss before income tax expense	(29,923)		(18.8)	%	(33,071)		(25.3)	%	Loss before income tax expense	(11,423)		(5.9)		(29,923)		(18.8)
Income tax expense	Income tax expense	101		0.1	%	97		0.1	%	Income tax expense	171		0.1		101		0.1
Net loss	Net loss	$	(30,024)	(18.9)	%	$	(33,168)	(25.4)	%	Net loss	$	(11,594)	(6.0)	%	$	(30,024)	(18.9)	%


	Six Months Ended June 30,				Change
	2023		2022		Amount		%
Open ablation	$	52,144	$	41,044	$	11,100	27.0	%
Minimally invasive ablation	21,007		18,769		2,238		11.9
Pain management	23,658		18,224		5,434		29.8
Appendage management	66,283		55,500		10,783		19.4
Total United States	$	163,092	$	133,537	$	29,555	22.1
Total International	31,320		25,568		5,752		22.5
Total revenue	$	194,412	$	159,105	$	35,307	22.2	%

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Six Months Ended
June 30, Change
2022 2021 Amount %
Open ablation $ 41,044 $ 36,942 $ 4,102 11.1 %
Minimally invasive ablation 18,769 18,087 682 3.8 %
Pain management 18,224 9,607 8,617 89.7 %
Appendage management 55,500 45,743 9,757 21.3 %
Total United States $ 133,537 $ 110,379 $ 23,158 21.0 %
Total International 25,568 20,272 5,296 26.1 %
Total revenue $ 159,105 $ 130,651 $ 28,454 21.8 %

Worldwide revenue increased ~~21.8% (23.0%~~22.2% (22.4% on a constant currency basis). In the United States, ~~we experienced~~ growth ~~across most~~in all key product lines ~~as cardiac surgery volumes began to stabilize. Appendage management~~reflected continuing adoption of our products. Open ablation revenue increases were driven by ~~sales~~the EnCompass clamp, which was launched in April 2022. Sales of the ~~AtriClip®~~AtriClip Flex⋅V®and ~~Pro⋅V~~® ~~devices, while continuing~~cryoSPHERE probe contributed to revenue growth in the appendage management and post-operative pain management franchises. Increased physician adoption of the ~~cryoSPHERE~~® ~~probe for post-operative pain management drove pain management sales. The launch of~~Hybrid AF™ Therapy procedure using the ~~new ENCOMPASS clamp contributed to the open ablation sales growth, while adoption of the~~ EPi-Sense® System drove ~~increases~~growth in minimally invasive ~~ablation and offset declines in other minimally invasive ablation products.~~sales. International sales increased ~~26.1% (33.7%~~22.5% (23.8% on a constant currency basis)~~, with procedure volumes rising~~ across all ~~major~~ franchises and major geographic regions.

Cost of revenue and gross margin. Cost of revenue increased ~~$7,958,~~$7,735 primarily reflecting higher ~~revenue and a decrease in~~sales volumes, while gross margin ~~of approximately~~increased 60 basis points ~~resulting~~as realization of increasing production efficiencies more than offset cost pressure from ~~changes in U.S. product mix and cost inflation and~~ supply chain ~~pressures, slightly offset by~~challenges and geographic and product mix.

Research and development expenses. Research and development expenses increased ~~$5,006~~$4,345 or ~~21.4%. Personnel~~15.3%, primarily from a $3,130 increase in personnel costs ~~increased $2,560 from~~due to additional headcount ~~as we continue to build~~in our product development, regulatory and clinical ~~teams~~teams. The increase in clinical activity driven by the LeAAPS and ~~return to historical travel levels. Regulatory submissions, consulting, as well as~~HEAL-IST clinical trials also contributed incremental expense of $2,162. This increase was offset by a $770 decrease in product development ~~projects increased $1,119. Amortization expense increased $978 following the April 2021 PMA resulting from the CONVERGE IDE clinical trial.~~and consulting costs as EU MDR compliance efforts diminished in 2023.

Selling, general and administrative expenses. Selling, general and administrative expenses increased ~~$12,338,~~$5,343, or ~~11.6%. Additional headcount and travel activities~~4.5%, largely due to increased ~~$9,459, primarily reflecting the expansion across our teams, as well~~personnel costs of $12,003 as a ~~return to historical travel levels. Additional tradeshow, meetings, physician training~~result of growth in headcount, variable compensation and share-based compensation and $1,229 of additional marketing, ~~activities contributed $4,969 of~~trade shows, and meeting activities. Offsetting the increase ~~reflecting continuing transition~~was a $2,882 decrease in training due to improved efficiencies from ~~virtual to in-person events~~our various global training programs, and a $1,182 decrease in legal spend as a result of settlements reached in the ~~expansion~~first half of ~~training programs. Other operating costs,~~2023. Selling, general and administrative expenses were also offset by a net gain of $4,466 for non-recurring legal settlements, including ~~contracting, product demo costs and professional services grew $1,161 as compared to~~a $7,500 gain from proceeds on a matter settled during the ~~prior period. Additionally, 2021 expenses included a $5,100 charge for the change in fair value~~first quarter of ~~the SentreHEART contingent consideration liability,~~2023, partially offset by ~~a one-time tax credit~~$3,088 charge for settlement of ~~$759.~~an intellectual property matter. See Note 9 – Commitments and Contingencies for further discussion.

Other income (expense). Other income and expense consists primarily of net interest expense and net foreign currency transaction ~~gains and~~ losses. ~~Net interest expense decreased $240 primarily due to lower interest expense stemming from the November 2021 amendment of our Loan Agreement.~~

Liquidity and Capital Resources

As of June 30, ~~2022,~~2023, the Company had cash, cash equivalents and investments of ~~$182,749~~$134,623 and outstanding debt of $60,000. We had unused borrowing capacity of $28,750 under our revolving credit facility. ~~Most of our operating cash and all cash equivalents and investments are held by~~Our primary banking relationship in the United States ~~financial institutions.~~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 as of March 31, 2023. Access to our funds, funding sources and other credit arrangements are adequate to finance or capitalize our current and projected future business operations. We had net working capital of ~~$149,850~~$166,565 and an accumulated deficit of ~~$310,177~~$338,213 as of June 30, ~~2022.~~2023.


		Six Months Ended June 30,							Six Months Ended June 30,
		2022		2021		Change			2023		2022		Change
		(dollars in thousands)							(dollars in thousands)
Net cash used in operating activities	Net cash used in operating activities	$	(20,403)	$	(13,849)	$	6,554	Net cash used in operating activities	$	(1,068)	$	(20,403)	$	(19,335)
Net cash provided by investing activities	Net cash provided by investing activities	40,243		47,528		(7,285)		Net cash provided by investing activities	12,733		40,243		(27,510)
Net cash used in financing activities	Net cash used in financing activities	(8,636)		(7,889)		747		Net cash used in financing activities	(2,523)		(8,636)		(6,113)

Cash flows used in operating activities. Net cash used in operating activities ~~increased $6,554~~decreased $19,335 from 2022 to 2023, reflecting the improvement in ~~2022 compared to 2021. This change is~~operating results after non-cash charges of $21,438 driven by ~~the fluctuation~~higher sales and a net gain from legal settlements. This improvement was offset by a $2,103 increase in cash used in working capital and other assets and ~~liabilities of $6,389, primarily due to the~~

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~~$9,665 reduction~~liabilities. The increase in ~~accrued liabilities as a result of higher annual variable compensation payments due to improved operating performance,~~cash used in working capital was driven by increased inventory, partially offset by ~~a $2,042 decrease in~~increased collections of accounts receivable. The remaining fluctuation is a decrease in the net loss of $3,144, largely driven by a decrease in non-cash expenses, including $5,100 non-cash impact for the fair value adjustment of the SentreHEART contingent consideration liability in 2021, offset partially by increased amortization of the CONVERGE technology asset.

Cash flows provided by investing activities. Net cash provided by investing activities decreased by ~~$7,285~~$27,510 in ~~2022~~2023 compared to ~~2021,~~2022, reflecting ~~decreases~~$30,000 in ~~net sales~~cash paid for acquisition of intellectual property and ~~maturities of available-for-sale securities of $5,259 and increased~~a reduction in purchases of property and equipment ~~of $2,026 for the expansion of~~following our 2022 manufacturing facilities ~~and new product introductions.~~expansion.

Cash flows used in financing activities. Net cash used in financing activities ~~increased~~decreased by ~~$747~~$6,113 in ~~2022 largely reflecting lower~~2023, as fewer shares were repurchased for payment of taxes for stock ~~option exercise activity~~awards.

Table of ~~$6,090, offset by a decrease of $4,927 in cash tax payments from restricted and performance share vesting and increased proceeds from issuance of shares under ESPP of $453.~~Contents

Credit facility. Our Loan and Security Agreement, as amended and modified effective November 1, 2021 (Loan Agreement) ~~with Silicon Valley Bank (SVB)~~ provides for a $60,000 term loan, a $30,000 revolving line of credit, and an option to make available an additional $30,000 in term loan borrowings. The Loan Agreement has a five year term, expiring November 2026. Principal payments are to be made ratably commencing 24 months after the inception of the loan through the loan's maturity date. At the option of the Company, the commencement of term loan principal payments may be extended 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. As of June 30, ~~2022,~~2023, our outstanding debt was $60,000, of which $13,333 is classified as current and $46,667 and is classified as noncurrent. We had unused borrowing capacity of $28,750 under our revolving credit facility. For additional information on the terms and conditions, as well as applicable interest and fee payments, see Note ~~6 —~~7 – Indebtedness.

Our corporate headquarters lease agreement requires a $1,250 letter of credit which renews annually and remains outstanding as of June 30, ~~2022.~~2023.

Uses of liquidity and capital resources. Our executive officers and Board of Directors review our funding sources and future capital requirements in connection with our annual operating plan and periodic updates to the plan. Our future capital requirements depend on a number of factors, including, without limitation: market acceptance of our current and future products; costs to develop and support our products, including professional training; ~~future expenses~~costs to expand and support our sales and marketing efforts; operating and filing costs relating to changes in regulatory policies or laws; costs for clinical trials and to secure regulatory approval for new products; costs to prosecute, defend and enforce our intellectual property rights; maintenance and enhancements to our information systems and security; and possible acquisitions and joint ventures, including potential business integration costs. We continue to evaluate additional measures to maintain financial flexibility, and we will continue to closely monitor macroeconomic conditions including, but not limited to, inflationary pressures, rising interest rates, and fluctuations in currency exchange rates that may impact our liquidity and access to capital ~~resources through the recovery from, and any further disruptions caused by, COVID-19.~~resources. Our principal cash requirements include costs of operations, capital expenditures, debt service costs and other contractual obligations.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. On a periodic basis, we evaluate our estimates, including those related to sales returns and allowances, inventories, share-based compensation and income taxes. We use authoritative pronouncements, historical experience and other assumptions as the basis for making estimates. Actual results could differ from those estimates under different assumptions or conditions. Our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 includes additional information about the Company, our operations, our financial position and our critical accounting policies and estimates and should be read in conjunction with this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

As of June 30, ~~2022,~~2023, there were no material changes to the information provided regarding recent accounting pronouncements in Note ~~2, “Recent~~1, “Description of the Business and Summary of Significant Accounting ~~Pronouncements”~~Policies” in the Company’s Form 10-K for the fiscal year ended December 31, ~~2021.~~

212022.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of June 30, ~~2022,~~2023, there were no material changes to the information provided under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the President and Chief Executive Officer (the Principal Executive Officer) and Chief Financial Officer (the Principal Accounting and Financial Officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13(a) -15(e) and 15(d) -15(e) of the Securities Exchange Act of 1934 as amended (Exchange Act), as of the end of the period covered by this report. Based on this evaluation, we concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s forms and rules,

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and the material information relating to the Company is accumulated and communicated to management, including the President and Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that control objectives are met. Because of inherent limitations in all control systems, no evaluation of controls can provide assurance that all control issues and instances of fraud, if any, within a company will be detected. Additionally, controls can be circumvented by individuals, by collusion of two or more people or by management override. Over time, controls can become inadequate because of changes in conditions or the degree of compliance may deteriorate. Further, the design of any system of controls is based in part upon assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Because of the inherent limitations in any cost-effective control system, misstatements due to errors or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

In the ordinary course of business, we routinely enhance our information systems by either upgrading current systems or implementing new ones. There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to legal proceedings can be found under the heading “Legal” in Note 89 – Commitments and Contingencies to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Item 1A, “Risk Factors” in our Form 10-K for the year ended December 31, ~~2021,~~2022, as amended by our Form 10-Q for the quarter ended March 31, 2023, all of which could materially affect our business, financial condition or future results. The risks described therein are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may adversely affect our business, financial condition and/or operating results. There have been no material changes with respect to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, as amended by risk factors provided in our Form 10-Q for the quarter ended March 31, 2023 which are incorporated herein by reference.

Item 5. Other Information

During the three months ended June 30, 2023, none of our executive officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.

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Item 6. Exhibits


Exhibit No.			Description
10.1#			AtriCure, Inc. ~~2014~~2023 Stock Incentive Plan ~~(Amended and Restated as of May 25, 2022)~~ (incorporated by reference to our Current Report on Form 8-K, filed on May ~~27, 2022)~~26, 2023).
10.2#			AtriCure, Inc. 2018 Employee Stock Purchase Plan (Amended and Restated as of May 25, 2023) (incorporated by reference to our Current Report on Form 8-K, filed on May 26, 2023).
31.1			Rule 13a-14(a) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Rule 13a-14(a) Certification of Principal Accounting and Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification pursuant to 18 U.S.C. Section 1350 by the Principal Executive Officer, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification pursuant to 18 U.S.C. Section 1350 by the Principal Accounting and Financial Officer, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________________________

# Compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			AtriCure, Inc.
			(REGISTRANT)


Date: ~~August 3, 2022~~July 26, 2023			/s/ Michael H. Carrel
			Michael H. Carrel
			President and Chief Executive Officer (Principal Executive Officer)


Date: ~~August 3, 2022~~July 26, 2023			/s/ Angela L. Wirick
			Angela L. Wirick
			Chief Financial Officer (Principal Accounting and Financial Officer)

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		June 30, 2022				December 31, 2021
	Estimated Useful Life	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Technology	10 - 15 years	$	55,712	$	14,663	$	55,712	$	12,720