Acutus Medical(AFIB) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents Acutus Medical, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, including balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, business operations, and financial instrument valuations Condensed Consolidated Balance Sheet Highlights (March 31, 2023 vs. December 31, 2022) | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total Current Assets | $101,788 | $117,867 | $(16,079) | -13.6% | | Total Assets | $115,996 | $133,440 | $(17,444) | -13.1% | | Total Current Liabilities | $17,110 | $19,872 | $(2,762) | -13.9% | | Total Liabilities | $55,530 | $58,421 | $(2,891) | -4.9% | | Total Stockholders' Equity | $60,466 | $75,019 | $(14,553) | -19.4% | Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (Three Months Ended March 31, 2023 vs. 2022) | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Revenue | $4,170 | $3,681 | $489 | 13.3% | | Cost of products sold | $6,790 | $6,941 | $(151) | -2.2% | | Gross profit | $(2,620) | $(3,260) | $640 | -19.6% | | Research and development | $6,117 | $8,003 | $(1,886) | -23.6% | | Selling, general and administrative | $9,565 | $14,385 | $(4,820) | -33.5% | | Goodwill impairment | $— | $12,026 | $(12,026) | -100.0% | | Gain on sale of business | $(1,207) | $— | $(1,207) | 100.0% | | Loss from operations | $(17,307) | $(38,630) | $21,323 | -55.2% | | Net loss | $(16,315) | $(40,017) | $23,702 | -59.2% | | Net loss per common share, basic and diluted | $(0.57) | $(1.42) | $0.85 | -59.9% | Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, 2023 vs. 2022) | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (in thousands) | | :-------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash used in operating activities | $(16,515) | $(27,609) | $11,094 | | Net cash provided by investing activities | $15,249 | $15,999 | $(750) | | Net cash used in financing activities | $(213) | $(42) | $(171) | | Net change in cash, cash equivalents and restricted cash | $(1,471) | $(11,752) | $10,281 | Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements Note 1—Organization and Description of Business Note 2—Summary of Significant Accounting Policies Note 3—Sale of Business Note 4—Marketable Securities Note 5—Inventory Note 6—Lessor Sales-Type Leases Note 7—Property and Equipment, Net Note 8—Intangible Assets Note 9—Accrued Liabilities Note 10—Debt Note 11—Operating Leases Note 12—Commitments and Contingencies Note 13—Warrants Note 14—Stockholders' Equity Note 15—Stock-Based Compensation Note 16—Net Loss Per Common Share Note 17—401(k) Retirement Plan Note 18—Related Party Transactions Note 19—Subsequent Events Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Acutus Medical, Inc.'s business, financial condition, and results of operations for the three months ended March 31, 2023, compared to the same period in 2022. It highlights the company's focus on arrhythmia management, recent restructuring efforts, contingent consideration from the Medtronic sale, key business metrics, and factors affecting performance, alongside a detailed analysis of revenue, costs, and liquidity - Acutus Medical, Inc. is an arrhythmia management company focused on improving cardiac arrhythmia diagnosis and treatment through its product portfolio, including the AcQMap imaging and mapping system[164][165] - The company completed an organizational workforce reduction and implemented cost reduction measures in 2022 to optimize cash resources and prioritize console utilization and procedure volume growth in targeted regions[171] Key Business Metrics (As of March 31, 2023 vs. 2022) | Metric | As of March 31, 2023 | As of March 31, 2022 | | :-------------------------- | :------------------- | :------------------- | | Total Acutus net system placements | 77 | 77 | | Procedure volumes | 451 | 465 | Overview Restructuring Contingent Consideration Relating to Sale of Left-heart Access Portfolio Key Business Metrics Factors Affecting Our Performance Components of Results of Operations Results of Operations for the Three Months Ended March 31, 2023 and 2022 Liquidity, Capital Resources, and Going Concern Debt Obligations Cash Flows Contractual Obligations and Commitments Off-Balance Sheet Arrangements Critical Accounting Policies and Estimates Recent Accounting Pronouncements Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Acutus Medical, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this quarterly report - Acutus Medical, Inc. is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company'[253] Item 4. Controls and Procedures This section confirms that Acutus Medical, Inc.'s disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023. No material changes in internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated and concluded to be effective as of March 31, 2023[254][256] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[257] Disclosure Controls and Procedures Changes in Internal Control over Financial Reporting PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, recent securities sales, exhibits, and official signatures Item 1. Legal Proceedings Acutus Medical, Inc. is involved in two putative securities class action lawsuits filed in February and March 2022, consolidated in July 2022. The lawsuits allege violations of Section 10(b) and 20(a) of the Exchange Act due to alleged false and misleading statements. The outcome is currently undeterminable, and the company may incur substantial defense costs or damages - Acutus Medical, Inc. and certain officers are defendants in two consolidated securities class action lawsuits filed in February and March 2022, alleging violations of Section 10(b) and 20(a) of the Exchange Act[260] - The lawsuits claim false and misleading statements were made between May 13, 2021, and November 11, 2021, seeking compensatory damages, attorney's fees, and other costs[260] - The outcome of these legal matters is not presently determinable, and the company could face substantial defense costs or damages[261] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's annual report on Form 10-K for the year ended December 31, 2022. These factors could significantly impact the company's operations or financial condition - No material changes to risk factors have occurred since the annual report on Form 10-K for the year ended December 31, 2022[262] - Existing risk factors, or new unforeseen ones, could materially and adversely affect the company's results of operations or financial condition[262] Item 2. Recent Sales of Unregistered Securities On June 30, 2022, Acutus Medical, Inc. issued warrants to purchase up to 3,779,018 shares of common stock to lenders under the 2022 Credit Agreement. These warrants, issued in a private placement under Section 4(a)(2) of the Securities Act, have an exercise price of $1.1114 per share and an eight-year term, subject to certain beneficial ownership limitations and anti-dilution adjustments - On June 30, 2022, Acutus Medical, Inc. issued warrants to purchase up to 3,779,018 shares of common stock to lenders under the 2022 Credit Agreement[263] - The warrants have an exercise price of $1.1114 per share, an eight-year term, and were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act[263][265] - Key terms include a 4.9% beneficial ownership limitation, anti-dilution adjustments, and holder options for redemption or assumption in a 'Major Transaction'[264] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents, employment agreements, certifications from executive officers, and financial information formatted in XBRL - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Certificate of Designation for Series A Preferred Stock, and employment agreements[267] - Certifications from the Principal Executive Officer and Principal Financial Officer are provided pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[267] - Financial information from the Quarterly Report is provided in Inline Extensible Business Reporting Language (XBRL) format[267] Signatures The report is duly signed on behalf of Acutus Medical, Inc. by David H. Roman, President, Chief Executive Officer and Director, and Takeo Mukai, Senior Vice President and Chief Financial Officer, on May 11, 2023 - The report was signed by David H. Roman, President, Chief Executive Officer and Director, and Takeo Mukai, Senior Vice President and Chief Financial Officer[273] - The signing date for the report was May 11, 2023[273]