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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
__________________________________
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
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 001-39430
__________________________________
https://cdn.kscope.io/53c786dba9d61711a49ca9f48577554c-afib-20210930_g1.jpg
ACUTUS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
__________________________________
Delaware45-1306615
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2210 Faraday Ave.,
Suite 100, Carlsbad, CA
92008
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code) (442) 232-6080
___________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol
Name of each exchange on which registered 
Common Stock, par value $0.001 per shareAFIBThe Nasdaq Stock Market LLC
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically, if any, 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  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth 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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class of Common StockOutstanding Shares as of November 8, 2021
Common Stock, $0.001 par value
27,952,948


Table of Contents
Acutus Medical, Inc.
Form 10-Q
For the Quarter Ended September 30, 2021
Table of Contents
Page



Table of Contents

Item 1. Financial Statements.
Acutus Medical, Inc.
Condensed Consolidated Balance Sheets
September 30,
2021
December 31,
2020
(in thousands, except share and per share amounts)(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$58,492 $25,234 
Marketable securities, short-term71,962 105,839 
Restricted cash150 150 
Accounts receivable4,190 2,160 
Inventory14,962 12,958 
Prepaid expenses and other current assets6,045 5,047 
Total current assets155,801 151,388 
Marketable securities, long-term4,061 8,726 
Property and equipment, net14,595 12,356 
Right-of-use assets, net4,682 1,669 
Intangible assets, net5,173 5,653 
Goodwill12,026 12,026 
Other assets1,086 717 
Total assets$197,424 $192,535 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$6,417 $8,266 
Accrued liabilities9,398 7,308 
Contingent consideration, short-term1,900 5,400 
Operating lease liabilities, short-term466 933 
Total current liabilities18,181 21,907 
Operating lease liabilities, long-term4,695 1,134 
Long-term debt40,043 39,011 
Contingent consideration, long-term800 3,900 
Other long-term liabilities18  
Total liabilities63,737 65,952 
Commitments and contingencies (Note 12)
Stockholders' equity
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 6,666 shares of the preferred stock, designated as Series A Common Equivalent Preferred Stock, are issued and outstanding as of September 30, 2021, no shares issued and outstanding as of December 31, 2020
  
Common stock, $0.001 par value; 260,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 27,948,653 and 27,991,425 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
28 28 
Additional paid-in capital581,133 487,290 
Accumulated deficit(447,434)(361,015)
Accumulated other comprehensive income (loss)(40)280 
Total stockholders' equity133,687 126,583 
Total liabilities and stockholders' equity$197,424 $192,535 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Acutus Medical, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(in thousands, except share and per share amounts)(unaudited)(unaudited)
Revenue$4,601 $3,173 $12,901 $5,890 
Costs and operating expenses:
Cost of products sold8,539 5,141 22,986 10,998 
Research and development9,299 8,343 27,843 24,492 
Selling, general and administrative15,805 15,833 47,658 35,193 
Change in fair value of contingent consideration(1,953)118 (3,364)(1,466)
Total costs and operating expenses31,690 29,435 95,123 69,217 
Loss from operations(27,089)(26,262)(82,222)(63,327)
Other income (expense):
Change in fair value of warrant liability (3,683) (5,555)
Interest income19 23 88 393 
Interest expense(1,441)(1,366)(4,285)(4,090)
Total other expense, net(1,422)(5,026)(4,197)(9,252)
Loss before income taxes(28,511)(31,288)(86,419)(72,579)
Income tax benefit    
Net loss$(28,511)$(31,288)$(86,419)$(72,579)
Other comprehensive income (loss)
Unrealized loss on marketable securities(13)(9)(3)(50)
Foreign currency translation adjustment(183)78 (317)147 
Comprehensive loss$(28,707)$(31,219)$(86,739)$(72,482)
Net loss per common share, basic and diluted$(0.94)$(1.95)$(2.99)$(12.36)
Weighted average shares outstanding, basic and diluted30,460,466 16,080,467 28,890,382 5,870,861 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Acutus Medical, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
For the Three Months Ended September 30, 2021
(in thousands, except share amounts)Preferred StockCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
SharesAmountSharesAmount
Balance as of June 30, 2021 (unaudited) $ 28,211,626 $28 $494,595 $(418,923)$156 $75,856 
Unrealized loss on marketable securities— — — — — — (13)(13)
Foreign currency translation adjustment— — — — — — (183)(183)
Issuance of common stock for cash, net of issuance
costs of $5,885
— — 6,325,000 6 82,658 — — 82,664 
Stock option exercises— — 11,452 — 84 — — 84 
Stock-based compensation— — 32,775 — 3,350 — — 3,350 
Employee stock purchase plan shares issued— — 33,641 — 440 — — 440 
Exchange of common stock for Series A Common Equivalent Preferred Stock6,666 — (6,665,841)(6)6 — —  
Net loss— — — — — (28,511)— (28,511)
Balance as of September 30, 2021 (unaudited)6,666 $ 27,948,653 $28 $581,133 $(447,434)$(40)$133,687 
For the Three Months Ended September 30, 2020
(in thousands, except share amounts)Series A
Convertible Preferred
Stock
Series B
Convertible Preferred
Stock
Series C
Convertible Preferred
Stock
Series D
Convertible Preferred
Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance as of June 30, 2020 (unaudited)391,210 $3,059 3,088,444 $40,685 4,499,921 $74,575 8,593,360 $142,236 775,403 $1 $36,355 $(300,325)$(2)$(263,971)
Unrealized loss on marketable securities— — — — — — — — — — — — (9)(9)
Foreign currency translation adjustment— — — — — — — — — — — — 78 78 
Conversion of convertible preferred stock into common stock upon IPO(391,210)(3,059)(3,088,444)(40,685)(4,499,921)(74,575)(8,593,360)(142,236)16,572,935 17 260,538 — — 260,555 
Issuance of common stock for cash, net of issuance costs of $16,361
— — — — — —   10,147,058 10 166,276 — — 166,286 
Reclassification of warrant liability to stockholders' equity — — — — — — — — — — 14,474 — — 14,474 
Stock option exercises— — — — — — — — 27,661 — 145 — — 145 
Stock-based compensation— — — — — — — — 303,351  6,374 — — 6,374 
Net loss— — — — — — — — — — — (31,288)— (31,288)
Balance as of September 30, 2020 (unaudited) $  $  $  $ 27,826,408 $28 $484,162 $(331,613)$67 $152,644 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Acutus Medical, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
For the Nine Months Ended September 30, 2021
(in thousands, except share amounts)Preferred StockCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
SharesAmountSharesAmount
Balance as of December 31, 2020 $ 27,991,425 $28 $487,290 $(361,015)$280 $126,583 
Unrealized loss on marketable securities— — — — — — (3)(3)
Foreign currency translation adjustment— — — — — — (317)(317)
Issuance of common stock for cash, net of issuance
costs of $5,885
— — 6,325,000 6 82,658 — — 82,664 
Stock option exercises— — 110,421 — 703 — — 703 
Stock-based compensation— — 127,049 — 10,036 — — 10,036 
Employee stock purchase plan shares issued— — 33,641 — 440 — — 440 
Issuance of common stock for cashless warrant exercise— — 26,958 — — — — — 
Exchange of common stock for Series A Common Equivalent Preferred Stock6,666 — (6,665,841)(6)6 — —  
Net loss— — — — — (86,419)— (86,419)
Balance as of September 30, 2021 (unaudited)6,666 $ 27,948,653 $28 $581,133 $(447,434)$(40)$133,687 
For the Nine Months Ended September 30, 2020
(in thousands, except share amounts)Series A
Convertible Preferred
Stock
Series B
Convertible Preferred
Stock
Series C
Convertible Preferred
Stock
Series D
Convertible Preferred
Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance as of December 31, 2019391,210 $3,059 3,088,444 $40,685 4,499,921 $74,575 8,200,297 $135,039 695,902 $1 $33,252 $(259,034)$(30)$(225,811)
Unrealized loss on marketable securities— — — — — — — — — — — — (50)(50)
Foreign currency translation adjustment— — — — — — — — — — — — 147 147 
Issuance of Series D convertible preferred stock for the Biotronik Asset Purchase— — — — — — 273,070 5,000 — — — — — — 
Issuance of Series D convertible-preferred stock for the contingent consideration related to the Rhythm Xience Acquisition— — — — — — 119,993 2,197 — — — — — — 
Conversion of convertible
preferred stock into common
stock upon IPO
(391,210)(3,059)(3,088,444)(40,685)(4,499,921)(74,575)(8,593,360)(142,236)16,572,935 17 260,538 — — 260,555 
Issuance of common stock for
cash, net of issuance costs of
$16,361
— — — — — — — — 10,147,058 10 166,276 — — 166,286 
Reclassification of warrant liability
to stockholders' equity
— — — — — — — — — — 14,474 — — 14,474 
Stock option exercises— — — — — — — — 92,223 — 350 — — 350 
Stock-based compensation— — — — — — — — 318,290 — 9,272 — — 9,272 
Net loss— — — — — — — — — — — (72,579)— (72,579)
Balance as of September 30, 2020 (unaudited) $  $  $  $ 27,826,408 $28 $484,162 $(331,613)$67 $152,644 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Acutus Medical, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30,
20212020
(in thousands)(unaudited)
Cash flows from operating activities
Net loss$(86,419)$(72,579)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense4,227 1,754 
Amortization of intangible assets480 330 
Non-cash stock-based compensation expense10,263 9,272 
Amortization of premiums on marketable securities, net1,011 113 
Amortization of debt issuance costs1,032 518 
Amortization of right-of-use assets496 507 
Change in fair value of warrant liability 5,555 
Change in fair value of contingent consideration(3,364)(1,466)
Changes in operating assets and liabilities:
Accounts receivable(2,030)(1,630)
Inventory(2,004)(1,865)
Prepaid expenses and other current assets(59)(2,729)
Other assets(369)(387)
Accounts payable(1,813)753 
Accrued liabilities1,862 1,423 
Operating lease liabilities(432)(615)
Other long-term liabilities18 8 
Net cash used in operating activities(77,101)(61,038)
Cash flows from investing activities
Purchases of available-for-sale marketable securities(70,020)(108,528)
Sales of available-for-sale marketable securities8,590 17,095 
Maturities of available-for-sale marketable securities98,507 45,000 
Purchases of property and equipment(6,587)(7,822)
Net cash provided by (used in) investing activities30,490 (54,255)
Cash flows from financing activities
Payment of deferred offering costs(572) 
Payment of contingent consideration(3,152)(2,636)
Proceeds from the issuance of common stock, net of issuance costs82,664 166,286 
Proceeds from stock options exercises703 350 
Proceeds from employee stock purchase plan440  
Net cash provided by financing activities80,083 164,000 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(214)143 
Net change in cash, cash equivalents and restricted cash33,258 48,850 
Cash, cash equivalents and restricted cash, at the beginning of the period25,384 9,602 
Cash, cash equivalents and restricted cash, at the end of the period$58,642 $58,452 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$38 $ 
Cash paid for interest$3,109 $3,526 
Supplemental disclosure of noncash investing and financing activities:
Issuance of Series D convertible preferred stock for Biotronik asset purchase$ $5,000 
Issuance of Series D convertible preferred stock for Rhythm Xience Acquisition$ $2,197 
Change in unrealized loss on marketable securities$3 $50 
Right-of-use assets exchanged for operating lease liabilities$3,527 $ 
Unpaid purchases of property and equipment$36 $88 
Conversion of convertible preferred stock into common stock upon IPO$ $260,555 
Reclassification of warrant liability to stockholders' equity$ $14,474 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Acutus Medical, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1—Organization and Description of Business
Acutus Medical, Inc. (the “Company”) is an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated. The Company designs, manufactures and markets a range of tools for catheter-based ablation procedures to treat various arrhythmias. The Company’s product portfolio includes novel access sheaths, transseptal crossing tools, diagnostic and mapping catheters, ablation catheters, mapping and imaging consoles and accessories, as well as supporting algorithms and software programs. The Company was incorporated in the state of Delaware on March 25, 2011, and is located in Carlsbad, California.
Public Offerings
In July 2021, the Company issued 6,325,000 shares of common stock in a public offering, which included 825,000 shares of common stock issued upon the underwriter's exercise in full of an option to purchase additional shares of common stock. The price to the public for each share was $14.00. The Company received gross proceeds of $88.6 million from the offering. Net of underwriting discounts and commission and other offering expenses, the Company received proceeds of $82.7 million from the offering.
On August 10, 2020, the Company issued 10,147,058 shares of common stock in an initial public offering (“IPO”), which included 1,323,529 shares of common stock issued upon the underwriters’ exercise in full of an option to purchase, at the public offering price less underwriting discounts and commissions, up to an additional 1,323,529 shares. The price to the public for each share was $18.00. The Company received proceeds of $166.3 million from its IPO, net of underwriting discounts and commissions and other offering expenses.

On August 10, 2020, in connection with the closing of the IPO, 391,210 shares of Series A, 3,088,444 shares of Series B, 4,499,921 shares of Series C and 8,593,360 shares of Series D convertible preferred stock automatically converted into an equal number of shares of common stock, and the warrants to purchase 446,990 shares of Series D convertible preferred stock were automatically converted to an equal number of warrants to purchase common stock at an exercise price of $16.67 per share.

As a result of the IPO, the underwriters’ exercise of their option, and the conversions of the Series A, B, C and D convertible preferred stock, the Company’s total number of outstanding shares increased by 26,719,993 immediately following the closing of the IPO.

Reverse Stock Split

The Company’s board of directors approved a reverse split of shares of the Company’s common stock and convertible preferred stock on a 9.724-for-one basis (the “Reverse Stock Split”), which was effected on July 28, 2020. The par value and the number of authorized shares of the convertible preferred stock and common stock were not adjusted in connection with the Reverse Stock Split. All references to common stock, convertible preferred stock, warrants to purchase common stock, warrants to purchase convertible preferred stock, options to purchase common stock, restricted stock units, restricted stock awards, share data, per share data and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. No fractional shares of the Company’s common stock were issued in connection with the Reverse Stock Split. Any fractional share resulting from the Reverse Stock Split was rounded down to the nearest whole share, and any stockholder entitled to a fractional share as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares.
Going Concern, Liquidity and Capital Resources
The Company has limited revenue, has incurred operating losses since inception and expects to continue to incur significant operating losses for at least the next several years and may never become profitable. As of September 30, 2021 and December 31, 2020, the Company had an accumulated deficit of $447.4 million and $361.0 million, respectively, and working capital of $137.6 million and $129.5 million, respectively. The Company has historically funded its operations primarily through the sale of debt and equity securities, as well as other indebtedness. With the closing of the Company’s IPO in August 2020 and follow on offering in July 2021, the Company’s current cash, cash equivalents and marketable securities are sufficient to fund operations for at least the next 12 months. However, the Company may need to raise additional funds through the issuance of additional debt, equity or both. Until such time, if ever, that the Company can generate revenue sufficient to achieve profitability, the Company expects to finance its operations through equity or debt financings, which may not be available to the
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Company on the timing needed or on terms that the Company deems to be favorable. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interest of its stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. The Company may be required to delay, limit, reduce or terminate its product discovery and development activities or future commercialization efforts.
Impact of COVID-19
Beginning in March 2020, the COVID-19 pandemic and the measures imposed to contain this pandemic disrupted and are expected to continue to impact the Company's business. For example, on March 19, 2020, the Executive Department of the State of California issued Executive Order N-33-20, ordering all individuals in the State of California to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors. The Company's primary operations are located in Carlsbad, California. As a result of such order, the majority of the Company’s employees have telecommuted, which may impact certain of its operations over the near term and long term. Moreover, beginning in March 2020 and continuing through the filing of this Form 10-Q, access to hospitals and other customer sites was restricted to essential personnel, which negatively impacted the Company’s ability to install its AcQMap consoles and workstations in new accounts and for sales representatives and mappers to promote the use of the Company’s products with physicians. Moreover, hospitals and other therapeutic centers suspended many elective procedures, resulting in a significantly reduced volume of procedures using the Company's products. In addition, all clinical trials in Europe were suspended with follow-ups for clinical trials done via telecom, and the Company believes enrollment timing in its planned clinical trials will be slowed due to COVID-19 driven delayed access to enrollment sites. As a result of the interruptions to the business due to COVID-19, the Company enacted a cash conservation program, which included delaying certain non-critical capital expenditures and other projects and implementing a hiring freeze, headcount reductions and temporary compensation reductions (through August 2020). The effects of the pandemic began to decrease in late April 2020 as electrophysiology labs began reopening and procedure volumes began increasing as compared to COVID-19 related low points in March 2020. The Company’s IPO in August 2020 provided resources sufficient to restore compensation reductions to pre-COVID levels, as well as to restart hiring and capital expenditures in support of its growth. Over the past 12-months, the Company has continued to observe intermittent suspension of many elective procedures associated with the resurgence of COVID-19 in geographies where it sells, markets and distributes its products. In addition, the impact of COVID-19 has varied by region and by healthcare facility, which has hampered the Company’s ability to forecast the sustained impact on its business from COVID-19. The Company continues to see intermittent suspension of many elective procedures in many hospitals, resulting in reduced volume of procedures using its products. In addition, the Company has experienced personnel and other resource shortages at hospitals at which procedures utilizing our products otherwise could be used; disruptions or restrictions on the ability of many of our employees and of third parties on which we rely to work effectively, including because of adherence to governmental orders or recommendations or to internal policies intended to reduce the spread of COVID-19; and temporary closures of our facilities and of the facilities of our customers and suppliers. The magnitude of the impact of the COVID-19 pandemic on productivity, results of operations and financial position, and its disruption to the Company’s business and clinical programs and timelines, will depend, in part, on the length and severity of the pandemic, associated restrictions and other measures designed to prevent the spread of COVID-19 and on the Company’s ability to conduct business in the ordinary course. Quarantines, shelter-in-place, vaccine mandates and similar government orders have also impacted, and may continue to impact, the Company’s third-party manufacturers and suppliers, and could in turn adversely impact the availability or cost of materials, which could disrupt the Company’s supply chain. The markets the Company serves are likely to see continued impacts from COVID-19 for the foreseeable future, and the emergence of new variants of COVID-19 creates significant uncertainty as to how long COVID-19 will continue to impact the Company’s business.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and note disclosures normally included in the Company’s annual financial statements
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prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Acutus Medical, Inc. and its wholly-owned subsidiary Acutus Medical NV (“Acutus NV”), which was incorporated under the laws of Belgium in August 2013. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates and Assumptions
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and disclosures of contingent assets and liabilities. The most significant estimates and assumptions in the Company’s condensed consolidated financial statements include, but are not limited to, revenue recognition, useful lives of intangible assets, assessment of impairment of goodwill, measurement of operating lease liabilities, and the fair value of common stock, stock options, warrants, intangible assets and contingent consideration. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could differ from those estimates.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. All of the Company’s cash equivalents have liquid markets and high credit ratings. The Company maintains its cash in bank deposits and other accounts, the balances of which, at times and as of September 30, 2021 and December 31, 2020, exceeded federally insured limits.
Restricted cash serves as collateral for the Company’s corporate credit card program. The following table reconciles cash, cash equivalents and restricted cash in the condensed consolidated balance sheets to the total shown on the condensed consolidated statement of cash flows (in thousands):
September 30,
2021
December 31,
2020
(unaudited)
Cash and cash equivalents$58,492 $25,234 
Restricted cash150 150 
Total cash, cash equivalents and restricted cash$58,642 $25,384 
Marketable Securities
The Company considers its debt securities to be available-for-sale securities. Available-for-sale securities are classified as cash equivalents or short-term or long-term marketable securities based on the maturity date at time of purchase and their availability to meet current operating requirements. Marketable securities that mature in three months or less from the date of purchase are classified as cash equivalents. Marketable securities, excluding cash equivalents, that mature in one year or less are classified as short-term available-for-sale securities and are reported as a component of current assets.
Securities that are classified as available-for-sale are measured at fair value with temporary unrealized gains and losses reported in other comprehensive loss, and as a component of stockholders’ equity until their disposition or maturity. See “Fair Value Measurements” below. The Company reviews all available-for-sale securities at each period end to determine if they remain available-for-sale based on the Company’s current intent and ability to sell the security if it is required to do so. Realized gains and losses from the sale of marketable securities, if any, are calculated using the specific-identification method.
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Marketable securities are subject to a periodic impairment review. The Company may recognize an impairment charge when a decline in the fair value of investments below the cost basis is determined to be other-than-temporary. In determining whether a decline in market value is other-than-temporary, various factors are considered, including the cause, duration of time and severity of the impairment, any adverse changes in the investees’ financial condition and the Company’s intent and ability to hold the security for a period of time sufficient to allow for an anticipated recovery in market value. Declines in value judged to be other-than-temporary are included in the Company’s condensed consolidated statements of operations and comprehensive loss. The Company did not record any other-than-temporary impairments related to marketable securities in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, restricted cash, accounts receivable and marketable securities. Cash and restricted cash are maintained in accounts with financial institutions, which, at times may exceed the Federal depository insurance coverage of $0.25 million. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. The Company’s marketable securities portfolio primarily consists of investments in commercial paper, U.S. treasury securities, asset-backed securities and short-term high credit quality corporate debt securities.
Revenue from Contracts with Customers
The Company accounts for revenue earned from contracts with customers under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), and ASC 842, Leases ("ASC 842"). The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when, or as, the company satisfies a performance obligation.

ASC 842 provides guidance on determining if an agreement contains a lease. ASC 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

For new customers, the Company places its medical diagnostic equipment, AcQMap System, at customer sites under evaluation agreements and generates revenue from the sale of disposable products used with the AcQMap System. Disposable products primarily include AcQMap Catheters and AcQGuide Steerable Sheaths. Outside of the U.S., the Company also has a Qubic Force Device which generates revenue from the sale of the AcQBlate Force Ablation Catheters. The Company provides the disposable products in exchange for consideration, which occurs when a customer submits a purchase order and the Company provides disposables at the agreed upon prices in the invoice. Generally, customers purchase disposable products using separate purchase orders after the equipment has been provided to the customer for free with no binding agreement or requirement to purchase any disposable products. The Company has elected the practical expedient and accounting policy election to account for the shipping and handling as activities to fulfill the promise to transfer the disposable products and not as a separate performance obligation.

The Company sells the AcQMap System to customers along with software updates on a when-and-if-available basis, as well as the Qubic Force Device and a transseptal crossing line of products which can be used in a variety of heart procedures and does not need to be accompanied with an AcQMap System or Qubic Force Device. Included in the transseptal crossing line of products are primarily the AcQRef introducer sheath, the AcQGuide sheaths and the AcQCross Transseptal Dilator/Needle.

The Company also enters into deferred equipment agreements that are generally structured such that the Company agrees to provide an AcQMap System at no up-front charge, with title of the device transferring to the customer at the end of the contract term, in exchange for the customer’s commitment to purchase disposables at a specified price over the term of the agreement, which generally ranges from two to four years. The Company determined that the deferred equipment agreements include embedded sales-type leases. The Company allocates contract consideration under deferred equipment agreements containing fixed annual disposable purchase commitments to the underlying lease and non-lease components at contract inception. The
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Company expenses the cost of the device at the inception of the agreement and records a financial lease asset equal to the gross consideration allocated to the lease. The lease asset will be reduced by payments for minimum disposable purchases that are allocated to the lease.

Lastly, the Company enters into short-term operating leases, for the rental of the system after an evaluation. These lease agreements impose no requirement on the customer to purchase the equipment and the equipment is not transferred to the customer at the end of the lease term. The short-term nature of the lease agreements does not result in lease payments accumulating to an amount that equals the value of the equipment nor is the lease term reflective of the economic life of the equipment.
The Company’s contracts primarily include fixed consideration. Generally, there are no discounts, rebates, returns or other forms of variable consideration. Customers are generally required to pay within 30 to 60 days.
The delivery of disposable products are performance obligations satisfied at a point in time. The disposable products are shipped Free on Board (“FOB”) shipping point or FOB destination. For disposable products that are shipped FOB shipping point, the customer has the significant risks and rewards of ownership and legal title to the assets when the disposable products leave the Company’s shipping facilities, thus the customer obtains control and revenue is recognized at that point in time. Revenue is recognized on delivery for disposable products shipped via FOB destination.

For direct customers, the installation and delivery of the AcQMap System is satisfied at a point in time when the installation is complete, which is when the customer can benefit and has control of the system. For AcQMap System sales sold to Biotronik SE & Co. KG (“Biotronik”), the installation is not a performance obligation as it is performed by Biotronik, and therefore the AcQMap System is satisfied at a point in time when they have control of the system. The Company’s software updates and equipment service performance obligations are satisfied evenly over time as the customer simultaneously receives and consumes the benefits of the Company’s performance for these services throughout the service period.
The Company allocates the transaction price to each performance obligation identified in the contract based on the relative standalone selling price (“SSP”). The Company determines SSP for the purposes of allocating the transaction price to each performance obligation based on the adjusted market assessment approach that maximizes the use of observable inputs, which includes, but is not limited to, transactions where the specific performance obligations are sold separately, list prices and offers to customers.
Except for the deferred equipment agreements noted above, the Company’s contracts with customers generally have an expected duration of one year or less, and therefore the Company has elected the practical expedient in ASC 606 to not disclose information about its remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of the Company’s contracts. The Company’s contract balances consisted solely of accounts receivable as of September 30, 2021 and December 31, 2020.
In May 2020, the Company entered into bi-lateral distribution agreements with Biotronik (the “Bi-Lateral Distribution Agreements”). Pursuant to the Bi-Lateral Distribution Agreements, the Company obtained a non-exclusive license to distribute a range of Biotronik’s products and accessories in the United States, Canada, China,