What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 149 added, 130 removed, 578 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30,

Current assets:

24 unchanged sentences

150,000,000 shares authorized;

shares and 21,184,524 shares issued and outstanding at June 30, 2020

shares and 21,184,524 shares issued and outstanding at September 30, 2020

and December 28, 2019, respectively

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

6 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Cost of revenue

20 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Other comprehensive income (loss):

8 unchanged sentences

(in thousands, except share amounts)

Convertible Preferred Stock

Preferred Stock

Stockholders'

24 unchanged sentences

Balances at June 30, 2020

Issuance of common stock

upon the exercise of

common stock options

Issuance of common stock in

connection with employee

stock purchase plan

Reversal of estimated

offering costs

Stock-based compensation

Foreign currency

translation adjustment

Unrealized losses on

marketable securities

September 30, 2020

The accompanying notes are an integral part of these consolidated financial statements.

36 unchanged sentences

Balances at June 29, 2019

Issuance of common stock

upon the exercise of

common stock options

Settlement of accrued

financing fee

Stock-based compensation

Foreign currency translation

Unrealized gains on

marketable securities

September 28, 2019

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

Cash flows from operating activities:

5 unchanged sentences

Net amortization (accretion) of premiums (discounts) on marketable securities

Unrealized foreign currency transaction losses

Unrealized foreign currency transaction (gains) losses

Changes in operating assets and liabilities:

26 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Conversion of convertible preferred stock to common stock upon initial public offering

Settlement of accrued financing fee

Transfers of inventory to property and equipment

31 unchanged sentences

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including net losses attributable to the Company of $17.3 million for the fiscal six months ended June 30, 2020 and $33.5 million for the fiscal year ended December 28, 2019.

As of June 30, 2020, the Company had an accumulated deficit of $386.8 million.

The Company has incurred recurring losses since inception, including net losses attributable to the Company of $22.4 million for the fiscal nine months ended September 30, 2020 and $33.5 million for the fiscal year ended December 28, 2019.

As of September 30, 2020, the Company had an accumulated deficit of $391.9 million.

The Company expects to continue to generate operating losses in the foreseeable future.

The Company believes that its existing cash, cash equivalents, and marketable securities of $139.4 million as of June 30, 2020 will be sufficien t to fund its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

The Company may need to seek additional funding through equity financings, debt financings or strategic alliances.

The Company believes that its existing cash, cash equivalents, and marketable securities of $132.7 million as of September 30, 2020 will be sufficient to fun d its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

The Company may need to seek additional funding through equity financings, debt financings or stra tegic alliances.

The Company may not be able to obtain financing on acceptable terms, or at all, and the terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders.

If the Company is unable to obtain fundin g, the Company will be required to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations.

The Company is subject to risks and uncertainties common to companies in the medical device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance wi th government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations.

If the Company is unable to obtain funding, the C ompany will be required to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations.

The Company is subject to risks and uncertainties common to companies in the medical device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with gover nment regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations.

Potential risks and uncertainties also include, without limitation, uncertainties regarding the duration and magnitude of the impact of the COVID-19 pandemic on the Company’s business and the economy generally.

1 unchanged sentence

These efforts require additional capital, adequate personnel, infrastructure and extensive compliance-reporting capabilities.

The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval, and approved products may not prove commercially viable.

The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval on its expected timeline or at all, and approved products may not prove commercially viable.

The Company operates in an environment of rapid change in technology and competition.

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China.

Less than four months later, in March 2020, the World Health Organization declared COVID-19 a pandemic, and the virus has now spread to many other countries an d regions and every state within the United States, including Massachusetts, where the Company’s primary offices and manufacturing facilities are located.

The impact of this pandemic has been and will likely continue to be extensive in many aspects of soci ety, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

The impact of the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to the Company’s business as a result of COVID-19 include the temporary disruption of transplant procedures at many of the organ transplant centers that purchase OCS products;

disruptions to the Company’s manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and othe r social distancing efforts;

disruptions to the Company’s manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts;

labor shortages;

1 unchanged sentence

restrictions on or delays of the Company’s clinical trials and studies;

delays of reviews and approvals by the Food and Drug Administration (“FDA”) and other health authorities;

limitations on its employees’ and customers’ ability to travel, and delays in product installations, trainings or shipments to and from affected countries and within the United States.

In response to the pandemic, healthcare providers have, and may need to further, reallocate resources, such as physicians, staff, hospital beds and intensive care unit facilities, and these actions significantly delay the provision of other medical care such as organ transplantation and reduce the number of transplant procedures that are performed, which negatively impacts the Company’s revenue and clinical trial activities.

The Company’s sales and clinical adoption team is also operating at reduced capacity and restricted in visiting many transplant centers in person.

The Company’s sales and clinical adoption team has been and may continue to be restricted in visiting many transplant centers in person.

The Company plans to maintain these or similar restrictions until it believes employees can fully resume such activities in accordance with federal, state and local requirements.

In addition, the Company had temporarily reduced the manufacturing and distribution of its OCS products at its facility in Andover, Massachusetts.

1 unchanged sentence

While the Company maintains an inventory of finished products and raw materials used in its OCS products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture its products.

The Company plans to maintain these or similar restrictions until it believes employees can fully resume such activities in accordance with federal, state and local requirements.

The COVID-19 pandemic has impacted regulatory timelines, including with respect to the Company’s OCS Heart Pre-Market Approval (“PMA”) appl ication, and may affect other potential PMA applications.

While the COVID-19 pandemic did not significantly impact the Company’s business or results of operations during the first quarter of 2020, OCS product sales were negatively impacted by the COVID-19 pandemic in the second quarter of 2020 and the Company anticipates a negative impact to OCS product sales for the remainder of 2020;

The COVID-19 pandemic also has impacted operations at the FDA and other health authorities, resulting in delays of reviews and approvals, including with respect to the Company’s OCS Heart Pre-Market Approval (“PMA”) application, and may affect other potential PMA applications.

While the COVID-19 pandemic did not significantly impact the Company’s business or results of operations during the first quarter of 2020, OCS product sales have been negatively impacted by the COVID-19 pandemic since the second quarter of 2020 and the Company anticipates a negative impact to OCS product sales for the remainder of 2020;

however, the length and extent of the pandemic, its consequences, and containment efforts will determine the future impact on the Company’s operations and financial condition.

Prior to 2020, the Company’s fiscal year ended on the last Saturday in December, and the Company reported fiscal years using a 52/53-week convention.

Under this convention, certain fiscal years contain ed 53 weeks.

Under this convention, certain fiscal years contained 53 weeks.

Each fiscal year was typically composed of four 13-week fiscal quarters, but in years with 53 weeks, the fourth quarter was a 14-week period.

4 unchanged sentences

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying consolidated financial statements include the accounts of the Co mpany and its wholly owned subsidiaries.

The accompanying consolidated financial statements include the accou nts of the Company and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

3 unchanged sentences

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements a nd the notes thereto for the fiscal year ended December 28, 2019 included in the Company’s Annual Report on Form 10-K on file with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2020 and results of operations for the fiscal three and six months ended June 30, 2020 and June 29, 2019 and cash flows for the fiscal six months ended in the same periods have been made.

The Company’s results of operations for the fiscal three and six months ended June 30, 2020 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2020.

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the fiscal year ended December 28, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2020 and results of operations for the fiscal three and nine months ended September 30, 2020 and September 28, 2019 and cash flows for the fiscal nine months ended in the same periods have been made.

The Company’s results of operations for the fiscal three and nine months ended September 30, 2020 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2020.

Use of Estimates

12 unchanged sentences

Significant customers are those that accounted for 10% or more of the Company’s net revenue or accounts receivable.

For the fiscal three and six months ended June 30, 2020, one customer represented 17% and 11% of net revenue, respectively.

For the fiscal three and six months ended June 29, 2019, one customer represented 17% and 12% of net revenue, respectively.

As of June 30, 2020 and December 28, 2019, no customer accounted for 10% or more of accounts receivable.

For the fiscal three months ended September 30, 2020, two customers represented 12% and 14% of net revenue, respectively.

For the fiscal nine months ended September 30, 2020, two customers represented 13% and 12% of net revenue, respectively.

For the fiscal three months ended September 28, 2019, no customer accounted for 10% or more of net revenue.

For the fiscal nine months ended September 28, 2019, one customer represented 10% of net revenue.

As of September 30, 2020, two customers accounted for 14% each of accounts receivable.

As of December 28, 2019, no customer accounted for 10% or more of accounts receivable.

Certain of the components and subassemblies included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers.

10 unchanged sentences

The carrying values of the Company’s accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

The carrying value of the Company’s long-term debt approximates its fair value at each balance sheet date due to its variable interest rate, which approximates a market interest rate.

The carrying value of the Company’s long-term debt approximates its fair value (a level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate.

Marketable Securities

52 unchanged sentences

Reductions of revenue related to such payments made to customers for reimbursements are recognized when the Company recognizes the revenue for the sale of its OCS disposable sets.

The Company recorded the reimbursable clinical costs as a reduction of revenue of $0.5 million and $1.2 million for the fiscal three and six months ended June 30, 2020, respectively, and $0.5 million and $1.2 million for the fiscal three and six months ended June 29, 2019, respectively, as presented below in disaggregated revenue.

The Company recorded the reimbursable clinical costs as a reduction of revenue of $0.9 million and $2.1 million for the fiscal three and nine months ended September 30, 2020, respectively, and $0.7 million and $1.8 million for the fiscal three and nine months ended September 28, 2019, respectively, as presented below in disaggregated revenue.

The Company has also determined that payments made to customers to obtain information related to post-approval studies or existing standard-of-care protocols (i.e., unrelated to the Company’s OCS products) do meet the criteria to be classified as a cost because the Company receives a distinct good or service transferred by the customer separate from the customer’s purchase of the Company’s OCS products and the consideration paid represents the fair value of the distinct good or service received by the Company.

As a result, these payments made to the customers for information related to post-approval studies or standard-of-care protocols are recorded as research, development, and clinical trials expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $0.4 million and $0.8 million for the fiscal three and six months ended June 30, 2020, respectively, and $0.3 million and $0.5 million for the fiscal three and six months ended June 29, 2019, respectively, as research, development, and clinical trials expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $0.3 million and $1.1 million for the fiscal three and nine months ended September 30, 2020, respectively, and $0.4 million and $0.9 million for the fiscal three and nine months ended September 28, 2019, respectively, as research, development, and clinical trials expenses.

Variable Consideration

10 unchanged sentences

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time.

The Company had no contract assets as of June 30, 2020 and December 28, 2019.

The Company had no contract assets as of September 30, 2020 and December 28, 2019.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer.

1 unchanged sentence

The Company generally satisfies performance obligations within one year of the contract inception date.

As of June 30, 2020, the Company’s wholly- or partially-unsatisfied performance obligations totaled $2.9 million and are expected to be completed within the next year.

As of September 30, 2020, the Company’s wholly- or partially-unsatisfied performance obligations totaled $1.4 million and are expected to be completed within the next year.

Disaggregated Revenue

2 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Gross revenue from sales to customers

3 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Net revenue by OCS product:

4 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Net revenue by country (1):

3 unchanged sentences

Total net revenue

Net revenue by country is categorized based on the location of the end customer.

Other Revenue Considerations

10 unchanged sentences

The Company records revenue based on the amount of the discounted selling price.

When a sale to a distributor includes an OCS Console, the Company performs the training and OCS Console equipment set-up for the end customer.

The Company recognizes no revenu e from a distributor order that includes an OCS Console until the OCS Console has arrived at the customer site and the training and equipment set-up have been completed by the Company.

When a sale to a distributor includes an OCS Console, the Company performs the training and OCS Co nsole equipment set-up for the end customer.

The Company recognizes no revenue from a distributor order that includes an OCS Console until the OCS Console has arrived at the customer site and the training and equipment set-up have been completed by the Com pany.

Stock-Based Compensation

17 unchanged sentences

Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to such participating securities, and as a result, basic and diluted net loss per share were the same.

The Company reported a net loss attributable to common stockholders for the fiscal three and six months ended June 29, 2019.

The Company reported a net loss attributable to common stockholders for the fiscal three and nine months ended September 28, 2019.

Under the two-class method, basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period.

3 unchanged sentences

Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards.

For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to h ave been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the fiscal three and six months ended June 30, 2020.

For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are no t assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the fiscal three and nine months ended September 30, 2020.

Recently Issued Accounting Pronouncements

29 unchanged sentences

Marketable Securities

As of June 30, 2020 and December 28, 2019, marketable securities by security type consisted of the following (in thousands):

June 30, 2020

As of September 30, 2020 and December 28, 2019, marketable securities by security type consisted of the following (in thousands):

September 30, 2020

Treasury securities (due within one year)

5 unchanged sentences

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at June 30, 2020 Using:

Fair Value Measurements at September 30, 2020 Using:

Cash equivalents:

12 unchanged sentences

government agency bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy.

During the fiscal three and six months ended June 30, 2020 and June 29, 2019, there were no transfers between Level 1, Level 2, and Level 3.

As of June 30, 2020 and December 28, 2019, inventory consisted of the following (in thousands):

June 30, 2020

During the fiscal three and nine months ended September 30, 2020 and September 28, 2019, there were no transfers between Level 1, Level 2, and Level 3.

As of September 30, 2020 and December 28, 2019, inventory consisted of the following (in thousands):

September 30, 2020

December 28, 2019

2 unchanged sentences

Finished goods

During the fiscal six months ended June 30, 2020 and June 29, 2019, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $0.1 million and $1.3 million, respectively.

During the fiscal nine months ended September 30, 2020 and September 28, 2019, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $0.7 million and $1.9 million, respectively.

Accrued Expenses and Other Current Liabilities

As of June 30, 2020 and December 28, 2019, accrued expenses and other current liabilities consisted of the following (in thousands):

June 30, 2020

As of September 30, 2020 and December 28, 2019, accrued expenses and other current liabilities consisted of the following (in thousands):

September 30, 2020

December 28, 2019

4 unchanged sentences

TransMedics has a credit agreement (the “Credit Agreement”) with OrbiMed Royalty Opportunities II, LP (“OrbiMed”), entered into in June 2018, pursuant to which TransMedics borrowed $35.0 million.

As of June 30, 2020 and December 28, 2019, long-term debt consisted of the following (in thousands):

June 30, 2020

As of September 30, 2020 and December 28, 2019, long-term debt consisted of the following (in thousands):

September 30, 2020

December 28, 2019

9 unchanged sentences

Borrowings under the Credit Agreement are repayable in quarterly interest-only payments until the maturity date, at which time all principal and accrued interest is due and payable.

At its option, the Company may prepay outstanding borrowings under the Credit Agreement, subject to a prepayment premium of 9.0% of the principal amount of any prepayment within the first three years, which percentage decreases annually until it reaches zero at the end of three years.

At its option, the Company may prepay outstanding borrowings under the Credit Agreement, subject to a prepayment premium that decreases annually.

The current prepayment premium is 4.0% and will decrease to zero in June 2021.

The Company is also required to make a final payment in an amount equal to 3.0% of the principal amount of any prepayment or repayment.

3 unchanged sentences

Under the Credit Agreement, the Company has agreed to certain affirmative and negative covenants to which it will remain subject until maturity.

The covenants include maintaining a minimum liquidity amount of $3.0 million;

The financial covenants include maintaining a minimum liquidity amount of $3.0 million;

the requirement, on an annual basis, to deliver to OrbiMed annual audited financial statements with an unqualified audit opinion from the Company’s independent registered public accounting firm;

5 unchanged sentences

and engaging in certain other business transactions.

As of June 30, 2020, the Company was in compliance with the covenants under the Credit Agreement.

As of September 30, 2020, the Company was in complian ce with the financial covenants under the Credit Agreement.

The obligations under the Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in the Company’s business), failure to comply with certain covenants, including the minimum liquidity and unqualified audit opinion covenants, and a material adverse change in the Company’s business, operations or other financial condition.

Upon the occurrence of an event of default and until such event of default is no longer cont inuing, the Applicable Margin will increase by 4.0% per annum.

If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, OrbiMed may declare all or any portion of the outstanding principal amount of the borrow ings plus accrued and unpaid interest to be due and payable.

Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest will automatically become due and pay able.

In addition, the Company may be required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

As of June 30, 2020, the interest rate applicable to borrowings under the Credit Agreement was 10.0%.

During the fiscal six months ended June 30, 2020, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.7%.

Upon the occurrence of an event of default and until such event of default is no longer continuing, the Applicable Margi n will increase by 4.0% per annum.

If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, OrbiMed may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable.

In addition, the Compa ny may be required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

As of September 30, 2020, the interest rate applicable to borrowings under the Credit Agreement was 9.5%.

During the fiscal nine months ended September 30, 2020, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.2%.

Paycheck Protection Program Loan

4 unchanged sentences

Preferred Stock

As of June 30, 2020, the Company’s articles of organization authorized the Company to issue up to 25,000,000 shares of preferred stock, no par value per share, all of which is undesignated .

As of June 30, 2020, the Company’s articles of organization authorized the Company to issue up to 150,000,000 shares of common stock, no par value per share.

As of September 30, 2020, the Company’s articles of organization authorized the Company to issue up to 25,000,000 shares of preferred stock, no par value per share, all of which is undesignated .

As of September 30, 2020, the Company’s articles of organization authorized the Company to issue up to 150,000,000 shares of common stock, no par value per share.

Each share of common stock is entitled to one vote on all matters submitted to a vote of the Company’s shareholders.

The holders of common stock are entitled to receive dividends, if any, as may be declared by the board of directors.

Through June 30, 2020, no dividends had been declared or paid.

Through September 30, 2020, no dividends had been declared or paid.

Immediately prior to the closing of the IPO on May 6, 2019, pursuant to the Corporate Reorganization, all of the outstanding preferred stock warrants of TransMedics were converted into warrants to purchase an aggregate of 64,440 shares of common stock.

No warrants have been exercised.

As a result, as of June 30, 2020, the Company has outstanding warrants to purchase 50,000 shares of common stock at an exercise price of $8.75 per share with an expiration date of November 7, 2022 and warrants to purchase 14,440 shares of common stock at an exercise price of $17.47 per share with an expiration date of May 6, 2024.

As a result, as of September 30, 2020, the Company has outstanding warrants to purchase 50,000 shares of common stock at an exercise price of $8.75 per share with an expiration date of November 7, 2022 and warrants to purchase 14,440 shares of common stock at an exercise price of $17.47 per share with an expiration date of May 6, 2024.

Stock-Based Compensation

4 unchanged sentences

Since the effectiveness of the Company’s 2019 Plan in April 2019, no future awards will be made under the 2014 Plan.

Shares withheld in payment of the exercise or purchase price of an award or in satisfaction of tax withholding requirements, and the shares covered by a stock appreciation right for which any portion is settled in stock, will reduce the number of shares a vailable for issuance under the 2019 Plan.

In addition, the number of shares available for issuance under the 2019 Plan (i) will not be increased by any shares delivered under the 2019 Plan that are subsequently repurchased using proceeds directly attribut able to stock option exercises and (ii) will not be reduced by any awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by TransMedics Group without the issuance of stock under the 2019 Plan.

As of June 30, 2020, 2, 485,187 shares of common stock were available for issuance under the 2019 Plan.

During the fiscal six months ended June 30, 2020, the Company granted to its employees and its non-employee directors options with service-based vesting for the purchase of an aggregate of 564,836 shares of common stock with a weighted average grant fair value of $7.89 per share.

In addition, the number of shares available for issuance under the 2019 Plan (i) will not be increased by any shares delivered under the 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises and (ii) will not be reduced by any awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by TransMedics Group without the issuance of stock under the 2019 Plan.

As of September 30, 2020, 2,465,687 shares of common stock were available for issuance under the 2019 Plan.

During the fiscal nine months ended September 30, 2020, the Company granted to its employees and its non-employee directors options with service-based vesting for the purchase of an aggregate of 585,336 shares of common stock with a weighted average grant fair value of $7.95 per share.

2019 Employee Stock Purchase Plan

1 unchanged sentence

A total of 371,142 shares of common stock of TransMedics Group are reserved for issuance under the 2019 ESPP.

During the fiscal six months ended June 30, 2020, 12,163 shares of common stock were issued under the 2019 ESPP and as of June 30, 2020, 358,979 shares of common stock remained available for issuance.

During the fiscal nine months ended September 30, 2020, 22,697 shares of common stock were issued under the 2019 ESPP and as of September 30, 2020, 348,445 shares of common stock remained available for issuance.

Stock-Based Compensation

1 unchanged sentence

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Cost of revenue

1 unchanged sentence

Selling, general and administrative expenses

As of June 30, 2020, total unrecognized compensation cost related to unvested share-based awards was $7.0 million which is expected to be recognized over a weighted average period of 2.9 years.

As of September 30, 2020, total unrecognized compensation cost related to unvested share-based awards was $6.5 million, which is expected to be recognized over a weighted average period of 2.7 years.

Commitments and Contingencies

10 unchanged sentences

The Company’s lease agreements, as amended, include payment escalations, rent holidays, and other lease incentives, which are accrued or deferred as appropriate such that rent expense for each lease is recognized on a straight-line basis over the respective lease terms, recording deferred rent for rent expense incurred but not yet paid.

The Company recorded rent expense of $0.5 million and $0.3 million in each of the fiscal three months ended June 30, 2020 and June 29, 2019, respectively.

The Company recorded rent expense of $1.0 million and $0.6 million in each of the fiscal six months ended June 30, 2020 and June 29, 2019, respectively.

The Company recorded rent expense of $0.4 million and $0.3 million in each of the fiscal three months ended September 30, 2020 and September 28, 2019, respectively.

The Company recorded rent expense of $1.4 million and $1.0 million in each of the fiscal nine months ended September 30, 2020 and September 28, 2019, respectively.

Costs incurred by the Company for tenant improvements but not yet reimbursed by the landlord are presented on the accompanying consolidated balance sheets as a tenant receivable within prepaid expenses and other current assets.

As of June 30, 2020, the Company had a tenant receivable of $0.2 million.

Future minimum lease payments under operating leases as of June 30, 2020 are as follows (in thousands):

As of September 30, 2020, the Company had a tenant receivable of $0.2 million.

Future minimum lease payments under operating leases as of September 30, 2020 are as follows (in thousands):

December 31, 2020 (remaining 3 months)

26 unchanged sentences

Company contributions to the plan may be made at the discretion of the board of directors.

As of June 30, 2020 and December 28, 2019, the Company had not made any contributions to the plan.

As of September 30, 2020 and December 28, 2019, the Company had not made any contributions to the plan.

Indemnification Agreements

4 unchanged sentences

In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors or officers.

The maximum potential amount of future payments the Company could be requir ed to make under these indemnification agreements is, in many cases, unlimited.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not currently aware of any indemnification claims and had not accr ued any liabilities related to such obligations in its consolidated financial statements as of June 30, 2020 and December 28, 2019.

The Co mpany is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2020 and December 28, 2019.

Legal Proceedings

5 unchanged sentences

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Fiscal Nine Months Ended

September 30, 2020

September 28, 2019

September 30, 2020

September 28, 2019

Net loss attributable to common

5 unchanged sentences

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated above because including them would have had an anti-dilutive effect:

June 30, 2020

June 29, 2019

September 30, 2020

September 28, 2019

Warrants to purchase common stock

2 unchanged sentences

Segment Reporting and Geographic Data

The Company has determined that it operates in one segment (see Note 2).

Financial data by geographical area is summarized as follows (in thousands):

Fiscal Three Months Ended

Fiscal Six Months Ended

June 30, 2020

June 29, 2019

June 30, 2020

June 29, 2019

Net revenue by country(1):

United States

United Kingdom

All other countries

Total net revenue

June 30, 2020

The Company has determined that it operates in one segment (see Note 2 for disaggregated net revenue by geographical area).

Long-lived assets by geographical area is summarized as follows (in thousands):

September 30, 2020

December 28, 2019

3 unchanged sentences

Total long-lived assets

Net revenue by country is categorized based on the location of the end customer.

The Company’s only long-lived assets consist of property and equipment, net of depreciation, which are categorized based on their location of domicile.

5 unchanged sentences

The Company paid Dr.

Amira Hassanein $0.1 million and $0.2 million in total compensation for the fiscal three and six months ended June 30, 2020, respectively, and less than $0.1 million and $0.1 in total compensation for each of the fiscal three and six months ended June 29, 2019, respectively, for her services as an employee.

Amira Hassanein less than $0.1 million in total compensation for each of the fiscal three months ended September 30, 2020 and September 28, 2019, and $0.2 million in total compensation for each of the fiscal nine months ended September 30, 2020 and September 28, 2019, for her services as an employee.

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

What changed 10-Q

Item 1. Financial Statements