What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-05 · 128 added, 87 removed, 354 unchanged (38% of the section changed)

29 unchanged sentences

150,000,000 shares authorized;

shares and 27,791,615 shares issued and outstanding at March 31, 2022

shares and 27,791,615 shares issued and outstanding at June 30, 2022

and December 31, 2021, respectively

7 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

6 unchanged sentences

Interest expense

Other expense, net

Other income (expense), net

Total other expense, net

9 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive income (loss):

19 unchanged sentences

Balances at March 31, 2022

Issuance of common stock upon the

exercise of common stock options

Stock-based compensation expense

Issuance of restricted common stock

Foreign currency translation

Unrealized gains on marketable

Balances at June 30, 2022

Stockholders'

9 unchanged sentences

Balances at March 31, 2021

Issuance of common stock upon the

exercise of common stock options

Stock-based compensation expense

Foreign currency translation

Unrealized losses on marketable

Balances at June 30, 2021

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

26 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosure of non-cash investing and financing activities:

Supplemental disclosure of non-cash investing activities:

Transfers of inventory to property and equipment

Purchases of property and equipment included in accounts payable and accrued expenses

Purchases of property and equipment included in accounts payable and accrued

Reconciliation of cash, cash equivalents and restricted cash:

15 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 of $ 10.6 million for the three months ended March 31, 2022 and $ 44.2 million for the year ended December 31, 2021.

As of March 31, 2022, the Company had an accumulated deficit of $ 453.0 million.

The Company has incurred recurring losses since inception, including net losses of $ 22.1 million for the six months ended June 30, 2022 and $ 44.2 million for the year ended December 31, 2021.

As of June 30, 2022, the Company had an accumulated deficit of $ 464.5 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 $ 72.0 million as of March 31, 2022 will be sufficient 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 believes that its existing cash, cash equivalents, and marketable securities of $ 58.1 million as of June 30, 2022 in addition to the net proceeds from its debt financing in July 2022 (see Note 13), will be sufficient 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.

18 unchanged sentences

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 COVID-19 pandemic also has impacted operations at the FDA and other health authorities, resulting in delays of reviews and approvals, and may affect other potential Pre-Market Approval (“PMA”) applications.

The COVID-19 pandemic also has impacted operations at the FDA and other health authorities, resulting in delays of reviews and approvals.

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

7 unchanged sentences

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 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 March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021 have been made.

The Company’s results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

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, 2022 and results of operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021 have been made.

The Company’s results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

Use of Estimates

11 unchanged sentences

The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

As of March 31, 2022 and December 31, 2021, the Company had no allowance for credit losses.

As of June 30, 2022 and December 31, 2021, the Company had no allowance for credit losses.

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

For the three months ended March 31, 2022, three customers accounted for 16 %, 15 % and 12 % of net revenue, respectively.

For the three months ended March 3 1 , 202 1 , two customer s each accounted for 12 % of net revenue.

As of March 31, 2022 , four customer s accounted for 14 % , 12 %, 12 % and 10 % of accounts receivable , respectively .

As of December 31 , 20 2 1 , two customer s accounted for 21 % and 15 % of accounts receivable , respectively .

For the three months ended June 30, 2022, one customer accounted for 17 % of net revenue.

For the six months ended June 30, 2022, one customer accounted for 17 % of net revenue.

For the three months ended June 30, 2021, no customer accounted for 10% or more of net revenue.

For the six months ended June 30, 2021, one customer accounted for 10 % of net revenue.

As of June 30, 2022, two customers accounted for 13 % and 11 % of accounts receivable, respectively.

As of December 31, 2021, two customers accounted for 21 % and 15 % of accounts receivable, respectively.

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.

13 unchanged sentences

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

The Company is developing and commercializing a proprietary system to preserve human organs for transplant in a near-physiologic condition to address the limitations of cold storage organ preservation.

The Company has developed and is commercializing a proprietary system to preserve human organs for transplant in a near-physiologic condition to address the limitations of cold storage organ preservation.

Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance.

5 unchanged sentences

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 have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for each of the three months ended March 31, 2022 and 2021.

The Company reported a net loss attributable to common stockholders for each of the three and six months ended June 30, 2022 and 2021.

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

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:

As of March 31,

As of June 30,

Warrants to purchase common stock

1 unchanged sentence

Employee stock purchase plan

Restricted stock awards

Marketable Securities

Marketable securities by security type consisted of the following (in thousands):

March 31, 2022

June 30, 2022

Credit Losses

Treasury securities (due within one year)

government agency bonds (due within one year)

government agency bonds (due within

December 31, 2021

Credit Losses

Treasury securities (due within one year)

government agency bonds (due within one year)

government agency bonds (due within

Fair Value of Financial Assets and Liabilities

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 March 31, 2022 Using:

Fair Value Measurements at June 30, 2022 Using:

Cash equivalents:

13 unchanged sentences

Inventory consisted of the following (in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

Finished goods

During the three months ended March 31, 2022 and 2021, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 1.0 million and $ 0.4 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 1.4 million and $ 0.8 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

Long-term debt consisted of the following (in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

5 unchanged sentences

Long-term debt, net of discount and current portion

Borrowings under the Credit Agreement bear interest at an annual rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a minimum of 1.0 % and a maximum of 4.0 % , plus 8.5 % (the “Applicable Margin”), subject in the aggregate to a maximum interest rate of 11.5 %.

In addition, borrowings under the Credit Agreement bear paid-in-kind (“PIK”) interest at an annual rate equal to the amount by which LIBOR plus the Applicable Margin exceeds 11.5 %, but not to exceed 12.5 %.

The PIK interest is added to the principal amount of the borrowings outstanding at the end of each quarter until the maturity date of the Credit Agreement in June 2023 .

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.

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

The final payment and debt discount amounts are being accreted to interest expense over the term of the Credit Agreement using the effective interest method.

All obligations under the Credit Agreement are guaranteed by the Company and each of its material subsidiaries.

All obligations of the Company and each guarantor are secured by substantially all of the Company’s and each guarantor’s assets, including their intellectual property, subject to certain exceptions, including a perfected security interest in substantially all tangible and intangible assets of the Company and each guarantor.

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

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

On July 25, 2022, the Company entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”) for total borrowings of $ 60.0 million (the “CIBC Credit Agreement”) (see Note 13).

A portion of the proceeds were used to repay the outstanding principal, accrued interest and end-of-term payment of the Credit Agreement with OrbiMed totaling $ 36.3 million.

In accordance with the applicable accounting standards, a short-term debt obligation should be excluded from current liabilities if the entity has both the intent and ability to refinance the obligation on a long-term basis.

The intent and ability can be demonstrated by the issuance of a long-term obligation to refinance the short-term obligation on a long-term basis after the date of an entity’s balance sheet but before that balance sheet is issued.

In connection with the repayment of the outstanding borrowings under the Credit Agreement with the proceeds from the CIBC Credit Agreement and the related repayment provisions under the CIBC Credit Agreement, the Company has classified $ 35.5 million of long-term debt, net of discount and current portion outstanding as of June 30, 2022 under the Credit Agreement as a long-term liability.

Prior to repayment, borrowings under the Credit Agreement bore interest at an annual rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a minimum of 1.0 % and a maximum of 4.0 % , plus 8.5 % (the “Applicable Margin”), subject in the aggregate to a maximum interest rate of 11.5 %.

In addition, borrowings under the Credit Agreement bore paid-in-kind (“PIK”) interest at an annual rate equal to the amount by which LIBOR plus the Applicable Margin exceeded 11.5 %, but not to exceed 12.5 %.

The PIK interest was added to the principal amount of the borrowings outstanding at the end of each quarter until the repayment of the borrowings in July 2022 .

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

At its option, the company could prepay outstanding borrowings under the Credit Agreement.

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

The final payment and debt discount amounts were being accreted to interest expense over the term of the Credit Agreement using the effective interest method.

All obligations under the Credit Agreement were guaranteed by the Company and each of its material subsidiaries.

All obligations of the Company and each guarantor were secured by substantially all of the Company’s and each guarantor’s assets, including their intellectual property, subject to certain exceptions, including a perfected security interest in substantially all tangible and intangible assets of the Company and each guarantor.

Under the Credit Agreement, the Company agreed to certain affirmative and negative covenants to which it was subject until repayment.

The financial covenants included 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 March 31, 2022, the Company was in compliance 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 continuing, 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 borrowings 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 payable.

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 March 31, 2022, the interest rate applicable to borrowings under the Credit Agreement was 9.5 %.

During the three months ended March 31, 2022, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.2 %.

As of June 30, 2022, the Company was in compliance with the financial covenants under the Credit Agreement.

The obligations under the Credit Agreement were 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 was no longer continuing, the Applicable Margin would increase by 4.0 % per annum.

If an event of default (other than certain events of bankruptcy or insolvency) occurred and was continuing, OrbiMed may have declared all or any portion of the outstanding principal amount of the borrowings 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 would have

automatically bec ame due and payable.

In addition, the Company may have been 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, 2022, the interest rate applicable to borrowings under the Credit Agreement was 9.5 %.

During the six months ended June 30, 2022, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.2 %.

Stock-Based Compensation

5 unchanged sentences

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 March 31, 2022, 890,558 shares of common stock were available for issuance under the 2019 Plan.

As of June 30, 2022, 809,496 shares of common stock were available for issuance under the 2019 Plan.

2019 Employee Stock Purchase Plan

2 unchanged sentences

A total of 371,142 shares of the Company’s common stock are reserved for issuance under the 2019 ESPP.

During the three months ended March 31, 2022, 12,465 shares of common stock were issued under the 2019 ESPP and as of March 31, 2022, 308,131 shares of common stock remained available for issuance.

During the six months ended June 30, 2022, 12,465 shares of common stock were issued under the 2019 ESPP and as of June 30, 2022, 308,131 shares of common stock remained available for issuance.

2021 Inducement Plan

3 unchanged sentences

A total of 1,000,000 shares of the Company’s common stock were initially available for issuance under the Inducement Plan.

As of March 31, 2022, 580,200 shares of common stock were available for issuance under the Inducement Plan.

As of June 30, 2022, 615,400 shares of common stock were available for issuance under the Inducement Plan.

Stock Option Activity

During the six months ended June 30, 2022, the Company granted options under the 2019 Plan and the Inducement Plan to its employees and directors with service-based vesting for the purchase of an aggregate of 1,040,210 shares of common stock with a weighted average grant-date fair value of $ 8.53 per share.

Restricted Common Stock Activity

During the three months ended June 30, 2022, the Company granted shares of restricted common stock.

Shares of unvested restricted common stock may not be sold or transferred by the holder.

If the holder’s service to the Company and its affiliates ceases for any reason, unvested shares of restricted common stock held by these individuals will immediately be forfeited for no consideration, as defined in the restricted stock agreement.

During the three months ended June 30, 2022, the Company granted 23,120 shares of restricted common stock under the 2019 Plan to consultants with service-based vesting conditions and a weighted-average grant-date fair value of $ 25.95 per share.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

1 unchanged sentence

Selling, general and administrative expenses

During the three months ended March 31, 2022, the Company granted options to its employees and directors with service-based vesting for the purchase of an aggregate of 880,910 shares of common stock with a weighted average grant-date fair value of $ 7.11 per share.

As of March 31, 2022, total unrecognized compensation cost related to unvested share-based awards was $ 24.6 million, which is expected to be recognized over a weighted average period of 3.1 years.

As of June 30, 2022, total unrecognized compensation cost related to unvested share-based awards was $ 23.4 million, which is expected to be recognized over a weighted average period of 2.8 years.

Commitments and Contingencies

1 unchanged sentence

The Company leases office, laboratory and manufacturing space under two non-cancelable operating leases.

There have been no material changes to the Company’s leases during the three months ended March 31, 2022.

There have been no material changes to the Company’s leases during the six months ended June 30, 2022.

For additional information, please read Note 12 Leases, to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2021.

1 unchanged sentence

In 2002, the Company entered into a license agreement with the Department of Veterans Affairs (the “VA”), under which the Company was granted an exclusive, worldwide license under specified patents to make, use, sell and import certain technology used in the Company’s products and a non-exclusive, worldwide license to make, use, sell and import solutions for use in or with those products.

The rights under the license agreement continue until the expiration of the last to expire of the licensed patents.

The rights under the license agreement continued until the expiration of the last to expire of the licensed patents.

The majority of the licensed U.S.

patents expired in 2017, and the foreign patents expired in September 2018.

However, the Company has requested a patent term extension for one U.S.

However, the Company requested a patent term extension for one U.S.

patent covered by the VA license agreement, U.S.

The Company was granted an interim patent term extension for this patent until November 6, 2021.

The Company has not received final approval of the patent extension beyond the interim patent term extension already granted.

The maximum extension requested would be through May 2022;

however, the length of the patent term extension will be determined by the United States Patent and Trademark Office (“USPTO”) based on input from the FDA.

On February 8, 2021, the FDA provided to the USPTO a determined regulatory review period for the OCS Lung.

Under the FDA’s analysis, the patent term extension of the ’082 patent would be until November 6, 2021 .

The Company has not yet received communication from the USPTO but expects that the USPTO’s determination of patent term extension for the ’082 patent will maintain the November 6, 2021 expiration date.

The final determination of the length of the patent extension is not expected to have a material impact on the Company’s financial results.

The license includes the right to grant sublicenses, subject to approval by the VA and other restrictions, and is subject to the U.S.

government’s right to practice the licensed patents on its own behalf without payment of a royalty and obligation to grant certain sublicenses as necessary to fulfill public health, welfare and safety needs.

The license agreement also requires the Company to make its products covered by the licensed patents available to the public on reasonable terms and to provide the U.S.

government such products at the lowest price.

As consideration for the licenses granted by the VA, the Company is obligated to pay tiered royalties ranging from a low single-digit to a mid single-digit percentage on net sales of each product covered by a licensed patent (subject to a minimum aggregate royalty payment of less than $ 0.1 million per year during each of the first five years after the first commercial sale, after which no minimum is required).

Royalties will be paid by the Company on a licensed product-by-licensed product and country-by-country basis, beginning on the first commercial sale of such licensed product in such country until expiration of the last valid patent claim covering such licensed product in such country.

The Company is also responsible for all costs related to the amendment, prosecution and maintenance of the licensed patent rights.

The VA license agreement can be terminated by the Company or the VA only if the other party fails to cure its material breach within a specified period after receiving notice of such breach.

6100082 (the “’082 patent”).

The Company received a Notice of Final Determination on June 27, 2022 from the United States Patent and Trademark Office (“USPTO”) finding the ‘082 patent’s term extension expired on November 6, 2021, and as a result the license has terminated.

The termination of the license is not expected to have a material impact on the Company’s financial results.

As consideration for the licenses granted by the VA, the Company was obligated to pay tiered royalties ranging from a low single-digit to a mid single-digit percentage on net sales of each product covered by a licensed patent (subject to a minimum aggregate royalty payment of less than $ 0.1 million per year during each of the first five years after the first commercial sale, after which no minimum is required).

Royalties were paid by the Company on a licensed product-by-licensed product and country-by-country basis, beginning on the first commercial sale of such licensed product in such country until expiration of the last valid patent claim covering such licensed product in such country.

The Company was also responsible for all costs related to the amendment, prosecution and maintenance of the licensed patent rights.

As all of the licensed patents expired as of November 6, 2021, the Company no longer has an obligation to pay royalties.

401(k) Savings Plan

2 unchanged sentences

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

As of March 31, 2022 and December 31, 2021, the Company had no t made any contributions to the plan.

As of June 30, 2022 and December 31, 2021, the Company had no t made any contributions to the plan.

Indemnification Agreements

In the ordinary course of business, the Company has agreed to defend and indemnify its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets.

The Company’s exposure under these indemnification provisions is generally limited to the total amount paid

by the end-customer under the agreement.

The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by the end-customer under the agreement.

However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement.

3 unchanged sentences

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 accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2022 and December 31, 2021.

The Company 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 June 30, 2022 and December 31, 2021.

Unconditional Purchase Commitment

1 unchanged sentence

The contract is not cancellable without penalty.

The remaining purchase commitment as of March 31, 2022 was $ 8.0 million.

The remaining purchase commitment as of June 30, 2022 was $ 8.0 million.

Legal Proceedings

6 unchanged sentences

Long-lived assets by geography are summarized as follows (in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

7 unchanged sentences

The reconciliation of gross revenue to net revenue for these certain payments is shown below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Gross revenue from sales to customers

3 unchanged sentences

As a result, such payments made to the customers are recorded as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.5 million for each of the three months ended March 31, 2022 and 2021, as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively, as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.7 million and $ 1.2 million, respectively, for the three and six months ended June 30, 2021, respectively, as operating expenses.

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers by product type and geographical area as it believes this presentation best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors, as shown below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net revenue by OCS product:

3 unchanged sentences

Total net revenue

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net revenue by country(1):

3 unchanged sentences

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

When a customer order includes disposable sets and organ retrieval or OCS organ management services, the Company has determined that the disposable sets and services constitute separate performance obligations and recognizes revenue as the disposable sets and services are delivered to the customer.

Net revenue during the three and six months ended June 30, 2022 included service revenue comprising approximately 13 % and less than 10 %, respectively, of net revenue relating to organ retrieval and OCS organ management services sold under the National OCS Program, the Company’s turnkey solution to provide outsourced organ retrieval and OCS organ management.

Contract Assets and Liabilities

2 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 March 31, 2022 and December 31, 2021.

The Company had no contract assets as of June 30, 2022 and December 31, 2021.

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 March 31, 2022, the Company’s wholly- or partially unsatisfied performance obligations totaled $ 2.1 million and are expected to be completed within the next year.

As of June 30, 2022, the Company’s wholly- or partially unsatisfied performance obligations totaled $ 1.7 million and are expected to be completed within the next year.

Related Party Transactions

4 unchanged sentences

The Company paid Dr.

Amira Hassanein approximately $ 0.1 million in total compensation for each of the three months ended March 31, 2022 and 2021 for her services as an employee.

Amira Hassanein approximately $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2022, respectively, and $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2021, respectively, for her services as an employee.

Subsequent Events

Canadian Imperial Bank of Commerce Credit Agreement

On July 25, 2022, the Company entered into a credit agreement with CIBC pursuant to which CIBC made a term loan commitment of $ 60.0 million available to the Company.

The entire term loan was drawn on July 25, 2022 .

The term loan under the CIBC Credit Agreement bears interest at an annual rate equal to either, at the Company’s option, (i) the secured overnight financing rate for an interest period selected by the Company, subject to a minimum of 1.5 %, plus 2.0 % or (ii) 1.0 % plus the higher of a) the prime rate subject to a minimum of 4.0 % or b) the Federal Funds Effective Rate plus 0.5 %.

Borrowings under the CIBC Credit Agreement are payable in monthly interest-only payments for the first 24 months, and then payable in equal monthly principal payments plus accrued interest until the maturity date of the CIBC Credit Agreement in July 2027 .

If certain revenue milestones are met after the first 24 months, the Company may extend the interest-only repayment period by one additional year.

At its option, the Company may prepay borrowings outstanding under the CIBC Credit Agreement, subject to a prepayment fee of 2.0 % of outstanding borrowings if paid prior to 12 months after the closing date, and 1.0 % if paid after 12 months but prior to 24 months after the closing date.

The obligations under the CIBC Credit Agreement are guaranteed by the Company’s material wholly-owned subsidiaries and are secured by substantially all of the assets of the Company and the guarantors.

Repayment of OrbiMed Credit Agreement

On July 25, 2022, the Company repaid all amounts due under the Credit Agreement with OrbiMed of $ 36.3 million, including $ 35.0 million of principal repayments, using proceeds from the borrowings under the CIBC Credit Agreement.

The Credit Agreement was terminated on July 25, 2022 and all security interests securing obligations under the Credit Agreement were released.

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