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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 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: 001-38891

 

TransMedics Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

Massachusetts

83-2181531

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

200 Minuteman Road

Andover, Massachusetts

01810

(Address of principal executive offices)

(Zip code)

 

(978) 552-0900

(Registrant’s telephone number, including area code)

 

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

 

Title of each class 

 

Trading Symbol(s) 

 

Name of each exchange on which registered 

Common Stock, No Par Value

 

TMDX

 

The Nasdaq Global Market

 

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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of July 31, 2021, the registrant had 27,677,048 shares of common stock, no par value per share, outstanding.

 

 

 

 


 

 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors,” which could cause actual results to differ materially. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or reflect interim developments.

Some of the key factors that could cause actual results to differ include:

 

that we continue to incur losses;

 

our need to raise additional funding;

 

our existing and any future indebtedness, including our ability to comply with affirmative and negative covenants under our credit agreement to which we will remain subject to until maturity, and our ability to obtain additional financing on favorable terms or at all;

 

the fluctuation of our financial results from quarter to quarter;

 

our ability to use net operating losses and research and development credit carryforwards;

 

our dependence on the success of the Organ Care System, or OCS;

 

the rate and degree of market acceptance of the OCS;

 

our ability to educate patients, surgeons, transplant centers and private and public payors of benefits offered by the OCS;

 

the impact of the outbreak of the novel strain of coronavirus, or COVID-19, and associated containment, remediation and vaccination efforts;

 

our ability to improve the OCS platform;

 

our dependence on a limited number of customers for a significant portion of our net revenue;

 

the timing of and our ability to obtain and maintain regulatory approvals or clearances for our OCS products;

 

our ability to adequately respond to the Food and Drug Administration, or FDA, follow-up inquiries in a timely manner;

 

the timing of and our ability to commercialize and market our OCS products;

 

the performance of our third-party suppliers and manufacturers;

 

the timing or results of clinical trials for the OCS;

 

our manufacturing, sales, marketing and clinical support capabilities and strategy;

 

attacks against our information technology infrastructure;

 

the economic, political and other risks associated with our foreign operations;

 

our ability to attract and retain key personnel;

i


 

 

 

our ability to protect, defend, maintain and enforce our intellectual property rights relating to the OCS and avoid allegations that our products infringe, misappropriate or otherwise violate the intellectual property rights of third parties;

 

the pricing of the OCS, as well as the reimbursement coverage for the OCS in the United States and internationally;

 

regulatory developments in the United States, European Union and other jurisdictions;

 

the extent and success of competing products that are or may become available;

 

the impact of any product recalls or improper use of our products;

 

our use of proceeds from our equity offerings; and

 

our estimates regarding revenues, expenses and needs for additional financing.

ii


 

 

TransMedics Group, Inc.

Table of Contents

 

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

Consolidated Balance Sheets

 

1

 

Consolidated Statements of Operations

 

2

 

Consolidated Statements of Comprehensive Loss

 

3

 

Consolidated Statements of Stockholders’ Equity

 

4

 

Consolidated Statements of Cash Flows

 

6

 

Notes to Unaudited Consolidated Financial Statements

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

33

Item 4.

Controls and Procedures

 

33

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

34

Item 1A.

Risk Factors

 

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

Item 6.

Exhibits

 

35

Signatures

 

36

 

 

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

TRANSMEDICS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,314

 

 

$

24,581

 

Marketable securities

 

 

86,935

 

 

 

101,061

 

Accounts receivable

 

 

6,271

 

 

 

6,864

 

Inventory

 

 

13,007

 

 

 

11,934

 

Prepaid expenses and other current assets

 

 

3,525

 

 

 

2,326

 

Total current assets

 

 

135,052

 

 

 

146,766

 

Property and equipment, net

 

 

4,954

 

 

 

4,754

 

Restricted cash

 

 

500

 

 

 

500

 

Other long-term assets

 

 

6

 

 

 

6

 

Total assets

 

$

140,512

 

 

$

152,026

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,389

 

 

$

1,206

 

Accrued expenses and other current liabilities

 

 

12,100

 

 

 

10,317

 

Deferred revenue

 

 

473

 

 

 

263

 

Current portion of deferred rent

 

 

117

 

 

 

93

 

Total current liabilities

 

 

15,079

 

 

 

11,879

 

Long-term debt, net of discount and current portion

 

 

34,921

 

 

 

34,657

 

Deferred rent, net of current portion

 

 

1,529

 

 

 

1,599

 

Total liabilities

 

 

51,529

 

 

 

48,135

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, no par value; 25,000,000 shares authorized; no shares

   issued or outstanding

 

 

 

 

 

 

Common stock, no par value; 150,000,000 shares authorized; 27,647,234

   shares and 27,175,305 shares issued and outstanding at June 30, 2021

   and December 31, 2020, respectively

 

 

505,933

 

 

 

502,217

 

Accumulated other comprehensive loss

 

 

(134

)

 

 

(95

)

Accumulated deficit

 

 

(416,816

)

 

 

(398,231

)

Total stockholders' equity

 

 

88,983

 

 

 

103,891

 

Total liabilities and stockholders' equity

 

$

140,512

 

 

$

152,026

 

 

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

1


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenue

 

$

8,171

 

 

$

3,391

 

 

$

15,224

 

 

$

10,921

 

Cost of revenue

 

 

2,582

 

 

 

1,482

 

 

 

4,824

 

 

 

4,152

 

Gross profit

 

 

5,589

 

 

 

1,909

 

 

 

10,400

 

 

 

6,769

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research, development and clinical trials

 

 

6,295

 

 

 

3,903

 

 

 

10,827

 

 

 

10,128

 

Selling, general and administrative

 

 

9,162

 

 

 

5,867

 

 

 

15,948

 

 

 

12,519

 

Total operating expenses

 

 

15,457

 

 

 

9,770

 

 

 

26,775

 

 

 

22,647

 

Loss from operations

 

 

(9,868

)

 

 

(7,861

)

 

 

(16,375

)

 

 

(15,878

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(965

)

 

 

(1,001

)

 

 

(1,917

)

 

 

(2,043

)

Other income (expense), net

 

 

171

 

 

 

371

 

 

 

(283

)

 

 

588

 

Total other expense, net

 

 

(794

)

 

 

(630

)

 

 

(2,200

)

 

 

(1,455

)

Loss before income taxes

 

 

(10,662

)

 

 

(8,491

)

 

 

(18,575

)

 

 

(17,333

)

Provision for income taxes

 

 

(6

)

 

 

(6

)

 

 

(10

)

 

 

(16

)

Net loss

 

$

(10,668

)

 

$

(8,497

)

 

$

(18,585

)

 

$

(17,349

)

Net loss per share attributable to common stockholders,

   basic and diluted

 

$

(0.39

)

 

$

(0.36

)

 

$

(0.68

)

 

$

(0.78

)

Weighted average common shares outstanding,

   basic and diluted

 

 

27,620,764

 

 

 

23,330,918

 

 

 

27,495,125

 

 

 

22,259,047

 

 

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

2


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(10,668

)

 

$

(8,497

)

 

$

(18,585

)

 

$

(17,349

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(27

)

 

 

(42

)

 

 

(29

)

 

 

(26

)

Unrealized gains (losses) on marketable securities,

   net of tax of $0

 

 

(18

)

 

 

(149

)

 

 

(10

)

 

 

64

 

Total other comprehensive income (loss)

 

 

(45

)

 

 

(191

)

 

 

(39

)

 

 

38

 

Comprehensive loss

 

$

(10,713

)

 

$

(8,688

)

 

$

(18,624

)

 

$

(17,311

)

 

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

3


 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehen-

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

sive Income

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

27,175,305

 

 

$

502,217

 

 

$

(95

)

 

$

(398,231

)

 

$

103,891

 

Issuance of common stock upon the

   exercise of common stock options

 

 

287,705

 

 

 

372

 

 

 

 

 

 

 

 

 

372

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

14,951

 

 

 

211

 

 

 

 

 

 

 

 

 

211

 

Stock-based compensation expense

 

 

 

 

 

1,112

 

 

 

 

 

 

 

 

 

1,112

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,917

)

 

 

(7,917

)

Balances at March 31, 2021

 

 

27,477,961

 

 

 

503,912

 

 

 

(89

)

 

 

(406,148

)

 

 

97,675

 

Issuance of common stock upon the

   exercise of common stock options

 

 

169,273

 

 

 

213

 

 

 

 

 

 

 

 

 

213

 

Stock-based compensation expense

 

 

 

 

 

1,808

 

 

 

 

 

 

 

 

 

1,808

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Unrealized losses on marketable

   securities

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,668

)

 

 

(10,668

)

Balances at June 30, 2021

 

 

27,647,234

 

 

$

505,933

 

 

$

(134

)

 

$

(416,816

)

 

$

88,983

 

 

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


4


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehen-

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

sive Income

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 28, 2019

 

 

21,184,524

 

 

$

424,134

 

 

$

(2

)

 

$

(369,483

)

 

$

54,649

 

Issuance of common stock upon the

   exercise of common stock options

 

 

146,793

 

 

 

75

 

 

 

 

 

 

 

 

 

75

 

Issuance of common stock in connection

   with employee stock purchase plan

 

 

12,163

 

 

 

197

 

 

 

 

 

 

 

 

 

197

 

Stock-based compensation expense

 

 

 

 

 

385

 

 

 

 

 

 

 

 

 

385

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Unrealized gains on marketable

   securities

 

 

 

 

 

 

 

 

213

 

 

 

 

 

 

213

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,852

)

 

 

(8,852

)

Balances at March 31, 2020

 

 

21,343,480

 

 

 

424,791

 

 

 

227

 

 

 

(378,335

)

 

 

46,683

 

Issuance of common stock

   upon the exercise of

   common stock options

 

 

42,882

 

 

 

92

 

 

 

 

 

 

 

 

 

92

 

Issuance of common stock

   in public offering, net of

   discounts and issuance

   costs of $628

 

 

5,750,000

 

 

 

75,042

 

 

 

 

 

 

 

 

 

75,042

 

Stock-based compensation

   expense

 

 

 

 

 

631

 

 

 

 

 

 

 

 

 

631

 

Foreign currency

   translation adjustment

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Unrealized losses on

   marketable securities

 

 

 

 

 

 

 

 

(149

)

 

 

 

 

 

(149

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,497

)

 

 

(8,497

)

Balances at June 30, 2020

 

 

27,136,362

 

 

$

500,556

 

 

$

36

 

 

$

(386,832

)

 

$

113,760

 

 

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

 

5


 

 

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(18,585

)

 

$

(17,349

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

896

 

 

 

745

 

Stock-based compensation expense

 

 

2,920

 

 

 

1,016

 

Non-cash interest expense and end of term accretion expense

 

 

264

 

 

 

249

 

Net amortization of premiums on marketable securities

 

 

767

 

 

 

49

 

Unrealized foreign currency transaction (gains) losses

 

 

314

 

 

 

(131

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

560

 

 

 

2,135

 

Inventory

 

 

(1,894

)

 

 

(1,409

)

Prepaid expenses and other current assets

 

 

(1,209

)

 

 

(324

)

Accounts payable

 

 

938

 

 

 

(3,827

)

Accrued expenses and other current liabilities

 

 

1,990

 

 

 

660

 

Deferred revenue

 

 

219

 

 

 

848

 

Deferred rent

 

 

(46

)

 

 

623

 

Net cash used in operating activities

 

 

(12,866

)

 

 

(16,715

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(273

)

 

 

(397

)

Purchases of marketable securities

 

 

(45,461

)

 

 

(63,637

)

Proceeds from sales and maturities of marketable securities

 

 

58,810

 

 

 

36,025

 

Net cash provided by (used in) investing activities

 

 

13,076

 

 

 

(28,009

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of public offering costs and other financing costs

 

 

 

 

 

(339

)

Proceeds from issuance of common stock in public offering, net of

   underwriting discounts and commissions

 

 

 

 

 

75,670

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

585

 

 

 

167

 

Proceeds from issuance of common stock in connection with employee stock

   purchase plan

 

 

211

 

 

 

197

 

Proceeds from Paycheck Protection Program loan

 

 

 

 

 

2,249

 

Repayment of Paycheck Protection Program loan

 

 

 

 

 

(2,249

)

Net cash provided by financing activities

 

 

796

 

 

 

75,695

 

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

 

 

(273

)

 

 

89

 

Net increase in cash, cash equivalents and restricted cash

 

 

733

 

 

 

31,060

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

25,081

 

 

 

20,592

 

Cash, cash equivalents and restricted cash, end of period

 

$

25,814

 

 

$

51,652

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Transfers of inventory to property and equipment

 

$

765

 

 

$

78

 

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

 

$

70

 

 

$

47

 

Offering costs included in accounts payable and accrued expenses

 

$

 

 

$

409

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,314

 

 

$

51,152

 

Restricted cash

 

 

500

 

 

 

500

 

Total cash, cash equivalents and restricted cash shown in the statement of cash flows

 

$

25,814

 

 

$

51,652

 

 

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

6


 

TRANSMEDICS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

TransMedics Group, Inc. (“TransMedics Group” and, together with its consolidated subsidiaries, the “Company”) was incorporated in the Commonwealth of Massachusetts in October 2018. TransMedics, Inc. (“TransMedics”), an operating company and wholly owned subsidiary of TransMedics Group, was incorporated in the State of Delaware in August 1998. The Company is a commercial-stage medical technology company transforming organ transplant therapy for end-stage organ failure patients across multiple disease states. The Company developed the Organ Care System (“OCS”) to replace a decades-old standard of care. The OCS represents a paradigm shift that transforms organ preservation for transplantation from a static state to a dynamic environment that enables new capabilities, including organ optimization and assessment. The Company’s OCS technology replicates many aspects of the organ’s natural living and functioning environment outside of the human body.

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 $18.6 million for the six months ended June 30, 2021 and $28.7 million for the year ended December 31, 2020. As of June 30, 2021, the Company had an accumulated deficit of $416.8 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 $112.2 million as of June 30, 2021 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. 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 funding, 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 with government 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. Products currently under development will require additional research and development efforts, including additional clinical testing and regulatory approval, prior to commercialization. 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 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.

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; customer delays or reductions in customer capital expenditures and operating budgets and the related impact on our product sales; 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; decreased productivity and unavailability of materials or components; 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, including with respect to the Company’s OCS Heart Pre-Market Approval (“PMA”) application; 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 addition, the Company’s sales and clinical adoption team was restricted in visiting many transplant centers in person between April 2020 and September 2020. 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.

7