Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. ALIMERA SCIENCES INC (1267602) 10-K published on Mar 02, 2020 at 4:07 pm
Reporting Period: Dec 30, 2019
An outbreak of a new respiratory illness caused by coronavirus disease 2019 (“COVID-19”) has resulted in tens of thousands of infections in China and continues to spread, including to the United States and Europe, the major markets in which we operate. The outbreak of COVID-19 could materially and adversely affect our business, financial condition and results of operations. Its effects could include disruptions from temporary hospital and clinic closures, disruptions in our ability to market and distribute ILUVIEN, deferral of ILUVIEN procedures as COVID-19 treatment and containment is prioritized, illness and quarantine of our personnel and restrictions on our employees’ ability to travel. For example, in Italy, sales representatives, medical science liaisons and others are currently restricted from entering hospitals to make sales calls. COVID-19 could also result in social, economic and labor instability in the countries in which we or our customers and suppliers operate.
Our common stock trades on The Nasdaq Global Market, which we believe helps support and maintain liquidity for our stock. Companies whose shares are listed on The Nasdaq Global Market, however, are subject to various rules and requirements imposed by Nasdaq that a listed company must satisfy to continue having its stock listed on the exchange. We received notice in September 2019 from The Nasdaq Stock Market (Nasdaq) that, for the last 30 consecutive trading days before the date of the notice, the Market Value of Listed Securities (MVLS) for our common stock was below the minimum MVLS of $50,000,000 required for continued listing on The Nasdaq Global Market. We have not regained compliance with Nasdaq’s minimum MVLS requirement, and our 180-day compliance period expires on March 9, 2020. However, Nasdaq has three alternate standards for continued listing, and we expect to regain compliance with Nasdaq’s continued listing standards by qualifying under a different listing standard that requires a listed company’s revenue and total assets in each case to exceed $50 million (the Total Assets/Total Revenue Standard). Based on our revenue and total assets as reflected on the audited consolidated financial statements included in this Annual Report on Form 10-K, we believe that we meet the Total Assets/Total Revenue Standard. If Nasdaq concurs with our view as we expect, the Listing Qualifications Department of Nasdaq will send us a letter to that effect. We expect the letter to state that we have complied with the Total Assets/Total Revenue Standard and therefore our failure to comply with the minimum MVLS requirement will no longer affect our continued listing. We will not be able to confirm that we have regained compliance, however, until we receive a letter to that effect from the Listing Qualifications Department of Nasdaq.
For our common stock to remain listed on The Nasdaq Global Market, we must meet either (a) the Total Assets/Total Revenue Standard, (b) the Market Value Standard (which would require us to meet the minimum MVLS requirement) or (c) the Equity Standard, which is based on stockholders’ equity. Because we currently do not meet the Market Value Standard or the Equity Standard, we can regain compliance in the near future only by complying with the Total Assets/Total Revenue Standard. If we were to fail to regain compliance with Nasdaq’s continued listing requirements, our shares could be delisted from The Nasdaq Global Market, which could materially reduce the liquidity of our common stock and have an adverse effect on its market price. If our common stock is delisted from Nasdaq, the only established trading market for our common stock would be eliminated and we would be forced to list our shares on the OTC Markets or another quotation medium, depending on our ability to meet the specific listing requirements of those quotation systems. As a result, an investor would likely find it more difficult to trade, or to obtain accurate price quotations for, our shares. Delisting would likely also reduce the visibility, liquidity and value of our common stock, including as a result of reduced institutional investor interest in our company, and may increase the volatility of our common stock. Delisting could also cause a loss of confidence of potential industry partners, lenders and employees, which could further harm our business and our future prospects.
On November 14, 2019, we filed a certificate of amendment to our restated certificate of incorporation with the Secretary of State of the State of Delaware, which effected a one-for-15 reverse stock split (the “reverse split”) of our issued and outstanding shares of common stock at 5:01 PM Eastern Time on that date. As a result of the reverse split, every 15 shares of common stock issued and outstanding were converted into one share of common stock. No fractional shares were issued in connection with the reverse split. Stockholders who would otherwise have been entitled to a fractional share of common stock instead received a cash payment equal to such fraction multiplied by the average of the closing sales prices of the common stock (as adjusted to give effect to the reverse split) on The Nasdaq Global Market for the five consecutive trading days immediately preceding the effective date.
The reverse split did not change the par value of the common stock or the authorized number of shares of common stock. The reverse split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in our equity (other than as a result of the payment of cash in lieu of fractional shares). All outstanding options, preferred stock, restricted stock units, warrants and other securities entitling their holders to purchase or otherwise receive shares of Alimera’s common stock have been adjusted as a result of the reverse split, as required by the terms of each security. The number of shares available to be awarded under our 2019 Omnibus Incentive Plan and the number of shares that are purchasable under our 2010 Employee Stock Purchase Plan have also been appropriately adjusted. The common stock began trading on The Nasdaq Global Market on a post-reverse split basis on November 15, 2019. The reverse split permitted us to regain compliance with Nasdaq’s “minimum bid price” requirement for continued listing, which requires that the bid price of the stock of a listed company be at least $1.00 per share.
On January 5, 2018, we entered into the $40.0 million 2018 Solar Loan Agreement. Under that agreement, we borrowed the entire $40.0 million as a term loan that was scheduled to mature on July 1, 2022 (the 2018 Solar Loan). We used the proceeds of the 2018 Solar Loan Agreement to repay the Hercules Loan and pay related expenses. On December 31, 2019, we refinanced the 2018 Solar Loan Agreement by entering into the $45.0 million 2019 Solar Loan Agreement. Under the 2019 Solar Loan Agreement, we borrowed $42.5 million on December 31, 2019, and thereafter we borrowed the remaining $2.5 million on February 21, 2020 (the 2019 Solar Loan). The 2019 Solar Loan matures on July 1, 2024. We used the initial proceeds of the 2019 Solar Loan to pay off the 2018 Solar Loan, along with related prepayment, legal and other fees and expenses of approximately $2.3 million, which included a $1.8 million fee to Solar Capital upon repayment of the 2018 Solar Loan that was previously accrued and a $400,000 prepayment fee to Solar Capital that was capitalized as deferred financing costs. We expect to use the remaining proceeds of the 2019 Solar Loan to provide additional working capital for general corporate purposes. (See Note 11 of our notes to consolidated financial statements below.)