Business Context and Reporting Period
This Form 8-K, dated January 5, 2021, reports a material agreement entered into by Second Sight Medical Products, Inc. (Second Sight) with Pixium Vision, a French neuromodulation company. The filing details a proposed "Business Combination" involving a private equity raise, an asset contribution from Pixium, and a spin-off of Second Sight's Orion Visual Cortical Prosthesis System assets into a new subsidiary (SpinCo).
Key Financial Metrics and Transaction Terms
The filing outlines specific financial terms and capital structure changes rather than historical operating results:
- Capital Raise: Second Sight plans to raise at least $25,000,000 in a private placement of equity securities.
- Equity Issuance: Second Sight will issue 34,876,043 new shares to Pixium in exchange for its neuromodulation assets. This issuance represents approximately 60% of the combined company's share capital and voting rights.
- Spin-Off Structure: Second Sight will transfer Orion assets to SpinCo and distribute 60% of SpinCo's shares to existing Second Sight shareholders as a stock dividend.
- Termination Fees: The agreement includes potential termination fees of up to $1,000,000 payable by either party depending on the cause of termination (e.g., breach of representations, failure to convene shareholder meetings, or superior offers).
- Voting Agreements: Key shareholders Gregg Williams and Matthew Pfeffer have agreed to vote approximately 30% of Second Sight's outstanding shares in favor of the transaction.
Note: The filing does not provide historical revenue, profit, cash flow, or debt figures for Second Sight or Pixium.
Material Changes and Corporate Actions
The filing announces a fundamental restructuring of Second Sight's business and ownership:
- Leadership Change: Upon closing, Pixium CEO Lloyd Diamond is expected to serve as Executive Chairman and CEO of the combined entity.
- Board Composition: The new board will consist of seven members: three nominated by Pixium (including Mr. Diamond), two from the current Second Sight board, and two independent directors appointed by Pixium.
- Reincorporation: Second Sight intends to reincorporate as a Delaware corporation.
- Listing Status: Second Sight received notice from Nasdaq on January 4, 2021, regarding non-compliance with listing rules due to the failure to hold an annual shareholder meeting within 12 months of its fiscal year-end. The company has 45 days to submit a compliance plan.
Outlook, Risks, and Contingencies
Timeline and Conditions: The Business Combination is expected to close in the first or early second quarter of 2021, subject to several conditions:
- Completion of the $25 million fund raising.
- Appointment of a valuing auditor by the Commercial Court of Paris to confirm asset values.
- Shareholder approval from both Second Sight and Pixium.
- Clearance from the French Minister for the Economy.
- Nasdaq authorization for the listing of the new shares.
- Transaction Failure: Risks include failure to secure shareholder approval, inability to raise capital, or regulatory rejection.
- Delisting Risk: Immediate risk of delisting from Nasdaq if a compliance plan is not accepted by the exchange.
- Operational Disruption: Potential disruption to current plans and operations during the transaction process.
- Forward-Looking Statements: The filing cautions that actual results may differ materially from projections due to factors including the impact of COVID-19 and legal proceedings.
Investor Verification Checklist
- Verify the status of the $25 million private placement fundraising.
- Confirm the outcome of the Nasdaq compliance plan submission regarding the missed annual meeting.
- Review the definitive proxy statement for detailed risk factors and valuation methodologies once filed.
- Monitor the appointment of the French valuing auditor and the French Minister's clearance.
- Assess the impact of the 60% equity dilution to Pixium on existing shareholder value.