Item 1.01 Entry into a Material Definitive Agreement
The information included under Item 2.03 below is incorporated into this Item 1.01 by reference.
Item 2.02 Results of Operations and Financial Condition
On
The press release attached as Exhibit 99.1 is being furnished herewith and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On
Additionally, on
The foregoing descriptions of the Promissory Note and the Amendment are not complete and are qualified in their entirety by reference to the full text of the Promissory Note and of the Amendment, copies of which are filed herewith as Exhibit 10.1 and 10.2, respectively, and to this Current Report on Form 8-K and are incorporated herein by reference.
Item 8.01 Other Information
As a result of the outbreak of, and local, state and federal governmental
responses to, the COVID-19 coronavirus pandemic, the Company is furnishing this
Current Report on Form 8-K to obtain an extension to file its Quarterly Report
on Form 10-Q for the period ended
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"SEC") on
The Company's operations and business have experienced disruptions due to the
unprecedented conditions surrounding the COVID-19 pandemic that has spread
throughout
As such, the Company will be relying on the Order and will be making use of the
45-day grace period provided by the Order to delay filing of the Quarterly
Report. The Company plans to file the Quarterly Report by the week of
COVID-19 Risk Factor
In light of the rapidly evolving COVID-19 outbreak, the Company is also filing
this Current Report on Form 8-K for the purpose of supplementing the risk
factors disclosed in Item 1A of its Annual Report on Form 10-K for the fiscal
year ended
We have limited capital resources and will likely need additional funding before we are able to achieve profitability. If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.
We have limited capital resources and expect to incur further losses for the foreseeable future. In particular our revenues have significantly declined as a result of the COVID-19 pandemic. A significant percentage of our products are utilized in elective surgeries or procedures, which may be deferred or avoided altogether due to COVID-19 outbreak, materially impacting our financial results. The COVID-19 outbreak has materially impacted our operations and financial results and continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations or financial results.
As of
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other lenders may then declare a default and we may be unable to repay the amounts owed without raising additional capital. If we are unable to repay the amounts owed, we may be forced to declare bankruptcy.
The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made any adjustments to the accompanying consolidated financial statements related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company will require additional capital to sustain its operations and make the investments it needs to execute upon its longer-term business plan. If the Company is unable to generate sufficient revenue from its existing long-term business plan, the Company will need to obtain additional equity or debt financing. If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.
If our essential employees who are unable to telework become ill or otherwise incapacitated, our operations may be adversely impacted.
As a medical device manufacturer, we fall within a "critical essential
infrastructure" sector, specifically the "
Public health threats such as COVID-19 could have a material adverse effect on our operations, the operations of our business partners, and the global economy as a whole.
Public health threats and other highly communicable diseases, outbreaks of which
have already occurred in various parts of the world, could adversely impact our
operations, as well as the operations of our customers, suppliers, distributors
and other business partners. For example, the outbreak in
The COVID-19 outbreak, or other similar outbreaks or epidemics, may have an adverse effect on the overall productivity of our workforce, and we may be required to take extraordinary measures to ensure the safety of our employees and those of our business partners. These measures could require that our employees refrain from traveling to their normal workplace for extended periods of time, which in turn could result in a decrease in our commercial activities, or result in higher costs or other inefficiencies. In addition, our employees may be required
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to take time off for extended periods of time due to illness or as a result of government-imposed changes to daily routines, including school closures. These impacts could result in delays in or the suspension of our manufacturing operations, research and product development activities, regulatory work streams, clinical development programs and other important commercial functions.
In particular, if we were required to suspend our manufacturing operations, we may encounter severe product shortages, which would adversely affect our results of operations and harm our reputation. We are also dependent upon our suppliers for many of our product components, and the outbreak could have a material adverse impact on the operations of one or more of our suppliers, which could prevent them from timely delivering products to us. Further, our business would be harmed if our customers seek to limit or prevent access by our sales and clinical support teams (or the sales and clinical support teams of our distribution partners) to their operating rooms, or to their facilities generally, which we have already experienced in certain locations. Finally, the outbreak has resulted in restrictions on domestic and international travel, which could have a negative impact on our customer engagement efforts, including through the cancellation or postponement of Company-sponsored educational events, as well as third-party conferences, trade shows and similar events.
We expect any further spread of the COVID-19 outbreak, or even the threat or perception that this could occur, could have a material adverse effect on our business, operations and financial results.
Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit Number Description 10.1 Promissory Note, datedMay 1, 2020 , fromBank of America, N.A . 10.2 Amendment to Facility Agreements, datedMay 4, 2020 , by and among the Company,Deerfield ELGX Revolver, LLC andDeerfield Private Design Fund I.V., L.P. 99.1 Press Release Regarding First Quarter Financial Results, datedMay 11, 2020 .
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