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ALIMERA SCIENCES INC - Quarter Report: 2020 March (Form 10-Q)


 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
o
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: 001-34703
 
Alimera Sciences, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
20-0028718
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
6120 Windward Parkway, Suite 290
Alpharetta, GA
 
30005
(Address of principal executive offices)
 
(Zip Code)
(678) 990-5740
(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, $0.01 par value per share
ALIM
The Nasdaq Stock Market LLC
(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  x    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  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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
o
 
Accelerated filer
x
 
 
 
 
 
Non-accelerated filer
o
 
Smaller reporting company
x
 
 
 
 
 
 
 
 
Emerging growth company
o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
As of May 4, 2020, there were 5,031,745 shares of the registrant’s Common Stock issued and outstanding.

 
 
 


ALIMERA SCIENCES, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
 
 
 



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND PROJECTIONS
Various statements in this report of Alimera Sciences, Inc. (we, our, Alimera or the Company) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties and are based on information currently available to our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “contemplates,” “predict,” “project,” “target,” “likely,” “potential,” “continue,” “ongoing,” “will,” “would,” “should,” “could,” or the negative of these terms and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements. Meaningful factors that could cause actual results to differ include:
•
the adverse effects of COVID-19, and its unpredictable duration, in the regions where we have customers, employees and distributors;
•
the adverse effects of COVID-19 on sales of ILUVIEN® resulting from (a) limitations on in-person access to physicians for treatment imposed by governments or healthcare facilities and (b) the unwillingness of patients, many of whom suffer from diabetic macular edema and, in Europe and the Middle East, non-infectious uveitis, to visit their physicians in person due to their fear of contracting COVID-19;
•
the possibility that we may fail to plan appropriately to meet the demand of our customers for ILUVIEN, which could lead either to (a) ILUVIEN being out of stock or (b) our investment of a greater amount of cash in inventory than we need;
•
the possibility that the economic impact of COVID-19 will lead to changes in reimbursement policies and reduce market access for ILUVIEN in countries where we sell ILUVIEN;
•
the possibility that we may fail to maintain or modify as necessary our internal controls over financial reporting in the new environment in which (a) almost all of our employees are working remotely and (b) we or our distributors are required to modify our standard business processes to take into account the current environment in light of COVID-19;
•
the possibility of reduced efficiency and potential distractions of our employees working remotely, and the resulting loss of productivity;
•
the possibility that we may fail to comply with minimum required revenue and liquidity covenants in our $45.0 million loan and security agreement with Solar Capital Ltd.;
•
uncertainty associated with our need to replace our key third-party manufacturer of certain component parts of the ILUVIEN injector before our manufacturing contract with the manufacturer expires on September 30, 2020;
•
dependence on third-party manufacturers to manufacture ILUVIEN or any future products or product candidates in sufficient quantities and quality, in a timely manner, and at an acceptable price;
•
financial uncertainty associated with the adverse effects of COVID-19 and the duration of those effects, which has had a material adverse effect on our revenue and may in the future have a material adverse effect on our financial condition and cash flows as well as an impact in future periods on certain estimates used in the preparation of our quarterly financial results, including impairment of intangible assets, the income tax provision and recoverability of certain receivables;
•
a slowdown or reduction in our sales in due, in addition to the other factors cited above, to a reduction in end user demand, unanticipated competition, regulatory issues, or other unexpected circumstances;
•
uncertainty regarding our ability to achieve profitability and positive cash flow through the commercialization of ILUVIEN in the U.S., the European Economic Area and other regions of the world where we sell ILUVIEN;

3

•
uncertainty regarding the pricing and reimbursement guidelines for ILUVIEN or any future products or product candidates, including ILUVIEN in new markets;
•
uncertainty associated with our pursuit of reimbursement approval from local health authorities in certain countries for the recently obtained additional indication for ILUVIEN for prevention of relapse in recurrent non-infectious uveitis affecting the posterior segment of the eye (NIU-PS);
•
uncertainty associated with our ability to meet any post-market requirements for NIU-PS in the European Economic Area;
•
our ability to retain and recruit appropriate employees, in particular a productive sales force;
•
the possibility that we may fail to comply with the Nasdaq listing standards in the future;
•
our ability to successfully commercialize ILUVIEN following regulatory approval in additional markets;
•
delay in or failure to obtain regulatory and reimbursement approval of ILUVIEN or any future products or product candidates in additional countries;
•
our possible need to raise additional financing; and
•
current and future laws and regulations.
All written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We caution investors not to rely too heavily on the forward-looking statements we make or that are made on our behalf. We undertake no obligation and specifically decline any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please see, however, any further disclosures we make on related subjects in any annual, quarterly or current reports that we may file with the Securities and Exchange Commission (SEC).
We encourage you to read the discussion and analysis of our financial condition and our condensed consolidated financial statements contained in this report. We also encourage you to read Item 1A of Part II of this Quarterly Report on Form 10-Q, entitled “Risk Factors,” and Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which contains a more detailed discussion of some of the risks and uncertainties associated with our business. In addition to the risks described above, other unknown or unpredictable factors also could affect our results. There can be no assurance that we will in fact achieve the actual results or developments we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore, we can give no assurances that we will achieve the outcomes stated in those forward-looking statements and estimates.
Unless the context otherwise requires, throughout this Quarterly Report on Form 10-Q, the words “Alimera” “we,” “us,” the “registrant” or the “Company” refer to Alimera Sciences, Inc. and its subsidiaries (as applicable).


4

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
ALIMERA SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
March 31,
2020
 
December 31, 2019
 
(In thousands, except share and per share data)
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
12,242

 
$
9,426

Restricted cash
31

 
33

Accounts receivable, net
16,179

 
19,331

Prepaid expenses and other current assets
2,497

 
2,565

Inventory (Note 7)
1,196

 
1,390

Total current assets
32,145

 
32,745

NON-CURRENT ASSETS:
 
 
 
Property and equipment, net
867

 
940

Right of use assets, net
967

 
1,107

Intangible asset, net (Note 8)
14,299

 
14,783

Deferred tax asset
720

 
734

TOTAL ASSETS
$
48,998

 
$
50,309

CURRENT LIABILITIES:
 
 
 
Accounts payable
$
5,833

 
$
7,077

Accrued expenses
3,045

 
4,716

Finance lease obligations
243

 
255

Total current liabilities
9,121

 
12,048

NON-CURRENT LIABILITIES:
 
 
 
Note payable, net of discount (Note 10)
41,395

 
38,658

Finance lease obligations — less current portion
97

 
94

Other non-current liabilities
3,789

 
3,954

COMMITMENTS AND CONTINGENCIES


 


STOCKHOLDERS’ (DEFICIT) EQUITY:
 
 
 
Preferred stock, $.01 par value — 10,000,000 shares authorized at March 31, 2020 and December 31, 2019:


 


Series A Convertible Preferred Stock, 1,300,000 authorized and 600,000 issued and outstanding at March 31, 2020 and December 31, 2019; liquidation preference of $24,000 at March 31, 2020 and December 31, 2019
19,227

 
19,227

Series C Convertible Preferred Stock, 10,150 authorized issued and outstanding at March 31, 2020 and December 31, 2019; liquidation preference of $10,150 at March 31, 2020 and December 31, 2019
11,117

 
11,117

Common stock, $.01 par value — 150,000,000 shares authorized, 5,028,882 shares issued and outstanding at March 31, 2020 and 4,965,949 shares issued and outstanding at December 31, 2019
50

 
50

Additional paid-in capital
350,442

 
350,117

Common stock warrants
3,707

 
3,707

Accumulated deficit
(388,768
)
 
(387,570
)
Accumulated other comprehensive loss
(1,179
)
 
(1,093
)
TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY
(5,404
)
 
(4,445
)
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
$
48,998

 
$
50,309

See Notes to Condensed Consolidated Financial Statements.

5


ALIMERA SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended March 31,
 
2020
 
2019
 
(In thousands, except share and per share data)
NET REVENUE
$
14,535

 
$
12,890

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION
(1,927
)
 
(1,600
)
GROSS PROFIT
12,608

 
11,290

 
 
 
 
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
2,883

 
2,727

GENERAL AND ADMINISTRATIVE EXPENSES
3,181

 
3,393

SALES AND MARKETING EXPENSES
5,672

 
5,913

DEPRECIATION AND AMORTIZATION
654

 
652

OPERATING EXPENSES
12,390

 
12,685

NET INCOME (LOSS) FROM OPERATIONS
218

 
(1,395
)
 
 
 
 
INTEREST EXPENSE AND OTHER
(1,292
)
 
(1,228
)
UNREALIZED FOREIGN CURRENCY LOSS, NET
(81
)
 
(69
)
NET LOSS BEFORE TAXES
(1,155
)
 
(2,692
)
PROVISION FOR TAXES
(43
)
 
(71
)
NET LOSS
(1,198
)
 
(2,763
)
NET LOSS PER COMMON SHARE — Basic and diluted
$
(0.24
)
 
$
(0.59
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — Basic and diluted
4,980,722

 
4,716,054

See Notes to Condensed Consolidated Financial Statements.

6


ALIMERA SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
 
Three Months Ended March 31,
 
2020
 
2019
 
(In thousands)
NET LOSS
$
(1,198
)
 
$
(2,763
)
 
 
 
 
OTHER COMPREHENSIVE LOSS
 
 
 
Foreign currency translation adjustments
(86
)
 
(83
)
TOTAL OTHER COMPREHENSIVE LOSS
(86
)
 
(83
)
COMPREHENSIVE LOSS
$
(1,284
)
 
$
(2,846
)

See Notes to Condensed Consolidated Financial Statements.

7


ALIMERA SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(1,198
)
 
$
(2,763
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
654

 
652

Unrealized foreign currency transaction loss
81

 
69

Amortization of debt discount
239

 
206

Stock-based compensation expense
440

 
770

Changes in assets and liabilities:
 
 
 
Accounts receivable
3,036

 
1,755

Prepaid expenses and other current assets
54

 
(381
)
Inventory
177

 
532

Accounts payable
(1,154
)
 
301

Accrued expenses and other current liabilities
(1,627
)
 
(857
)
Other long-term liabilities
(154
)
 
—

Net cash provided by operating activities
548

 
284

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(25
)
 
(15
)
Net cash used in investing activities
(25
)
 
(15
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Issuance of debt
2,500

 
—

Payment of debt costs
(3
)
 
—

Payment of finance lease obligations
(82
)
 
(110
)
Net cash provided by (used in) financing activities
2,415

 
(110
)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
(124
)
 
(107
)
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
2,814

 
52

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period
9,459

 
13,075

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH — End of period
$
12,273

 
$
13,127

SUPPLEMENTAL DISCLOSURES:
 
 
 
Cash paid for interest
$
1,007

 
$
1,012

Cash paid for income taxes
$
30

 
$
4

Supplemental schedule of non-cash investing and financing activities:
 
 
 
Property and equipment acquired under finance leases
$
74

 
$
64


See Notes to Condensed Consolidated Financial Statements.

8


ALIMERA SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

 
Common Stock
 
Series A
Convertible
Preferred Stock
 
Series C
Convertible
Preferred Stock
 
Additional
Paid-In
Capital
 
Common
Stock
Warrants
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
2020
(In thousands, except share data)
Balance, December 31, 2019
4,965,949

 
$
50

 
600,000

 
$
19,227

 
10,150

 
$
11,117

 
$
350,117

 
$
3,707

 
$
(387,570
)
 
$
(1,093
)
 
$
(4,445
)
Issuance of common stock, net of issuance costs
62,933

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Stock-based compensation
—

 
—

 
—

 
—

 
—

 
—

 
440

 
—

 
—

 
—

 
440

Other
—

 
—

 
—

 
—

 
—

 
—

 
(115
)
 
—

 
—

 
—

 
(115
)
Net loss
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1,198
)
 
—

 
(1,198
)
Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(86
)
 
(86
)
Balance, March 31, 2020
5,028,882

 
$
50

 
600,000

 
$
19,227

 
10,150

 
$
11,117

 
$
350,442

 
$
3,707

 
$
(388,768
)
 
$
(1,179
)
 
$
(5,404
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
4,671,921

 
$
47

 
600,000

 
$
19,227

 
10,150

 
$
11,117

 
$
346,762

 
$
3,707

 
$
(377,127
)
 
$
(1,011
)
 
2,722

Issuance of common stock, net of issuance costs
59,319

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Stock-based compensation
—

 
—

 
—

 
—

 
—

 
—

 
770

 
—

 
—

 
—

 
770

Net loss
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,763
)
 
—

 
(2,763
)
Foreign currency translation adjustments
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(83
)
 
(83
)
Balance, March 31, 2019
4,731,240

 
$
47

 
600,000

 
$
19,227

 
10,150

 
$
11,117

 
$
347,532

 
$
3,707

 
$
(379,890
)
 
$
(1,094
)
 
$
646





9
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.
NATURE OF OPERATIONS
Alimera Sciences, Inc., together with its wholly owned subsidiaries (the Company), is a pharmaceutical company that specializes in the commercialization and development of ophthalmic pharmaceuticals. The Company’s only product is ILUVIEN®, which has received marketing authorization and reimbursement approval in numerous countries for the treatment of diabetic macular edema (DME). In the U.S. and certain other countries outside Europe, ILUVIEN is indicated for the treatment of DME in patients who have been previously treated with a course of corticosteroids and did not have a clinically significant rise in intraocular pressure. In 17 countries in Europe, ILUVIEN is indicated for the treatment of vision impairment associated with chronic DME considered insufficiently responsive to available therapies. ILUVIEN is also indicated in 16 countries in Europe for prevention of relapse in recurrent non-infectious uveitis affecting the posterior segment of the eye (NIU-PS).
The Company markets ILUVIEN directly in the U.S., Germany, the U.K., Portugal, Austria and Ireland. In addition, the Company has entered into various agreements under which distributors are providing or will provide regulatory, reimbursement and sales and marketing support for ILUVIEN in Belgium, France, Italy, Luxembourg, the Netherlands, Spain, Australia, New Zealand, Canada and several countries in the Middle East. As of March 31, 2020, the Company has recognized sales of ILUVIEN to the Company’s international distributors in the Middle East, France, Italy and Spain.
2. BASIS OF PRESENTATION
The Company has prepared the accompanying unaudited interim condensed consolidated financial statements and notes thereto (Interim Financial Statements) in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, these Interim Financial Statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying Interim Financial Statements reflect all adjustments, which include normal recurring adjustments, necessary to present fairly the Company’s interim financial information.
The accompanying Interim Financial Statements and related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019 and related notes included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 2, 2020. The financial results for any interim period are not necessarily indicative of the expected financial results for the full year.
Effects of the COVID-19 Pandemic
The public health crisis caused by the COVID-19 pandemic and the measures being taken by governments, businesses, and the public at large to limit COVID-19’s spread have had, and the Company expects will continue to have, certain negative effects on, and present certain risks to, the Company’s business. The Company is currently unable to fully determine its future impact on the Company’s business. These limitations and other effects of COVID-19 had a material adverse impact on the Company’s revenues late in the first quarter of 2020 and in the month of April 2020. The Company expects these factors to continue to adversely impact the Company’s revenue, but the extent and duration of that impact is uncertain at this time. The Company is monitoring the pandemic and its potential effect on the Company’s financial position, results of operations and cash flows. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the Company’s quarterly financial results, including impairment of intangible assets, the income tax provision and realizability of certain receivables. Should the pandemic continue for an extended period of time, the impact on the Company’s operations could have a material adverse effect on the Company’s revenue, financial condition and cash flows.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s accounting policies followed for quarterly financial reporting are the same as those disclosed in the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2019.
Reverse Stock Split
On November 14, 2019, the Company filed a certificate of amendment to its 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 its 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

10
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

common stock issued and outstanding were converted into one share of common stock. The Company paid cash in lieu of fractional shares, and accordingly, no fractional shares were issued in connection with the reverse split.
The reverse split did not change the par value of the common stock or the authorized number of shares of common stock. 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 the 2019 Omnibus Incentive Plan and the number of shares that are purchasable under the 2010 Employee Stock Purchase Plan have also been appropriately adjusted.
Accounting Standards Issued but Not Yet Effective
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Accounting Standards Codification (ASC 326)): Measurement of Credit Losses on Financial Instruments. This ASU replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. The standard becomes effective for the Company on January 1, 2023. The Company does not anticipate the adoption of this ASU will have a material impact on its financial statements.
4. REVENUE RECOGNITION
Net Revenue
The Company sells its products to major pharmaceutical distributors, pharmacies, hospitals and wholesalers (collectively, its Customers). In addition to distribution agreements with Customers, the Company enters into arrangements with healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s products. All of the Company’s current contracts have a single performance obligation, as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and is, therefore, not distinct.
All of the Company’s revenue is derived from product sales. The Company recognizes revenues from product sales at a point in time when the Customer obtains control, typically upon delivery. The Company accrues for fulfillment costs when the related revenue is recognized. Taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues.
As of March 31, 2020, the Company had received a total of $1,000,000 of milestone payments in connection with the Company’s Canadian distributor that it has not recognized as revenue based on the Company’s analysis in connection with ASU 2014-09, Revenue from Contracts with Customers (ASC 606). These deferred revenues are included as a component of other non-current liabilities on the Company’s balance sheets.
Estimates of Variable Consideration
Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for reserves related to statutory rebates to State Medicaid and other government agencies; commercial rebates and fees to Managed Care Organizations (MCOs), Group Purchasing Organizations (GPOs), distributors, and specialty pharmacies; product returns; sales discounts (including trade discounts); distributor costs; wholesaler chargebacks; and allowances for patient assistance programs relating to the Company’s sales of its products.
These reserves are based on estimates of the amounts earned or to be claimed on the related sales. Management’s estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and Customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant reversal in the amount of the cumulative revenue recognized in a future period. If actual results vary, the Company may adjust these estimates, which could have an effect on earnings in the period of adjustment.
With respect to the Company’s international contracts with third party distributors, certain contracts have elements of variable consideration, and management reviews those contracts on a regular basis and makes estimates of revenue based on historical ordering patterns and known market events and data. The amount of variable consideration included in net sales in each period could vary depending on the terms of these contracts and the probability of reversal in future periods.

11
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consideration Payable to Customers
Distribution service fees are payments issued to distributors for compliance with various contractually-defined inventory management practices or services provided to support patient access to a product. Distribution service fees reserves are based on the terms of each individual contract and are classified within accrued expenses and are recorded as a reduction of revenue.
Product Returns
The Company’s policies provide for product returns in the following circumstances: (a) expiration of shelf life on certain products; (b) product damaged while in the Customer’s possession; and (c) following product recalls. Generally, returns for expired product are accepted three months before and up to one year after the expiration date of the related product, and the related product is destroyed after it is returned. The Company may either refund the sales price paid by the Customer by issuing a credit or exchanging the returned product for replacement inventory. The Company typically does not provide cash refunds. The Company estimates the proportion of recorded revenue that will result in a return by considering relevant factors, including historical returns experience, the estimated level of inventory in the distribution channel, the shelf life of products and product recalls, if any.
The estimation process for product returns involves, in each case, several interrelating assumptions, which vary for each Customer. The Company estimates the amount of its product sales that may be returned by its Customers and records this estimate as a reduction of revenue from product sales in the period the related revenue is recognized, and because this returned product cannot be resold, there is no corresponding asset for product returns. To date, product returns have been minimal.
Other Revenue
The Company enters into agreements in which it licenses certain rights to its products to partner companies that act as distributors. The terms of these arrangements may include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply services the Company provides; and a revenue share on net sales of licensed products. Each of these payments is recognized as other revenues.
As part of the accounting for these arrangements, the Company must develop estimates that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. Performance obligations are promises in a contract to transfer a distinct good or service to the Customer, and the Company recognizes revenue when, or as, performance obligations are satisfied. The Company uses key assumptions to determine the stand-alone selling price; these assumptions may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical, regulatory and commercial success.
Certain of these agreements include consideration in the form of milestone payments. At the inception of each arrangement that includes milestone payments, the Company evaluates the recognition of milestone payments. Typically, milestone payments are associated with events that are not entirely within the control of the Company or the licensee, such as regulatory approvals; are included in the transaction price; and are subject to a constraint until it is probable that there will not be a significant revenue reversal, typically upon achievement of the milestone. At the end of each reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.
Customer Payment Obligations
The Company receives payments from its Customers based on billing schedules established in each contract, which vary across the Company’s locations, but generally range between 30 to 120 days. Occasionally, the timing of receipt of payment for the Company’s international Customers can be extended. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation is that the Customer will pay for the product or services in one year or less of receiving those products or services.
5. LEASES
The Company evaluates all of its contracts to determine whether it is or contains a lease at inception. The Company reviews its contracts for options to extend, terminate or purchase any right of use assets and accounts for these, as applicable, at inception of the contract. Lease renewal options are not recognized as part of the lease liability until the Company determines it is reasonably certain it will exercise any applicable renewal options. The Company has not recorded any liability for renewal

12
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

options in these Interim Financial Statements. The useful lives of leased assets as well as leasehold improvements, if any, are limited by the expected lease term.
Operating Leases
The Company’s operating lease activities primarily consist of leases for office space in the U.S., the United Kingdom and Germany. Most of these leases include options to renew, with renewal terms generally ranging from one to seven years. The exercise of lease renewal options is at the Company’s sole discretion. Certain of the Company’s operating lease agreements include variable lease costs that are based on common area maintenance and property taxes. The Company expenses these payments as incurred. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information as of March 31, 2020 for the Company’s operating leases is as follows:
 
 
(in thousands)
NON-CURRENT ASSETS:
 
 
Right of use assets, net
 
$
967

Total lease assets
 
$
967

 
 
 
CURRENT LIABILITIES:
 
 
Accrued expenses
 
$
473

NON-CURRENT LIABILITIES:
 
 
Other non-current liabilities
 
665

Total lease liabilities
 
$
1,138

The Company’s operating lease cost for the three months ended March 31, 2020 was $127,000 and is included in general and administrative expenses in its condensed consolidated statement of operations.
As of March 31, 2020, a schedule of maturity of lease liabilities under all of the Company’s operating leases is as follows:
Years Ending December 31
 
(In thousands)
2020
 
$
499

2021
 
451

2022
 
152

2023
 
152

2024
 
155

Thereafter
 
—

Total
 
1,409

Less amount representing interest
 
(271
)
Present value of minimum lease payments
 
1,138

Less current portion
 
(473
)
Non-current portion
 
$
665

Cash paid for operating leases was $102,000 during the three months ended March 31, 2020. No right of use assets were obtained in exchange for operating leases for the three months ended March 31, 2020.
As of March 31, 2020, the weighted average remaining lease terms of the Company’s operating leases was 3.3 years. The weighted average discount rate used to determine the lease liabilities was 10.1%.
Finance Leases
The Company’s finance lease activities primarily consist of leases for office equipment and automobiles. Property and equipment leases are capitalized at the lesser of fair market value or the present value of the minimum lease payments at the inception of the leases using the Company’s incremental borrowing rate. The Company’s finance lease agreements do not

13
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information as of March 31, 2020 and December 31, 2019 for the Company’s finance leases is as follows:
 
March 31, 2020
 
December 31, 2019
 
(In thousands)
NON-CURRENT ASSETS:
 
 
 
Property and equipment, net
$
406

 
$
414

Total lease assets
$
406

 
$
414

 
 
 
 
CURRENT LIABILITIES:
 
 
 
Finance lease obligations
$
243

 
$
255

NON-CURRENT LIABILITIES:
 
 
 
Finance lease obligations — less current portion
97

 
94

Total lease liabilities
$
340

 
$
349

Depreciation expense associated with property and equipment under finance leases was approximately $81,000 and $76,000 for the three months ended March 31, 2020 and 2019, respectively. Interest expense associated with finance leases was $7,000 and $9,000 for the three months ended March 31, 2020 and 2019, respectively.
As of March 31, 2020, a schedule of maturity of lease liabilities under finance leases, together with the present value of minimum lease payments, is as follows:
Years Ending December 31
 
(In thousands)
2020
 
238

2021
 
105

2022
 
20

2023
 
1

Total
 
364

Less amount representing interest
 
(24
)
Present value of minimum lease payments
 
340

Less current portion
 
(243
)
Non-current portion
 
$
97

Cash paid for finance leases was $82,000 during the three months ended March 31, 2020. The Company acquired $74,000 of property and equipment in exchange for finance leases during the three months ended March 31, 2020.
As of March 31, 2020, the weighted average remaining lease terms of the Company’s financing leases was 1.1 years. The weighted average discount rate used to determine the financing lease liabilities was 7.5%.
6. GOING CONCERN
The accompanying Interim Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Interim Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
To date, the Company has incurred recurring losses and negative cash flow from operations and has accumulated a deficit of $388,768,000 from inception through March 31, 2020. As of March 31, 2020, the Company had approximately $12,242,000 in cash and cash equivalents. The Company’s ability to avoid depleting its cash depends upon its ability to maintain revenue and contain its expenses. Should the impact of COVID-19 be extended, the Company has plans in place to reduce its expenses further in the future.

14
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Further, the Company must maintain compliance with the debt covenants of its $45,000,000 Loan and Security Agreement and First Amendment dated May 1, 2020 with Solar Capital Ltd. (see Note 10). In management’s opinion, the uncertainty regarding future revenues raises substantial doubt about the Company’s ability to continue as a going concern without access to additional debt and/or equity financing over the course of the next twelve months.
To meet the Company’s future working capital needs, the Company may need to raise additional debt or equity financing. While the Company has historically been able to raise additional capital through issuance of equity and/or debt financing, and while the Company has implemented a plan to control its expenses to satisfy its obligations due within one year from the date of issuance of these Interim Financial Statements, the Company cannot guarantee that it will be able to maintain debt compliance, raise additional equity, contain expenses, or increase revenue. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year after these Interim Financial Statements are issued.
7. INVENTORY

Inventory consisted of the following:
 
March 31,
2020
 
December 31, 2019
 
(In thousands)
Component parts (1)
$
380

 
$
389

Work-in-process (2)
220

 
399

Finished goods
596

 
602

Total Inventory
$
1,196

 
$
1,390


(1) Component parts inventory consists of manufactured components of the ILUVIEN applicator.

(2) Work-in-process consists of completed units of ILUVIEN that are undergoing, but have not completed, quality assurance testing or stability testing as required by U.S. or EEA regulatory authorities.
8. INTANGIBLE ASSET
As a result of the approval of ILUVIEN by the U.S. Food and Drug Administration (FDA) in 2014, the Company was required to pay EyePoint a milestone payment of $25,000,000 (see Note 9).
The gross carrying amount of the intangible asset is $25,000,000, which is being amortized over approximately 13 years from the acquisition date. The amortization expense related to the intangible asset was approximately $484,000 and $478,000 for the three months ended March 31, 2020 and 2019, respectively. The net book value of the intangible asset was $14,299,000 and $14,783,000 as of March 31, 2020 and December 31, 2019, respectively.
The estimated future amortization expense as of March 31, 2020 for the remaining periods in the next five years and thereafter is as follows:
Years Ending December 31
(In thousands)
2020
$
1,462

2021
1,940

2022
1,940

2023
1,940

2024
1,946

Thereafter
5,071

Total
$
14,299

Property and equipment and definite lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When indicators of impairment are present, the Company evaluates the carrying amount of such assets in relation to the operating performance and future estimated undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment

15
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The assessment of the recoverability of assets will be impacted if estimated future operating cash flows are not achieved.
In April of 2020, as a result of the potential impact of COVID-19 on the Company’s statements of operations, the Company performed an asset impairment analysis by comparing future undiscounted cash flows of the identified asset group to the carrying value of that asset group. The Company concluded no impairment was necessary for the three months ended March 31, 2020.
9. LICENSE AGREEMENTS
EyePoint Agreement
In February 2005, the Company entered into an agreement with EyePoint (formerly known as pSivida US, Inc.) for the use of fluocinolone acetonide (FAc) in EyePoint’s proprietary insert technology. This agreement was subsequently amended a number of times (as amended, the EyePoint Agreement). The EyePoint Agreement provides the Company with a worldwide exclusive license to utilize certain underlying technology used in the development and commercialization of ILUVIEN.
In July 2017, the Company amended and restated its license agreement with EyePoint, which was made effective July 1, 2017 (the New Collaboration Agreement). Under the New Collaboration Agreement, the Company has the right to the technology underlying ILUVIEN for the treatment of uveitis, including NIU-PS, in Europe, the Middle East and Africa. The New Collaboration Agreement converted the Company’s previous profit share obligation to a royalty payable on global net revenues of ILUVIEN. The Company began paying a 2% royalty on net revenues and other related consideration to EyePoint on July 1, 2017. The royalty amount increased to 6% effective December 12, 2018. The Company is required to pay an additional 2% royalty on global net revenues and other related consideration in excess of $75,000,000 in any year. During the three months ended March 31, 2020 and 2019, the Company recognized approximately $581,000 and $516,000 of royalty expense, respectively, which is included in cost of goods sold, excluding depreciation and amortization. As of March 31, 2020, approximately $581,000 of this royalty expense was included in the Company’s accounts payable.
Following the signing of the New Collaboration Agreement, the Company retained a right to recover up to $15,000,000 of commercialization costs that were incurred prior to profitability of ILUVIEN and to offset a portion of future payments owed to EyePoint with these accumulated commercialization costs, referred to as the Future Offset. Due to the uncertainty of future net profits, the Company has fully reserved the Future Offset in the accompanying Interim Financial Statements. In March 2019, pursuant to the New Collaboration Agreement, the Company forgave $5,000,000 of the Future Offset in connection with the approval of ILUVIEN for NIU-PS in the U.K. As of March 31, 2020, the balance of the Future Offset was approximately $8,567,000.
10. LOAN AGREEMENTS
Hercules Loan Agreement
In April 2014, Alimera Sciences Limited (Alimera UK), a subsidiary of the Company, entered into a loan and security agreement (Hercules Loan Agreement) with Hercules Capital, Inc. (Hercules) providing for a term loan of up to $35,000,000 (Hercules Loan). The Company amended the Hercules Loan Agreement several times. On January 5, 2018, the Company paid off the Hercules Loan on behalf of Alimera UK, using the proceeds of the 2018 Solar Loan Agreement described below.
2014 Warrant
In connection with Alimera UK entering into the Hercules Loan Agreement, the Company issued a warrant that granted Hercules the right to purchase up to 19,002 shares of the Company’s common stock at an exercise price of $92.10 per share (the 2014 Warrant). The Company amended the 2014 Warrant a number of times to increase the number of shares issuable upon exercise to 83,933 and decrease the exercise price to $20.85 per share. The right to exercise this warrant expires on November 2, 2020.
2016 Warrant
In connection with Alimera UK entering into an amendment to the Hercules Loan Agreement on October 20, 2016, the Company agreed to issue a new warrant to Hercules (the 2016 Warrant) that granted Hercules the right to purchase up to 30,582 shares of the Company’s common stock at an exercise price of $16.35 per share. The right to exercise this warrant expires on October 20, 2021.

16
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Solar Capital Loan Agreement
On January 5, 2018, the Company entered into a $40,000,000 Loan and Security Agreement (the 2018 Solar Loan Agreement) with Solar Capital Ltd. (Solar Capital), as Collateral Agent (Agent), and the parties signing the 2018 Solar Loan Agreement from time to time as Lenders, including Solar Capital in its capacity as a Lender (collectively, the Lenders). Under the 2018 Solar Loan Agreement, the Company borrowed the entire $40,000,000 as a term loan (the 2018 Solar Loan) that was scheduled to mature on July 1, 2022. The Company paid Solar Capital a $400,000 fee at the closing of the 2018 Solar Loan Agreement. The Company repaid the 2018 Solar Loan on December 31, 2019 with a new loan agreement with Solar Capital as described below.
The Company used the proceeds of the 2018 Solar Loan to extinguish (prepay) the Hercules Loan Agreement and pay related expenses. The Company used the remaining loan proceeds to provide additional working capital for general corporate purposes.
Interest on the 2018 Solar Loan was payable at one-month LIBOR plus 7.65% per annum. The 2018 Solar Loan Agreement provided for interest only payments through the date of repayment. As of the final interest payment on the 2018 Solar Loan, the interest rate was approximately 9.3%.
The Company agreed, for itself and its subsidiaries, to customary affirmative and negative covenants and events of default in connection with the 2018 Solar Loan Agreement.
2018 Exit Fee Agreement
Notwithstanding the repayment of the 2018 Solar Loan, the Company remains obligated to pay additional fees under the Exit Fee Agreement (2018 Exit Fee Agreement) dated as of January 5, 2018 by and among the Company, Solar Capital as Agent, and the Lenders. The 2018 Exit Fee Agreement survived the termination of the 2018 Solar Loan Agreement upon the repayment of the 2018 Solar Loan and has a term of 10 years. The Company is obligated to pay up to, but no more than, $2,000,000 in fees under the 2018 Exit Fee Agreement.
2019 Solar Capital Loan Agreement
On December 31, 2019, the Company entered into a $45,000,000 Loan and Security Agreement (the 2019 Solar Loan Agreement) with Solar Capital, as Agent, and the parties signing the 2019 Solar Loan Agreement from time to time as Lenders, including Solar Capital in its capacity as a Lender (collectively, the Lenders). Under the 2019 Solar Loan Agreement, the Company borrowed $42,500,000 on December 31, 2019 and subsequent to December 31, 2019, the Company borrowed the remaining $2,500,000 on February 21, 2020 (the two borrowings totaling $45,000,000 are referred to as the 2019 Solar Loan). The 2019 Solar Loan matures on July 1, 2024.
As noted above, the Company 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 $2,278,000, 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. The Company expects to use the remaining loan proceeds to provide additional working capital for general corporate purposes.
Interest on the 2019 Solar Loan is payable at the greater of (i) one-month LIBOR or (ii) 1.78%, plus 7.65% per annum. As of December 31, 2019, the 2019 Solar Loan’s interest rate is 9.43%. The 2019 Solar Loan provides for interest only payments until January 1, 2023. If the Company meets certain revenue thresholds and no event of default shall have occurred and is continuing, the Company can extend the interest only period an additional six months, ending on June 30, 2023, followed by one year of monthly payments of principal and interest.
The Company paid the Lenders a non-refundable facility fee in the amount of $25,000 on February 21, 2020. In addition, the Company is obligated to pay a $2,250,000 fee upon repayment of the 2019 Solar Loan.
First Amendment to 2019 Solar Capital Loan Agreement
On May 1, 2020, the Company entered into a First Amendment (the Amendment) to its 2019 Solar Loan Agreement with Solar Capital. The Amendment, among other things:
(a)eliminates the previous requirement that the following covenant (the Revenue Covenant) be measured at June 30, 2020 and September 30, 2020: the Company shall not permit revenues (under U.S. GAAP) from the sale of ILUVIEN in the ordinary

17
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

course of business to third party customers, on a trailing six-month basis, to be less than a specified minimum revenue amount for each such date;
(b)requires that the Revenue Covenant be measured at November 30, 2020 and specifies a new minimum revenue amount in that regard;
(c)requires that the Revenue Covenant be measured at December 31, 2020 and specifies a new minimum revenue amount in that regard; and
(d)requires that the Revenue Covenant be measured at March 31, 2021 and at the last day of each quarter thereafter, with the minimum revenue amount equal to a percentage of the Company’s projected revenues in accordance with an annual plan submitted by the Company to Agent by January 15th of such year, such plan to be approved by the Company’s board of directors and Agent in its sole discretion.
The Amendment also adds the following new minimum liquidity requirement that is in effect from May 1, 2020 until the Company notifies Agent that it has met the Revenue Covenant at November 30, 2020: the Company shall not permit the aggregate amount of unrestricted cash and cash equivalents to be less than the sum of (i) $8,500,000 plus (ii) the amount of the Company’s accounts payable that have not been paid within 90 days from the invoice date of the relevant account payable. We paid no fees to Solar Capital; however, we agreed to reimburse Agent for its legal fees.
Modification of Debt
In accordance with the guidance in ASC 470-50, Debt, the Company entered into and accounted for the 2019 Solar Loan Agreement as a modification and capitalized approximately $427,000 of costs as additional deferred financing costs and expensed approximately $76,000 of costs incurred with third parties within the consolidated statements of operations for the year ended December 31, 2019.
Fair Value of Debt
The weighted average interest rates of the Company’s notes payable approximate the rate at which the Company could obtain alternative financing. Therefore, the carrying amount of the notes approximated their fair value at March 31, 2020 and December 31, 2019.
11. EARNINGS (LOSS) PER SHARE (EPS)
The Company follows ASC 260, Earnings Per Share (ASC 260), which requires the reporting of both basic and diluted earnings per share. Because the Company’s preferred stockholders participate in dividends equally with common stockholders (if the Company were to declare and pay dividends), the Company uses the two-class method to calculate EPS. However, the Company’s preferred stockholders are not contractually obligated to share in losses.
Basic EPS is computed by dividing net income (loss) available to stockholders by the weighted average number of shares outstanding for the period. Diluted EPS is calculated in accordance with ASC 260 by adjusting weighted average shares outstanding for the dilutive effect of common stock options, restricted stock units and warrants. In periods where a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be anti-dilutive.
Common stock equivalent securities that would potentially dilute basic EPS in the future, but were not included in the computation of diluted EPS because they were either classified as participating or would have been anti-dilutive, were as follows:
 
Three Months Ended
March 31,
 
2020
 
2019
Series A convertible preferred stock
601,504

 
601,504

Series C convertible preferred stock
676,667

 
676,667

Common stock warrants
119,712

 
119,712

Stock options
1,036,484

 
894,097

Restricted stock units
30,086

 
32,029

Total
2,464,453

 
2,324,009


18
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


12. STOCK INCENTIVE PLANS
Stock Option Plans
During the three months ended March 31, 2020 and 2019, the Company recorded compensation expense related to stock options of approximately $292,000 and $545,000, respectively. As of March 31, 2020, the total unrecognized compensation cost related to non-vested stock options granted was $2,200,000 and is expected to be recognized over a weighted average period of 2.63 years. The following table presents a summary of stock option activity for the three months ended March 31, 2020 and 2019:
 
Three Months Ended March 31,
 
2020
 
2019
 
Options
 
Weighted
Average
Exercise
Price ($)
 
Options
 
Weighted
Average
Exercise
Price ($)
Options outstanding at beginning of period
871,472

 
35.46

 
830,100

 
39.41

Grants
168,850

 
6.75

 
78,324

 
13.10

Forfeitures
(3,838
)
 
20.99

 
(14,318
)
 
29.92

Exercises
—

 
—

 
—

 
—

Options outstanding at period end
1,036,484

 
30.84

 
894,106

 
37.25

Options exercisable at period end
707,763

 
40.00

 
636,028

 
45.22

Weighted average per share fair value of options granted during the period
$4.18
 
 
 
$8.21
 
 
The following table provides additional information related to outstanding stock options, exercisable stock options and stock options that were expected to vest as of March 31, 2020:
 
Shares
 
Weighted
Average
Exercise
Price ($)
 
Weighted
Average
Remaining Contractual
Term
 
Aggregate
Intrinsic
Value ($)
 
 
 
 
 
 
 
(In thousands)
Outstanding
1,036,484

 
30.84

 
4.97 years
 
9

Exercisable
707,763

 
40.00

 
4.97 years
 
9

Outstanding, vested and expected to vest
989,943

 
31.83

 
6.12 years
 
99

The following table provides additional information related to outstanding stock options, exercisable stock options and stock options that were expected to vest as of December 31, 2019:
 
Shares
 
Weighted
Average
Exercise
Price ($)
 
Weighted
Average
Remaining Contractual
Term
 
Aggregate
Intrinsic
Value ($)
 
 
 
 
 
 
 
(In thousands)
Outstanding
871,472

 
35.46

 
5.83 years
 
4,043

Exercisable
674,952

 
41.25

 
5.04 years
 
13

Outstanding, vested and expected to vest
849,285

 
36.00

 
5.75 years
 
3,324

As of March 31, 2020, 265,625 shares remain available for grant under the 2019 Omnibus Incentive Plan.

19
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Employee Stock Purchase Plan
During the three months ended March 31, 2020 and 2019, the Company recorded compensation expense related to its employee stock purchase plan of approximately $21,000 and $6,000, respectively.
Restricted Stock and Restricted Stock Units
A summary of restricted stock and restricted stock units (RSU) transactions under the plans are as follows: 
 
Three Months Ended March 31,
 
2020
 
2019
 
Restricted Stock & RSUs
 
Weighted Average Grant Date Fair Value ($)
 
Restricted Stock & RSUs

 
Weighted Average Grant Date Fair Value ($)
Restricted stock & RSUs outstanding at beginning of period
36,763

 
13.15

 
60,041

 
17.30

Grants
30,086

 
3.12

 
32,029

 
12.90

Vested units
(36,763
)
 
13.15

 
(59,341
)
 
17.30

Forfeitures
—

 
—

 
(700
)
 
17.40

Restricted stock & RSUs outstanding at period end
30,086

 
3.12

 
32,029

 
12.90

As of December 31, 2019, there was approximately $123,000 of total unrecognized compensation cost related to outstanding RSUs that was recognized during the first quarter of 2020. Employee stock-based compensation expense related to restricted stock and RSUs recognized in accordance with ASC 718, Compensation - Stock Compensation (ASC 718) was $127,000 and $219,000 for the three months ended March 31, 2020 and 2019, respectively.
13. INCOME TAXES
In accordance with ASC 740, Income Taxes, the Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities at the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company records a valuation allowance against its net deferred tax asset to reduce the net carrying value to an amount that is more likely than not to be realized. At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year. This estimate reflects, among other items, the Company’s best estimate of operating results and foreign currency exchange rates.

The Company also applies the provisions for income taxes related to, among other things, accounting for uncertain tax positions and disclosure requirements. The Company’s recorded liability for uncertain tax positions as of March 31, 2020 has increased by approximately $8,000 as compared to December 31, 2019. There has been no change to the Company’s policy that recognizes potential interest and penalties related to uncertain tax positions. The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. In addition to other provisions, the CARES Act contains modifications to Net Operating Loss (NOL) carryback rules. For the three months ended March 31, 2020, there was no impact to the tax provision related to the CARES Act. We are currently evaluating the provisions of the CARES Act and how other elections may impact our financial position, results of operations, and disclosures, if needed.
At December 31, 2019, the Company had U.S. federal NOL carry-forwards of approximately $125,756,000 and state NOL carry-forwards of approximately $172,993,000 available to reduce future taxable income. The Company’s U.S. federal NOL carry-forwards remain fully reserved as of March 31, 2020. Except for the NOLs generated after 2017, the U.S. federal NOLs not fully utilized will expire at various dates between 2029 and 2037; most state NOL carry-forwards will expire at various dates between 2020 and 2039. Under the Tax Cuts and Jobs Act of 2017, U.S. federal NOLs and some state NOLs generated after 2017 will carryforward indefinitely.
As of December 31, 2019, the Company had cumulative book losses in foreign subsidiaries of $134,379,000. The Company has not recorded a deferred tax asset for the excess of tax over book basis in the stock of its foreign subsidiaries. The

20
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company anticipates that its foreign subsidiaries will be profitable and have earnings in the future. Once the foreign subsidiaries do have earnings, the Company intends to indefinitely reinvest in its foreign subsidiaries all undistributed earnings of and original investments in such subsidiaries. As a result, the Company has not recorded a deferred tax liability related to excess of book over tax basis in the stock of its foreign subsidiaries in accordance with ASC 740-30-25.

14. SEGMENT INFORMATION
During the three months ended March 31, 2020 and 2019, two customers within the U.S. segment that are large pharmaceutical distributors accounted for 49% and 52%, respectively, of the Company’s consolidated revenues. These same two customers within the U.S. segment accounted for approximately 65% and 68% of the Company’s consolidated accounts receivable at March 31, 2020 and at December 31, 2019, respectively.
The Company’s chief operating decision maker is the Chief Executive Officer (CEO). While the CEO is apprised of a variety of financial metrics and information, the business is principally managed and organized based upon geographic and regulatory environment. Each segment is separately managed and is evaluated primarily upon segment loss from operations. Non-cash items including stock-based compensation expense and depreciation and amortization are categorized as Other within the table below. The Company does not report balance sheet information by segment because the Company’s chief operating decision maker does not review that information.
The following table presents a summary of the Company’s reporting segments for the three months ended March 31, 2020 and 2019:
 
Three Months Ended
March 31, 2020
 
Three Months Ended
March 31, 2019
 
U.S.
 
International
 
Other
 
Consolidated
 
U.S.
 
International
 
Other
 
Consolidated
 
(In thousands)
NET REVENUE
$
7,068

 
$
7,467

 
$
—

 
$
14,535

 
$
6,766

 
$
6,124

 
$
—

 
$
12,890

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION
(759
)
 
(1,168
)
 
—

 
(1,927
)
 
(685
)
 
(915
)
 
—

 
(1,600
)
GROSS PROFIT
6,309

 
6,299

 
—

 
12,608

 
6,081

 
5,209

 
—

 
11,290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
1,922

 
893

 
68

 
2,883

 
1,427

 
1,170

 
130

 
2,727

GENERAL AND ADMINISTRATIVE EXPENSES
1,973

 
936

 
272

 
3,181

 
1,933

 
988

 
472

 
3,393

SALES AND MARKETING EXPENSES
4,280

 
1,292

 
100

 
5,672

 
4,041

 
1,705

 
167

 
5,913

DEPRECIATION AND AMORTIZATION
—

 
—

 
654

 
654

 
—

 
—

 
652

 
652

OPERATING EXPENSES
8,175

 
3,121

 
1,094

 
12,390

 
7,401

 
3,863

 
1,421

 
12,685

SEGMENT (LOSS) INCOME FROM OPERATIONS

(1,866
)
 
3,178

 
(1,094
)
 
218

 
(1,320
)
 
1,346

 
(1,421
)
 
(1,395
)
OTHER INCOME AND EXPENSES, NET
—

 
—

 
(1,373
)
 
(1,373
)
 
—

 
—

 
(1,297
)
 
(1,297
)
NET LOSS BEFORE TAXES
 
 
 
 
 
 
$
(1,155
)
 
 
 
 
 
 
 
$
(2,692
)
15. SUBSEQUENT EVENTS
$1.8 Million Loan under the Paycheck Protection Program
As we announced on April 23, 2020, the Company received on April 22, 2020 approximately $1.8 million in support in the form of a loan (the “PPP Loan”) from the U.S. federal government under the Paycheck Protection Program established as part of the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. The PPP Loan is unsecured and is evidenced by a note (the “Note”) in favor of HSBC Bank USA, National Association (“HSBC”) as the lender and is governed by a Loan Agreement with HSBC.
The interest rate on the Note is 1.0% per annum. Payments of principal and interest are deferred for 180 days from the date of the Note. The Paycheck Protection Program provides a mechanism for forgiveness of up to the full amount borrowed as long

21
ALIMERA SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

as the Company uses the loan proceeds during the eight-week period after the loan origination for eligible purposes as described in the CARES Act and related guidance.
In connection with the PPP Loan, the Company entered into a Consent to Loan and Security Agreement (the “Consent”) under the 2019 Solar Loan Agreement. In the Consent, Solar Capital consented as Collateral Agent and a Lender, and the other Lenders consented as Lenders, to the indebtedness incurred under the PPP Loan, subject to certain conditions, including the Company’s covenant to comply with specified provisions of the CARES Act, the Company’s confirmation of the accuracy of its representations and warranties in the 2019 Solar Loan Agreement and related documents and a release in favor of the Collateral Agent and the Lenders.
German Withholding Tax
In April 2020, recent interpretations of a German law relating to withholding taxes on intellectual property rights have emerged. The Company is currently evaluating this law and any related impact to its financial position or results of operations.
First Amendment to 2019 Solar Capital Loan Agreement
On May 1, 2020, the Company entered into a First Amendment to its 2019 Solar Loan Agreement. (See Note 10 above for expanded disclosures.)




22

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those provided in the sections entitled “Risk Factors” in our most recent annual report on Form 10-K and in Part II, Item 1A of this report below. For further information regarding forward-looking statements, please refer to the “Special Note Regarding Forward-Looking Statements and Projections” immediately after the index to this report above.
Alimera Sciences, Inc., and its subsidiaries (we, our or us), is a pharmaceutical company that specializes in the commercialization and development of prescription ophthalmic pharmaceuticals. We presently focus on diseases affecting the back of the eye, or retina, because these diseases are not well treated with current therapies and affect millions of people globally. Our only product is ILUVIEN®, which has received marketing authorization and reimbursement approval in numerous countries for the treatment of diabetic macular edema (DME). In addition, ILUVIEN has received marketing authorization and reimbursement approval in Germany and the U.K. for the prevention of relapse in recurrent non-infectious uveitis affecting the posterior segment (NIU-PS).
We market ILUVIEN directly in the U.S., Germany, the U.K., Portugal, Austria and Ireland. In addition, we have entered into various agreements under which distributors are providing or will provide regulatory, reimbursement and sales and marketing support for ILUVIEN in Belgium, France, Italy, Luxembourg, the Netherlands, Spain, Australia, New Zealand, Canada and several countries in the Middle East. As of March 31, 2020, we have recognized sales of ILUVIEN to our international distributors in the Middle East, France, Italy and Spain.
Effects of the COVID-19 Pandemic
The unprecedented and adverse effects of COVID-19, and its unpredictable duration, in the regions where we have customers, employees and distributors have had a material adverse effect on our sales of ILUVIEN and thus on our net revenues and may in the future have a material adverse effect on our liquidity and financial condition. These adverse effects of COVID-19 on us have resulted from the following, among other factors. Governments and private parties imposed limitations on in-person access to physicians, which adversely affects us in at least two ways. First, these limitations can affect patient access to treatment. Because ILUVIEN is administered only by an injection into the eye, telemedicine is not a viable substitute when administration of treatment is required. Second, limitations on in-person access to physicians also makes it difficult or impossible for our sales representatives (including those employed by our distributors) to meet with retina specialists and their staff to educate them about the benefits of ILUVIEN and to provide support for insurance pre-certifications.
Our business is also negatively affected by patients’ concerns in the current environment. Prior to the pandemic, most of our ILUVIEN sales were driven by the use of ILUVIEN to treat diabetic macular edema, or DME. Given that governmental authorities have cited diabetes as a factor that places a person at higher risk for severe illness from COVID-19, many of those patients were unwilling to visit their physicians in person (even if otherwise permitted) due to their fear of contracting COVID-19.
In addition to the effects of limitations on in-person access to physicians, limitations on travel within and between the countries in which we market and sell ILUVIEN, as well as various types of “shelter in place” orders, has curtailed our in-person marketing activities.
These limitations and other effects of COVID-19 had a material adverse impact on our revenues late in the first quarter and in the month of April. We expect these factors to continue to adversely impact our revenue, but the extent and duration of that impact is uncertain at this time. Depending on the duration of these limitations and other effects of COVID-19, our liquidity and financial condition may be adversely affected in the future as well.
In response to these developments, we have implemented measures to focus on the safety of our customers and employees, while at the same time seeking to mitigate the impact on our financial position and operations. These measures include the following:
•We are managing our cost structure in the second quarter, minimizing all non-payroll spending where possible to mitigate our anticipated loss of revenue in this quarter and conserve our cash.
•We are significantly decreasing our external spending on commercial and medical activities related to the promotion of ILUVIEN.

23

•Because we believe that our employees are critical to both (a) serving our customers and patients as the pandemic-related restrictions are lifted in the coming weeks and months, and (b) realizing the long-term value of ILUVIEN, we have determined to maintain our staffing levels at this time and do not currently have any plans to reduce them.
License Agreement with EyePoint Pharmaceuticals US, Inc.
In July 2017, we amended and restated our license agreement with EyePoint Pharmaceuticals US, Inc. (EyePoint), formerly known as pSivida US, Inc., which was made effective July 1, 2017 (the New Collaboration Agreement). Under the New Collaboration Agreement, we have rights to the technology underlying ILUVIEN for the treatment of uveitis, including NIU-PS, in Europe, the Middle East and Africa. The New Collaboration Agreement converted our previous profit share obligation to a royalty payable on global net revenues of ILUVIEN. We began paying a 2% royalty on net revenues and other related consideration to EyePoint effective July 1, 2017. The royalty amount increased to 6% as of December 12, 2018. We will pay an additional 2% royalty on global net revenues and other related consideration in excess of $75.0 million in any year. During the three months ended March 31, 2020 and 2019, we recognized approximately $581,000 and $516,000 of royalty expense, respectively. As of March 31, 2020, approximately $581,000 of this royalty expense was included in our accounts payable.
Following the signing of the New Collaboration Agreement, we retained a right to offset $15.0 million of future royalty payments. In March 2019, pursuant to the New Collaboration Agreement, we forgave $5,000,000 of the Future Offset in connection with the approval of ILUVIEN for NIU-PS in the U.K. As of March 31, 2020, the balance of the Future Offset was approximately $8,567,000. (See Note 9 of our notes to the accompanying Interim Financial Statements.)
Sources of Revenues
Our revenues for the three months ended March 31, 2020 and 2019 were generated from product sales primarily in the U.S., Germany and the U.K. In the U.S., two large pharmaceutical distributors accounted for 49% and 52% of our consolidated revenues for the three months ended March 31, 2020 and 2019, respectively. These U.S.-based distributors purchase ILUVIEN from us, maintain inventories of ILUVIEN and sell downstream to physician offices, pharmacies and hospitals. Internationally, in countries where we sell direct, our customers are hospitals, clinics and pharmacies. We sometimes refer to physician offices, pharmacies, hospitals and clinics as end users. In international countries where we sell to distributors, these distributors maintain inventory levels of ILUVIEN and sell to their customers.
Reverse Stock Split Effective November 14, 2019
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.
First Amendment to 2019 Solar Capital Loan Agreement
On May 1, 2020, we entered into a First Amendment (the Amendment) to our $45,000,000 Loan and Security Agreement (the 2019 Solar Loan Agreement) with Solar Capital, as Agent, and the parties signing the Loan Agreement from time to time as Lenders, including Solar Capital in its capacity as a Lender (collectively, the Lenders). For a summary of the terms of the Amendment, see “Liquidity and Capital Resources - Indebtedness - Loans from Solar Capital.”

24

Results of Operations
 
Three Months Ended March 31,
 
2020
 
2019
 
(In thousands, except share and per share data)
NET REVENUE
$
14,535

 
$
12,890

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION
(1,927
)
 
(1,600
)
GROSS PROFIT
12,608

 
11,290

 
 
 
 
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
2,883

 
2,727

GENERAL AND ADMINISTRATIVE EXPENSES
3,181

 
3,393

SALES AND MARKETING EXPENSES
5,672

 
5,913

DEPRECIATION AND AMORTIZATION
654

 
652

OPERATING EXPENSES
12,390

 
12,685

NET INCOME (LOSS) FROM OPERATIONS
218

 
(1,395
)
 
 
 
 
INTEREST EXPENSE AND OTHER
(1,292
)
 
(1,228
)
UNREALIZED FOREIGN CURRENCY LOSS, NET
(81
)
 
(69
)
NET LOSS BEFORE TAXES
(1,155
)
 
(2,692
)
PROVISION FOR TAXES
(43
)
 
(71
)
NET LOSS
(1,198
)
 
(2,763
)
NET LOSS PER COMMON SHARE — Basic and diluted
$
(0.24
)
 
$
(0.59
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — Basic and diluted
4,980,722

 
4,716,054

Net Revenue
We began generating revenue from ILUVIEN in 2013. Revenue from our U.S. distributors and revenue from our partners in the markets in our international segment where we do not sell direct fluctuates depending on the timing of the shipment of ILUVIEN to the distributors and the distributors’ sales of ILUVIEN to their customers.
Net revenue increased by approximately $1.6 million, or 12%, to approximately $14.5 million for the three months ended March 31, 2020, compared to approximately $12.9 million for the three months ended March 31, 2019. The increase was primarily attributable to revenue increases in our international segment, including increases of approximately $1.0 million in the international markets where we sell direct and $340,000 in the international markets where we sell to distributors. The increase was also attributable to a revenue increase of approximately $300,000 in the U.S. Importantly, we achieved this growth despite the temporary shortage of inventory in our U.S. business, as well as the end of quarter negative impact of the COVID-19 pandemic.
The increase in our net revenue in the first quarter of 2020 over the same period in 2019 is not indicative of our future operating results or of future financial condition.
Cost of Goods Sold, Excluding Depreciation and Amortization, and Gross Profit
Gross profit is affected by costs of goods sold, which includes costs of manufactured goods sold and royalty payments to EyePoint under the New Collaboration Agreement. Additionally, cost of goods sold from our international distributors fluctuates depending on the timing of the shipment of ILUVIEN to our international distributors.
Cost of goods sold, excluding depreciation and amortization, increased by approximately $300,000, or 19%, to approximately $1.9 million for the three months ended March 31, 2020, compared to approximately $1.6 million for the three months ended March 31, 2019. The increase was primarily attributable to increased sales.

25

Gross profit increased by approximately $1.3 million, or 12%, to approximately $12.6 million for the three months ended March 31, 2020, compared to approximately $11.3 million for the three months ended March 31, 2019. Gross margin was 87% and 88% for the three months ended March 31, 2020 and 2019, respectively.
Research, Development and Medical Affairs Expenses
Currently, our research, development and medical affairs expenses are primarily focused on activities that support ILUVIEN and include salaries and related expenses for research and development and medical affairs personnel, including medical sales liaisons, as well as costs related to the provision of medical affairs support, including scientific advisory boards, symposia development for physician education, and costs related to compliance with FDA, European Medicines Agency or other regulatory requirements. We expense both internal and external development costs as they are incurred.
Research, development and medical affairs expenses increased by approximately $200,000, or 7%, to approximately $2.9 million for the three months ended March 31, 2020, compared to approximately $2.7 million for the three months ended March 31, 2019. The increase was primarily attributable to clinical research.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation for employees in executive and administrative functions, including finance, accounting, legal, information technology and human resources. Other significant costs include facilities costs and professional fees for accounting and legal services. We expect to continue to incur significant costs to comply with the corporate governance, internal control and similar requirements applicable to public companies.
General and administrative expenses decreased by approximately $200,000, or 6%, to approximately $3.2 million for the three months ended March 31, 2020, compared to approximately $3.4 million for the three months ended March 31, 2019. The decrease was primarily attributable to lower stock-based compensation expenses.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of third-party service fees and compensation for employees for the commercial promotion, the assessment of the commercial opportunity of, the development of market awareness for, the pursuit of market reimbursement for and the execution of launch plans for ILUVIEN in countries where we have not previously sold ILUVIEN or are marketing it for a different indication. Other costs include professional fees associated with developing plans for ILUVIEN or any future products or product candidates and maintaining public relations.
Sales and marketing expenses decreased by approximately $200,000, or 3%, to approximately $5.7 million for the three months ended March 31, 2020, compared to approximately $5.9 million for the three months ended March 31, 2019. The decrease was primarily attributable to an approximately $460,000 decrease in marketing costs, the largest component of which was associated with the first quarter 2019 launch of our direct-to-patient advertising pilot program in the U.S., partially offset by an increase of approximately $190,000 in personnel costs.
Operating Expenses
As a result of the increases and decreases in various expenses described above, total operating expenses decreased by approximately $300,000, or 2%, to approximately $12.4 million for the three months ended March 31, 2020, compared to approximately $12.7 million for the three months ended March 31, 2019. The decrease was primarily attributable to an approximately $200,000 decrease in general and administrative expenses and an approximately $200,000 decrease in sales and marketing expenses, partially offset by a $200,000 increase in research, development and medical affairs expenses as described above.
Interest Expense and Other
Interest expense and Other increased by approximately $100,000, or 8%, to approximately $1.3 million for the three months ended March 31, 2020, compared to approximately $1.2 million for the three months ended March 31, 2019. For these periods, interest expense consisted primarily of interest and amortization of deferred financing costs and debt discounts associated with our outstanding debt under the 2018 and 2019 Solar Loan Agreements with Solar Capital. As discussed in Note 10 of our notes to Interim Financial Statements, we entered into the 2018 Solar Loan Agreement on January 5, 2018, which we refinanced with the 2019 Solar Loan Agreement on December 31, 2019.
Basic and Diluted Net Income (Loss) Applicable to Common Stockholders per Share of Common Stock
We follow FASB Accounting Standards Codification, Earnings Per Share (ASC 260), which requires the reporting of both basic and diluted earnings per share. Because our preferred stockholders participate in dividends equally with common

26

stockholders (if we were to declare and pay dividends), we use the two-class method to calculate EPS. However, our preferred stockholders are not contractually obligated to share in losses.
Basic EPS is computed by dividing net income (loss) available to stockholders by the weighted average number of shares outstanding for the period. Diluted EPS is calculated in accordance with ASC 260 by adjusting weighted average shares outstanding for the dilutive effect of common stock options, restricted stock units and warrants. In periods where a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be anti-dilutive.
Common stock equivalent securities that would potentially dilute basic EPS in the future, but were not included in the computation of diluted EPS because they were either classified as participating and do not share in losses or would have been anti-dilutive, were approximately 2,464,453 for the three months ended March 31, 2020 and 2,324,009 for the three months ended March 31, 2019.
Results of Operations - Segment Review
The following selected unaudited financial and operating data are derived from our Interim Financial Statements. The results and discussions that follow reflect how executive management monitors the performance of our reporting segments.
We have three segments: U.S., International and Other. Each segment is separately managed and is evaluated primarily upon segment loss from operations. Non-cash items including stock-based compensation expense, depreciation and amortization are categorized as Other. We allocate certain operating expenses between our reporting segments based on activity-based costing methods. These activity-based costing methods require us to make estimates that affect the amount of each expense category that is attributed to each segment. Changes in these estimates will directly affect the amount of expense allocated to each segment and therefore the operating profit of each reporting segment. There were no significant changes in our expense allocation methodology during 2020 or 2019.
U.S. Segment
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In thousands)
NET REVENUE
$
7,068

 
$
6,766

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION
(759
)
 
(685
)
GROSS PROFIT
6,309

 
6,081

 
 
 
 
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
1,922

 
1,427

GENERAL AND ADMINISTRATIVE EXPENSES
1,973

 
1,933

SALES AND MARKETING EXPENSES
4,280

 
4,041

OPERATING EXPENSES
8,175

 
7,401

SEGMENT LOSS FROM OPERATIONS
$
(1,866
)
 
$
(1,320
)
U.S. Segment - three months ended March 31, 2020 compared to the three months ended March 31, 2019
Net revenue. Net revenue increased by approximately $300,000, or 4%, to approximately $7.1 million for the three months ended March 31, 2020, compared to approximately $6.8 million for the three months ended March 31, 2019. Net revenue during the three months ended March 31, 2020 was negatively affected due to the impact from the COVID-19 virus pandemic late in the first quarter, as well as a temporary shortage in stock in the first quarter. There was no material increase in the stock levels held by our U.S. distributors during the quarter.
Cost of goods sold, excluding depreciation and amortization. Cost of goods sold, excluding depreciation and amortization, increased by approximately $70,000, or 10%, to approximately $760,000 for the three months ended March 31, 2020, compared to approximately $690,000 for the three months ended March 31, 2019.
Research, development and medical affairs expenses. Research, development and medical affairs expenses increased by approximately $500,000, or 36%, to approximately $1.9 million for the three months ended March 31, 2020, compared to approximately $1.4 million for the three months ended March 31, 2019. The increase was primarily attributable to clinical research.

27

General and administrative expenses. General and administrative expenses increased by approximately $100,000, or 5%, to approximately $2.0 million for the three months ended March 31, 2020, compared to approximately $1.9 million for the three months ended March 31, 2019.
Sales and marketing expenses. Sales and marketing expenses increased by approximately $300,000, or 8%, to approximately $4.3 million for the three months ended March 31, 2020, compared to approximately $4.0 million for the three months ended March 31, 2019. The increase was primarily attributable to an increase of approximately $250,000 in personnel costs, as we maintained full staffing levels during the three months ended March 31, 2020, compared to the three months ended March 31, 2019.
International Segment
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In thousands)
NET REVENUE
$
7,467

 
$
6,124

COST OF GOODS SOLD, EXCLUDING DEPRECIATION AND AMORTIZATION
(1,168
)
 
(915
)
GROSS PROFIT
6,299

 
5,209

 
 
 
 
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
893

 
1,170

GENERAL AND ADMINISTRATIVE EXPENSES
936

 
988

SALES AND MARKETING EXPENSES
1,292

 
1,705

OPERATING EXPENSES
3,121

 
3,863

SEGMENT LOSS FROM OPERATIONS
$
3,178

 
$
1,346

International Segment - three months ended March 31, 2020 compared to the three months ended March 31, 2019
Net revenue. Net revenue increased by approximately $1.4 million, or 23%, to approximately $7.5 million for the three months ended March 31, 2020, compared to approximately $6.1 million for the three months ended March 31, 2019. The increase was primarily attributable to increases of approximately $1.0 million in the international markets where we sell direct and $340,000 in the international markets where we sell to distributors. A significant amount of the growth was due to our increasing success in the marketing and sale of ILUVIEN for a new indication for the prevention of relapse in recurrent NIU-PS of the eye in the United Kingdom and Germany. We began selling ILUVIEN for this indication in the second half of 2019.
Cost of goods sold, excluding depreciation and amortization. Cost of goods sold, excluding depreciation and amortization, increased by approximately $280,000, or 30%, to approximately $1.2 million for the three months ended March 31, 2020, compared to approximately $920,000 for the three months ended March 31, 2019. The increase was primarily attributable to our increased international sales.
Research, development and medical affairs expenses. Research, development and medical affairs expenses decreased by approximately $310,000, or 26%, to approximately $890,000 for the three months ended March 31, 2020, compared to approximately $1.2 million for the three months ended March 31, 2019. The decrease was primarily related to a decrease in costs associated with our 5-year open label registry study as it nears completion.
General and administrative expenses. General and administrative expenses decreased by approximately $50,000, or 5%, to approximately $940,000 for the three months ended March 31, 2020, compared to approximately $990,000 for the three months ended March 31, 2019.
Sales and marketing expenses. Sales and marketing expenses decreased by approximately $400,000, or 24%, to approximately $1.3 million for the three months ended March 31, 2020, compared to approximately $1.7 million for the three months ended March 31, 2019. The decrease was primarily attributable to decreases of approximately $190,000 in marketing costs and $110,000 in market access costs.

28

Other Segment
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In thousands)
RESEARCH, DEVELOPMENT AND MEDICAL AFFAIRS EXPENSES
$
68

 
$
130

GENERAL AND ADMINISTRATIVE EXPENSES
272

 
472

SALES AND MARKETING EXPENSES
100

 
167

DEPRECIATION AND AMORTIZATION
654

 
652

OPERATING EXPENSES
1,094

 
1,421

SEGMENT LOSS FROM OPERATIONS
$
(1,094
)
 
$
(1,421
)
Our chief operating decision maker manages and evaluates our U.S. and International segments based on net loss from operations adjusted for certain non-cash items, such as stock-based compensation expense and depreciation and amortization. Therefore, these non-cash expenses included in research, development and medical affairs expenses, general and administrative expenses, and sales and marketing expenses are classified within the Other segment within our Interim Financial Statements.
Within the respective financial statement line items included in the Other segment, stock-based compensation expense, collectively, decreased by approximately $330,000, or 43%, to $440,000 for the three months ended March 31, 2020, compared to approximately $770,000 for the three months ended March 31, 2019.

Depreciation and amortization was approximately $650,000 for the three months ended March 31, 2020 and 2019.
Liquidity and Capital Resources
Overview
Since inception, we have incurred recurring losses, negative cash flow from operations and have accumulated a deficit in stockholders’ equity of $388.8 million through March 31, 2020.
As explained above in “Effects of the COVID-19 Pandemic,” the unprecedented and adverse effects of COVID-19 pandemic, and its unpredictable duration, in the regions where we have customers, employees and distributors have had a material adverse effect on our sales of ILUVIEN and thus on our net revenues. Depending on the duration of the pandemic and the success of our strategy to conserve our cash and otherwise mitigate the impact of the pandemic, it may have a material adverse effect on our liquidity and financial condition in the future as well. We expect that the pandemic may adversely affect our ability to operate as we did before. As a result, it is difficult to project the extent of that impact now and as this situation continues to evolve.
Since January 2018, we have funded our operations through the 2018 and 2019 Solar Loan Agreements described below and a small offering of common stock. In April 2020, we obtained a loan under the Paycheck Protection Program established as part of the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. Our loans do not include a revolving loan feature and have been fully advanced by the respective lenders. We currently have no additional borrowing capacity, and the 2019 Solar Loan Agreement generally prohibits any additional debt unless we obtain the prior consent of Solar Capital. Currently, we cannot access the equity markets without severe dilution to our current stockholders.
Indebtedness
Loans from Solar Capital. On January 5, 2018, we entered into a $40.0 million Loan and Security Agreement (the 2018 Solar Loan Agreement) with Solar Capital Ltd. (Solar Capital) and other lenders. Under the 2018 Solar Loan 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 to refinance the then outstanding loan under our previous loan agreement with Hercules Capital, Inc. and to pay closing expenses associated with the 2018 Solar Loan Agreement.
On December 31, 2019, we refinanced the 2018 Solar Loan Agreement by entering into a $45.0 million Loan and Security Agreement (the 2019 Solar Loan Agreement) with Solar Capital as Collateral Agent (Agent), and the parties signing the 2018 Solar Loan Agreement from time to time as Lenders, including Solar Capital in its capacity as a Lender (collectively, the Lenders). Under the 2019 Solar Loan Agreement, we borrowed $42.5 million on December 31, 2019 and $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

29

2019 Solar Loan to pay off the 2018 Solar Loan, along with related prepayment, legal and other fees and expenses totaling approximately $2.3 million, which included $2.2 million in fees to Solar Capital. We expect to use the remaining proceeds of the 2019 Solar Loan to provide additional working capital for general corporate purposes, and those proceeds are part of the cash and cash equivalents described below.
On May 1, 2020, we entered into a First Amendment (the Amendment) to the 2019 Solar Loan Agreement. The Amendment, among other things:
(a)eliminates the previous requirement that the following covenant (the Revenue Covenant) be measured at June 30, 2020 and September 30, 2020: we shall not permit revenues (under U.S. GAAP) from the sale of ILUVIEN in the ordinary course of business to third party customers, on a trailing six-month basis, to be less than a specified minimum revenue amount for each such date;
(b)requires that the Revenue Covenant be measured at November 30, 2020 and specifies a new minimum revenue amount in that regard;
(c)requires that the Revenue Covenant be measured at December 31, 2020 and specifies a new minimum revenue amount in that regard; and
(d)requires that the Revenue Covenant be measured at March 31, 2021 and at the last day of each quarter thereafter, with the minimum revenue amount equal to a percentage of our projected revenues in accordance with an annual plan we submit to Agent by January 15th of such year, such plan to be approved by our board of directors and Agent in its sole discretion.
The Amendment also adds the following new minimum liquidity requirement that is in effect from May 1, 2020 until we notify Agent that we have met the Revenue Covenant at November 30, 2020: we shall not permit the aggregate amount of unrestricted cash and cash equivalents to be less than the sum of (i) $8,500,000 plus (ii) the amount of our accounts payable that have not been paid within 90 days from the invoice date of the relevant account payable.
Paycheck Protection Program Loan. On April 22, 2020, we received approximately $1.8 million in support (the PPP Loan) from the U.S. federal government under the Paycheck Protection Program established as part of the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. The PPP Loan is unsecured and is evidenced by a note (the HSBC Note) in favor of HSBC Bank USA, National Association (HSBC) as the lender and is governed by a Loan Agreement with HSBC.
The interest rate on the HSBC Note is 1.0% per annum. Payments of principal and interest are deferred for 180 days from the date of the HSBC Note. The Paycheck Protection Program provides a mechanism for forgiveness of up to the full amount borrowed as long as we use the loan proceeds during the eight-week period after the loan origination for eligible purposes as described in the CARES Act and related guidance. We have placed the PPP Loan proceeds in the bank account we use for payroll and will use the proceeds for the sole purpose of meeting payroll obligations and other eligible uses under the Paycheck Protection Program when due. Solar Capital and the other Lenders consented to the indebtedness incurred under the PPP Loan.
Current Cash Position
As of March 31, 2020, we had approximately $12.2 million in cash and cash equivalents, an increase of $2.8 million from the $9.4 million in cash and cash equivalents that we reported on December 31, 2019. Contributing to the increase, in February 2020, we borrowed the remaining $2.5 million under the $45.0 million loan agreement from Solar Capital. In April 2020, we received approximately $1.8 million in support from the U.S. federal government under the Paycheck Protection Program established as part of the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. Especially in light of the adverse effects of COVID-19, we may need to raise additional capital to fund our business strategy, including the continued commercialization of ILUVIEN and the retention of our current employees and staff. In any event, we have adjusted and we expect to continue to adjust our commercial spending so that we can continue to operate with our existing cash resources. The actual amount of funds that we will need will depend on many factors, some of which are beyond our control. We may need funds sooner than currently anticipated. See “Effects of the COVID-19 Pandemic” above for an explanation of our strategy to conserve our cash and otherwise mitigate the impact of the pandemic on our financial position and operations.
We cannot ensure that our mitigation strategies will be effective or will continue to be effective if the duration of the pandemic is longer than we expect. We cannot be sure that additional financing will be available when needed or that, if available, the additional financing could be obtained on terms that are not significantly detrimental to us or our stockholders. If we were to raise additional funds by issuing equity securities, substantial dilution to existing stockholders would likely result, and the terms of any new equity securities may have a preference over our common stock. If we were to attempt to raise additional funds through strategic collaboration agreements, we may not be successful in obtaining those agreements, or in receiving milestone or royalty payments under them. If we were to attempt to raise additional funds through debt financing, (a) the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that

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may restrict our ability to achieve our business strategy; and (b) we would be required to obtain the permission or participation of Solar Capital, which we might not be able to obtain. Our recurring losses and any potential needs to raise capital create substantial doubt about our ability to continue as a going concern for the next 12 months following the issuance of the financial statements for the filing of this Form 10-Q.
Sources and Uses of Cash for the three months ended March 31, 2020 compared to the three months ended March 31, 2019
For the three months ended March 31, 2020, cash provided by our operations was approximately $550,000. The cash provided by our operations was primarily due to our net loss of $1.2 million, offset by $650,000 of non-cash depreciation and amortization, $440,000 of non-cash stock-based compensation expense and $240,000 of non-cash interest expense associated with the amortization of our debt discount. Further reducing cash from operations was a $2.8 million net decrease in accounts payable, accrued expenses and other current liabilities and a $150,000 decrease in long-term liabilities. These were offset by a $3.0 million decrease in accounts receivable, a $180,000 decrease in inventory and a $50,000 decrease in prepaid expenses and other current assets.
For the three months ended March 31, 2019, cash provided by our operations was approximately $280,000. The cash provided by our operations was primarily due to our net increase in our working capital. Accounts receivable decreased by $1.8 million and inventory decreased by $530,000. These net cash increases were offset by a net increase of $560,000 in accounts payable, accrued expenses and other current liabilities and an increase of $380,000 in prepaid expenses and other current assets. Further impacting our cash provided by operations was our net loss of $2.8 million, which was offset by $770,000 of non-cash stock-based compensation expense, $650,000 for non-cash depreciation and amortization and $210,000 for non-cash interest expense associated with the amortization of our debt discount.
For the three months ended March 31, 2020, net cash used in our investing activities was approximately $25,000, which was due to the purchase of property and equipment.
For the three months ended March 31, 2019, net cash used in our investing activities was approximately $15,000.
For the three months ended March 31, 2020, net cash used in our financing activities was approximately $2.4 million which is primarily due to borrowing the remaining $2.5 million under the 2019 Solar Loan Agreement.
For the three months ended March 31, 2019, net cash provided by our financing activities was approximately $110,000, which is due to payments of finance lease obligations.
Contractual Obligations and Commitments
There have been no other material changes to our contractual obligations and commitments outside the ordinary course of business from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established to facilitate off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance and the performance of our subsidiaries.
Impact of Recent Accounting Pronouncements
See Note 3 of our notes to Interim Financial Statements for a description of recent accounting pronouncements, including the expected dates of adoption and expected effects on results of operations and financial condition, if known.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.

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ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2020.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We are not a party to any material pending legal proceedings, and management is not aware of any contemplated proceedings by any governmental authority against us.

ITEM 1A. Risk Factors
In our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 2, 2020, we identify under Item 1A of Part I important factors that could affect our business, financial condition, results of operations and future operations and could cause our actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Quarterly Report on Form 10-Q. Except as described below, there have been no material changes in our risk factors after the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. However, the risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties that we currently deem to be immaterial or not currently known to us, as well as other risks reported from time to time in our reports to the SEC, also could cause our actual results to differ materially from our anticipated results or other expectations.
You should read the following information in conjunction with the Interim Financial Statements and related notes in Part I, Item 1, Financial Information and the discussion and analysis of our financial condition in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business, and such impacts may have a material adverse effect on our results of operations, financial condition and cash flows.
The public health crisis caused by the COVID-19 pandemic and the measures being taken by governments, businesses, and the public at large to limit COVID-19’s spread have had, and we expect will continue to have, certain negative effects on, and present certain risks to, our business including the following:
•
We have experienced a decrease in sales of ILUVIEN in the U.S. and in our international markets that have been affected by the COVID-19 pandemic resulting from, among other things:

▪
Governments and private parties have imposed limitations on in-person access to physicians, which can:
◦
affect patient access to treatment, given that ILUVIEN is administered only by an injection into the eye, which means telemedicine is not a viable substitute; and
◦
make it difficult or impossible for our sales representatives (including those employed by our distributors) to meet with retina specialists and their staff to educate them about the benefits of ILUVIEN and to provide support for insurance pre-certifications.

▪
Our business is also negatively affected by patient behavior in the current environment. Most of our ILUVIEN sales are driven by the use of ILUVIEN to treat diabetic macular edema, or DME. Given that governmental authorities have cited diabetes as a factor that places a person at higher risk for severe illness from COVID-19, many of those patients may be unwilling to visit their physicians in person (even if otherwise permitted) due to their fear of contracting COVID-19.
These limitations and other effects of COVID-19 had a material adverse impact on our revenues late in the first quarter of 2020 and in April 2020. We expect these factors to continue to adversely impact our revenue, but the extent and duration of that impact is uncertain at this time. If the COVID-19 pandemic intensifies, its duration is longer than we expect or if a second pandemic follows after initial resolution, its negative impact on our sales and thus our liquidity and financial condition could be more prolonged and may be severe. Financial uncertainty associated with the adverse effects of COVID-19, and the duration of those effects, could have an impact in future periods on certain estimates used in the preparation of our quarterly financial results, including impairment of intangible assets, the income tax provision and realizability of certain receivables.

•
Limitations on travel within and between the countries in which we market and sell ILUVIEN, as well as various types of “shelter in place” orders, have curtailed our in-person marketing activities, which have in turn contributed to lower sales of ILUVIEN.


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•
As a result of the COVID-19 pandemic, including related governmental guidance or directives, we have required almost all office-based employees, including almost all employees based at our headquarters in Georgia, to work remotely. We may experience reductions in productivity and disruptions to our business routines while our remote work policy remains in place.

•
We may fail to maintain or modify as necessary our internal controls over financial reporting in the new environment in which (a) almost all of our employees are working remotely and (b) we or our distributors have been and may be required to modify our standard business processes to take into account the current environment in light of COVID-19. If we fail to maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

•
We may fail to plan appropriately to meet the demand of our customers for ILUVIEN, which could lead either to (a) ILUVIEN being out of stock or (b) our investment of a greater amount of cash in inventory than we need. Either event could have a material adverse effect on our results of operations, financial condition and cash flows.

•
As the result of lower sales of ILUVIEN, we may fail to comply with financial covenants in our $45.0 million 2019 Solar Loan Agreement, as amended, that are based on (a) minimum trailing six months’ revenues as of November 30, 2020 and the end of each calendar quarter thereafter and (b) a minimum liquidity requirement that is in effect from May 1, 2020 until we notify Solar Capital that we have met the minimum revenue amount at November 30, 2020. If an event of default under the 2019 Solar Loan Agreement occurs, Solar Capital may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to raise additional financing, renegotiate the 2019 Solar Loan Agreement on terms less favorable to us or immediately cease operations. Any declaration by Solar Capital of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline significantly after we publicly disclose that event in an SEC filing. Further, if we are liquidated, Solar Capital’s right to repayment would be senior to the rights of our stockholders.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
On March 18, 2020, the compensation committee of our board of directors granted shares of restricted stock to our executive officers as follows:
Name
 
Total Number
of Shares of Restricted Stock Granted
 
Vesting Dates and Number of Shares of Restricted Stock
Vested on Those Dates
Richard S. Eiswirth, Jr.
 
10,884
 
5,442 on March 11, 2021
 
 
 
 
5,442 on March 12, 2021
Philip Ashman, Ph.D.
 
5,389
 
5,389 on March 4, 2021
Samer Kaba
 
4,683
 
4,683 on March 5, 2021
David Holland
 
5,172
 
5,172 on March 8, 2021
J. Philip Jones
 
3,958
 
3,958 on March 9, 2021
On the date of grant, the closing price of our common stock on the Nasdaq Global Market was $3.12 per share. The form of restricted stock agreement is attached as Exhibit 10.5.C to this Form 10-Q, along with a form of restricted stock unit agreement that is attached as Exhibit 10.5.D to this Form 10-Q.


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ITEM 6. Exhibits
Exhibit
Number
 
Description
 
 
 
3.1
 


 
 
 
3.2
 

 
 
 
10.3.I†*

 

 
 
 
10.5.C†*

 

 
 
 
10.5.D†*

 
 
 
 
31.1*
 
 
 
 
31.2*
 
 
 
 
32.1*
 
 
 
 
101.INS+
 
XBRL Instance Document.
 
 
 
101.SCH+
 
XBRL Taxonomy Extension Schema Document.
 
 
 
101.CAL+
 
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
101.DEF+
 
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
101.LAB+
 
XBRL Taxonomy Extension Label Link Document.
 
 
 
101.PRE+
 
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
*
Filed herewith.
 
 
 
†

Management contracts and compensatory plans and arrangements.

 
 
 
+
Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.

The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Alimera Sciences, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
ALIMERA SCIENCES, INC.
 
 
 
May 6, 2020
By:
/s/ Richard S. Eiswirth, Jr.
 
 
Richard S. Eiswirth, Jr.
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
 
 
 
May 6, 2020
By:
/s/ J. Philip Jones
 
 
J. Philip Jones
 
 
Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)


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