UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 3 TO
FORM
S-1
REGISTRATION
STATEMENT
Under
The
Securities Act of 1933
TEARLAB
CORPORATION
(Exact
name of Registrant as specified in its charter)
Delaware
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3841
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59-343-4771
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(State
or other jurisdiction of
incorporation or organization)
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|
(Primary
Standard Industrial
Classification Code Number)
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|
(I.R.S.
Employer
Identification Number)
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9980
Huennekens St., Suite 100
San
Diego, CA 92121
(858)
455-6006
(Address,
including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Wes
Brazell
Chief
Financial Officer
TearLab
Corp.
9980
Huennekens St., Suite 100
San
Diego, CA 92121
(858)
455-6006
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
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|
Copies
to:
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Martin
J. Waters
Daniel
Horwood
Wilson
Sonsini Goodrich & Rosati
Professional
Corporation
12235
El Camino Real, Suite 200
San
Diego, CA 92130
(858)
350-2300
|
|
Wes
Brazell
Chief
Financial Officer
TearLab
Corp.
9980
Huennekens St., Suite 100
San
Diego, CA 92121
(858)
455-6006
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|
Joseph
A. Smith
Ellenoff
Grossman & Schole LLP
1345
Avenue of the Americas
New
York, NY 10105-0302
(212)
370-1300
|
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended, check the following box. [X]
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
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. (Check one):
Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ] (do not check if a smaller reporting company)
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Smaller
reporting company [X]
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Emerging
growth company [ ]
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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 in Section 7(a)(2)(B) of the Securities Act. [ ]
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of Securities to be Registered
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Proposed
Maximum
Aggregate Offering
Price (1)(2)
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Amount
of
Registration
Fee (4)
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Class
A Units consisting of:
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$
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5,000,000
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(i)
Common Stock $0.001 par value
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(ii)
Warrants to purchase Common Stock (3)
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Class
B Units consisting of:
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$
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5,000,000
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(i)
Series A Convertible Preferred Stock
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(ii)
Warrants to purchase Common Stock (3)
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Common
Stock issuable upon conversion of Series A Convertible Preferred Stock
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Common
Stock issuable upon exercise of warrants
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$
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10,000,000
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Placement
agent’s Warrants to purchase Common Stock (3)
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$
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437,500
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Total
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$
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20,437,500
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$
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2,545
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(1)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933,
as amended.
(2)
Pursuant to Rule 416 under the Securities Act, this registration statement shall also cover any additional shares of the registrant’s
securities that become issuable by reason of any stock splits, stock dividends, or similar transactions.
(3)
No additional registration fee is payable pursuant to Rule 457(g) under the Securities Act.
(4)
The Registrant previously paid the registration fee in connection with prior filings of this Registration Statement
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Securities and Exchange Commission acting pursuant to such section 8(a) may determine.
The
information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
Subject
to Completion, dated November 22 , 2017
PRELIMINARY
PROSPECTUS
TearLab
Corporation
Up
to 6,996,921
Class
A Units consisting of Common Stock and Warrants and
Class
B Units consisting of Series A Convertible Preferred Stock and
Warrants
(
shares of Common Stock underlying the Series A Convertible
Preferred
Stock and Warrants)
We
are offering up to 6,996,921 Class A Units, each Unit consisting of one share of our common stock, a Series A warrant to
purchase one share of our common stock at an exercise price per whole share of common stock equal to the public offering price
of the Class A Units (“Series A warrant”), and a Series B warrant to purchase one share of our common stock at an
exercise price per whole share of common stock equal to the public offering price of the Class A Units (“Series B warrant”
and, collectively with Series A warrant, the “Warrants ”) (based on an assumed offering price per Class A Unit of
$0.71, which was the last reported sales price of our common stock on November 21, 2017). Each Series A warrant will be exercisable
immediately and will expire five years from the date of issuance and each Series B warrant will be exercisable immediately and
will expire six months from the date of issuance. The Warrants will contain anti-dilution price protection upon subsequent
equity sales. Upon a dilutive issuance below the then exercise price, the exercise price shall be reduced and only reduced to
equal the lower price. The shares of common stock, Series A warrants and Series B warrants comprising a Class A Unit are immediately
separable and will be issued separately in this offering.
We
are also offering to those purchasers, if any, whose purchase of Class A Units in this offering would otherwise result in the
purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, or to those
purchasers that elect to purchase such securities in their sole discretion, the opportunity, in lieu of purchasing Class A Units,
to purchase Class B Units. Each Class B Unit will consist of one share of our Series A Convertible Preferred Stock, or the Series
A Preferred Stock, with a stated value of $1,000 per share and convertible into shares of our common stock at the public offering
price of the Class A Units, together with the equivalent number of Series A warrants and number of Series B warrants as would
have been issued to such purchaser if they had purchased Class A Units based on the public offering price. The Series A Preferred
Stock do not generally have any voting rights but are convertible into shares of common stock. The shares of Series A Preferred
Stock, Series A warrants and Series B warrants comprising a Class B Unit are immediately separable and will be issued separately
in this offering.
We
are also offering the shares of common stock that are issuable from time to time upon conversion of the Series A Preferred Stock
and upon exercise of the Series A warrants and Series B warrants being offered by this prospectus. This offering is being made
on a best efforts basis and there is no minimum amount of proceeds that is a condition of closing.
Our
common stock is listed on the OTCQB under the symbol “TEAR” and on the Toronto Stock Exchange under the symbol “TLB.”
On November 21 , 2017, the last reported sale price of our common stock on the OTCQB was $0.71 per share. On November
21 , 2017, the last reported sale price of our common stock on the Toronto Stock Exchange was $0.94 (Canadian dollars)
per share. The Series A warrants, the Series B warrants and Series A Preferred Stock will not be listed on any national securities
exchange or other trading market.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 9.
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Per
Class A Unit
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Per
Class B Unit
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Total
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Public
offering price
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$
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$
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$
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Placement
agent’s fees
(1)
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$
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$
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$
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Proceeds
to TearLab Corp., before expenses
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$
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$
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$
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(1)
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We
have agreed to reimburse the placement agent for certain of its expenses and to issue common stock purchase warrants to the
placement agent. See “Plan of Distribution” on page 33 of this prospectus for a description of the compensation
payable to the placement agent.
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We
have engaged H.C. Wainwright & Co., LLC (“Wainwright” or the “placement agent”) to act as our exclusive
placement agent in connection with this offering. Wainwright is not purchasing or selling the securities offered by us, and is
not required to sell any specific number or dollar amount of securities, but will use its reasonable best efforts to arrange for
the sale of the securities offered. We have agreed to pay Wainwright a placement fee equal to 7% of the aggregate gross proceeds
to us from the sale of the securities in the offering, plus additional compensation as set forth under “Plan of Distribution”.
Wainwright may engage one or more sub-agents or selected dealers in connection with this offering. We estimate total expenses
of this offering, excluding the placement agent fees, will be approximately $325,000. Because there is no minimum offering amount
required as a condition to closing in this offering, the actual public offering amount, placement agent fees, and proceeds to
us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above.
This offering will terminate on, 2017, unless the offering is fully
subscribed before that date or we decide to terminate the offering prior to that date. In either event, the offering may be closed
without further notice to you.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Delivery
of the securities will take place on or about ,
2017.
H.C.
Wainwright & Co.
,
2017
TABLE
OF CONTENTS
We
have not authorized anyone to provide you with information other than that contained in this prospectus or in any free writing
prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no
assurance as to the reliability of, any other information that others may give to you. We are offering to sell, and seeking offers
to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale
of our common stock. Our business, financial condition, results of operations, and prospects may have changed since that date.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession
or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions
outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the
distribution of this prospectus applicable to that jurisdiction.
Certain
monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly,
figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures
expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation
of the percentages that precede them. In this prospectus, “TearLab,” “we,” “us” and the “company”
refer to TearLab Corporation and, where appropriate, its subsidiaries, unless expressly indicated or the context otherwise requires.
PROSPECTUS
SUMMARY
This
summary highlights information contained in other parts of this prospectus or incorporated by reference into this prospectus from
our Annual Report on Form 10-K for the year ended December 31, 2016, and our other filings with the Securities and Exchange Commission
listed in the section of the prospectus entitled “Incorporation of Certain Information by Reference.” Because it is
only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock
and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere
or incorporated by reference in this prospectus. You should read the entire prospectus, the registration statement of which this
prospectus is a part, and the information incorporated by reference herein in their entirety before investing in our common stock,
including the “Risk Factors” section beginning on page 9 and the information in our Annual Report on Form 10-K for
the year ended December 31, 2016, which includes our financial statements and the related notes. Unless the context requires otherwise,
references in this prospectus to “TearLab,” “we,” “us” and the “company” refer
to TearLab Corporation and, where appropriate, its subsidiaries, unless expressly indicated or the context otherwise requires.
TearLab
Corporation
Overview
We
are an
in-vitro
diagnostic company based in San Diego, California. We have commercialized a proprietary tear testing platform,
the TearLab® Osmolarity System that enables eye care practitioners to test for highly sensitive and specific biomarkers using
nanoliters of tear film at the point-of-care. Our first product measures tear film osmolarity for the diagnosis of Dry Eye Disease
(“DED”). Our results of operations are included in our financial statements, which are included under Item 8 in our
Annual Report on Form 10-K for fiscal year ended December 31, 2016.
TearLab
Research, Inc.
TearLab
Research, Inc. (“TearLab Research”), our wholly-owned subsidiary, develops technologies to enable eye care practitioners
to test a wide range of biomarkers (chemistries, metabolites, genes and proteins) at the point-of-care. Commercializing that tear
testing platform is now the focus of our business.
Our
product, the TearLab® Osmolarity System, enables the rapid measurement of tear osmolarity in the doctor’s office. Osmolarity
is a quantitative and highly specific biomarker that has been shown to assist in the diagnosis and disease management of DED.
Market Scope estimates that there are 19 million people suffering from dry eye in the US and nearly 337 million worldwide. Postmenopausal
women make up the largest portion of the dry eye population across all regions of the world (US, West Europe, Japan, China, India,
Latin America, and Rest of World). The innovation of the TearLab® Osmolarity System is its ability to precisely and rapidly
measure osmolarity in nanoliter volumes of tear samples, using a highly efficient and novel tear collection system at the point
of care. Historically, eye care researchers have relied on expensive instruments to perform tear biomarker analysis. In addition
to their cost, these conventional systems are slow, highly variable in their measurement readings, and not categorized as waived
by the United States Food and Drug Administration (the “FDA”), under regulations promulgated under the Clinical Laboratory
Improvement Amendments, (“CLIA”).
The
TearLab® Osmolarity System consists of the following three components: (1) the TearLab disposable, which is a single-use microfluidic
microchip; (2) the TearLab Pen, which is a hand-held device that interfaces with the TearLab disposable; and (3) the TearLab Reader,
which is a small desktop unit that allows for the docking of the TearLab Pen and provides a quantitative reading for the operator.
In
October 2008, the TearLab® Osmolarity System received CE mark approval, clearing the way for sales in the European Union and
all countries recognizing the CE mark. On December 8, 2009, TearLab announced that Health Canada issued a Medical Device License
for the TearLab® Osmolarity System.
On
May 19, 2009, we announced that we received 510(k) clearance from the FDA. On January 23, 2012, we announced that after reviewing
and accepting labeling submitted to it by the Company, the FDA had granted the waiver categorization under CLIA for the TearLab®
Osmolarity System. The CLIA waiver reduces the regulatory paperwork and related administrative time for customers.
Currently,
the TearLab® Osmolarity System is commercialized in over 40 countries. In the United States, the TearLab® Osmolarity System
is sold direct. In markets outside of the United States the TearLab® Osmolarity System is sold through distributors.
Current
Status and Recent Financings
Effective
at the open of business on November 9, 2017, our common stock was suspended and delisted from The Nasdaq Capital Market and began
trading on the OTCQB. The delisting was the result of our non-compliance with Nasdaq Listing Rule 5550(b).
On
February 27, 2017, the Company effected a 1-for-10 reverse stock split of its common stock. All common stock share amounts and
prices per share of common stock in this prospectus have been retroactively adjusted to reflect the reverse stock split.
On
May 9, 2016, the Company issued 1,861,090 shares of common stock, 3,291.8 shares of Series A Convertible Preferred Stock (“Preferred
Stock”) and Series A warrants to purchase 1,150,000 shares of common stock (“Series A Warrants”) for gross proceeds
of $17.3 million. Additionally, the Company granted the placement agent warrants to purchase 103,500 shares of common stock with
an exercise price of $11.25 per share. All of the Preferred Stock shares were subsequently converted into 438,910 shares of common
stock.
On
March 4, 2015, the Company executed a term loan agreement with CRG LP and certain of its affiliates (the “Term Loan Agreement”)
providing the Company access to $35.0 million under the arrangement. The Company received $15.0 million in gross proceeds under
the loan agreement on March 4, 2015, and an additional $10.0 million on October 6, 2015, pursuant to the second amendment to the
Term Loan Agreement. We were unable to access a third tranche of $10.0 million because we did not attain at least $38.0 million
in trailing twelve-month revenue prior to June 30, 2016, as required to access the third tranche. As part of the second amendment
to the Term Loan Agreement and funding of the $10.0 million tranche, CRG received warrants to purchase 35,000 shares of common
stock of the Company at a price of $50.00 per share. The warrants have a life of five years. On April 7, 2016, the Term Loan Agreement
was further amended, under the fourth amendment, to change the required minimum revenue levels. In addition, the fourth amendment
reduced the exercise price of the warrants CRG received under the second amendment to $15.00 per share and granted CRG additional
warrants to purchase an additional 35,000 common shares in the Company at a price of $15.00 per share. The Term Loan Agreement
has a term of six years and bears interest at 13% per annum, with quarterly payments of interest only for the first four years.
At the Company’s option, during the first four years a portion of the interest payments amounting to a 4.5% per annum rate
may be deferred and paid together with the principal in the fifth and sixth years. On October 12, 2017, the Term Loan Agreement
was further amended to reduce the required minimum revenue levels and to amend the CRG warrants to (i) reduce the strike price
to $1.50 per share and (ii) to include broad based anti-dilution protection such that the CRG warrants shall maintain the same
ownership percentage following any capital raises the Company may complete through March 31, 2018.
Industry
Point-of-care
Testing and Dry Eye Disease, or DED
The
market research firm, “Markets and Markets” reports the global market for point-of-care testing will reach $37 billion
annually by 2021. Approximately 75% of all laboratory tests today are performed at centralized clinical laboratories. However,
diagnostic testing is increasingly being performed at the point-of-care due to several factors, including a need for rapid testing
in acute care situations, the benefits of patient monitoring and disease management, streamlining therapeutic decision making
and the overall trend toward personalized medicine. We believe that advances in bio-detection technologies that can simplify and
accelerate the rate of performing complex diagnostic tests at the point-of-care, will drive utilization and overall point-of-care
testing market growth.
Each
time a person blinks, his or her eyes are resurfaced with a thin layer of a complex fluid known as the tear film. The tear film
works to protect eyes from the outside world. Bacteria, viruses, sand, freezing winds and salt water (inclusive of most environmental
factors) will not damage eyes when the tear film is intact. However, when compromised, a deficient tear film can be an exceedingly
painful and disruptive condition. The tear film consists of three components: (i) an innermost glycocalyx (produced by the surface
cells); (ii) the aqueous layer (the water in tears, produced by the lacrimal gland); and (iii) an oily lipid layer which limits
evaporation of the tears (produced by the meibomian glands, located at the margins of the eyelids). The apparatus of the ocular
surface forms an integrated unit. When working correctly, the tear film presents a smooth optical surface essential for clear
vision and proper immunity. Androgen deficiency, contact lens wear and chronic inflammation of the lacrimal or meibomian gland
may lead to the condition known as dry eye, which has been likened to arthritis of the eye, and results in a compromised, fragile
tear film. In turn, the unstable tear film undermines vision, altering focus between every blink. An unstable tear film is the
equivalent of a smudge atop the lens of a camera. It doesn’t matter how many megapixels your camera has, if the first lens
is compromised, the image will be fuzzy.
DED
is often seen as a result of aging, diabetes, cancer therapy, HIV, autoimmune diseases such as Sjögren’s syndrome and
rheumatoid arthritis, LASIK surgery, contact lens wear, menopause and as a side effect of hormone replacement therapy. Numerous
commonly prescribed and over-the-counter medications also can cause, or contribute to, the manifestation of DED.
Discomfort
and dryness are the most commonly reported symptoms of contact lens wear. These symptoms can lead to contact lens drop out if
severe and/or persistent. In 2010, Contact Lens Spectrum reported that 16% of contact lens wearers permanently dropout of contact
lens wear each year. In addition, there are approximately 600,000 LASIK procedures performed in the U.S each year with up to 60%
reporting dry eye symptoms 1 month post-LASIK.
Diagnostic
Alternatives for Dry Eye Disease
Existing
diagnostic tools are highly subjective, do not correlate well with symptoms, are invasive for patients and may require up to an
hour of operator time to perform. All of these factors have constrained the diagnosis and treatment of the DED patient population.
As physicians have not had access to objective, quantitative diagnostic assays that correlate well with and the severity of DED
disease, it has been difficult for them to objectively differentiate DED symptoms from other eye diseases that present with very
similar symptoms, such as ocular allergies, conjunctivochalasis or infectious bacterial or viral diseases. To treat DED effectively
and to mitigate the emotional and physical effects of this disease, it is important to equip physicians with objective, quantitative
measurements of disease pathogenesis so they can determine more accurately the most efficacious treatments for their patients.
Osmolarity
in DED presents itself as an increase in the salt concentration of the tear film. For over 50 years, studies have shown that tear
film osmolarity is the ideal clinical marker for diagnosing DED, providing an objective, quantitative measurement of disease pathogenesis.
Measuring osmolarity also serves as an effective disease management tool by providing physicians with an ability to personalize
therapeutic intervention and to track patient outcomes quantitatively. Osmolarity testing could also provide physicians with a
tool to identify patients at risk for dropping out of contact lens wear early in disease progression, as well as an invaluable
test to guide the type and duration of therapy prior to, and following refractive surgery.
The
main challenge in measuring osmolarity at the point-of-care is the small volume of tear available for testing. Older laboratory
osmometers require upwards of ten microliters of fluid to produce a single reading. In addition, these instruments are not particularly
suitable for use in a physician’s office, since they require continual calibration, cleaning and maintenance. Existing osmometers
currently are marketed primarily to reference and hospital laboratories for the measurement of osmolarity in blood, urine and
other serum samples.
TearLab’s
Product
Our
TearLab® Osmolarity System is an integrated testing system comprised of: (1) the TearLab disposable, which is a single-use
microfluidic microchip; (2) the TearLab Pen, which is a hand-held device that interfaces with the TearLab disposable; and (3)
the TearLab Reader, which is a small desktop unit that allows for the docking of the TearLab Pen and provides a quantitative reading
for the operator. The innovation of the TearLab® Osmolarity System is its ability to measure precisely, rapidly, and inexpensively
biomarkers in
nanoliter
volumes of tear samples or approximately 1,000 times less volume than required for older laboratory
devices.
The
operator of the TearLab® Osmolarity System, most likely a technician, collects the tear sample from the patient’s eye
in the TearLab disposable, using the TearLab Pen. After the tear has been collected, the operator places the Pen into the Reader.
The TearLab Reader then will display an osmolarity reading to the operator. Following the completion of the test, the TearLab
disposable will be discarded and a new TearLab disposable will be readied for the next test. The entire process, from sample to
answer, should require approximately two minutes or less to complete.
In
July 2017, the commercial version of the TearLab Discovery™ System, which we refer to as Discovery, received its CE Marking.
CE Marking of the device provides marketing clearance in the European Union and European Free Trade Association member countries.
We will not immediately commercialize Discovery with the CE Marking but will instead gain clinical and user feedback from key
doctors as we continue our development and prepare for Discovery’s regulatory approval filing in the United States.
Discovery
is our next generation of comprehensive in-vitro diagnostic testing platform and will offer eye care professionals the ability
to assess multiple biomarkers in human tears with a single nanoliter volume tear collection. The test card for Discovery is capable
of measuring three biomarkers, including osmolarity and MMP-9 and IL-1Ra, both of which are inflammatory markers established as
an aid in identifying, treating, and monitoring dry eye sufferers. We have begun clinical studies in support of a 510(k) application
to the FDA, which we anticipate submitting by the end of calendar year 2017.
Competition
The
medical device industry is highly competitive and we face potential competition from medical device companies worldwide. There
are several laboratory technologies that claim to measure the osmolarity of nanoliter tear samples. The i-Pen manufactured by
i-Med Pharma Inc. has approval from Health Canada and a CE mark. We are also seeing distribution for the i-Pen in the United Kingdom
and Australia. The LacriPen, developed by LacriSciences, LLC (Washington, DC, US), does not have a CE Mark, FDA 510(k) clearance
or a CLIA waiver, but has stated to be in clinical trials. Another investigational device aimed at dry eye diagnosis, the TeaRx,
manufactured by DiagnosTear Ltd., a division of BioLight Life Sciences Investments of Tel Aviv, Israel, announced positive correlations
between TeaRx diagnostic parameters and benchmarks used to test for dry eye syndrome. Another non-osmolarity based in vitro diagnostic
test for dry eye has been developed by Rapid Pathogen Screening, Inc. (RPS), of Sarasota Florida. RPS has commercialized a tear
test for dry eye that measures MMP-9, an inflammatory biomarker and this business has recently been purchased by a larger diagnostic
company, Quidel Corporation. This test is FDA cleared and has obtained a CLIA waiver. Another company, ATD (Advanced Tear Diagnostics)
has a CLIA classification of Moderately Complex in the United States, and markets products that measure lactoferrin and IgE in
human tears for the diagnosis of aqueous deficient dry eye disease and ocular allergy, respectively.
Tear
film break-up time, or TBUT, is a non-laboratory test performed to evaluate tear film stability during an examination of the ocular
surface with a slit lamp by an eye care practitioner. However, it is subjective, requires a physician to instill a carefully controlled
amount of fluorescein dye into the eye and requires a stopwatch to determine the endpoint. TBUT has been shown to be unreliable
as a determinant of DED since shortened TBUT does not always correlate well with other signs or symptoms.
Other
office-based tests performed during a standard eye care examination like impression cytology and corneal staining, although indicative
of relatively late stage phenomena in DED, are subjective, qualitative and generally do not correlate to disease pathogenesis.
We believe the Schirmer Test, to determine tear fluid volume, is an imprecise marker of tear function since its diagnostic results
vary significantly.
Principal
Suppliers
We
rely on two suppliers based in the United States for the manufacture of the Readers and Pens which are key components of the TearLab®
Osmolarity System. We also rely on a single supplier, MiniFAB (Aust) Pty Ltd. located in Australia, for the manufacture of the
test cards which is also a key component of the TearLab® Osmolarity System.
Patents
and Proprietary Rights
We
own or have exclusive licenses to multiple patents and applications relating to the TearLab® Osmolarity System and related
technology and processes:
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fifteen
issued U.S. patents; relating to the TearLab® Osmolarity System and related technology and processes and have applied
for a number of other patents in the United States and other jurisdictions;
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Twenty-eight
issued patents in the rest of the world; and
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eleven
applications pending.
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We
intend to rely on know-how, continuing technological innovation and in-licensing opportunities to further develop our proprietary
position. Our ability to obtain intellectual property protection for the TearLab® Osmolarity System and related technology
and processes, and our ability to operate without infringing on the intellectual property rights of others and to prevent others
from infringing on our intellectual property rights, will have a substantial impact on our ability to succeed in our business.
Although we intend to seek to protect our proprietary position by, among other methods, continuing to file patent applications,
the patent position of companies like TearLab is generally uncertain and involves complex legal and factual questions. Our ability
to maintain and solidify a proprietary position for our technology will depend on our success in obtaining effective claims and
enforcing those claims once granted. We do not know whether any part of our patent applications will result in the issuance of
any patents. Our issued patents, those that may be issued in the future or those licensed to us, may be challenged, invalidated
or circumvented, which could limit our ability to stop would-be competitors from marketing tests identical to the TearLab®
Osmolarity System.
In
addition to patent protection, we have registered the TearLab trademark in the United States, the European Union, Japan, Korea,
Mexico, the Russian Federation, Australia, Canada, China and Turkey.
Government
Regulation
Government
authorities in the United States and other countries extensively regulate, among other things, the research, development, testing,
manufacture, labeling, promotion, advertising, distribution and marketing of our product, which is a medical device. In the United
States, the FDA regulates medical devices under the Federal Food, Drug, and Cosmetic Act and implementing regulations. Failure
to comply with the applicable FDA requirements, both before and after approval, may subject us to administrative and judicial
sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, warning letters, product recalls,
product seizures, total or partial suspension of production or distribution, injunctions, administrative fines or criminal prosecution.
Unless
exempted by regulation, medical devices may not be commercially distributed in the United States unless they have been cleared
or approved by the FDA. Medical devices are classified into one of the three classes, Class I, II or III, on the basis of the
controls necessary to reasonably assure their safety and effectiveness. Class I devices are subject to general controls, such
as labeling, pre-market notification and adherence to good manufacturing practices. The TearLab
®
Osmolarity System
is a Class I, non-exempt device and qualifies for the 510(k) procedure. Under the FDA’s Section 510(k) procedure, the manufacturer
provides a pre-market notification that it intends to begin marketing the product, and shows that the product is substantially
equivalent to another legally marketed product, that it has the same intended use and is as safe and effective as a legally marketed
device and does not raise different questions of safety and effectiveness than does a legally marketed device. In some cases,
the submission must include data from human clinical studies. Marketing may commence when the FDA issues a clearance letter finding
substantial equivalence. On May 19, 2009, we announced that we received FDA 510(k) clearance of the TearLab® Osmolarity System.
After
a device receives 510(k) clearance, any modification to the device that could significantly affect its safety or effectiveness,
or that would constitute a major change in its intended use, would require a new 510(k) clearance or an approval of a Premarket
Approval, or PMA. A PMA is the FDA process of scientific or regulatory review to evaluate the safety and effectiveness of Class
III medical devices which are those devices which support or sustain human life, are of substantial importance in preventing impairment
of human health, or which present a potential, unreasonable risk of illness or injury. Although the FDA requires the manufacturer
to make the initial determination regarding the effect of a modification to the device that is subject to 510(k) clearance, the
FDA can review the manufacturer’s determination at any time and require the manufacturer to seek another 510(k) clearance
or an approval of a PMA.
CLIA
is intended to ensure the quality and reliability of clinical laboratories in the United States by mandating specific standards
in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management, quality
control, quality assurance and inspections. The regulations promulgated under CLIA establish three levels of
in vitro
diagnostic
tests: (1) waiver; (2) moderately complex; and (3) highly complex. The standards applicable to a clinical laboratory depend on
the level of diagnostic tests it performs. A CLIA waiver is available to clinical laboratory test systems if they meet certain
requirements established by the statute. Waived tests are simple laboratory examinations and procedures employing methodologies
that are so simple and accurate as to render the likelihood of erroneous results negligible or to pose no reasonable risk of harm
to patients if the examinations or procedures are performed incorrectly. These tests are waived from regulatory oversight of the
user other than the requirement to follow the manufacturer’s labeling and directions for use.
On
January 23, 2012, we announced that after reviewing and accepting labeling submitted to it by the Company, the FDA had granted
the waiver categorization under CLIA for the TearLab® Osmolarity System.
Regardless
of whether a medical device requires FDA clearance or approval, a number of other FDA requirements apply to the device, its manufacturer
and those who distribute it. Device manufacturers must be registered and their products listed with the FDA, and certain adverse
events and product malfunctions must be reported to the FDA. The FDA also regulates the product labeling, promotion and, in some
cases, advertising, of medical devices. In addition, manufacturers and their suppliers must comply with the FDA’s quality
system regulation which establishes extensive requirements for quality and manufacturing procedures. Thus, suppliers, manufacturers
and distributors must continue to spend time, money and effort to maintain compliance, and failure to comply can lead to enforcement
action. The FDA periodically inspects facilities to ascertain compliance with these and other requirements.
Clinical,
Regulatory, Research and Development Expenditure
Our
clinical, regulatory, research and development expense was $5.2 million and $7.0 million for the years ended December 31, 2016
and 2015, respectively.
Employees
On
December 31, 2016, we had 75 full-time employees. None of our employees are covered by a collective bargaining agreement.
Corporate
Information
TearLab
Corporation was incorporated as OccuLogix, Inc. in Delaware in 2002. Our executive offices are located at 9980 Huennekens St.,
Suite 100, San Diego, California 92121 and our telephone number at that address is (858) 455-6006. We maintain an Internet website
at www.tearlab.com. We have not incorporated the information on our website by reference into this prospectus, and you should
not consider it to be a part of this prospectus.
The
Offering
Class
A Units offered by us
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We
are offering up to $5,000,000 of Class A Units. Each Class A Unit will consist of one share of our common stock, a Series A warrant
to purchase one share of our common stock at an exercise price per whole share of common stock equal to the public offering price
of the Class A Units (“Series A warrant”), and a Series B warrant to purchase one share of our common stock at an
exercise price per whole share of common stock equal to the public offering price of the Class A Units (“Series B warrant”).
The Class A Units will not be certificated and the share of common stock, Series A warrant and Series B warrant comprising such
Class A Unit are immediately separable and will be issued separately in this offering.
This
prospectus also relates to the offering of shares of our common stock issuable upon the exercise of the Series A warrants
comprising the Class A Units.
Assuming
we sell all $5,000,000 of Class A Units (and no Class B Units) being offered in this offering and a public offering price
of $0.71 , the reported closing price of our common stock on November 21 , 2017, we would issue in this offering
an aggregate of 6,996,921 shares of our common stock, 6,996,921 Series A warrants and 6,996,921 Series
B warrants to purchase shares of our common stock.
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Class
B Units offered by us
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We
are also offering to those purchasers, if any, whose purchase of Class A Units in this offering would otherwise result in the
purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, or to those
purchasers that elect to purchase such securities in their sole discretion, the opportunity, in lieu of purchasing Class A Units,
to purchase Class B Units. Each Class B Unit will consist of one share of our Series A Convertible Preferred Stock, or the Series
A Preferred Stock, with a stated value of $1,000 and convertible into shares of our common stock at a conversion price equal to
the public offering price of the Class A Units, together with the equivalent number of Series A warrants and number of Series
B warrants as would have been issued to such purchaser if the purchaser had purchased Class A Units based on the public offering
price. The Class B Units will not be certificated and the share of Series A Preferred Stock and Series A warrants and Series B
warrants comprising such Class B Unit are immediately separable and will be issued separately in this offering. The Series A Preferred
Stock issued in the Class B Units is convertible into shares of our common stock, provided that holders of Series A Preferred
will be prohibited from converting Series A Preferred Stock into shares of our common stock if, as a result of the conversion,
the holder would beneficially own more than 4.99% (or, at the election of purchaser, 9.99%) of our common stock. Purchasers of
Class B Units may increase their ownership to a percentage not in excess of 9.99% upon notice to us, provided that any increase
shall not be effective until 61 days after providing notice to us.
This
prospectus also relates to the offering of shares of our common stock issuable upon conversion of the Series A Preferred
Stock and upon exercise of the Series A warrants and Series B warrants comprising the Class B Units.
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Series
A Warrants
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Each
Series A warrant included in the Units will have an exercise price per whole share of common stock equal to the public offering
price of the Class A Units will be immediately exercisable and will be exercisable for five years from the date of issuance.
There
is no established public trading market for the Series A warrants, and we do not expect a market to develop. In addition,
we do not intend to apply for a listing of the Series A warrants on any national securities exchange or other trading
market.
The
Series A Warrants will contain an anti-dilution provision for the term of the Series A Warrants whereby if the Company or any
subsidiary shall consummate a dilutive issuance through the sale or grant of any option to purchase, or sell or grant of any right
to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition)
any common stock or common stock equivalents, subject to customary exceptions, at an effective price per share less than the exercise
price of the Series A Warrants then in effect then simultaneously with the consummation of each dilutive issuance the exercise
price of the Series A Warrants shall be reduced and only reduced to equal the share Price of the dilutive issuance.
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Series
B Warrants
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Each
Series B warrant included in the Units will have an exercise price per whole share of
common stock equal to the public offering price of the Class A Units will be immediately
exercisable and will be exercisable for six (6) months from the date of issuance.
There
is no established public trading market for the Series B warrants, and we do not expect a market to develop. In addition,
we do not intend to apply for a listing of the Series B warrants on any national securities exchange or other trading
market.
The
Series B Warrants will contain an anti-dilution provision for the term of the Series B Warrants whereby if the Company
or any subsidiary shall consummate a dilutive issuance through the sale or grant of any option to purchase, or sell or
grant of any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase
or other disposition) any common stock or common stock equivalents, subject to customary exceptions, at an effective price
per share less than the exercise price of the Series B Warrants then in effect then simultaneously with the consummation
of each dilutive issuance the exercise price of the Series B Warrants shall be reduced and only reduced to equal the share
Price of the dilutive issuance.
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Common
stock outstanding
before
this offering
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5,742,453
shares
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Common
stock to be outstanding
immediately
after this offering
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12,739,374
Shares
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Use
of proceeds
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We
intend to use the net proceeds to us from this offering for general corporate purposes,
including commercializing our products, research and product development, capital expenditures,
and working capital needed to satisfy our debt covenants. We may also use our
net proceeds to acquire and invest in complementary products, technologies or businesses;
however, we currently have no agreements or commitments to complete any such transaction
and are not involved in negotiations to do so. Pending these uses, we intend to invest
our net proceeds from this offering primarily in investment-grade, interest-bearing instruments.
See “Use of Proceeds” on page 23.
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Risk
factors
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See
“Risk Factors” beginning on page 9 and the other information included in this prospectus for a discussion of factors
you should read and carefully consider before deciding to invest in our common stock.
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OTCQB
Symbol
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“TEAR”
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Toronto
Stock Exchange Symbol
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“TLB”
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The
number of shares of our common stock to be outstanding after this offering is based on 5,742,453 shares of our common stock
outstanding as of September 30, 2017, and excludes:
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681,786shares
of common stock issuable upon the exercise of stock options outstanding as of September 30, 2017 with a weighted average exercise
price of $31.50 per share;
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1,324,000
shares of our common stock issuable upon the exercise of warrants outstanding as of September 30, 2017 with a weighted
average exercise price of $11.45 per share;
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1,070,000
shares of our common stock reserved for future issuance as of September 30, 2017 under our 2002 Stock Incentive Plan, including
through the exercise of outstanding options; and
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28,601
shares of our common stock reserved for future issuance as of September 30, 2017, under our 2014 Employee Stock Purchase Plan.
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shares
of common stock that may be issued upon exercise of warrants to be issued in this offering
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The
number of shares of our common stock to be outstanding after this offering also assumes only Class A Units are sold in this offering.
To the extent we sell any Class B Units, the same aggregate number of common stock equivalents resulting from this offering would
be convertible under the Series A Preferred issued as part of the Class B Units.
Unless
otherwise indicated, all information in this prospectus assumes no exercise of outstanding options or warrants to purchase common
stock after September 30, 2017.
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Before deciding to invest in our company or deciding to maintain or increase
your investment, you should consider carefully the risks and uncertainties described below. The risks and uncertainties described
below and in our other filings with the SEC are not the only ones we face. If one or more of the following risks are realized,
our business, financial condition and results of operations and prospects could be materially and adversely affected. In that
event, the market price for our common stock could decline and you may lose all or part of your investment. Please also read carefully
the section below titled “Special Note Regarding Forward-Looking Statements.”
Risks
Related to Our Financial Condition
We
have limited working capital and a history of losses that raise substantial doubts as to whether we will be able to continue as
a going concern.
We
have prepared our consolidated financial statements on the basis that we would continue as a going concern. However, we have incurred
losses in each year since our inception and there is substantial doubt about our ability to continue as a going concern as it
is uncertain presently how long our current cash will last. We currently anticipate that if we do not raise additional capital
prior to the end of the fourth quarter or in the first quarter of 2018 we will not be in compliance with the financial covenants
in our Term Loan Agreement (as defined below), and we cannot assure you that we will be able to raise such additional capital.
Our net working capital balance at September 30, 2017 was $6.9 million which represents a $9.3 million decrease
in the balance from our working capital of $16.3 million at December 31, 2016. We do not currently have any available borrowing
under our term loan or credit facility.
Our
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary if we were not able to continue as a going
concern. If we are unable to generate positive cash flows from operations, we would need to undertake a review of potential business
alternatives, which may include, but are not limited to, a merger or sale of the company or ceasing operations and winding down
the business.
We
have incurred losses since inception and anticipate that we will incur continued losses for the foreseeable future.
We
have incurred losses in each year since our inception. As of September 30, 2017, we had an accumulated deficit of $525.0
million. Our losses have resulted primarily from expenses incurred in research and development of our product candidates from
the former retina and glaucoma business divisions. We do not know when or if we will successfully commercialize the TearLab®
Osmolarity System in the United States or in international markets. As a result, and because of the numerous risks and uncertainties
facing us, it is difficult to provide the extent of any future losses or the time required to achieve profitability, if at all.
Any failure to become and remain profitable would require us to undertake a review of the potential business alternatives discussed
above.
We
will need to raise additional capital in the near future. Such capital may not be available to us on reasonable terms, if at all,
when or as we require additional funding. If we issue additional shares of our common stock or other securities that may be convertible
into, or exercisable or exchangeable for, our common stock, our existing stockholders, would experience further dilution.
We
expect that we will need to raise additional capital prior to the end of the fourth quarter of 2017 or in the first quarter of
2018. Such financings may involve the issuance of debt, equity and/or securities convertible into or exercisable or exchangeable
for our equity securities. These financings may not be available to us on reasonable terms or at all when and as we require funding.
Any failure to obtain additional working capital when required would have a material adverse effect on our business and financial
condition, our ability to continue as a going concern and would be expected to result in a decline in our stock price. If we consummate
such financings, the terms of such financings may adversely affect the interests of our existing stockholders. Any issuances of
our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable
for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders. If access
to sufficient capital is not available as and when needed, our business will be materially impaired and we may be required to
cease operations, curtail product development, manufacturing improvements, or sales generation programs, attempt to obtain funds
through licensing certain technologies or products, or we may be required to significantly reduce expense, sell assets, seek a
merger or joint venture partner, file for protection from creditors or liquidate all our assets.
We
may not be able to generate sufficient cash to service our indebtedness, which currently consists of our credit facility with
CRG. We may not be able to satisfy our minimum revenue and cash covenants, as required by the CRG term loan. If our annual sales
revenue levels do not meet or exceed the levels required by the CRG covenants, we will be required to raise additional equity
or subordinated debt, with the proceeds paid to reduce the outstanding principal of the CRG term loan. This financing could dilute
existing shareholders and impact the value of their investment.
On
March 4, 2015, the Company executed a term loan agreement with CRG as lenders, the Term Loan Agreement, providing the Company
with access of up to $35.0 million under the Term Loan Agreement. We entered into an amendment of the Term Loan Agreement with
CRG on August 6, 2015. We received $25.0 million in gross proceeds during 2015. We were unable to access a third tranche of $10.0
million because we did not achieve at least $38.0 million in twelve-month sales revenue prior to June 30, 2016, as required to
access the third tranche.
Our
ability to make scheduled payments or to refinance our debt obligations depends on numerous factors, including the amount of our
cash reserves and our actual and projected financial and operating performance. These amounts and our performance are subject
to certain financial and business factors, as well as prevailing economic and competitive conditions, some of which may be beyond
our control. We cannot assure you that we will maintain a level of cash reserves or cash flows from operating activities sufficient
to permit us to pay the principal, premium, if any, and interest on our existing or future indebtedness. If our cash flows and
capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures,
sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure you that we
would be able to take any of these actions, or that these actions would permit us to meet our scheduled debt service obligations.
In addition, in the event of our breach of the Term Loan Agreement with CRG, we may not be allowed to draw additional amounts
under the agreement, we may be required to repay any outstanding amounts earlier than anticipated, and the lenders may foreclose
on their security interest in our assets.
The
CRG loan is collateralized by all assets of the Company. Additionally, the terms of the Term Loan Agreement as amended contain
various affirmative and negative covenants agreed to by the Company. Among them, the Company must attain minimum annual revenue
and minimum cash threshold levels. The minimum annual revenue threshold levels required by the Term Loan are $25 million, $25
million, $38.0 million and $45.0 million for calendar years 2017, 2018, 2019 and 2020, respectively. The minimum cash balance
required is $5.0 million, subject to certain conditions. After receipt of proceeds in this offering, we may be out of compliance
with the minimum cash balance in the first quarter of 2018.
If
we do not have annual revenue greater or equal to the annual revenue covenant in a calendar year, the Company will have to raise
subordinated debt or equity, which we refer to as the CRG Equity Cure, equal to twice the difference between the annual revenue
and the revenue covenant, with the total proceeds from this financing to be used to reduce the principal of the Term Loan. We
cannot assure you that we will be able to achieve the annual revenue thresholds and the daily cash threshold. We cannot assure
you that we would be able to raise the financing for the CRG Equity Cure, if required. In addition, in the event of our breach
of the Term Loan Agreement, we may be required to repay any outstanding amounts earlier than anticipated, and the lenders may
foreclose on their security interest in our assets.
Borrowings
under the Term Loan Agreement are subject to certain conditions, including the non-occurrence of a material adverse change in
our business or operations (financial or otherwise), or a material impairment of the prospect of repayment of obligations.
Our
existing Term Loan Agreement contains restrictive and financial covenants that may limit our operating flexibility.
Our
existing Term Loan Agreement with CRG contains certain restrictive covenants that limit our ability to incur additional indebtedness
and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of
business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into
various specified transactions. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the
consent of the lender or terminate the Term Loan Agreement. There is no guarantee that we will be able to generate sufficient
cash flow or sales to meet the financial covenants or pay the principal and interest under the Term Loan Agreement. Furthermore,
there is no guarantee that future working capital, borrowings or equity financing will be available to repay or refinance the
amounts outstanding under the Term Loan Agreement.
The
proceeds from this offering will likely not be sufficient to effect the extension of the interest only/pay in kind payment period
under the amendment to the Term Loan Agreement.
On
October 12, 2017, we entered into an amendment to the Term Loan Agreement providing that, among other things, if the Company raises
net equity proceeds of at least $7 million (net of bona fide costs incurred in connection with issuance of such equity) by March
31, 2018, the period through which the Company may make interest only payments or pay interest in kind under the Term Loan Agreement
shall be extended through the calendar year 2019 but that if the Company fails to raise net equity proceeds of $7 million on or
before March 31, 2018, such period will remain unchanged from the current dates. Unless the purchasers in this offering exercise
at least $2 million of Warrants, the proceeds from this offering will likely not be sufficient to effect the extension of the
interest only period and the Company will need to raise at least an additional $2 million in equity prior to March 31, 2018 in
order to maintain the extension of the interest only payment period. If the Company is unable to raise the proceeds necessary
for this extension, the Company may be unable to make the cash payments required under the Term Loan Agreement.
Our
financial results may vary significantly from year-to-year and quarter-to-quarter due to a number of factors, which may lead to
volatility in the trading price of our common stock.
Our
annual and quarterly revenue and results of operations have varied in the past and may continue to vary significantly from year-to-year
and quarter-to-quarter. The variability in our annual and quarterly results of operations may lead to volatility in our stock
price as research analysts and investors respond to these annual and quarterly fluctuations. These fluctuations are due to numerous
factors that are difficult to forecast, including:
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fluctuations
in demand for our products;
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changes
in customer budget cycles and capital spending;
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seasonal
variations in customer operations that could occur during holiday or summer vacation periods;
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tendencies
among some customers to defer purchase decisions to the end of the quarter;
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the
unit value of our systems;
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changes
in our pricing and sales policies or the pricing and sales policies of our competitors;
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Changes
in reimbursement levels that might negatively impact our pricing policies;
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our
ability to design, manufacture and deliver products to our customers in a timely and cost effective manner;
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quality
control or yield problems in our manufacturing operations;
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our
ability to timely obtain adequate quantities of the components used in our products;
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new
product introductions and enhancements by us and our competitors;
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unanticipated
increases in costs or expenses;
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global
economic conditions; and
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fluctuations
in foreign currency exchange rates.
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In
addition, we may experience seasonal variations in our customer operations such as could occur during holiday vacation periods.
For example, one of our principal target markets consists of private ophthalmic and optometric practices, and our operating results
could be adversely affected by summer vacation periods. The foregoing factors, as well as other factors, could materially and
adversely affect our quarterly and annual results of operations. In addition, a significant amount of our operating expenses are
relatively fixed due to our manufacturing, research and development, and sales and general administrative efforts. Any failure
to adjust spending quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall
on our results of operations. We expect that our sales will continue to fluctuate on a quarterly basis and our financial results
for some periods may differ from those projected by securities analysts, which could significantly decrease the price of our common
stock.
Risks
Related to Our Business
Our
near-term success is highly dependent on the success of the TearLab® Osmolarity System, and we cannot be certain that it will
be successfully commercialized in the United States.
The
TearLab® Osmolarity System is currently our only product. Our product is currently sold outside of the United States pursuant
to CE mark approval; in Canada pursuant to a Health Canada Medical Device License; and in the United States as a result of having
received 510(k) approval from the U.S. Food and Drug Administration, or the FDA, to market the TearLab® Osmolarity System
to those reference and physician operated laboratories with Clinical Laboratory Improvement Act, or CLIA, waiver certifications.
Even though the TearLab® Osmolarity System has received all regulatory approvals in the United States, and is currently sold
in the United States, it may never be successfully commercialized. If the TearLab® Osmolarity System is not as successfully
commercialized as expected, we may not be able to generate revenue, become profitable or continue our operations. Any failure
of the TearLab® Osmolarity System to be successfully commercialized in the United States would have a material adverse effect
on our business, operating results, financial condition and cash flows and could result in a substantial decline in the price
of our common stock.
Our
near-term success is highly dependent on increasing sales of the TearLab
®
Osmolarity System outside the United
States, and we cannot be certain that we will successfully increase such sales.
Our
product is currently sold outside of the United States pursuant to CE mark approval and Health Canada Approval in Canada. Our
near-term success is highly dependent on increasing our international sales. We may also be required to register our product with
health departments in our foreign market countries. A failure to successfully register in such markets would negatively affect
our sales in any such markets. In addition, import taxes are levied on our product in certain foreign markets. Other countries
may adopt taxation codes on imported products. Increases in such taxes or other restrictions on our product could negatively affect
our ability to import, distribute and price our product.
We
have outstanding liabilities, which could adversely affect our ability to adjust our business to respond to competitive pressures
and to obtain sufficient funds to satisfy our future research and development needs, and to defend our intellectual property.
As
of September 30, 2017, our total liabilities were $33.7 million including $27.8 million of long-term obligations
under our Term Loan Agreement. Our significant liability service requirements could adversely affect our ability to operate our
business and may limit our ability to take advantage of potential business opportunities. For example, our liabilities present
the following risks:
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our
liabilities increase our vulnerability to economic downturns and adverse competitive and industry conditions and could place
us at a competitive disadvantage compared to those of our competitors that are less leveraged;
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our
liabilities could limit our flexibility in planning for, or reacting to, changes in our business and our industry and could
limit our ability to pursue other business opportunities, borrow money for operations or capital in the future and implement
our business strategies; and
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our
labilities may restrict us from raising additional funds on satisfactory terms to fund working capital, capital expenditures,
product development efforts, strategic acquisitions, investments and alliances, and other general corporate requirements.
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If
we are at any time unable to generate sufficient cash flow to service our liabilities when payment is due, we may be required
to attempt to renegotiate the terms of the instruments relating to the liabilities, seek to refinance all or a portion of the
liabilities or obtain financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any
such refinancing would be possible or that any additional financing could be obtained on terms that are favorable or acceptable
to us.
We
will face challenges in continuing to bring the TearLab® Osmolarity System to market in the United States and may not succeed
in executing our business plan.
There
are numerous risks and uncertainties inherent in the development of new medical technologies. In addition to our requirement for
additional capital, our ability to continue to bring the TearLab® Osmolarity System to market in the United States and to
execute our business plan successfully is subject to the following risks, among others:
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Our
clinical trials may not succeed. Clinical testing is expensive and can take longer than originally anticipated. The outcomes
of clinical trials are uncertain, and failure can occur at any stage of the testing. We could encounter unexpected problems,
which could result in a delay in efforts to complete clinical trials supporting our commercialization efforts.
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The
TearLab® Osmolarity System is rated under a CLIA waiver certification which requires
our customers to be certified under the CLIA waiver requirements to be reimbursed under
Medicare, including certain parallel state requirements. If our customers are unwilling
or unable to comply with such requirements, it could have an adverse effect on their
acceptance of and on our ability to market the TearLab® Osmolarity System.
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Our
suppliers and we will be subject to numerous FDA requirements covering the design, testing,
manufacturing, quality control, labeling, advertising, promotion and export of the TearLab®
Osmolarity System and other matters. If our suppliers or we fail to comply with these
regulatory requirements, the TearLab® Osmolarity System could be subject to restrictions
or withdrawals.
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Even
though we successfully obtained the sought-after FDA approvals, we may be unable to commercialize
the TearLab® Osmolarity System successfully in the United States. Successful commercialization
will depend on a number of factors, including, among other things, achieving widespread
acceptance of the TearLab® Osmolarity System among physicians, establishing adequate
sales and marketing capabilities, addressing competition effectively, the ability to
obtain and enforce patents to protect proprietary rights from use by would-be competitors,
key personnel retention and ensuring sufficient manufacturing capacity and inventory.
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Our
business is subject to health care industry cost-containment measures that could result in reduced sales of our TearLab® Osmolarity
System.
Most
of our customers rely on third-party payers, including government programs and private health insurance plans, to reimburse some
or all of the cost of the procedures which use our TearLab® Osmolarity System. The continuing efforts of governmental authorities,
insurance companies, and other health care payers to contain or reduce these costs could lead to patients being unable to obtain
approval for payment from these third-party payers. If patients cannot obtain third-party payer payment approval, the use of our
TearLab® Osmolarity System may decline significantly and our customers may reduce or eliminate the use of our system. The
cost-containment measures that health care providers are instituting, both in the U.S. and internationally, could harm our ability
to operate profitably. For example, managed care organizations have successfully negotiated volume discounts for pharmaceuticals.
While this type of discount pricing does not currently exist for the medical systems we supply, if managed care or other organizations
were able to affect discount pricing for such systems, it could result in lower prices to our customers from their customers and,
in turn, reduce the amounts we can charge our customers for our products.
In
addition to general health care industry cost-containment, the Centers for Medicare and Medicaid Services (CMS) released its final
rule implementing section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA) that will require reporting entities
to report private payer rates paid to laboratories for lab tests, which will be used to calculate Medicare payment rates. This
final rule also announces CMS’ decision to move the implementation date for the private payer rate-based fee schedule to
January 1, 2018. Reporting entities, which would primarily be certain qualifying customers in the U.S. that derive a certain percentage
and volume of their revenue from laboratory tests from Medicare, will report private payer rates for our laboratory tests which
will serve under the act as a baseline for future reimbursement. Our product was only minimally impacted by PAMA for the year
2018 through 2020. However, should reimbursement for our products be reduced as a result of PAMA or other cost savings initiatives,
this could negatively impact our pricing and commercialization of our products in the U.S.
If
we are subject to regulatory enforcement action as a result of our failure to comply with regulatory requirements, our commercial
operations would be harmed.
While
we received the 510(k) clearance and CLIA waiver that we were seeking, we will be subject to significant ongoing regulatory requirements,
and if we fail to comply with these requirements, we could be subject to enforcement action by the FDA or state agencies, including:
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adverse
publicity, warning letters, fines, injunctions, consent decrees and civil penalties;
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repair,
replacement, refunds, recall or seizure of our product;
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operating
restrictions or partial suspension or total shutdown of production;
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refusal
to grant export approval for our products;
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withdrawing
510(k) clearances or premarket approvals that have already been granted; and
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criminal
prosecution.
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If
the government initiated any of these enforcement actions, our business could be harmed.
We
are required to demonstrate and maintain compliance with the FDA’s Quality System Regulation, or the QSR. The QSR is a complex
regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality
assurance, packaging, storage and shipping of our products. The FDA must determine that the facilities which manufacture and assemble
our products that are intended for sale in the United States, as well as the manufacturing controls and specifications for these
products, are compliant with applicable regulatory requirements, including the QSR. The FDA enforces the QSR through periodic
unannounced inspections. The FDA has not yet inspected our facilities, and we cannot assure you that we will pass any future FDA
inspection. Our failure, or the failure of our suppliers, to take satisfactory corrective action in response to an adverse QSR
inspection could result in enforcement actions, including a public warning letter, a shutdown of our manufacturing operations,
a recall of our product, civil or criminal penalties or other sanctions, which would significantly harm our available inventory
and sales and cause our business to suffer.
If
we are unable to fully comply with federal and state “fraud and abuse laws,” we could face substantial penalties,
which may adversely affect our business, financial condition and results of operations.
We
are subject to various laws pertaining to health care fraud and abuse, including the U.S. Anti- Kickback Statute, physician self-referral
laws, known as the “Stark Law,” the U.S. False Claims Act, the U.S. False Statements Statute, the Physician Payment
Sunshine Act, and state law equivalents to these U.S. federal laws, which may not be limited to government-reimbursed items and
may not contain identical exceptions. Violations of these laws are punishable by criminal and civil sanctions, including, in some
instances, civil and criminal penalties, damages, fines, exclusion from participation in U.S. federal and state health care programs,
including Medicare and Medicaid, and the curtailment or restructuring of operations. Any action against us for violation of these
laws could have a significant impact on our business. In addition, in connection with our international product commercialization
and sales, we are subject to the U.S. Foreign Corrupt Practices Act. Any action against us for violation by us or our agents or
distributors of this act could have a significant impact on our business.
If
we fail to comply with contractual obligations and applicable laws and regulations governing the handling of patient identifiable
medical information, we could suffer material losses or be adversely affected by exposure to material penalties and liabilities.
Many,
if not all of our customers, are covered entities under the Health Insurance Portability and Accountability Act of August 1996,
or HIPAA. As part of the operation of our business, we provide reimbursement assistance to certain of our customers, and as a
result, we act in the capacity of a business associate with respect to any patient-identifiable medical information, or PHI, we
receive in connection with these services. We and our customers must comply with a variety of requirements related to the handling
of patient information, including laws and regulations protecting the privacy, confidentiality and security of PHI. The provisions
of HIPAA require our customers to have business associate agreements with us under which we are required to appropriately safeguard
the PHI we create or receive on their behalf. Further, we and our customers are required to comply with HIPAA security regulations
that require us and them to implement certain administrative, physical and technical safeguards to ensure the confidentiality,
integrity and availability of electronic PHI, or EPHI. We are required by regulation and contract to protect the security of EPHI
that we create, receive, maintain or transmit for our customers consistent with these regulations. To comply with our regulatory
and contractual obligations, we may have to reorganize processes and invest in new technologies. We also are required to train
personnel regarding HIPAA requirements. If we, or any of our employees or consultants, are unable to maintain the privacy, confidentiality
and security of the PHI that is entrusted to us, we and/or our customers could be subject to civil and criminal fines and sanctions
and we could be found to have breached our contracts with our customers. Under the Health Information Technology for Economic
and Clinical Health Act, or HITECH Act, and recent omnibus revisions to the HIPAA regulations, we are directly subject to HIPAA’s
criminal and civil penalties for breaches of our privacy and security obligations and are required to comply with security breach
notification requirements. In addition to the HIPAA and HITECH Act requirements that we are subject to, we are also subject to
similar state laws and regulations that impact our collection, handling and storage of PHI and related information. The direct
applicability of federal and state laws and regulations, including the HIPAA privacy and security provisions and compliance with
the applicable notification requirements requires us to incur additional costs and may restrict our business operations.
Our
patents may not be valid, and we may not obtain and enforce patents to protect our proprietary rights from use by potential competitors.
Companies with other patents could require us to stop using or pay to use required technology.
Our
owned and licensed patents may not be valid, and we may not obtain and enforce patents and maintain trade secret protection for
our technology. The extent to which we are unable to do so could materially harm our business.
We
have applied for, and intend to continue to apply for, patents relating to the TearLab® Osmolarity System and related technology
and processes. Such applications may not result in the issuance of any patents, and any patents now held or that may be issued
may not provide adequate protection from competition. Furthermore, it is possible that patents issued or licensed to us may be
challenged successfully. In that event, if we have a preferred competitive position because of any such patents, any preferred
position would be lost. If we are unable to secure or to continue to maintain a preferred position, the TearLab® Osmolarity
System could become subject to competition from the sale of similar competing products.
Patents
issued or licensed to us may be infringed by the products or processes of others. The cost of enforcing patent rights against
infringers, if such enforcement is required, could be significant and the time demands could interfere with our normal operations.
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical,
biotechnology and medical technology industries. We are currently involved in litigation defending our patent rights in Canada.
Efforts to defend our rights could incur significant costs and may or may not be resolved in our favor. We could become a party
to additional patent litigation and other proceedings. The cost to us of any patent litigation, even if resolved in our favor,
could be substantial. Some of our would-be competitors may sustain the costs of such litigation more effectively than we can because
of their greater financial resources. Litigation also may absorb significant management time.
Unpatented
trade secrets, improvements, confidential know-how and continuing technological innovation are important to our future scientific
and commercial success. Although we attempt, and will continue to attempt, to protect our proprietary information through reliance
on trade secret laws and the use of confidentiality agreements with corporate partners, collaborators, employees and consultants
and other appropriate means, these measures may not effectively prevent disclosure of our proprietary information, and, in any
event, others may develop independently, or obtain access to, the same or similar information.
Certain
of our patent rights are licensed to us by third parties. If we fail to comply with the terms of these license agreements, our
rights to those patents may be terminated, and we will be unable to conduct our business.
It
is possible that a court may find us to be infringing upon validly issued patents of third parties. In that event, in addition
to the cost of defending the underlying suit for infringement, we may have to pay license fees and/or damages and may be enjoined
from conducting certain activities. Obtaining licenses under third-party patents can be costly, and such licenses may not be available
on acceptable terms, or at all.
Our
patents will begin to naturally expire starting in March of 2023. While we continue to file new patent applications, upon the
expiration of certain of our existing patents, the TearLab® Osmolarity system could become subject to competition from the
sale of generic products.
We
may face future product liability claims.
The
testing, manufacturing, marketing and sale of therapeutic and diagnostic products entail significant inherent risks of allegations
of product liability. Our past use of the RHEO™ System and the components of the SOLX Glaucoma System in clinical trials
and the commercial sale of those products may have exposed us to potential liability claims. Our use of the TearLab® Osmolarity
System and its commercial sale could also expose us to liability claims. All of such claims might be made directly by patients,
health care providers or others selling the products. We carry clinical trials and product liability insurance to cover certain
claims that could arise, or that could have arisen, during our clinical trials or during the commercial use of our products. We
currently maintain clinical trials and product liability insurance with aggregate annual coverage limits of $2.0 million. Such
coverage, and any coverage obtained in the future, may be inadequate to protect us in the event of successful product liability
claims, and we may not increase the amount of such insurance coverage or even renew it. A successful product liability claim could
materially harm our business. In addition, substantial, complex or extended litigation could result in the incurrence of large
expenditures and the diversion of significant resources.
If
we do not introduce new commercially successful products in a timely manner, our products may become obsolete over time, customers
may not buy our products and our revenue and profitability may decline.
Demand
for our products may change in ways we may not anticipate because of:
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evolving
customer needs;
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the
introduction of new products and technologies; and
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evolving
industry standards.
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Without
the timely introduction of new commercially successful products and enhancements, our products may become obsolete over time,
in which case our sales and operating results would suffer. The success of our new product offerings will depend on several factors,
including our ability to:
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properly
identify and anticipate customer needs;
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commercialize
new products in a cost-effective and timely manner;
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manufacture
and deliver products in sufficient volumes on time;
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obtain
and maintain regulatory approval for such new products;
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differentiate
our offerings from competitors’ offerings;
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achieve
positive clinical outcomes; and
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provide
adequate medical and/or consumer education relating to new products.
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Moreover,
innovations generally will require a substantial investment in research and development before we can determine the commercial
viability of these innovations and we may not have the financial resources necessary to fund these innovations. In addition, even
if we successfully develop enhancements or new generations of our products, these enhancements or new generations of products
may not produce revenue in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences
or the introduction by our competitors of products embodying new technologies or features.
We
rely on a limited number of suppliers of each of the key components of the TearLab® Osmolarity System and are vulnerable to
fluctuations in the availability and price of our suppliers’ products and services.
We
purchase each of the key components of the TearLab
®
Osmolarity System from a limited number of third-party suppliers.
Our suppliers may not provide the components or other products needed by us in the quantities requested, in a timely manner or
at a price we are willing to pay. In the event we were unable to renew our agreements with our suppliers or they were to become
unable or unwilling to continue to provide important components in the required volumes and quality levels or in a timely manner,
or if regulations affecting the components were to change, we would be required to identify and obtain acceptable replacement
supply sources. We may not be able to obtain alternative suppliers or vendors on a timely basis, or at all, which could disrupt
or delay, or halt altogether, our ability to manufacture or deliver the TearLab® Osmolarity System. If any of these events
should occur, our business, financial condition, cash flows and results of operations could be materially adversely affected.
We
face intense competition, and our failure to compete effectively could have a material adverse effect on our results of operations.
We
face intense competition in the markets for ophthalmic products and these markets are subject to rapid and significant technological
change. We have numerous potential competitors in the United States and abroad, including one direct competitor recently launched
in Canada. We face potential competition from industry participants marketing conventional technologies for the measurement of
osmolarity and other in-lab testing technologies, and commercially available methods, such as the Schirmer Test and ocular surface
staining. Many of our potential competitors have substantially more resources and a greater marketing scale than we do. If we
are unable to develop and produce or market our products to effectively compete against our competitors, our operating results
will materially suffer.
If
we lose key personnel, or we do not attract and retain highly qualified personnel on a cost-effective basis, it would be more
difficult for us to manage our existing business operations and to identify and pursue new growth opportunities.
Our
success depends, in large part, upon our ability to attract and retain highly qualified scientific, clinical, manufacturing and
management personnel. In addition, any difficulties in retaining key personnel or managing this growth could disrupt our operations.
Future growth will require us to continue to implement and improve our managerial, operational and financial systems, and to continue
to recruit, train and retain additional qualified personnel, which may impose a strain on our administrative and operational infrastructure.
The competition for qualified personnel in the medical technology field is intense. We are highly dependent on our continued ability
to attract, motivate and retain highly qualified management, clinical and scientific personnel.
Due
to our limited resources, we may not effectively recruit, train and retain additional qualified personnel. If we do not retain
key personnel or manage our growth effectively, we may not implement our business plan effectively.
Furthermore,
we have not entered into non-competition agreements with our key employees. In addition, we do not maintain “key person”
life insurance on any of our officers, employees or consultants. The loss of the services of existing personnel, the failure to
recruit additional key scientific, technical and managerial personnel in a timely manner, and the loss of our employees to our
competitors would harm our research and development programs and our business.
If
we fail to establish and maintain proper and effective internal controls, our ability to produce accurate financial statements
on a timely basis could be impaired, which would adversely affect our consolidated operating results, our ability to operate our
business and our stock price.
Ensuring
that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements
on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Failure on our part to maintain
effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material
adverse effect on our business, operating results, financial condition and cash flows, and could cause the trading price of our
common stock to fall dramatically.
Maintaining
proper and effective internal controls will require substantial management time and attention and may result in our incurring
substantial incremental expenses, including with respect to increasing the breadth and depth of our finance organization to ensure
that we have personnel with the appropriate qualifications and training in certain key accounting roles and adherence to certain
control disciplines within the accounting and reporting function. Any failure in internal controls or any errors or delays in
our financial reporting would have a material adverse effect on our business and results of operations and could have a substantial
adverse impact on the trading price of our common stock.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable
assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes
in accordance with U.S. GAAP. Our management does not expect that our internal control over financial reporting will prevent or
detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control system’s objectives will be met. Our management has identified control deficiencies
in the past and may identify additional deficiencies in the future.
We
cannot be certain that the actions we are taking to improve our internal controls over financial reporting will be sufficient
or that any changes in processes and procedures can be completed in a timely manner. In future periods, if the process required
by Section 404 of the Sarbanes-Oxley Act of 2002 reveals material weaknesses or significant deficiencies, the correction of any
such material weaknesses or significant deficiencies could require additional remedial measures which could be costly and time-consuming.
In addition, we may be unable to produce accurate financial statements on a timely basis. Any of the foregoing could cause investors
to lose confidence in the reliability of our consolidated financial statements, which could cause the market price of our common
stock to decline and make it more difficult for us to finance our operations and growth.
Risks
Related to Our Common Stock
Our
common stock was delisted from The Nasdaq Capital Market, which could make trading in our common stock more difficult for investors,
potentially leading to declines in our share price and liquidity and could limit our ability to raise additional capital.
Effective
at the open of business on November 9, 2017, our common stock was suspended and delisted from The Nasdaq Capital Market and began
trading on the OTCQB. The delisting was the result of our non-compliance with Nasdaq Listing Rule 5550(b).
Our
delisting from The Nasdaq Capital Market could make trading in our common stock more difficult for investors, potentially leading
to declines in our share price and liquidity. Without The Nasdaq Capital Market listing, stockholders may have a difficult time
getting a quote for the sale or purchase of our stock, the sale or purchase of our stock will likely be made more difficult and
the trading volume and liquidity of our stock could decline. Our delisting from The Nasdaq Capital Market could also result in
negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may
adversely impact the acceptance of our common stock as currency or the value accorded by other parties. Further, following our
delisting, we will also incur additional costs under state blue sky laws in connection with any sales of our securities. These
requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common
stock in the secondary market.
Now
that our common stock is traded on an over-the-counter quotation system, an investor may find it more difficult to sell our stock
or obtain accurate quotations as to the market value of our common stock.
Following
the delisting of our common stock, our common stock now falls within the definition of a “penny stock” as defined
in the Securities Exchange Act of 1934, or the Exchange Act, and is covered by Rule 15g-9 of the Exchange Act. Rule 15g-9 imposes
additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited
investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9 will affect
the ability or willingness of broker-dealers to sell our securities, and accordingly will affect the ability of stockholders to
sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital
in the future.
The
trading price of our common stock may be volatile.
The
market prices for, and the trading volumes of, securities of medical device companies, such as ours, have been historically volatile.
The market has experienced, from time to time, significant price and volume fluctuations unrelated to the operating performance
of particular companies. In addition, the fact that our common stock now trades on the OTCQB market could contribute to trading
volume in our shares being sporadic and volatility in the share price. If adverse market conditions exist, you may have difficulty
selling your shares. The market price of our common shares may fluctuate significantly due to a variety of factors, including:
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our
results of operations;
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the
results of pre-clinical testing and clinical trials by us, our collaborators and/or our competitors;
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technological
innovations or new diagnostic products;
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governmental
regulations and reimbursement levels;
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developments
in patent or other proprietary rights;
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litigation;
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public
concern regarding the safety of products developed by us or others;
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comments
by securities analysts;
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the
issuance of additional shares to obtain financing or for acquisitions;
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general
market conditions in our industry or in the economy as a whole; and
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political
instability, natural disasters, war and/or events of terrorism.
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the
impact of our delisting from The Nasdaq Capital Market
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In
addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of individual companies. Broad market and industry factors may seriously affect
the market price of our stock, regardless of actual operating performance. In the past, securities class action litigation often
follows periods of volatility in the overall market and market price of a particular company’s securities. This litigation,
if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
Because
we do not expect to pay dividends on our common stock, stockholders will benefit from an investment in our common stock only if
it appreciates in value.
We
have never paid cash dividends on our common stock and have no present intention to pay any dividends in the future. We are not
profitable and may not earn sufficient revenue to meet all operating cash needs. As a result, we intend to use all available cash
and liquid assets in the development of our business. Any future determination about the payment of dividends will be made at
the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements, our operating and
financial conditions and on such other factors as our board of directors may deem relevant. As a result, the success of an investment
in our common stock will depend upon any future appreciation in its value. There is no guarantee that our common stock will appreciate
in value or even maintain the price at which stockholders have purchased their shares.
Warrant
holders will not be entitled to any of the rights of common stockholders, but will be subject to all changes made with respect
thereto.
If
you hold warrants, you will not be entitled to any rights with respect to our common stock (including, without limitation, voting
rights and rights to receive any dividends or other distributions on our common stock), but you will be subject to all changes
affecting our common stock. You will have rights with respect to our common stock only if you receive our common stock upon exercise
of the warrants and only as of the date when you become a record owner of the shares of our common stock upon such exercise. For
example, if a proposed amendment to our charter or bylaws requires stockholder approval and the record date for determining the
stockholders of record entitled to vote on the amendment occurs prior to the date that you are deemed to be the owner of the shares
of our common stock due upon exercise of your warrants, you will not be entitled to vote on the amendment; although, you will
nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.
Risks
Related to the Offering
The
offering may not be fully subscribed, and, even if the offering is fully subscribed, we may need additional capital in the future.
If additional capital is not available, we may not be able to continue to operate our business pursuant to our business plan or
we may have to discontinue our operations entirely.
The
placement agent in this offering will offer the securities on a “best-efforts” basis, meaning that we may raise substantially
less than the total maximum offering amounts. We will not provide any refund to investors if less than all of the securities are
sold. We have incurred losses in each year since our inception. Our net working capital balance at September 30, 2017 was
$6.9 million which represents a $9.3 million decrease in the balance from our working capital of $16.3 million at
December 31, 2016. If we continue to use cash at this rate we will need significant additional financing, which we may seek to
raise through, among other things, public and private equity offerings and debt financing. Any equity financings will likely be
dilutive to existing stockholders, and any debt financings will likely involve covenants restricting our business activities.
Additional financing may not be available on acceptable terms, or at all.
There
is no public market for the Series A Preferred Stock or the warrants to purchase shares of our common stock being offered by us
in this offering.
There
is no established public trading market for the Series A Preferred Stock or the warrants being offered in this offering, and we
do not expect a market to develop. In addition, we do not intend to apply to list the Series A Preferred Stock or the warrants
on any national securities exchange or other nationally recognized trading system, including the OTCQB. Without an active market,
the liquidity of the Series A Preferred Stock and the warrants will be limited.
We
can issue shares of preferred stock that may adversely affect the rights of holders of our common stock.
Our
certificate of incorporation authorizes us to issue up to 10.0 million shares of preferred stock with designations, rights, and
preferences determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those
of holders of our common stock. For example, an issuance of shares of preferred stock could:
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adversely
affect the voting power of the holders of our common stock;
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make
it more difficult for a third party to gain control of us;
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discourage
bids for our common stock at a premium;
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limit
or eliminate any payments that the holders of our common stock could expect to receive upon our liquidation; or
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otherwise
adversely affect the market price or our common stock.
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We
have broad discretion as to the use of the net proceeds we receive from this offering and may not use them effectively.
We
retain broad discretion to use the net proceeds from this offering of our common stock. Accordingly, you will have to rely upon
the judgment of our management with respect to the use of those net proceeds. Our management may spend a portion or all of the
net proceeds we receive from this offering in ways that our stockholders may not desire or that may not yield a favorable return.
The failure by our management to apply these funds effectively could harm our business.
Purchasers
will suffer immediate and substantial dilution as a result of this offering.
Purchasers
of shares of our common stock offered by this prospectus will suffer immediate and substantial dilution of their investment. Purchasers
in this offering will suffer immediate dilution of approximately ($ 1.98) per share in the net tangible book value
of the common stock. See “Dilution” on page 24 of this prospectus for a more detailed discussion of the dilution purchasers
will incur in this offering.
Our
stockholders may experience further dilution if we issue additional shares of common stock in the future or outstanding options
and warrants to purchase our common stock are exercised.
Any
additional future issuances of common stock by us will reduce the percentage of our common stock owned by investors purchasing
shares in this offering who do not participate in such future issuances. In most circumstances stockholders will not be entitled
to vote on whether or not we issue additional common stock. In addition, outstanding options and warrants to purchase our common
stock may be exercised and additional options and warrants may be issued, resulting in the issuance of additional shares of common
stock. The issuance by us of additional equity securities, including the shares of common stock issuable upon exercise of the
warrants issued by us in this offering, depending upon the terms and pricing of such issuance and the value of our assets, would
result in dilution to our stockholders in both the book value and fair value of their shares, and even the perception that such
an issuance may occur could have a negative impact on the trading price of our common stock.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the information incorporated by reference herein contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities Exchange Act
of 1934, as amended, referred to as the Exchange Act. Forward-looking statements include information concerning our possible or
assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential
growth opportunities and the effects of competition. These forward-looking statements are based on our management’s beliefs
and assumptions and on information currently available to our management. These statements may appear in this prospectus and the
documents incorporated herein and therein by reference, particularly in the sections entitled “Prospectus Summary,”
“Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and “Business.” Forward-looking statements include all statements that are not historical facts and can be identified
by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,”
“projects,” “should,” “will,” “would” or similar expressions and the negatives
of those terms.
These
forward-looking statements include, among other things, statements about:
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Our
ability to continue as a going concern;
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The
adequacy of our funding and our forecast of the period of time through which our financial resources will be adequate to support
our operations;
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Our
future strategy, structure, and business prospects, and the ability to identify and execute any strategic alternatives;
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Our
ability to obtain additional financing for working capital on acceptable terms and in a timely manner;
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The
planned commercialization of our current product;
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Our
ability to expand into the next generation of product;
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Our
ability to meet the financial covenants under our credit facilities;
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Use
of cash, cash needs and ability to raise capital;
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The
size and growth of the potential markets for our product and technology;
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The
effect of our strategy to streamline our organization and lower our costs;
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The
adequacy of current, and the development of new distributor, reseller, and supplier relationships, and our efforts to expand
relationships with distributors and resellers in additional countries;
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Our
anticipated expansion of United States and international sales and operations;
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Our
ability to obtain and protect our intellectual property and proprietary rights;
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The
results of our clinical trials;
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Our
ability to maintain reimbursement of our product and support our pricing strategies;
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Our
plan to continue to develop and execute our conference and podium strategy to ensure visibility and evidence-based positioning
of the TearLab® Osmolarity System among eye care professionals;
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Our
ability to attract and retain a sufficient number of scientists, clinicians, sales personnel and other key personnel with
extensive experience in medical technology, who are in short supply;
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Our
beliefs about our employee relations;
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Our
efforts to assist our customers in obtaining their CLIA waiver or providing them with support from certified professionals;
and
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The
impact of our delisting from the NASDAQ Capital Market and our common stock being traded
on the OTCQB.
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Forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking
statements including those described in “Risk Factors,” elsewhere in this prospectus and the documents incorporated
by reference herein. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking
statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this
prospectus or the date of the documents incorporated herein by reference. You should read this prospectus and the documents incorporated
herein by reference, completely and with the understanding that our actual future results may be materially different from what
we expect.
Except
as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual
results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available
in the future.
This
prospectus and the documents incorporated herein by reference may also contain estimates and other information concerning our
market and industry that are based on government and industry publications. This information involves a number of assumptions
and limitations, and you are cautioned not to give undue weight to these estimates. These government and industry publications
generally indicate that their information has been obtained from sources believed to be reliable.
USE
OF PROCEEDS
We estimate that the net
proceeds to us from the sale of our common stock in this offering will be approximately $4,300,000 from the sale of approximately
$5.0 million of shares of our common stock offered by us in this offering, after deducting estimated placement agent fees and
commissions and estimated offering expenses payable by us.
We intend to use the net
proceeds from the sale of the shares offered by us in this offering to fund general corporate purposes, including commercializing
our products, research and product development, capital expenditures, and working capital needed to satisfy our debt covenants .
We may also use our net proceeds to acquire and invest in complementary products, technologies or businesses; however, we currently
have no agreements or commitments to complete any such transaction and are not involved in negotiations to do so. Pending these
uses, we intend to invest our net proceeds from this offering primarily in investment-grade, interest-bearing instruments.
As
of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received
upon the completion of this offering. The amount and timing of our expenditures will depend on several factors, including cash
flows from our operations and the anticipated growth of our business. Accordingly, our management will have broad discretion in
the application of the net proceeds and investors will be relying on the judgment of our board of directors and management regarding
the application of the proceeds from this offering. We reserve the right to change the use of these proceeds as a result of certain
contingencies such as the results of our commercialization efforts, competitive developments, opportunities to acquire products,
technologies or businesses, negotiations with CRG, debt repayment needs, and other factors.
PRICE
RANGE OF COMMON STOCK
Our
common stock previously traded on the NASDAQ Capital Market through November 8, 2017 (“NASDAQ”) under the symbol “TEAR”
and the Toronto Stock Exchange (“TSX”) under the symbol “TLB”. On November 9, 2017, our stock began trading
on the over-the-counter market place (“OTCQB”) under the symbol “TEAR”.
The
following table sets forth the range of high and low sales prices per share of our common stock on both the NASDAQ, the OTCQB
and the TSX for the fiscal periods indicated.
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Common
Stock Prices
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Fiscal
2017
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Fiscal
2016
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Fiscal
2015
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High
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Low
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High
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Low
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High
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Low
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NASDAQ/OTCQB
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First
Quarter
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$
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7.50
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$
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2.74
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$
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16.50
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$
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6.00
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$
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31.50
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$
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15.00
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Second
Quarter
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3.30
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1.55
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9.10
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6.00
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26.00
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19.60
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Third
Quarter
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3.75
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1.20
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9.00
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5.80
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30.30
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18.00
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Fourth
Quarter
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1.94
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*
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0.59
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*
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6.94
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3.90
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22.50
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11.50
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Toronto
Stock Exchange
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First
Quarter
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C$
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10.10
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C$
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3.73
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C$
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22.6
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7.90
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C$
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40.00
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C$
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19.20
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Second
Quarter
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4.50
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2.06
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12.4
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7.80
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32.30
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25.00
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Third
Quarter
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4.70
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1.50
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11.6
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8.00
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37.90
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24.30
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Fourth
Quarter
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2.50
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*
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0.80
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*
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9.1
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5.10
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29.20
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16.10
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*Fourth
Quarter 2017 Information through November 21 , 2017.
The
closing share price for our common stock on November 21 , 2017 as reported by OTCQB, was $0.71 . The closing share
price for our common stock on November 21 , 2017, as reported by TSX, was C$0.94 .
As
of November 21 , 2017, there were approximately 72 stockholders of record of our common stock.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on shares of our capital stock. We currently intend to retain all available funds
to support operations and to finance the growth and development of our business. Any determination related to payments of future
dividends will be at the discretion of our board of directors after taking into account various factors that our board of directors
deems relevant, including our financial condition, operating results, current and anticipated cash needs, plans for expansion
and debt restrictions, if any.
DILUTION
If
you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the amount per
share paid by purchasers of shares of our common stock in this public offering and the pro forma net tangible book value per share
of our common stock immediately after the closing of this offering.
Our
net tangible book value (deficit) is the amount of our total tangible assets less our total liabilities. Net tangible book value
per share is our net tangible book value divided by the number of shares of common stock outstanding as of September 30,
2017. Our net tangible book value (deficit) as of September 30, 2017 was ($17.2) million, or ($3.00) per
share, based on 5,742,453 shares of our common stock outstanding as of September 30, 2017.
After
giving effect to the sale of Units by us in this offering at a public offering price of $0.71 per Unit, and after deducting
estimated placement agent fees and commissions and estimated offering expenses payable by us, our pro forma net tangible book
value as of September 30, 2017 would have been approximately ($12.9) million, or ($1.02) per share of common
stock. This calculation excludes the proceeds, if any, from the exercise of warrants issued in this offering and includes proceeds
from the issuance of Series A Convertible Preferred shares. This represents an immediate increase in pro forma net tangible book
value of $1.98 per share to our existing stockholders and an immediate dilution of $1.73 per share to investors
purchasing shares of common stock in this offering.
The
following table illustrates this dilution on a per share basis:
Public
offering price per Unit
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$
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0.71
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Net
tangible book value (deficit) per share at September 30, 2017
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$
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( 3.00
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)
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Increase
to net tangible book value per share attributable to investors purchasing our common stock in this offering
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$
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1.98
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Pro
forma net tangible book value per share as of September 30, 2017, after giving effect to this offering
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$
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( 1.02
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)
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Dilution
of pro forma net tangible book value per share to investors purchasing our common stock in this offering
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$
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( 1.73
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)
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If
any shares of common stock are issued upon exercise of outstanding options or warrants, including the warrants issued in this
offering, you may experience further dilution.
The
number of shares of common stock set forth in the table above excludes:
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shares
of common stock that may be issued upon exercise of warrants to be issued in this offering
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681,786
shares
of our common stock are issuable upon the exercise of options outstanding as of September 30, 2017, with a weighted-average
exercise price of $31.50 per share;
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1,324,000
shares of our common stock issuable upon the exercise of warrants outstanding as of September 30, 2017, with a weighted-average
exercise price of $11.45 per share ;
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1,070,000
shares of our common stock reserved for future issuance as of September 30, 2017, under our 2002 Stock Incentive Plan,
including through the exercise of outstanding options; and
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●
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28,601
shares of our common stock reserved for future issuance as of September 30, 2017, under our 2014 Employee Stock Purchase
Plan.
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To
the extent that any of these outstanding options are exercised, or warrants, including the warrants issued in this offering, are
exercised, or we issue additional shares under our equity incentive plans, there will be further dilution to new investors. In
addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we
have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale
of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
DESCRIPTION
OF OUR CAPITAL STOCK
The
following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our
amended and restated certificate of incorporation, and amended and restated bylaws, copies of which are incorporated by reference
as exhibits to the registration statement, of which this prospectus forms a part, and to the applicable provisions of the Delaware
General Corporation Law.
General
As
of October 31, 2017, we were authorized to issue 50,000,000 shares of all classes of capital stock, of which 40,000,000 shares
are common stock, $0.001 par value per share; and 10,000,000 shares are undesignated preferred stock, $0.001 par value per share.
Our capital is stated in U.S. dollars. As of September 30, 2017, we had 5,742,453 outstanding shares of common stock.
Common
Stock
Voting
Rights
Each
holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including
the election of directors. Our restated certificate of incorporation and amended and restated bylaws do not provide for cumulative
voting rights. Because of this, the holders of a plurality of the shares of common stock entitled to vote in any election of directors
can elect all of the directors standing for election, if they should so choose. With respect to matters other than the election
of directors, at any meeting of the stockholders at which a quorum is present or represented, the affirmative vote of a majority
of the voting power of the shares present in person or represented by proxy at such meeting and entitled to vote on the subject
matter shall be the act of the stockholders, except as otherwise required by law. The holders of a majority of the stock issued
and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction
of business at all meetings of the stockholders.
Dividends
Subject
to preferences that may be applicable to any then outstanding preferred stock, holders of common stock are entitled to receive
dividends, if any, as may be declared from time to time by the board of directors out of legally available funds. For more information,
see the section of this prospectus captioned “Dividend Policy.”
Liquidation
In
the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net
assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the
satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.
Rights
and Preferences
Holders
of common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions
applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to and may be
adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.
Fully
Paid and Nonassessable
All
of our outstanding shares of common stock are, and the shares of common stock to be issued pursuant to this offering, when paid
for, will be fully paid and nonassessable.
Preferred
Stock
As
of September 30, 2017, no shares of our preferred stock were outstanding. However, shares of preferred stock may be issued
in one or more series from time to time by our board of directors, and the board of directors is expressly authorized to fix by
resolution or resolutions the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions
thereof, of the shares of each series of preferred stock. Subject to the determination of our board of directors, any shares of
our preferred stock that may be issued in the future would generally have preferences over our common stock with respect to the
payment of dividends and the distribution of assets in the event liquidation, dissolution or winding up of TearLab.
Transfer
Agents
The
co-transfer agents for our common stock are Computershare, P.O. Box 43006, Providence, RI 02940-3006, (888) 667-7671, and TMX
Equity Transfer Services Inc., (416) 361-0152.
Listing
Our
common stock is quoted on the OTCQB under the trading symbol “TEAR” and on the Toronto Stock Exchange under the symbol
“TLB.”
Delaware
Anti-Takeover Statute
Our
restated certificate of incorporation provides that we have opted out of the provisions of Section 203 of the Delaware General
Corporation Law, or the DGCL. Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for a period of three years after the time the person became an
interested stockholder, unless the business combination, or the transaction in which the stockholder became an interested stockholder,
is approved in a prescribed manner. Since we will have opted out in the manner permitted under the DGCL, these restrictions will
not apply to us.
Other
Anti-Takeover Provisions of Our Restated Certificate of Incorporation and Amended and Restated Bylaws
Our
restated certificate of incorporation and amended and restated bylaws contains several provisions, in addition to those pertaining
to the issuance of additional shares of our authorized common stock and preferred stock without the approval of the holders of
our common stock, that could delay or make more difficult the acquisition of our company through a hostile tender offer, open
market purchases, proxy contest, merger or other takeover attempt that a stockholder might consider to be in such holder’s
best interest, including those attempts that might result in a premium over the market price of our common stock.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We
are offering up to 6,996,921 Class A Units (based on an assumed offering price of $0.71, which was the last reported
sales price of our common stock on November 21, 2017) and Class B Units. Each Class A Unit consists of one share of our common
stock, a Series A warrant to purchase one share of our common stock at an exercise price per whole share of common stock
equal to the public offering price of the Class A Units (“Series A warrant ”), and a Series B warrant to purchase
one share of our common stock at an exercise price per whole share of common stock equal to the public offering price of the Class
A Units (“Series B warrant” and, collectively with the Series A warrants, the “Warrants”). Each Class
B Unit consists of one share of our Class A Convertible Preferred Stock, or the Series A Preferred Stock, with a stated value
of $1,000 and convertible into shares of our common stock at a conversion price equal to the public offering price of the Class
A Units, together with the equivalent number of Series A warrants and Series B warrants as would have been issued to such
purchaser if such purchaser had purchased Class A Units based on the public offering price. The Class A Units and Class B Units
will not be certificated and the shares of common stock and the Series A warrant and Series B warrant comprising
a Class A Unit and the Series A Preferred Stock and Series A warrant and Series B warrant comprising a Class B Unit are
each immediately separable and will be issued separately in this offering.
Common
Stock
The
material terms of our common stock are described in the section of this prospectus titled “Description of Our Capital Stock”
beginning on page 25 of this prospectus.
Series
A Convertible Preferred Stock
The
following summary of certain terms and provisions of our Series A Preferred Stock offered in this offering is subject to, and
qualified in its entirety by reference to, the terms and provisions set forth in our certificate of designation of preferences,
rights and limitations of Series A Convertible Preferred Stock.
General
.
Our certificate of incorporation authorizes our board of directors to issue up to 10,000,000 shares of our preferred stock, par
value $0.001 per share, all of which are undesignated preferred stock.
Subject
to the limitations prescribed by our certificate of incorporation, our board of directors is authorized to establish the number
of shares constituting each series of preferred stock and to fix the designations, powers, preferences and rights of the shares
of each of those series and the qualifications, limitations and restrictions of each of those series, all without any further
vote or action by our stockholders. Our board of directors has designated [ * ] of the 10,000,000 authorized shares of preferred
stock as Series A Preferred Stock. When issued, the shares of Series A Preferred Stock will be validly issued, fully paid and
non-assessable.
Rank.
The Series A Preferred Stock will rank:
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senior
to all of our common stock to the extent of its liquidation preference of $0.001 per share;
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senior
to any class or series of our capital stock hereafter created specifically ranking by its terms junior to the Series A Preferred
Stock to the extent of its liquidation preference of $0.001 per share;
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●
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senior
to warrants to purchase shares of our common stock issued in this offering; and
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●
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on
parity to any class or series of our capital stock hereafter created specifically ranking by its terms on parity with the
Series A Preferred Stock.
|
in
each case, as to distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily.
Conversion
.
Each share of the Series A Preferred Stock is initially convertible into an aggregate of shares of our common stock (subject to
adjustment as provided in the related certificate of designation of preferences) at a conversion price equal to the public offering
price of the Class A units at any time at the option of the holder, provided that the holder will be prohibited from converting
Series A Preferred Stock into shares of our common stock if, as a result of such conversion, the holder, together with its affiliates,
would own more than 4.99% (or, at the election of purchaser prior to issuance of shares of Preferred Stock, 9.99%) of the total
number of shares of our common stock then issued and outstanding. However, any holder may increase or decrease such percentage
to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61
days after such notice to us.
Liquidation
Preference.
In the event of our liquidation, dissolution or winding up, holders of the Series A Preferred Stock will receive
a payment equal to $0.001 per share of Series A Preferred Stock before any proceeds are distributed to the holders of our common
stock. Following the payment described in the preceding sentence, the holders of the Series A Preferred Stock will participate,
on an as-if-converted-to-common stock basis, in any distributions to the holders of common stock.
Voting
Rights.
Shares of Series A Preferred Stock will generally have no voting rights, except as required by law and except that
the consent of the holders of the outstanding Series A Preferred Stock will be required to amend any provision of our certificate
of incorporation that would have a materially adverse effect on the rights of the holders of the Series A Preferred Stock.
Dividends.
Shares of Series A Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by
our board of directors. The holders of the Series A Preferred Stock will participate, on an as-if-converted-to-common stock basis,
in any dividends to the holders of common stock.
Redemption.
We are not obligated to redeem or repurchase any shares of Series A Preferred Stock. Shares of Series A Preferred Stock are
not otherwise entitled to any redemption rights or mandatory sinking fund or analogous fund provisions.
Exchange
Listing.
We do not plan on making an application to list the Series A Preferred Stock on the OTCQB, any national securities
exchange or other nationally recognized trading system or other trading market. We plan to make an application to have the common
stock issuable upon conversion of the Series A Preferred Stock quoted on the OTCQB Venture Market.
Warrants
to Purchase Common Stock
The
material terms of the Series A warrants and Series B warrants to be issued are summarized below. This summary does not purport
to be complete in all respects. This description is subject to and qualified entirely by the terms of the form of warrant filed
as an exhibit to the registration statement of which this prospectus is a part.
Series
A Warrants:
The
Series A warrants to be issued with each Unit will have an exercise price per whole share of common stock of $0.71 per
share (equal to the public offering price of the Class A Units based on an assumed offering price per share of $0.71 which
was the last reported sales price of our common stock on November 21, 2017) and will be exercisable for shares of common stock
and may be exercised for a period of five years from the date of issuance. The Series A warrants will be issued in certificated
form.
The
Series A warrants may not be exercised by the holder to the extent that the holder, together with its affiliates, would beneficially
own, after such exercise more than 4.99% (or, at the election of purchaser, 9.99%) of the shares of common stock then outstanding,
subject to the right of the holder to increase or decrease such beneficial ownership limitation upon notice to us, provided that
such limitation cannot exceed 9.99% and provided that any increase in the beneficial ownership limitation shall not be effective
until 61 days after such notice is delivered.
The
Series A warrants are exercisable for cash or, solely in the absence of an effective registration statement or prospectus for
issuance of shares upon exercise, by cashless exercise.
The
exercise price of the warrants is subject to adjustment in the case of stock dividends or other distributions on shares of common
stock or any other equity or equity equivalent securities payable in shares of common stock, stock splits, stock combinations,
reclassifications or similar events affecting our common stock, and also, subject to limitations, upon any distribution of assets,
including cash, stock or other property to our stockholders.
Prior
to the exercise of any warrants to purchase common stock, holders of the warrants will not have any of the rights of holders of
the common stock purchasable upon exercise, including voting rights, provided, however, that the holders of the warrants will
have certain rights to participate in distributions or dividends paid on our common stock to the extent set forth in the warrants.
In
addition, the warrants provide that if, at any time while such warrants are outstanding, we (1) consolidate or merge with or into
another corporation, (2) sell all or substantially all of our assets or (3) are subject to or complete a tender or exchange offer
pursuant to which holders of our common stock are permitted to tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the outstanding Common Stock, (4) effect any reclassification, reorganization
or recapitalization of our common stock or any compulsory share exchange pursuant to which our common stock is converted into
or exchanged for other securities, cash or property, or (5) engage in one or more transactions with another party that results
in that party acquiring more than 50% of our outstanding shares of common stock (each, a “Fundamental Transaction”),
then the holder of such warrants shall have the right thereafter to receive, upon exercise of the warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been, immediately prior to such Fundamental Transaction, the holder of the number of warrant shares then issuable upon
exercise of the warrant, and any additional consideration payable as part of the Fundamental Transaction. Any successor to us
or surviving entity shall assume the obligations under the warrant. In connection with a Fundamental Transaction, the holders
of the Series A warrants have the right to elect to receive a payment of the Black Scholes value of the Series A warrants in cash
from us, as described in the Series A warrants.
In
addition, the Series A warrants will contain an anti-dilution provision for the term of the Series A Warrants whereby if the Company
or any subsidiary shall consummate a dilutive issuance through the sale or grant of any option to purchase, or sale or grant of
any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any common stock or common stock equivalents, subject to customary exceptions, at an effective price per share less
than the exercise price of the Series A warrants then in effect then simultaneously with the consummation of each dilutive issuance
the exercise price of the Series A warrants shall be reduced and only reduced to equal the price of the dilutive issuance.
The
provisions of the Series A warrants may be amended only if we obtain the written consent of Holder.
Series
B Warrants:
The
Series B warrants to be issued with each Unit will have an exercise price per whole share of common stock of $0.71 per
share (equal to the public offering price of the Class A Units based on an assumed offering price per share of $0.71 which
was the last reported sales price of our common stock on November 21, 2017) and will be exercisable for shares of common stock
and may be exercised for a period of 6 months from the date of issuance. The Series B warrants will be issued in certificated
form.
The
Series B warrants may not be exercised by the holder to the extent that the holder, together with its affiliates, would beneficially
own, after such exercise more than 4.99% (or, at the election of purchaser, 9.99%) of the shares of common stock then outstanding,
subject to the right of the holder to increase or decrease such beneficial ownership limitation upon notice to us, provided that
such limitation cannot exceed 9.99% and provided that any increase in the beneficial ownership limitation shall not be effective
until 61 days after such notice is delivered.
The
Series B warrants are exercisable for cash or, solely in the absence of an effective registration statement or prospectus for
issuance of shares upon exercise, by cashless exercise.
The
exercise price of the warrants is subject to adjustment in the case of stock dividends or other distributions on shares of common
stock or any other equity or equity equivalent securities payable in shares of common stock, stock splits, stock combinations,
reclassifications or similar events affecting our common stock, and also, subject to limitations, upon any distribution of assets,
including cash, stock or other property to our stockholders.
Prior
to the exercise of any warrants to purchase common stock, holders of the warrants will not have any of the rights of holders of
the common stock purchasable upon exercise, including voting rights, provided, however, that the holders of the warrants will
have certain rights to participate in distributions or dividends paid on our common stock to the extent set forth in the warrants.
In
addition, the warrants provide that if, at any time while such warrants are outstanding, we (1) consolidate or merge with or into
another corporation, (2) sell all or substantially all of our assets or (3) are subject to or complete a tender or exchange offer
pursuant to which holders of our common stock are permitted to tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the outstanding Common Stock, (4) effect any reclassification, reorganization
or recapitalization of our common stock or any compulsory share exchange pursuant to which our common stock is converted into
or exchanged for other securities, cash or property, or (5) engage in one or more transactions with another party that results
in that party acquiring more than 50% of our outstanding shares of common stock (each, a “Fundamental Transaction”),
then the holder of such warrants shall have the right thereafter to receive, upon exercise of the warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been, immediately prior to such Fundamental Transaction, the holder of the number of warrant shares then issuable upon
exercise of the warrant, and any additional consideration payable as part of the Fundamental Transaction. Any successor to us
or surviving entity shall assume the obligations under the warrant. In connection with a Fundamental Transaction, the holders
of the Series B warrants have the right to elect to receive a payment of the Black Scholes value of the Series B warrants in cash
from us, as described in the Series B warrants.
In
addition, the Series B warrants will contain an anti-dilution provision for the term of the Series A Warrants whereby if the Company
or any subsidiary shall consummate a dilutive issuance through the sale or grant of any option to purchase, or sale or grant of
any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any common stock or common stock equivalents, subject to customary exceptions, at an effective price per share less
than the exercise price of the Series B warrants then in effect then simultaneously with the consummation of each dilutive issuance
the exercise price of the Series B Warrants shall be reduced and only reduced to equal the price of the dilutive issuance.
The
provisions of the Series B warrants may be amended only if we obtain the written consent of Holder.
We
do not plan on applying to list the Series A Preferred Stock or any of the Series A warrants or Series B warrants on the OTCQB,
any other national securities exchange or any other nationally recognized trading system or other trading market.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF OUR COMMON STOCK
The
following is a summary of the material U.S. federal income tax and estate tax consequences of the ownership and disposition of
our common stock to non-U.S. holders, but does not purport to be a complete analysis of all the potential tax considerations relating
thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations
promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed,
possibly retroactively, so as to result in U.S. federal income tax or estate tax consequences different from those set forth below.
This
summary does not address the tax considerations arising under the laws of any U.S. state or local or any non-U.S. jurisdiction,
the potential application of the Medicare contribution tax or under U.S. federal gift and estate tax laws, except to the limited
extent indicated below. In addition, this discussion does not address tax considerations applicable to an investor’s particular
circumstances or to investors that may be subject to special tax rules, including, without limitation:
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banks,
insurance companies or other financial institutions;
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persons
subject to the alternative minimum tax;
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tax-exempt
organizations;
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controlled
foreign corporations, passive foreign investment companies or corporations that accumulate earnings to avoid U.S. federal
income tax;
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dealers
in securities or currencies;
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traders
in securities that elect to use a mark-to-market method of accounting for their securities holdings;
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persons
that own, or are deemed to own, more than five percent of our common stock (except to the extent specifically set forth below);
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certain
former citizens or long-term residents of the United States;
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persons
who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction”
or other risk reduction transaction;
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persons
who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment
purposes); or
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persons
deemed to sell our common stock under the constructive sale provisions of the Code.
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In
addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock,
the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership.
Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.
You
are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation,
as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal
estate or gift tax rules or under the laws of any U.S. state or local or any non-U.S. or other taxing jurisdiction or under any
applicable tax treaty.
Non-U.S.
Holder Defined
For
purposes of this discussion, you are a non-U.S. holder if you are a beneficial owner of our common stock that is not, for U.S.
federal income tax purposes, any of the following:
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an
entity or arrangement treated as a partnership;
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an
individual who is a citizen or resident of the United States;
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a
corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United
States or any political subdivision thereof;
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an
estate whose income is subject to U.S. federal income tax regardless of its source; or
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a
trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons
who have the authority to control all substantial decisions of the trust or (y) which has made a valid election under applicable
Treasury Regulations to be treated as a U.S. person.
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Distributions
If
we make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from
our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions
exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce
your basis in our common stock, but not below zero, and then will be treated as gain from the sale of common stock.
Any
dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend
or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must
provide us with an Internal Revenue Service, or IRS, Form W-8BEN or other appropriate version of IRS Form W-8, including a U.S.
taxpayer identification number, certifying qualification for the reduced rate. If you are eligible for a reduced rate of U.S.
withholding tax pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS in a timely manner. If you hold our common stock through a financial institution or other agent
acting on your behalf, you will be required to provide appropriate documentation to the agent, who then will be required to provide
the required certification to us or our paying agent, either directly or through other intermediaries. You should consult your
tax advisor regarding your entitlement to benefits under any applicable income tax treaty.
Dividends
received by you that are effectively connected with your conduct of a U.S. trade or business are taxed at the same graduated rates
applicable to U.S. persons, net of certain deductions and credits, subject to an applicable income tax treaty providing otherwise.
In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of
a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by
an applicable income tax treaty. Payments of effectively connected dividends that are included in the gross income of a non-U.S.
holder generally are exempt from withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8
ECI or other applicable IRS Form W-8 properly certifying such exemption.
If
you are eligible for a reduced rate of withholding tax pursuant to a tax treaty, you may be able to obtain a refund of any excess
amounts currently withheld if you timely file an appropriate claim for refund with the IRS.
Gain
on Disposition of Common Stock
You
generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common
stock unless:
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the
gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain
is attributable to a permanent establishment maintained by you in the U.S.), in which case you will be required to pay tax
on the net gain derived from the sale (net of certain deductions or credits) under regular graduated U.S. federal income tax
rates, and for a non-U.S. holder that is a corporation, such non-U.S. holder may also be subject to a branch profits tax at
a 30% rate or such lower rate as may be specified by an applicable income tax treaty;
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you
are an individual who is present in the U.S. for a period or periods aggregating 183 days or more during the calendar year
in which the sale or disposition occurs and certain other conditions are met, in which case you will be required to pay a
flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses (even though you are
not considered a resident of the U.S.) subject to applicable income tax or other treaties providing otherwise; or
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our
common stock constitutes a U.S. real property interest by reason of our status as a “U.S. real property holding corporation”
for U.S. federal income tax purposes (a “USRPHC”) at any time within the shorter of the five-year period preceding
the disposition or your holding period for our common stock. We believe that we are not currently and will not become a USRPHC.
However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative
to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future.
Even if we are or become a USRPHC, however, as long as our common stock is regularly traded on an established securities market,
such common stock will be treated as U.S. real property interests to you only if you actually or constructively hold more
than 5% of our common stock at any time during the shorter of the five-year period preceding your disposition of, or your
holding period for, our common stock.
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Federal
Estate Tax
If
you are an individual non-U.S. Holder who is not a citizen or resident of the United States (as defined for U.S. federal estate
tax purposes), at the time of your death, you generally will be required to include the value of our common stock in your gross
estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax unless an applicable estate tax treaty
provides otherwise.
Backup
Withholding and Information Reporting
Generally,
we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld,
if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make
these reports available to tax authorities in your country of residence.
Payments
of dividends or of proceeds on the disposition of common stock made to you may be subject to additional information reporting
and backup withholding at a current rate of 28% unless you establish an exemption, for example by properly certifying your non-U.S.
status on a Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and
information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S.
person.
Backup
withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained
from the IRS, provided that the required information is furnished to the IRS in a timely manner.
Legislation
Affecting Taxation of our Common Stock Held by or through Foreign Entities
Provisions
commonly referred to as “FATCA” generally will impose a U.S. federal withholding tax of 30% on dividends on and the
gross proceeds of a disposition of our common stock, paid to a “foreign financial institution” (as specially defined
under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments
and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution
(which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities
with U.S. owners) or otherwise establishes an exemption. FATCA also generally will impose a U.S. federal withholding tax of 30%
on dividends on and the gross proceeds of a disposition of our common stock paid to a non-financial foreign entity unless such
entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of
the entity, certifies that there are none or otherwise establishes an exemption. This withholding obligation under FATCA generally
will apply currently to payments of dividends on our common stock, and will apply under transition rules to payments of gross
proceeds from a sale or other disposition of our common stock on or after January 1, 2019. Under certain circumstances, a non-U.S.
holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an
applicable foreign country may modify the requirements described in this paragraph. Prospective investors are encouraged to consult
with their own tax advisors regarding the possible implications of this legislation on their investment in our common stock.
The
preceding discussion of U.S. federal tax considerations is for general information only. It is not tax advice. Each prospective
investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences
of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.
PLAN
OF DISTRIBUTION
We
engaged H.C. Wainwright & Co., LLC (“Wainwright” or the “placement agent”) to act as our exclusive
placement agent to solicit offers to purchase the securities offered by this prospectus. Wainwright is not purchasing or selling
any securities, nor are they required to arrange for the purchase and sale of any specific number or dollar amount of securities,
other than to use their “reasonable best efforts” to arrange for the sale of the securities by us. Therefore, we may
not sell the entire amount of securities being offered. There is no minimum amount of proceeds that is a condition to closing
of this offering. We will enter into a securities purchase agreement directly with the institutional investors who purchase our
securities in this offering. In the United States, offers will only be made to and subscriptions will only be accepted from investors
that qualify as “institutional” investors exempt from qualification under the laws and regulations of their state
of domicile. Wainwright may engage one or more sub-placement agents or selected dealers to assist with the offering.
Upon
the closing of this offering, we will pay the placement agent a cash transaction fee equal to 7% of the aggregate gross proceeds
to us from the sale of the Units in the offering and we will issue to the placement agent the Placement Agent Warrants as outlined
below. In addition, we will pay Wainwright a management fee equal to 1% of the aggregate gross proceeds in this offering. We will
also reimburse Wainwright for its expenses incurred in connection with this offering in a non-accountable amount equal to $25,000
and for its legal and other expenses in connection with this offering up to $100,000, subject to compliance with FINRA Rule 5110(f)(2)(D)(i).
The
following table shows the per Unit and total placement agent fees we will pay in connection with the sale of the securities in
this offering, assuming the purchase of all of the securities we are offering.
Per
Class A Unit
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$
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Per
Class B Unit
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$
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Total
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$
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We
estimate the total expenses of this offering, which will be payable by us, excluding the placement agent fees, will be approximately
$325,000 . After deducting the fees due to the placement agent and our estimated offering expenses, we expect the net proceeds
from this offering to be approximately $4.3 million.
In
addition, we agreed to grant compensation warrants to the placement agent (the “Placement Agent Warrants”) to purchase
a number of shares of our common stock equal to 7% of the number of shares of Common Stock sold in this offering (including the
number of shares of Common Stock issuable upon conversion of shares of Series A Preferred Stock but excluding any shares of Common
Stock underlying the warrants issued in this offering). The compensation warrants will be in same form as Series A warrants, except
that the compensation warrants will have an exercise price of $0.89 (125% of the assumed offering price per share
in this offering) and will terminate on the five year anniversary of the effective date of the registration statement of which
this prospectus is a part. Pursuant to FINRA Rule 5110(g), the compensation warrants and any shares issued upon exercise of the
compensation warrants shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short
sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person
for a period of 180 days immediately following the date of effectiveness or commencement of sales of this offering, except the
transfer of any security:
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by
operation of law or by reason of reorganization of our company;
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to
any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction set forth above for the remainder of the time period;
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if
the aggregate amount of securities of our company held by the holder of the compensation warrants or related persons do not
exceed 1% of the securities being offered;
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that
is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member
manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10%
of the equity in the fund; or
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the
exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above
for the remainder of the time period.
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The
placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received
by it and any profit realized on the sale of the securities by it while acting as principal may be deemed to be underwriting discounts
or commissions under the Securities Act. The placement agent will be required to comply with the requirements of the Securities
Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, Rule
10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of our
securities by the placement agent acting as principal. Under these rules and regulations, the placement agent may not (i) engage
in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed
their participation in the distribution.
If
we decide to make a public or private offering of our equity, equity-linked or debt securities or to refinance any indebtedness
at any time within nine months, we have granted the placement agent the right to act as the sole placement agent or sole placement
agent and sole book runner or manager, as applicable, for such offering under a separate agreement containing terms and conditions
customary for the placement agent and mutually agreed upon by us and the placement agent.
Other
Relationships
The
placement agent has performed investment banking services for us in the past, for which it has received customary fees and expenses.
The placement agent may, from time to time, engage in transactions with or perform services for us in the ordinary course of its
business and may continue to receive compensation from us for such services, but we have no present agreements with the placement
agent to do so.
Determination
of offering price
The
public offering price of the Units we are offering was negotiated between us and the investors, in consultation with the placement
agent based on the trading of our common stock prior to the offering, among other things, and may be at a discount to the current
market price. Other factors considered in determining the public offering price of the shares of our common stock we are offering
include the history and prospects of the Company, the stage of development of our business, our business plans for the future
and the extent to which they have been implemented, an assessment of our management, general conditions of the securities markets
at the time of the offering and such other factors as were deemed relevant.
Lock-up
Agreements
Our
officers and directors have agreed with the placement agent to be subject to a lock-up period of 60 days following the date of
closing of this offering. This means that, during the applicable lock-up period, such persons may not offer for sale, contract
to sell, sell, distribute, grant any option, right to warrant to purchase, pledge, hypothecate or otherwise dispose of, directly
or indirectly, any shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of
our common stock. Certain limited transfers are permitted during the lock-up period if the transferee agrees to these lock-up
restrictions. The 60 day lock-up period is subject to an additional extension to accommodate for our reports of financial results
or material news releases. The placement agent may, in its sole discretion and without notice, waive the terms of any of these
lock-up agreements. We have also agreed, in the securities purchase agreement, to a lock-up restriction on the issuance and sale
of our securities for 60 days following the date of this prospectus, although we will be permitted to issue stock options to directors,
officers, employees and consultants under our existing plans.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare, P.O. Box 43006, Providence, RI 02940-3006, (888) 667-7671,
and TMX Equity Transfer Services Inc., (416) 361-0152.
Indemnification
We
have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act of 1933,
or to contribute to payments the placement agent may be required to make with respect to any of these liabilities.
LEGAL
MATTERS
The
validity of the common stock offered by this prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, San Diego, California. Attorneys with Wilson Sonsini Goodrich & Rosati, Professional Corporation, and its affiliated
investment funds own an aggregate of 5,552 shares of our common stock as of the date of this prospectus. Certain legal matters
in connection with the offering will be passed upon for the placement agent by Ellenoff Grossman & Schole LLP.
EXPERTS
The
consolidated financial statements of TearLab Corporation at December 31, 2016 and 2015, and for the years then ended, incorporated
by reference in this Prospectus and Registration Statement have been audited by Mayer Hoffman McCann P.C., independent registered
public accounting firm, as set forth in their report thereon, and incorporated herein by reference. Such financial statements
are incorporated herein by reference in reliance upon such reports given on the authority of such firm as an expert in accounting
and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and other reports, proxy statements and other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file
at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, including any amendments to those reports, and other information that we file with or furnish to the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act can also be accessed free of charge through the Internet. These filings
will be available as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 relating to the offering of these
securities. The registration statement, including the attached exhibits, contains additional relevant information about us and
the securities. This prospectus does not contain all of the information set forth in the registration statement. You can obtain
a copy of the registration statement from the SEC at the address listed above. The registration statement and the documents referred
to below under “Incorporation of Certain Information by Reference” are also available on our Internet website, www.tearlab.com.
We have not incorporated by reference into this prospectus the information on our website, and you should not consider it to be
a part of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus certain information we file with it, which means that we can disclose
important information by referring you to those documents. The information incorporated by reference is considered to be a part
of this prospectus, and information that we file later with the SEC will automatically update and supersede information contained
in this prospectus. We incorporate by reference the documents listed below that we have previously filed with the SEC (excluding
those portions of any Form 8-K that are not deemed “filed” pursuant to the General Instructions of Form 8-K):
|
●
|
our
Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 10, 2017;
|
|
|
|
|
●
|
our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 , June 30, 2017 and September 30, 2017
filed with the SEC on May 15, 2017 , August 14, 2017 and November 13, 2017 respectively;
|
|
|
|
|
●
|
the
portions of our Definitive Proxy Statements on Schedule 14A filed with SEC on January 3, 2017, and April 28, 2017, that are
incorporated by reference into our Annual Report on Form 10-K, filed with the SEC on March 10, 2017;
|
|
|
|
|
●
|
our
Current Reports on Form 8-K filed with the SEC on February 27, 2017, March 29, 2017, May 15, 2017, June 27, 2017, August 14,
2017; October 16, 2017, November 7, 2017 and November 9, 2017 and
|
|
|
|
|
●
|
the
description of our common stock contained in our Registration Statement on Form 8-A as filed with the SEC on November 17,
2004 pursuant to Section 12(b) of the Exchange Act, including any amendments or reports filed for the purposes of updating
this description.
|
This
prospectus forms part of a registration statement on Form S-1 that we filed with the SEC. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits to the registration statement or the documents incorporated
by reference herein and therein. For further information with respect to us and the securities that we are offering under this
prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement
and the documents incorporated by reference herein and therein. You should rely only on the information incorporated by reference
or provided in this prospectus and registration statement. We have not authorized anyone else to provide you with different information.
You should not assume that the information in this prospectus and the documents incorporated by reference herein and therein is
accurate as of any date other than the respective dates thereof.
We
will provide to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request,
at no cost to the requester, a copy of any and all of the information that is incorporated by reference in this prospectus.
Requests
for such documents should be directed to:
TearLab
Corporation
Attn:
Investor Relations
9980
Huennekens Street, Suite 100
San
Diego, California 92121
(647)
872-4849
You
may also access the documents incorporated by reference in this prospectus through our website at www.tearlab.com. Except for
the specific incorporated documents listed above, no information available on or through our website shall be deemed to be incorporated
in this prospectus or the registration statement of which it forms a part.
$5,000,000
TearLab
Corporation
Up
to 6,996,921 of
Class
A Units consisting of Common Stock and Warrants and
Class
B Units consisting of Series A Convertible Preferred Stock and
Warrants
( shares
of Common Stock underlying the Series A Convertible
Preferred
Stock and Warrants)
Preliminary
Prospectus
H.C.
Wainwright & Co.
The
date of this preliminary prospectus is ,
2017.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth the various expenses, other than placement agent fees and commissions, payable by the Registrant in
connection with the sale of common stock being registered. All of the amounts shown are estimated except the Securities and Exchange
Commission registration fee and the FINRA filing fee.
|
|
Amount
To Be Paid
|
|
SEC
registration fee
|
|
$
|
2,545
|
|
FINRA
filing fee
|
|
|
2,750
|
|
The
OTCQB supplemental listing fee
|
|
|
-
|
|
Printing
and engraving expenses
|
|
|
5,000
|
|
Legal
fees and expenses
|
|
|
225,000
|
|
Accounting
fees and expenses
|
|
|
75,000
|
|
Transfer
agent and registrar fees
|
|
|
5,000
|
|
Miscellaneous
fees and expenses
|
|
|
5,000
|
|
Total
|
|
$
|
325,000
|
|
*
To be completed by amendment
Item
14. Indemnification of Directors and Officers.
Registrant
is a Delaware corporation. Section 145(a) of the Delaware General Corporation Law, or the DGCL, provides that a Delaware corporation
may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation,
by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section
145(b) of the DGCL provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including
attorney fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests
of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation, unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnification for such expenses which the court shall deem proper.
Further
subsections of DGCL Section 145 provide that:
(1)
to the extent a present or former director or officer of a corporation has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 or in the defense of any claim, issue
or matter therein, such person shall be indemnified against expenses, including attorneys’ fees, actually and reasonably
incurred by such person in connection therewith;
(2)
the indemnification and advancement of expenses provided for pursuant to Section 145 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise; and
(3)
the corporation shall have the power to purchase and maintain insurance of behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or
not the corporation would have the power to indemnify such person against such liability under Section 145.
As
used in this Item 14, the term “proceeding” means any threatened, pending, or completed action, suit, or proceeding,
whether or not by or in the right of Registrant, and whether civil, criminal, administrative, investigative or otherwise.
Section
145 of the DGCL makes provision for the indemnification of officers and directors in terms sufficiently broad to indemnify officers
and directors of Registrant under certain circumstances from liabilities (including reimbursement for expenses incurred) arising
under the Securities Act of 1933, as amended, or the Securities Act. Registrant’s Amended and Restated Certificate of Incorporation
provides, in effect, that, to the fullest extent and under the circumstances permitted by Section 145 of the DGCL, registrant
will indemnify any and all of its executive officers and directors. The registrant has entered into indemnification agreements
with its directors, executive officers and certain other officers. Registrant may, in its discretion, similarly indemnify its
employees and agents. Registrant’s Amended and Restated Certificate also relieves its directors from monetary damages to
Registrant or its stockholders for breach of such director’s fiduciary duty as a director to the fullest extent permitted
by the DGCL. Under Section 102(b)(7) of the DGCL, a corporation may relieve its directors from personal liability to such corporation
or its stockholders for monetary damages for any breach of their fiduciary duty as directors except (i) for a breach of the duty
of loyalty, (ii) for failure to act in good faith, (iii) for intentional misconduct or knowing violation of law, (iv) for willful
or negligent violations of certain provisions in the DGCL imposing certain requirements with respect to stock repurchases, redemptions
and dividends, or (v) for any transactions from which the director derived an improper personal benefit.
We
have entered into indemnification agreements with each of our directors, executive officers and certain other officers that provide,
in general, that we will indemnify them to the fullest extent permitted by law in connection with their service to us or on our
behalf.
Registrant
has purchased insurance policies which, within the limits and subject to the terms and conditions thereof, cover certain expenses
and liabilities that may be incurred by directors and officers in connection with proceedings that may be brought against them
as a result of an act or omission committed or suffered while acting as a director or officer of registrant.
Item
15. Recent Sales of Unregistered Securities.
The
following list sets forth information regarding all unregistered securities sold or granted by us since January 1, 2014. No underwriters
were involved in the sales and the certificates representing the securities sold and issued contain legends restricting transfer
of the securities without registration under the Securities Act or an applicable exemption from registration.
As
further consideration for the amendment to the CRG loan agreement and as a condition to the Company drawing down the second tranche
under the CRG loan agreement of $10.0 million, the Company issued to the lenders under the CRG loan agreement on October 8, 2015
warrants to purchase an aggregate of 35,000 shares of common stock of the Company at an exercise price of $50.00 per share of
common stock of the Company and with a five year term from the date of issuance of such warrants. On April 7, 2016, as further
consideration for the fourth amendment to the CRG loan agreement and as a condition to modifying the required minimum revenue
covenants under the loan agreement, the Company reduced the exercise price of the October 8, 2015 warrants to purchase an aggregate
of 35,000 shares of common stock to $15.00 and issued to the lenders under the CRG loan agreement additional warrants to purchase
an aggregate of 35,000 shares of common stock of the Company at an exercise price of $15.00 per share of common stock. On October
12, 2017, the Company agreed to amend the CRG Warrants to (i) reduce the strike price to $1.50 per share and (ii) to include broad
based anti-dilution protection such that the CRG Warrants shall maintain the same 1.22% ownership percentage following any capital
raises the Company may complete through March 31, 2018. Such warrants were issued to such lenders pursuant to the exemption from
the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”) afforded by Regulation
D promulgated thereunder. Such warrants were not registered under the Securities Act or any state securities laws, and may not
be offered or sold absent registration, or an applicable exemption from registration, under the Securities Act and applicable
state securities laws.
Item
16. Exhibits and Financial Statement Schedules.
(a)
Exhibits
See
Exhibit Index immediately following the Signature Pages.
(b)
No financial statement schedules are provided because the information called for is not required or is shown in the financial
statements or the notes thereto.
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
|
1.
|
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act;
|
|
|
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement.
|
|
|
|
|
(iii)
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
|
|
2.
|
That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
|
|
|
|
|
3.
|
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
|
|
|
|
|
4.
|
That
each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after effectiveness.
Provided, however,
that
no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
|
|
|
|
|
5.
|
That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of
the securities: the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
(i)
any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii)
any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
the portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
The
undersigned Registrant hereby undertakes that:
|
1.
|
For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
|
|
|
|
|
2.
|
For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on November 22 ,
2017.
|
TEARLAB
CORP.
|
|
|
|
|
By:
|
/s/
Joseph Jensen
|
|
|
Joseph
Jensen
|
|
|
Chief
Executive Officer
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Joseph Jensen
|
|
Chief
Executive Officer and Secretary
|
|
November
22 , 2017
|
Joseph
Jensen
|
|
(principal
executive officer)
|
|
|
|
|
|
|
|
/s/
Wes Brazell
|
|
Chief
Financial Officer
|
|
November
22 , 2017
|
Wes
Brazell
|
|
(principal
financial and accounting officer)
|
|
|
|
|
|
|
|
*
|
|
Chairman
of the Board
|
|
November
22 , 2017
|
Elias
Vamvakas
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Anthony
Altig
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Thomas
N. Davidson, Jr.
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Adrienne
L. Graves
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Joseph
S. Jensen
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Richard
L. Lindstrom, M.D.
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Donald
Rindell
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Paul
Karpecki
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
November
22 , 2017
|
Brock
Wright
|
|
|
|
|
*By:
|
/s/
Joseph Jensen
|
|
|
Joseph
Jensen
|
|
|
Attorney-in-Fact
|
|
EXHIBIT
INDEX
Exhibit
Number
|
|
Exhibit
Description
|
|
Incorporated
by Reference
|
|
|
|
|
|
1.1
|
|
Engagement
Letter, dated August 18, 2017, by and between the Registrant and H.C. Wainwright &
Co., LLC
|
|
Exhibit
1.1 to the Registrant’s Registration Statement on Form S-1 filed with the Commission
on August 21, 2017 (file no. 333-220080)
|
|
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation of the Registrant currently in effect
|
|
Exhibit
3.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 9, 2008 (file no. 000-51030)
|
|
|
|
|
|
3.2
|
|
Amended
and Restated By-Laws of the Registrant currently in effect
|
|
Exhibit
3.4 to the Registrant’s Registration Statement on Form S-1/A No. 3, filed with the Commission on November 16, 2004 (file
no. 333-118024)
|
|
|
|
|
|
3.3
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 9, 2008 (file no. 000-51030)
|
|
|
|
|
|
3.4
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 19, 2010 (file no. 000-51030)
|
|
|
|
|
|
3.5
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.4 to the Registrant’s Post Effective Amendment No. 1 to Form S-3 filed with the Commission on July 15, 2013 (file
no. 333-189372)
|
|
|
|
|
|
3.6
|
|
Form
of Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock
|
|
Exhibit
3.6 to the Registrant’s Registration Statement on Form S-1/A No. 2 filed with the Commission on April 29, 2016 (file
no. 333-210326)
|
|
|
|
|
|
3.7
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on
June 30, 2016 (file no. (000-51030)
|
3.8
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on
February 27, 2017 (file no. (000-51030)
|
|
|
|
|
|
3.9
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
|
|
Exhibit
3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 16, 2017 (file no. (000-51030)
|
|
|
|
|
|
3.9
|
|
Form
of Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible
Preferred Stock
|
|
|
|
|
|
|
|
4.1
|
|
Form
of Common Stock Purchase Warrant Agreement
|
|
Exhibit
A to the Registrant’s free writing prospectus filed with the Commission on March 15, 2010 (file no. 333-157269)
|
|
|
|
|
|
4.2
|
|
Form
of Common Stock Purchase Warrant Agreement
|
|
Exhibit
10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 16, 2009 (file no. 000-51030)
|
|
|
|
|
|
4.3
|
|
Form
of Senior Indenture
|
|
Exhibit
4.1 to the Registrant’s Registration Statement on Form S-3 filed with the Commission on January 2, 2015 (file no. 333-201355)
|
|
|
|
|
|
4.4
|
|
Form
of Subordinated Indenture
|
|
Exhibit
4.2 to the Registrant’s Registration Statement on Form S-3 filed with the Commission on January 2, 2015 (file no. 333-201355)
|
Exhibit
Number
|
|
Exhibit
Description
|
|
Incorporated
by Reference
|
|
|
|
|
|
4.5
|
|
Form
of warrant issued to certain affiliated funds of CRG LP (formerly known as Capital Royalty)
pursuant to the terms of the Term Loan Agreement, dated as of March 4, 2015, as amended
by the Omnibus Amendment Agreement, dated as of April 2, 2015, Amendment 2, dated August
6, 2015, Amendment 3, dated December 31, 2015, and Amendment 4, dated April 7, 2016,
by and among TearLab Corporation, certain of its subsidiaries from time to time party
thereto as guarantors and CRG LP (formerly known as Capital Royalty) and certain of its
affiliate funds, as lenders, dated as of April 7, 2016
|
|
Exhibit
4.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 9, 2016 (file no. 000-51030).
|
4.6
|
|
Form
of Series A Warrant
|
|
Exhibit
4.6 to the Registrant’s Registration Statement on Form S-1/A No. 2 filed with the Commission on April 29, 2016 (file
no. 333-210326)
|
|
|
|
|
|
4.7
|
|
Form
of Series A /Series B Warrant
|
|
|
|
|
|
|
|
5.1
|
|
Opinion
of Wilson Sonsini Goodrich & Rosati, Professional Corporation
|
|
|
|
|
|
|
|
10.1
|
†
|
License
Agreement between TearLab, Inc. and The Regents of the University of California dated March 12, 2003.
|
|
Exhibit
10.48 to the Registrant’s Annual Report on Form 10-K/A, filed with the Commission on March 29, 2007 (file no. 000-51030)
|
|
|
|
|
|
10.2
|
|
Amendment
No. 1, dated June 9, 2003, to the License Agreement between TearLab, Inc. and The Regents of the University of California
dated March 12, 2003.
|
|
Exhibit
10.49 to the Registrant’s Annual Report on Form 10-K/A, filed with the Commission on March 29, 2007 (file no. 000-51030)
|
|
|
|
|
|
10.3
|
†
|
Amendment
No. 2, dated September 5, 2005, to the License Agreement between TearLab, Inc. and The Regents of the University of California
dated March 12, 2003.
|
|
Exhibit
10.50 to the Registrant’s Annual Report on Form 10-K/A, filed with the Commission on March 29, 2007 (file no. 000-51030)
|
|
|
|
|
|
10.4
|
|
Amendment
No. 3, dated July 7, 2006, to the License Agreement between TearLab, Inc. and The Regents of the University of California
dated March 12, 2003.
|
|
Exhibit
10.51 to the Registrant’s Annual Report on Form 10-K/A, filed with the Commission on March 29, 2007 (file no. 000-51030)
|
|
|
|
|
|
10.5
|
|
Amendment
No. 4, dated October 9, 2006, to the License Agreement between TearLab, Inc. and The Regents of the University of California
dated March 12, 2003.
|
|
Exhibit
10.52 to the Registrant’s Annual Report on Form 10-K/A, filed with the Commission on March 29, 2007 (file no. 000-51030)
|
|
|
|
|
|
10.6
|
|
Terms
of Business, dated February 5, 2007, between Invetech Pty Ltd. and TearLab, Inc.
|
|
Exhibit
10.30 to the Registrant’s Annual Report on Form 10-K, filed with the Commission on March 17, 2008 (file no. 000-51030)
|
Exhibit
Number
|
|
Exhibit
Description
|
|
Incorporated
by Reference
|
|
|
|
|
|
10.7
|
†
|
Amendment
No. 5, dated June 29, 2007, to the License Agreement between TearLab, Inc. and The Regents of the University of California
dated March 12, 2003.
|
|
Exhibit
10.31 to the Registrant’s Annual Report on Form 10-K, filed with the Commission on March 17, 2008 (file no. 000-51030)
|
|
|
|
|
|
10.8
|
#
|
Securities
Purchase Agreement, dated as of March 14, 2010, by and between the Registrant and certain investors.
|
|
Registrant’s
free writing prospectus filed with the Commission on March 15, 2010 (file no. 333-157269)
|
|
|
|
|
|
10.9
|
|
Form
of Director and Affiliate Letter Agreement
|
|
Exhibit
10.5 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 16, 2009 (file no. 000-51030)
|
|
|
|
|
|
10.10
|
†
|
Deed
and Amendment, dated December 22, 2011, to Manufacturing and Development Agreement by and between TearLab Research, Inc. and
MiniFAB AB (Aust) Pty Ltd. Dated August 1, 2011.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 29, 2011 (file no. 000-51030)
|
|
|
|
|
|
10.11
|
†
|
Manufacturing
and Development Agreement by and between TearLab Research, Inc. and MiniFAB (Aust) Pty Ltd, dated August 1, 2011.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on August 25, 2011 (file no. 000-51030)
|
|
|
|
|
|
10.12
|
|
Purchase
Agreement, dated as of April 11, 2012, by and between the Registrant and Craig-Hallum Capital Group LLC.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 11, 2012 (file no. 000-51030)
|
|
|
|
|
|
10.13
|
#
|
Form
Change of Control Severance Agreement (for US executives).
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 21, 2013 (file no. 000-51030)
|
|
|
|
|
|
10.14
|
#
|
Form
Change of Control Severance Agreement (for Canadian executives).
|
|
Exhibit
10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 21, 2013 (file no. 000-51030)
|
|
|
|
|
|
10.15
|
#
|
Offer
Letter, dated September 24, 2013, by and between the Registrant and Joseph Jensen.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 1, 2013 (file no. 000-50789)
|
|
|
|
|
|
10.16
|
#
|
Nonstatutory
Stock Option Agreement, dated October 21, 2013, by and between the Company and Joseph Jensen.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 21, 2013 (file no. 000-50789)
|
Exhibit
Number
|
|
Exhibit
Description
|
|
Incorporated
by Reference
|
|
|
|
|
|
10.17
|
|
Asset
Purchase Agreement, dated March 14, 2014 by and among AOA Excel, Inc., Occulogix LLC and TearLab Corporation.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 17, 2014 (file no. 000-51030)
|
|
|
|
|
|
10.18
|
|
Term
Loan Agreement, dated as of March 4, 2015, by and among TearLab Corporation, certain of its subsidiaries from time to time
party thereto as guarantors and CRG LP (formerly known as Capital Royalty) and certain of its affiliate funds, as lenders.
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 10, 2015 (file no. 000-51030)
|
|
|
|
|
|
10.19
|
#
|
Nonstatutory
Stock Option Agreement, dated April 21, 2014 by and between the Company and Paul Smith
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 21, 2014 (file no. 000-51030)
|
|
|
|
|
|
10.20
|
#
|
Offer
Letter, dated May 15, 2015, by and between the Registrant and Wes Brazell
|
|
Exhibit
10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 6, 2015 (file no. 000-51030)
|
|
|
|
|
|
10.21
|
#
|
2002
Stock Option Plan, as amended effective as of February 5, 2015
.
|
|
Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 7, 2015 (file no. 000-51030)
|
|
|
|
|
|
10.22
|
#
|
OcuHub
LLC 2015 Equity Incentive Plan
|
|
Exhibit
10.22 to the Registrant’s Annual Report on Form 10-K/A filed with the Commission on March 22, 2016 (file no. 000-51030)
|
|
|
|
|
|
10.23
|
#
|
Option
Agreement dated as of October 1, 2015 by and between OcuHub LLC and Elias Vamvakas
|
|
Exhibit
10.23 to the Registrant’s Annual Report on Form 10-K/A filed with the Commission on March 22, 2016 (file no. 000-51030)
|
|
|
|
|
|
10.24
|
#
|
Profits
Interest Award Agreement dated as of October 1, 2015 by and between OcuHub LLC and Elias Vamvakas
|
|
Exhibit
10.24 to the Registrant’s Annual Report on Form 10-K/A filed with the Commission on March 22, 2016 (file no. 000-51030)
|
|
|
|
|
|
10.25
|
|
Amendment
to Term Loan Agreement, dated as of March 4, 2015, as amended by the Omnibus Amendment Agreement, dated as of April 2, 2015,
and Amendment 2, dated August 6, 2015, by and among the Registrant, certain of its subsidiaries from time to time party thereto
as guarantors and CRG LP (formerly known as Capital Royalty) and certain of its affiliate funds, as lenders, dated as of December
31, 2015
|
|
Exhibit
10.25 to the Registrant’s Annual Report on Form 10-K/A filed with the Commission on March 22, 2016 (file no. 000-51030)
|
|
|
|
|
|
10.26
|
#
|
Employment
Agreement, dated as of December 31, 2015, by and between the Registrant and Elias Vamvakas
|
|
Exhibit
10.26 to the Registrant’s Annual Report on Form 10-K/A filed with the Commission on March 22, 2016 (file no. 000-51030)
|
|
|
|
|
|
10.27
|
†
|
Manufacturing,
Supply and Development Agreement between MiniFAB (Aust) Pty Ltd and TearLab Research, Inc., dated March 7, 2016
|
|
Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission
on May 9, 2016 (file no. 000-51030)
|
10.28
|
|
Amendment
to Term Loan Agreement, dated as of March 4, 2015, as amended by the Omnibus Amendment
Agreement, dated as of April 2, 2015, Amendment 2, dated August 6, 2015, and Amendment
3, dated December 31, 2015, by and among the Registrant, certain of its subsidiaries
from time to time party thereto as guarantors and CRG LP (formerly known as Capital Royalty)
and certain of its affiliate funds, as lenders, dated as of April 7, 2016
|
|
Exhibit
10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 9, 2016 (file no. 000-51030)
|
10.29
|
†
|
Amended
and Restated Cooperative Marketing Agreement between PRN Physician Recommended Nutriceuticals, LLC and TearLab Research, Inc.
|
|
Exhibit
10.29 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 10, 2017 (file no.
000-51030)
|
10.30
|
#
|
Amendment
dated as of June 15, 2017 to Employment Agreement by and between the Registrant and Joseph Jensen
|
|
Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission
on August 14, 2017 (file no. 000-51030)
|
10.31
|
#
|
Amendment
dated as of June 15, 2017 to Employment Agreement by and between the Registrant and Wes Brazell
|
|
Exhibit
10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission
on August 14, 2017 (file no. 000-51030)
|
10.32
|
|
Termination
of Cooperative Marketing Agreement between PRN Physicians Recommended Nutriceuticals, LLC and TearLab Research, Inc.
|
|
Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission
on August 14, 2017 (file no. 000-51030)
|
10.33
|
|
Form
of Securities Purchase Agreement
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries
of Registrant.
|
|
Exhibit
21.1 to the Registrant’s Registration Statement on Form S-1, filed with the Commission
on July 28, 2011 (file no. 333-175861)
|
23.1
|
|
Consent
of Mayer Hoffman McCann, P.C., Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
24.1
|
|
Power
of Attorney
|
|
|
*
To be filed by amendment.
†
Portions of this exhibit have been omitted pursuant to an order granted by the Securities and Exchange Commission for confidential
treatment.
#
Management compensatory plan, contract or arrangement.