| Organization and Business Operations | 1. Organization
and Business Operations Second
Sight Medical Products, Inc. (“Second Sight,” the “Company,” “we,” “us,” “our”
or similar terms) has developed, manufactured and marketed implantable visual prosthetics that are intended to deliver useful
artificial vision to blind individuals. We are a recognized global leader in neuromodulation devices for blindness, and are committed
to developing new technologies to treat the broadest population of sight-impaired individuals. Agreement
and Plan of Merger with Nano Precision Medical, Inc. As
disclosed in the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2022, on February 4,
2022, Second Sight entered into the agreement and plan of merger (the “Merger Agreement”) with Nano Precision
Medical, Inc., a California corporation (“NPM”), and, upon and subject to the execution of a joinder, NPM
Acquisition Corp., a California corporation and a wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant
to the Merger Agreement and subject to the terms and conditions set forth therein, NPM will merge with and into Merger Sub
(the “Merger”), and upon consummation of the Merger, Merger Sub will cease to exist and NPM will become a
wholly-owned subsidiary of the Company. Upon completion of the Merger and subject to shareholder approval, the Company will
change its name as the Company and NPM may agree in the future and change its trading symbol as NPM requests in writing
following consultation with Nasdaq. Subject to the terms and conditions of the Merger Agreement, if the Merger is completed,
the securities of NPM will be converted into the right to receive an aggregate of approximately 134,349,464 77.32 SAFE Agreement On
February 4, 2022, in connection with the Merger, Second Sight and NPM also entered into a Simple Agreement
for Future Equity (“SAFE”) whereby Second Sight would provide to NPM, pending closing of the Merger, an
investment advance of $8 million which, effective upon the termination date of the Merger Agreement without completion of the
Merger, will result in NPM’s issuing to Second Sight that number of shares of NPM common stock which following that
issuance will equal not less than 2.133% of the issued and outstanding shares of NPM common stock assuming exercise or
conversion of all outstanding vested and unvested options, warrants, and convertible securities. In the event NPM completes
an equity financing at a lower valuation, Second Sight may be eligible to receive additional shares of NPM common stock as
set forth in the SAFE. If the Merger is completed, the SAFE will terminate. The SAFE is classified as a marked-to-market
asset pursuant to ASC 480, Distinguishing Liabilities from Equity Product
and Clinical Development Plans Leveraging
our 20 years of experience in neuromodulation for vision, we are developing the Orion ®
● We
have a good safety profile
● The
efficacy data is encouraging No
peer-reviewed data is available yet for the Orion system. We are currently negotiating the clinical and regulatory pathway to
commercialization with the FDA as part of the Breakthrough Devices Program. In
November 2017, the FDA granted Breakthrough Devices Program designation for the Orion. This designation is given to a few select
medical devices in order to provide more effective treatment of life-threatening or irreversibly debilitating diseases or conditions.
This program is intended to help patients have more timely access to these medical devices by expediting their development, assessment,
and review. On
February 26, 2021, the U.S. Food and Drug Administration (FDA) approved the Argus 2s Retinal Prosthesis System, a redesigned set
of external hardware (glasses and video processing unit) initially for use in combination with previously implanted Argus II systems
for the treatment of retinitis pigmentosa (RP). The Company expects that the Argus 2s will be adapted to be the external system
for the next generation Orion Visual Cortical Prosthesis System currently under development. In addition to ergonomic improvements,
the Argus 2s system offers significantly more processing power, potentially allowing for improved video processing. Our
principal offices are located in Los Angeles, California. In
2007, Second Sight formed Second Sight Medical Products (Switzerland) Sàrl, initially to manage clinical trials and sales
and marketing in Europe, the Middle East and Asia-Pacific, and more recently for the research of future technologies. As the laws
of Switzerland require at least two corporate stockholders, Second Sight Medical Products (Switzerland) Sàrl is 99.5 0.5 100 Market
Development Plans Orion.
Our
objective in designing and developing the Orion visual prosthesis system is to bypass the optic nerve and directly stimulate the
part of the brain responsible for human vision. An Early Feasibility Study of the Orion device is currently underway
at UCLA and Baylor College of Medicine. Regularly scheduled visits at both sites were placed on hold in mid-March due to Covid-19,
however visits at UCLA resumed mid-September 2020 and Baylor resumed in December 2020. Our 36-month results an
indicate a good safety profile with encouraging efficacy data and benefits in helping subjects perform their daily living tasks.
We believe these data are encouraging and support advancement of Orion into a larger pivotal clinical study. Early promising results
are not necessarily indicative of results which may be obtained in large clinical trials. No assurance can be given that we will
achieve similar results in our larger Orion clinical trials. No peer-reviewed data is available yet for the Orion system. COVID-19
Pandemic We
are requiring our employees to adhere to the local and state guidelines regarding the COVID-19 pandemic, and use their best judgement
to work remotely or work in the office. While many of our employees are accustomed to working remotely, much of our workforce
has not historically been remote. Although we continue to monitor the situation and may adjust our current policies as more information
and public health guidance becomes available, restricting the ability to do business in person may create operational or other
challenges, any of which could harm our business, financial condition and results of operations. In
addition, our clinical trials have been affected by the COVID-19 outbreak. Patient visits in ongoing clinical trials were paused,
for example, due to prioritization of hospital resources toward the COVID-19 outbreak, travel restrictions imposed by governments,
and the inability to access sites for initiation and monitoring. Also, some of our suppliers of certain materials used in the
development of our product candidates are located in areas impacted by COVID-19 which could limit our ability to obtain sufficient
materials for our product candidates. COVID-19 has and will continue to adversely affect global economies and financial markets,
and may result in an economic downturn that could affect demand for our product candidates, if approved, and impact our operating
results. Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result
of the continued global economic impact of the pandemic. We cannot anticipate all of the ways in which health epidemics such as
COVID-19 could adversely impact our business. Although we are continuing to monitor and assess the effects of the COVID-19 pandemic
on our business, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to
change. See the Risk Factors section for further discussion of the possible impact of the COVID-19 pandemic on our business. Liquidity From
inception, our operations have been funded primarily through the sales of our common stock and warrants, as well as from the issuance
of convertible debt, research and clinical grants, and limited product revenue generated from the sale of our Argus II product.
We have funded our business since 2020 primarily through the following transactions:
● On
June 25, 2021, we closed an underwritten public offering of 11,500,000 5.00 53.3 million
● On
March 23, 2021, we closed our private placement to seven institutional investors of 4,650,000 6.00 24.5 million We were awarded a $ 1.6 million 6.4 million 1.4 million 1.4 million On
September 17, 2019, we received a $ 2.4 million Our
financial statements have been presented on the basis that our business is a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. We are subject to the risks and uncertainties
associated with a business with no revenue that is developing a novel medical device, including limitations on our operating capital
resources. We have incurred recurring operating losses and negative operating cash flows since inception, and we expect to continue
to incur operating losses and negative operating cash flows for the foreseeable future. |
