EYES Second Sight Medical Products Inc

THIS INFORMATION STATEMENT IS BEING PROVIDED TO

YOU BY THE BOARD OF DIRECTORS OF SECOND SIGHT MEDICAL PRODUCTS, INC.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE

REQUESTED NOT TO SEND US A PROXY

INFORMATION STATEMENT

November 26, 2019

NOTICE OF SHAREHOLDER ACTION BY WRITTEN CONSENT

GENERAL INFORMATION

Second Sight Medical Products, Inc., a California corporation (the “Company,” “we, “us,” or “our”), is sending you this Information Statement solely for purposes of informing our shareholders of record as of November 26, 2019 (the “Record Date”) of action taken by our shareholders by less than unanimous written consent in lieu of a special meeting of shareholders. No action is requested or required on your part.

This Information Statement is being mailed on or about December 13, 2019. The Company’s principal executive offices are located at 12744 San Fernando Road, Suite 400, Sylmar, California 91342, and the Company’s telephone number is (818) 833-5000.

REVERSE STOCK SPLIT

General

On November 26, 2019, Second Sight Medical Products, Inc., a California corporation (the “Company”) obtained the unanimous written consent of its board of directors (“Board”) and the written consent of shareholders holding greater than 50% of the voting securities of the Company (the “Majority Shareholders”) approving a certificate of amendment to the Company’s Restated Articles of Incorporation, as amended, to effect a reverse stock split of all outstanding shares of the Company’s common stock, no par value, at a ratio of not less than 1-for-7 and not greater than 1-for-8, at any time before March 30, 2020, without further approval or authorization of our shareholders (the “Reverse Split”), with the exact ratio to be set within this range by Senior Management at their discretion without further shareholder approval.

We believe that enabling Senior Management to fix the specific ratio of the Reverse Stock Split within the stated range mandated by our Board and approved by the Majority Shareholders will provide us with the flexibility to effect the Reverse Split in a manner intended to implement the anticipated benefits for our shareholders.

The Board in its sole discretion may alternatively elect to abandon such proposed amendment and not effect the Reverse Split authorized by the Majority Shareholders.

Upon the filing with, and acceptance of the Certificate of Amendment by, the Secretary of State of  California the outstanding shares of our common stock will be reclassified and combined into a lesser number of shares such that one share of our common stock will be issued for a specified number of shares pursuant to the fixed ratio adopted for the Reverse Split.

The effect of the Reverse Split upon the market price for the Company's common stock cannot be predicted, and the history of similar stock split combinations for companies in like circumstances is varied. There can be no assurance that the market price per share of the Company's common stock after the Reverse Split will rise in proportion to the reduction in the number of shares of common stock outstanding resulting from the Reverse Split. The market price of the Company's common stock is also based on Company’s performance and other factors, some of which may be unrelated to the number of shares outstanding.

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This description of the amendment to our Articles of Incorporation to effect the Reverse Split is only a summary of such amendment and is qualified in its entirety by reference to the actual text of the form of proposed Certificate of Amendment to our Articles of Incorporation attached as Annex A to this Information Statement.

Background

Our common stock is currently listed on the Nasdaq Capital Market (the “Nasdaq”). In order for our common stock to continue to be listed on Nasdaq, we must satisfy various continued listing requirements of Nasdaq. If we are unable to meet Nasdaq continued listing requirements, our common stock will be subject to delisting. Under Nasdaq’s continued listing requirements, if the bid price of our common stock over a consecutive 30 trading-day period closed below $1.00 per share, our common stock would be subject to delisting by Nasdaq.

On January 25, 2019, the Company received a letter from Nasdaq (“First Notice”) advising the Company that for 30 consecutive business days preceding the date of the First Notice, the bid price of the Company’s common stock had closed below the $1.00 per share minimum required for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Requirement”) as required by Nasdaq Listing Rules.

Pursuant to Nasdaq’s continued listing standard, we initially had six months to cure this deficiency and regain compliance. The Company could regain compliance with this continued listing standard if during the 180 calendar day period following the date of the First Notice, the closing bid price of the Company’s common stock was at or above $1.00 for a minimum of 10 consecutive trading days.

On July 25, 2019, the Company received second notice from Nasdaq indicating that, while the Company had not regained compliance with the Minimum Bid Price requirement, Nasdaq had determined that the Company was eligible for an additional 180-day period, or until January 20, 2020 to regain compliance.

Purpose of the Proposed Reverse Split

              The primary objective in approving and implementing the Reverse Split is to raise the per share trading price of our common stock to meet Nasdaq’s continued listing requirements. The Reverse Split should result in a higher per share trading price, which is intended to enable us to maintain the listing of our common stock on Nasdaq and generate continued or greater investor interest in our company.

Our Board believes that maintaining the listing of our common stock on Nasdaq is in the best interests of our company and our shareholders. If our common stock were delisted from Nasdaq, our Board believes such delisting could adversely affect the market liquidity of our common stock, decrease the market price of our common stock, adversely affect our ability to obtain financing for the continuation of our operations, and result in the loss of confidence in our company.

Once the Reverse Split is effective, we expect to satisfy the Minimum Bid Price Requirement for continued listing. However, despite implementation of the Reverse Split by our Board, there can be no assurance that the Reverse Split will result in our meeting and maintaining the $1.00 per share minimum price requirement. The effect of the Reverse Split upon the market price for our common stock cannot be predicted, and the history of similar reverse stock splits for companies in like circumstances is varied. The market price per share of our common stock after the Reverse Split may not rise in proportion to the reduction in the number of shares of our common stock outstanding resulting from the Reverse Split due to, among other reasons, our performance and other factors which may be unrelated to the number of shares outstanding. The common stock could also be delisted from Nasdaq if we fail to comply with one or more other continued listing requirements of Nasdaq.

Effect on Preferred Stock

  We currently have 10,000,000 shares of preferred stock authorized. The amendment to the Articles of Incorporation will have no effect on the authorized preferred stock of our company.

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Effect on Outstanding Common Stock and Authorized Common Stock

            As a result of the Reverse Split, the number of outstanding shares of our common stock will be decreased proportionately in the split ratio of between 1-for-7 and 1-for-8, as determined by Senior Management. As of the Record Date, the Company had 124,598,198 shares of common stock issued and outstanding. Based on the number of shares of common stock issued and outstanding as of the Record Date, immediately following the completion of the Reverse Split, the number of shares may range from approximately 15,574,775 shares to 17,799,743 shares of common stock issued and outstanding. The number of our authorized shares will not be affected by the Reverse Split and will remain unchanged.

           The Reverse Split will affect all of our shareholders uniformly and will not affect any shareholder’s percentage ownership interests in our company or proportionate voting power, subject to the treatment of fractional shares. No fractional shares will be issued in connection with the Reverse Split. Instead, shareholders who would otherwise hold fractional shares will be entitled to cash payments (without interest) in respect of such fractional shares. See “Fractional Shares” below.

           The Certificate of Amendment will not change the terms of our common stock. The shares of new common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common stock now authorized. The common stock issued pursuant to the Reverse Split will remain fully paid and non-assessable. The Reverse Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Securities Exchange Act of 1934. We will continue to be subject to the periodic reporting requirements of the Exchange Act.

           Following the Reverse Split, our common stock will continue to be listed on Nasdaq under the symbol “EYES” although it will be considered a new listing with a new CUSIP number to be obtained.

Assuming reverse stock split ratios of 1-for-7 and 1-for-8 (which reflect the low and high end of the range that our Majority Shareholders have approved), the following table sets forth (i) the approximate number of shares of our common stock that would be issued and outstanding, (ii) the approximate number of shares of our common stock that would be reserved for future issuance pursuant to outstanding stock options, restricted stock units and warrants, as well as our existing equity incentive plans, and employee stock purchase plans, and (iii) the weighted-average exercise price of outstanding options and warrants, each giving effect to the Reverse Split and based on securities outstanding as of November 22, 2019.

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Accounting Matters

Our common stock has no par value and the par value is not changing as a result of the implementation of the Reverse Split. 

Possible Disadvantages of Reverse Split

We are required to implement the Reverse Split to maintain the minimum bid price per share needed for us to retain our Nasdaq listing. Nevertheless the following are some of the possible disadvantages of the Reverse Split:

Procedure for Effecting Reverse Split and Exchange of Stock Certificates

The Reverse Split will become effective at such time as we file the Certificate of Amendment to our Restated Articles of Incorporation with the Secretary of State of California, which will not occur prior to the date that is twenty (20) calendar days after the Definitive Information Statement is first sent or given to our shareholders.

As soon as practicable after the effective time of the Reverse Split, shareholders will be notified that the Reverse Split has been effected. If you hold shares of common stock in a book-entry form, you will receive a transmittal letter from our transfer agent as soon as practicable after the effective time of the Reverse Split with instructions on how to exchange your shares. After you submit your completed transmittal letter, a transaction statement will be sent to your address of record as soon as practicable after the effective date of the Reverse Split indicating the number of shares of common stock you hold.

Some shareholders hold their shares of common stock in certificate form or a combination of certificate and book-entry form. We expect that our transfer agent will act as exchange agent for purposes of implementing the

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exchange of stock certificates, if applicable. If you are a shareholder holding pre-split shares in certificate form, you will receive a transmittal letter from our transfer agent as soon as practicable after the effective time of the Reverse Split. The transmittal letter will be accompanied by instructions specifying how you can exchange your certificate representing the pre-split shares of our common stock for a statement of holding. When you submit your certificate representing the pre-split shares of our common stock, your post-split shares of our common stock will be held electronically in book-entry form in the Direct Registration System. This means that, instead of receiving a new stock certificate, you will receive a statement of holding that indicates the number of post-split shares you own in book-entry form. We will no longer issue physical stock certificates unless you make a specific request for a share certificate representing your post-Reverse Split ownership interest.

SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.

Beginning on the effective time of the Reverse Split, each certificate representing pre-Reverse Split shares will be deemed for all corporate purposes to evidence ownership of post-Reverse Split shares.

Shareholders holding our common stock in “street name” through a bank, broker, or other nominee should note that such banks, brokers, or other nominees may have different procedures for processing the consolidation than those that would be put in place by us for registered shareholders, and their procedures may result, for example, in differences in the precise cash amounts being paid by such nominees in lieu of a fractional share. If you hold your shares with such a bank, broker, or other nominee and if you have questions in this regard, you should contact your nominee.

Fractional Shares

We do not intend to issue fractional shares in connection with the Reverse Split. Therefore, we do not expect to issue certificates or book-entry interests representing fractional shares. Shareholders who otherwise would hold fractional shares because the number of shares of common stock they held before the Reverse Split would not be evenly divisible based upon the Reverse Split ratio will be entitled to cash payments (without interest) in respect of such fractional shares. Such cash payment shall be determined by multiplying (i) the fractional share interest to which the holder would otherwise be entitled, after taking into account all shares of such class held by the holder as of the effective date of the Reverse Split, and (ii) the volume weighted average trading price of the common stock, as reported on Nasdaq, for the five trading days immediately preceding the effective date of the Reverse Split, as adjusted for the split ratio.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

         No director, nominee for director, or officer of the Company, or associate of any of the foregoing persons, has any substantial interest, directly or indirectly, in the matter acted upon.

VOTING PROCEDURES

         Pursuant to the California Corporations Code and our Articles of Incorporation the affirmative vote of the holders of a majority of our outstanding common stock is sufficient to amend the Articles of Incorporation, which vote was obtained by the written consent of the Majority Shareholders as described herein. As a result, the amendment to the Articles of Incorporation has been approved and no further votes will be needed.

No Dissenter’s Rights

        Under California law, our shareholders are not entitled to dissenter’s rights with respect to our amendment to the Articles of Incorporation to effect the Reverse Split.

Notice Pursuant to the California Corporations Code

Pursuant to Section 603(b)(2) of the California Corporations Code, the Company is required to provide prompt notice of the taking of a corporate action by written consent to the Company’s shareholders who have not

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consented in writing to such action. This Information Statement serves as the notice required by Section 603(b)(2) of the Corporations Code.

Federal Income Tax Consequences of the Reverse Split

The following summary of the federal income tax consequences of the Reverse Split is based on current law, including the Internal Revenue Code of 1986, as amended, and is for general information only. The tax treatment of a shareholder may vary depending upon the particular facts and circumstances of such shareholder, and the discussion below may not address all the tax consequences for a particular shareholder. For example, foreign, state, and local tax consequences are not discussed below. Accordingly, each shareholder should consult his or her tax adviser to determine the particular tax consequences to him or her of a Reverse Split, including the application and effect of federal, state, local, and/or foreign income tax and other laws.

Generally, a reverse stock split will not result in recognition of gain or loss for federal income tax purposes. The adjusted basis of the new shares of common stock will be the same as the adjusted basis of the common stock exchanged for such new shares. The holding period of the new, post-Reverse Split shares of the common stock resulting from implementation of the Reverse Split will include the shareholder’s respective holding periods for the pre-Reverse Split shares. A U.S. holder of common stock that receives cash in lieu of a fractional share of common stock pursuant to the Reverse Split will recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the common stock surrendered that is allocated to such fractional share of common stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period for such common stock surrendered exceeded one year at the effective time of the Reverse Split.

VOTING SECURITIES AND INFORMATION ON CONSENTING SHAREHOLDERS

Pursuant to the Company’s Bylaws and the California Corporations Code, a vote by the holders of at least a majority of the voting shares is required to effect the action described herein. As of the Record Date, the Company had 124,598,198 shares of common stock issued and outstanding and entitled to vote, which for voting purposes are entitled to one vote per share.

The consenting shareholders identified below are the beneficial owners of a total of 84,129,609 shares of Common Stock which represent approximately 67.52% of the total number of voting shares. The consenting shareholders voted in favor of the actions described herein in a written consent, dated November 26, 2019. No consideration was paid for the consent. The consenting shareholder’s name, affiliations with the Company and beneficial holdings are as follows:

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