ANI PHARMACEUTICALS INC

Current report

The following are new significant risk factors related to the pending acquisition of Alimera that could materially harm our business, financial position, or operating results or could cause our actual results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this report.

Current report

Risks Related to the Merger

Current report

The Merger is subject to a number of conditions beyond our control. Failure to complete the Merger within the expected time frame, or at all, could have a material adverse effect on our business, operating results, financial condition and our share price.

Current report

On June 21, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alimera and ANIP Merger Sub INC., a Delaware corporation and wholly owned indirect subsidiary of us (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions set forth therein, (i) Merger Sub will be merged with and into Alimera (the “Merger”), with Alimera surviving the Merger as a wholly owned subsidiary of ANI and (ii) at the effective time of the Merger, each outstanding share of Alimera common stock, par value $0.01 per share, will automatically be converted into the right to receive (A) $5.50 in cash, without interest and less any applicable withholding taxes, and (B) one contingent value right (a “CVR”). Capitalized terms used herein, but not otherwise defined, have the meanings set forth in the Merger Agreement.

Current report

Consummation of the Merger is subject to certain conditions, including approval by Alimera’s stockholders, the absence of any legal restraints restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with such waiting period having expired on July 29, 2024 and any other specified required regulatory approvals that may be required will have been obtained, and each party’s performance of its obligations in all material respects under the Merger Agreement.

Current report

We cannot predict whether and when the conditions to the Merger will be satisfied. If one or more of these conditions are not satisfied, and as a result, we do not complete the Merger, we would remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the Merger. Certain costs associated with the Merger have already been incurred or may be payable even if the Merger is not consummated. Finally, any disruptions to our business resulting from the announcement and pendency of the Merger, including any adverse changes in our relationships with our partners, suppliers and employees, could continue or accelerate in the event that we fail to consummate the Merger.

Current report

Our share price may also fluctuate significantly based on announcements by Alimera, other third parties, or us regarding the Merger or based on market perceptions of the likelihood of the satisfaction of the conditions to the consummation of the Merger. Such announcements may lead to perceptions in the market that the Merger may not be completed, which could cause our share price to fluctuate or decline. Other factors outside of our control, such as a governmental entity enacting legislation that prohibits the Merger, could cause us not to satisfy the governmental entity condition and thus the Merger would not be consummated.

Current report

If we do not consummate the Merger, the price of our common stock may decline significantly from the current market price, which may reflect a market assumption that the Merger will be consummated. Any of these events could have a material adverse effect on our business, operating results and financial condition and could cause a decline in the price of our common stock.

Current report

Actions of activist stockholders or other parties may impair our ability to consummate the Merger.

Current report

Activist stockholders could also take actions that disrupt the business of Alimera, divert the time and attention of their management and employees away from their business operations, cause them to incur substantial additional expense, create perceived uncertainties among current and potential customers, clients, suppliers, employees and other constituencies as to their future direction as a consequence thereof, which may result in lost sales, impaired supplier relationships or other business arrangements and the loss of potential business opportunities, and make it more difficult to attract and retain qualified personnel and business partners.

Current report

We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger.

Current report

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the Merger, including costs that we may not currently expect. We must pay substantially all of these costs and expenses whether or not the transaction is completed. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. To the extent these acquisition and integration expenses are higher than anticipated, we may experience liquidity or cash flow issues. Among other termination rights, and subject to certain limitations, each of Alimera and ANI may terminate the Merger Agreement if the Merger is not consummated by December 21, 2024, and each of Alimera and ANI may mutually agree to terminate the Merger Agreement.

Current report

The obligations and liabilities of Alimera, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Alimera to us.

Current report

Alimera’s obligations and liabilities, some of which may not have been disclosed to us or may not be reflected or reserved for in Alimera’s historical financial statements, may be greater than we have anticipated. The obligations and liabilities of Alimera could have a material adverse effect on Alimera’s business or Alimera’s value to us or on our business, financial condition, or results of operations. Under the Merger Agreement, we have only limited indemnification with respect to obligations or liabilities of Alimera, whether known or unknown. In addition, even in cases where we are able to obtain indemnification, we may discover liabilities greater than the contractual limits or the financial resources of the indemnifying party. In the event that we are responsible for liabilities substantially in excess of any amounts recovered through rights to indemnification or alternative remedies that might be available to us, or any applicable insurance, we could suffer severe consequences that would substantially reduce our earnings and cash flows or otherwise materially and adversely affect our business, financial condition, or results of operations.

Current report

We will incur substantial debt in order to satisfy our obligations in connection with the acquisition of Alimera.

Current report

In connection with the acquisition, JP Morgan Chase Bank, N.A. and Blackstone Credit & Insurance have committed to provide debt financing for the transaction in an aggregate principal amount equal to $280.0 million, on the terms and subject the conditions set forth in a commitment letter, dated June 21, 2024 (the “Debt Commitment Letter”). In order to service the debt we incur under the Debt Commitment Letter, we will require a significant amount of cash. Our ability to make scheduled payments of principal and interest depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt or equity financing on terms that may not be favorable to us or available to us at all. Our ability to refinance any such debt will depend on the capital markets and our financial condition at that time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default under our current or future indebtedness. Any event of default or inability to otherwise satisfy our obligations could have a material adverse effect on our future operating results and financial condition.

Current report

As a result of the Merger, we will record goodwill in connection with our acquisition of Alimera, and if it becomes impaired, our earnings could be significantly impacted.

Current report

Under current accounting methods, goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis and more frequently if an event occurs or circumstances change that reduce the fair value of a reporting unit below its carrying amount. In connection with our acquisition of Alimera we will record goodwill in the fair value amount of such acquisition. Although we do not anticipate impairment charges, if we conclude that some portion of such goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded against earnings.

Current report

A goodwill impairment charge could be caused by a decline in our stock price or the occurrence of a triggering event that compounds negative financial results. Therefore, following the Merger, and our recording of goodwill in connection therewith, if such goodwill becomes impaired, our earnings could be significantly and adversely affected.

Current report

The Merger may become the target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Merger from being completed.

Current report

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. The outcome of any litigation is uncertain, but regardless of the outcome of any such lawsuits, they could delay or prevent the Merger or otherwise adversely affect us financially.

Current report

If the acquisition of Alimera is consummated, the combined company may not perform as we or the market expects, which could have an adverse effect on the price of our common stock.

Current report

Even if the Merger is consummated, the combined company may not perform as we or the market expects. Risks associated with the combined company following the Merger include:

Current report

•integrating businesses is a difficult, expensive, and time-consuming process, and the failure to successfully integrate our businesses with the business of Alimera in the expected time frame would adversely affect our financial condition and results of operation;

Current report

•there may be inconsistencies in standards, controls, procedures and policies that will need to be reconciled;

Current report

•the Merger will materially increase the size of our operations, and if we are not able to effectively manage our expanded operations, our common stock price may be adversely affected;

Current report

•it is possible that our key employees or key employees of Alimera might decide not to remain with us after the Alimera acquisition is completed, and the loss of such personnel could have a material adverse effect on the financial condition, results of operations, and growth prospects of the combined company;

Current report

•the success of the combined company will also depend upon relationships with third parties and Alimera’s or our pre-existing customers, which relationships may be affected by customer preferences or public attitudes about the Merger. Any adverse changes in these relationships could adversely affect the combined company’s business, financial condition, and results of operations; and

Current report

•if government agencies or regulatory bodies impose requirements, limitations, costs, divestitures or restrictions on the consummation of the Merger, the combined company’s ability to realize the anticipated benefits of the acquisition may be impaired.

Current report

Further, we intend to enter into the Merger with the expectation that the acquisition will result in, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company and operating efficiencies. Achieving the benefits of the Merger is subject to a number of uncertainties, including whether we integrate Alimera in an efficient manner, and general competitive factors in the marketplace. The occurrence of any of these Merger-related events individually or in combination could materially and adversely affect our business, results of operations, financial condition and the market price of our common stock.

Current report

Following the closing of the Merger, if we fail to successfully manage our international operations, our business, operating results and financial condition could suffer.

Current report

Alimera has direct operations and markets its products outside the United States, with international operations that cover the United Kingdom and much of Europe and the Middle East. We have not historically conducted any operations or marketed any of our products outside the United States. As a result, following the closing of the Merger, the percentage of our revenues generated outside of the United States will increase materially, and our new international operations will require significant management attention and financial resources.

Current report

There is a high level of regulation in all markets where Alimera’s products are sold and great diversity in how those markets operate. Consequently, experience and expertise will be required in understanding the market dynamics of each country, the rules and regulations in place governing the sale of medicines, the codes of practice governing promotion of medicines, different currencies, the financial frameworks applying to taxation (both corporate and

Current report

value-added tax) and the need to communicate in different languages.

Current report

Moreover, Alimera’s international operations rely on distributors in many countries to provide adequate levels of experience and expertise on its behalf. We will need to monitor and manage these relationships appropriately to address risks in these markets.

Current report

Conducting extensive international operations subjects us to risks that are inherent in international operations, including:

Current report

•extended collection timelines for accounts receivable and greater working capital requirements;

Current report

•multiple, conflicting legal systems and unexpected changes in legal requirements such as privacy and data protection laws and regulations, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

Current report

•tariffs, export restrictions, trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, including China and certain other parts of Asia;

Current report

•changes in currency exchange rates;