Nature of the Business and Liquidity

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business and Liquidity

Nature of the Business and Liquidity

Nature of the Business

Teligent, Inc. and its subsidiaries (collectively the “Company”), is a specialty generic pharmaceutical company. Our mission is to become a leader in the specialty generic pharmaceutical market in alternate dosage forms. Under our own label, we currently market and sell generic topical and generic and branded generic injectable pharmaceutical products in the United States and Canada. In the United States, we currently market thirty-six generic topical pharmaceutical products and four branded generic injectable pharmaceutical products. In Canada, we sell thirty-two generic and branded generic injectable products and medical devices. Generic pharmaceutical products are bioequivalent to their brand name counterparts. We also provide contract manufacturing services to the pharmaceutical, over the counter ("OTC"), and cosmetic markets. We operate our business under one reportable segment. Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TLGT.”  Our principal executive office, laboratories and manufacturing facilities are located at 105 Lincoln Avenue, Buena, New Jersey. We have additional offices located in Iselin, New Jersey, Mississauga, Canada, and Tallinn, Estonia.

Liquidity

The Company has incurred significant losses and generated negative cash flows from operations in recent years and expects to continue to incur losses and generate negative cash flow for the foreseeable future. As a result, the Company had an accumulated deficit of $116.2 million, total principal amount of outstanding borrowings of $174.1 million, and limited capital resources to fund ongoing operations at September 30, 2019. These capital resources were comprised of cash and equivalents of $6.7 million at September 30, 2019, the generation of cash inflows from working capital, and an additional $10.0 million of borrowing capacity under the Delayed Draw Term Loan A portion of the Company’s Senior Credit Facilities that expires on December 13, 2019. In addition, subsequent to September 30, 2019, the Company issued Series B Senior Unsecured Convertible Notes for aggregate proceeds of $34.4 million, of which the Company expects approximately $27.3 million will be available to fund operations. See Note 7 for additional information regarding the Company’s Senior Credit Facilities and Note 13 for additional information regarding the Company’s Series B Senior Unsecured Convertible Notes.

The Company’s available capital resources may not be sufficient for it to continue to meet its obligations as they become due over the next twelve months if the Company cannot improve its operating results or increase its operating cash inflows. In the event these capital resources are not sufficient, the Company may need to raise additional capital through the sale of equity or debt securities, enter into strategic business collaboration agreements with other companies, seek other funding facilities, or sell assets. However, the Company cannot provide assurances that additional capital will be available on acceptable terms or at all. Moreover, if the Company is unable to meet its obligations when they become due over the next twelve months through its available capital resources, or obtain new sources of capital when needed, the Company may have to delay expenditures, reduce the scope of its manufacturing operations, reduce or eliminate one or more of its development programs, or make significant changes to its operating plan. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In addition, as disclosed in Note 7, the Company is subject to certain financial covenants that are required to be met under the Senior Credit Facilities. These financial covenants include a trailing twelve months (“TTM”) Minimum Revenue covenant that was required to be met each quarterly period through June 30, 2019, a TTM Minimum Adjusted EBITDA that is required to be met each quarterly period from September 30, 2019 through September 30, 2020, and a Maximum Total Net Leverage Ratio that is required to be met each quarterly period thereafter. As of September 30, 2019, the Company was in compliance with the TTM Adjusted EBITDA covenant and currently anticipates it will remain in compliance with this covenant through September 30, 2020. However, a material change in the Company’s operating results over the next twelve months could negatively affect the Company’s ability to maintain compliance with the TTM Adjusted EBITDA covenant. Moreover, while the Company is not required to comply with the Maximum Total Net Leverage ratio until December 31, 2020, the Company currently anticipates that it will not be in compliance with this covenant absent a significant reduction in the Company’s total principal amount of outstanding debt. In the event the Company is unable to comply with this covenant, or obtain a waiver from its lenders, the total amounts outstanding under the Senior Credit Facilities and Convertible Notes would immediately become due in January 2021 for which the Company does not currently expect to have readily available capital resources to meet these obligations without raising additional capital through the sale of equity or debt securities. If the Company is unable to raise additional capital to meet these obligations if they become due in January 2021, the Company may have to seek other strategic alternatives. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In June 2019, the Company received a de-listing notice from the NASDAQ due to its share price being below $1.00 for 30 consecutive trading days. The notice specifies that the Company’s share price must trade above $1.00 per share for ten consecutive trading days prior to December 2, 2019 in order to prevent the Company’s common stock from being de-listed. As of September 30, 2019, and through the date of issuance of the accompanying financial statements, the share price of the Company’s common stock has not traded above $1.00 per share for the required ten consecutive trading days and, as such, the Company has filed a request from the NASDAQ for a 180-day extension. While the Company believes that the ongoing execution of its business plan will ultimately increase the Company’s share price above $1.00 for the required ten consecutive trading days, the Company can provide no assurances that its shares will trade above $1.00 per share within the 180-day extension period, if at all. Moreover, while the Company believes the NASDAQ will grant the 180-day extension request, the Company can provide no assurances that such extension will be granted. As a result, if the Company’s shares are de-listed from the NASDAQ, the Company would be in default of the non-financial covenant required by the Company’s Senior Credit Facilities and Convertible Notes for which the Company would have to seek a waiver from the lenders or seek new capital through the sale of equity or debt securities. If the Company is unable to obtain a waiver or raise new capital to meet these obligations if they become due, the Company may have to seek other strategic alternatives. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.