Chembio Diagnostics board recommends stockholders tender shares

Chembio Diagnostics released a letter to stockholders concerning the pending tender offer by Biosynex SA, which read in part, " As previously disclosed, Chembio Diagnostics entered into an Agreement and Plan of Merger, dated as of January 31, 2023, with Biosynex SA, a French societe anonyme, and Project Merci Merger Sub, Inc., a Nevada corporation and wholly-owned indirect subsidiary of Biosynex. Pursuant to the Merger Agreement, the Purchaser commenced a tender offer to purchase all of the issued and outstanding shares of the Company’s common stock, par value $0.01 per share, for a purchase price of $0.45 per share, net to the seller in cash, without interest and subject to any required tax withholding. The Offer was initially scheduled to expire at one minute after 11:59 p.m., New York City time, on March 14, 2023. Today, Biosynex announced an extension of the Offer until 6:00 p.m., New York City time, on March 28, 2023. I believe Chembio is at a critical juncture and it is important to communicate the best available information to our stockholders at this time. The decision to enter into the Merger Agreement was arrived at following an extensive strategic review as detailed in the Schedule 14D-9 filed with the U.S. Securities and Exchange Commission on February 14, 2023. As further disclosed in the Schedule 14D-9, the Company faces ongoing operational and financial challenges if it stays an independent company as a result of not enough Shares being tendered in the Offer and the transactions contemplated by the Merger Agreement not being consummated. These challenges include: Credit Agreement; Debt Maturity and Covenants. Our Credit Agreement has a September 4, 2023 maturity date, and we do not currently believe that replacement debt or equity financing arrangements are or will be available to us or, if available to us, will be on acceptable terms. In addition, the Credit Agreement includes a minimum total revenue covenant, and based on our financial performance to date for the current quarter, we do not believe that we will be in compliance for the four fiscal quarters ended March 31, 2023. Our lender has previously informed us that it will not agree to any restructuring of the Credit Agreement, and as a result we may be forced to pursue a bankruptcy or restructuring proceeding when the debt matures or pursue a transaction or financing arrangement that could be dilutive to stockholders. Potential Nasdaq Delisting. We do not anticipate meeting the minimum bid price requirement for continued listing on the Nasdaq Capital Market, and there is a strong likelihood that Nasdaq will notify the Company on or shortly after April 3, 2023 that it will be subject to delisting. While the Company may appeal a Nasdaq delisting determination to a Nasdaq hearings panel, there can be no assurance that any such appeal would be successful, particularly since we initially received a deficiency letter on April 5, 2022 and have already received a 180-day extension to regain compliance. Further, even if the Company were in a position to pursue a reverse stock split or other similar corporate action in an effort to regain compliance with the minimum bid requirement, there can be no assurance that it would be able to obtain the requisite stockholder approval under Nevada law. If the Company’s common stock were to be delisted, this would adversely affect the Company’s ability to publicly or privately sell equity securities and negatively impact the liquidity of your common stock. Net Losses and Going Concern Doubts. The Company’s net loss of approximately $33.9 million for the year ended December 31, 2021 and $22.4 million for the nine months ended September 30, 2022 coupled with ongoing liquidity concerns have resulted in the Company’s conclusion that there is substantial doubt about its ability to continue as a going concern. As further described in the Schedule 14D-9, our Board of Directors unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement are in the best interests of stockholders and recommended that stockholders tender their shares in the Offer. As part of reaching this determination and recommendation, the Board considered the premium the offer price represented, the certainty the tender offer and merger would provide stockholders, and the business reputation, management and financial resources of Biosynex."