What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-12 · 771 added, 577 removed, 160 unchanged (89% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

September 30,

Current Assets:

1 unchanged sentence

Deferred license costs

License fee and expense reimbursements receivables

Prepaid expenses and other current assets

17 unchanged sentences

Preferred stock, $0.0001 par value, 6,000,000 shares authorized;

0 shares issued and outstanding as of September 30, 2020 and

as of December 31, 2019

0 shares issued

and outstanding as of March 31, 2021 and December 31, 2020, respectively

Common stock, $0.0001 par value, 90,000,000 shares authorized;

24,884,251 and 17,100,726 shares issued and outstanding

as of September 30, 2020 and December 31, 2019, respectively

25,623,577 and

24,978,585 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

5 unchanged sentences

The accompanying notes are an integral part of these condensed financial statements.

EYENOVIA, INC.

Condensed Statements of Operations

For the Three Months Ended

For the Nine Months Ended

September 30,

Operating Income

Cost of revenue

Operating Expenses:

4 unchanged sentences

Other Income (Expense):

Small Business Administration

Economic Injury Disaster grant

Interest expense

Interest income

$ (5,351,667 )

$ (5,450,910 )

Net Loss Per Share

- Basic and Diluted

Weighted Average Number of Common

Shares Outstanding - Basic and

Weighted Average Number of

Common Shares Outstanding

- Basic and Diluted

The accompanying notes are an integral part of these condensed financial statements.

EYENOVIA, INC.

Condensed Statements of Changes in Stockholders' Equity

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Stockholders'

Balance - January 1, 2020

$ (57,671,052 )

Issuance of common stock and warrants in private placement [1]

Stock-based compensation

Balance - March 31, 2020

(63,121,962 )

Exercise of stock warrants

Stock-based compensation

Balance - June 30, 2020

Balance - December 31, 2020

$ (77,440,919 )

Issuance of common stock in public offering [2]

Exercise of stock warrants

Exercise of stock options

Stock-based compensation

Balance - September 30, 2020

Balance - March 31, 2021

$ (82,792,586 )

Includes gross proceeds of $5,984,931, less total issuance costs of $533,189.

[2] Includes gross proceeds of $13,800,002, less total issuance costs of $1,304,294.

For the Nine Months Ended September 30, 2019

For the Three Months Ended March 31, 2020

Stockholders'

1 unchanged sentence

$ (57,671,052 )

Exercise of stock options on a cashless basis

Exercise of stock options

Issuance of common stock and warrants in private placement [1]

Stock-based compensation

1 unchanged sentence

$ (63,121,962 )

Exercise of stock options

Stock-based compensation

Balance - June 30, 2019

(47,780,190 )

Issuance of common stock in public offering [1]

Stock-based compensation

Balance - September 30, 2019

$ (52,429,568 )

[1] Includes gross proceeds of $5,984,931, less total issuance costs of $533,189.

2 unchanged sentences

Condensed Statements of Cash Flows

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash Flows From Operating Activities

2 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Depreciation of property and equipment

Stock-based compensation

1 unchanged sentence

Prepaid expenses and other current assets

License fee and expense reimbursements receivables

Deferred license costs

3 unchanged sentences

Deferred license fee

Security deposit

Deferred rent

Net Cash Used In Operating Activities

(11,853,369 )

(14,899,112 )

Cash Flows From Investing Activities

2 unchanged sentences

Cash Flows From Financing Activities

Proceeds from sale of common stock in public offering [1]

Proceeds from sale of common stock and warrants in private placement [2]

Proceeds from sale of common stock in public offering [3]

Proceeds from exercise of stock warrants

Proceeds from PPP 7(a) Loan

Repayments of notes payable

Payment of public offering issuance costs

Proceeds from exercise of stock options

Payment of offering issuance costs

Net Cash Provided By Financing Activities

Net Increase (Decrease) in Cash and Cash Equivalents

Net Decrease in Cash and Cash Equivalents

Cash and cash equivalents - Beginning of Period

Cash and cash equivalents - End of Period

[1] Includes gross proceeds of $14,030,001, less issuance costs of $815,052 deducted directly from the offering proceeds.

[2] Includes gross proceeds of $5,984,931, less issuance costs of $415,795 deducted directly from the private placement proceeds.

[3] Includes gross proceeds of $13,800,002, less issuance costs of $1,066,000 deducted directly from the offering proceeds.

Supplemental Disclosure of Cash Flow Information:

Cash paid during the periods for:

Interest expense

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Accrual of public offering costs

Accrual of private placement offering costs

Purchase of insurance premium financed by note payable

Exercise of stock options on a cashless basis

[1] Includes $203,799 of leasehold improvements and $140,521 of equipment purchases for the three months ended March 31, 2021.

[2] Includes gross proceeds of $5,984,931, less issuance costs of $415,795 deducted directly from the private placement proceeds.

The accompanying notes are an integral part of these condensed financial statements.

1 unchanged sentence

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1 – Business Organization,

Nature of Operations and Basis of Presentation

or the “Company”) is a clinical stage ophthalmic biopharmaceutical company developing a pipeline of microdose

array print (MAP™) therapeutics.

Eyenovia aims to achieve clinical microdosing of next-generation formulations of well-established

ophthalmic pharmaceutical agents using its high-precision targeted ocular delivery system branded the Optejet ®

Note 1 –

Business Organization, Nature

of Operations and Basis of Presentation

Eyenovia, Inc.

(“Eyenovia”

“Company”) is a clinical stage ophthalmic company developing a pipeline of advanced therapeutics based on its propriety array

print (MAP TM ) platform technology.

Eyenovia aims to achieve clinical microdosing of next-generation formulations of novel

and existing ophthalmic pharmaceutical agents using its high-precision targeted ocular delivery system, branded the Optejet ®

which has the potential to replace conventional eye dropper delivery and improve safety, tolerability, patient compliance and topical

delivery success for ophthalmic eye treatments.

In the clinic, the Optejet has demonstrated the ability to horizontally deliver

ophthalmic medication with a success rate significantly higher than that of traditional eye drops (~ 90% vs.

proprietary delivery technology, Eyenovia is developing the next generation of smart ophthalmic therapies which target new indications

or new combinations where there are currently no comparable drug therapies approved by the U.S.

Food and Drug Administration (the

Eyenovia’s microdose therapeutics follow the FDA-designated pharmaceutical registration and regulatory

Its products are classified by the FDA as drugs, and not medical devices or drug-device combination products.

accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q

and Article 8 of Regulation S-X.

Accordingly, they do not include all of the information and disclosures required by U.S.

for complete financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal

recurring items) which are considered necessary for a fair presentation of the condensed financial statements of the Company as

of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019.

The results of operations for the three

and nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full year ending December

31, 2020 or any other period.

These unaudited condensed financial statements should be read in conjunction with the audited financial

statements and related disclosures of the Company as of December 31, 2019 and for the year then ended, which were included in the

Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March

Note 2 – Summary of Significant

Accounting Policies

Since the date of the Company’s Annual

Report on Form 10-K for the year ended December 31, 2019, there have been no material changes to the Company’s significant

accounting policies, except as disclosed below.

As of September 30, 2020, the Company had

cash and cash equivalents of approximately $22.9 million and an accumulated deficit of approximately $73.2 million.

months ended September 30, 2020 and 2019, the Company incurred net losses of approximately $15.6 million and $15.9 million, respectively,

and used cash in operations of approximately $11.9 million and $14.9 million, respectively.

Subsequent to September 30, 2020, the

Company entered into a License Agreement (the “Bausch License Agreement”) with a subsidiary of Bausch Health Companies

(“Bausch Health”) pursuant to which the Company received an upfront payment from Bausch Health of $10.0 million.

See Note 11 –

Subsequent Events for details.

The Company believes its current cash on

hand, including the proceeds received from the Bausch License Agreement and warrant exercises, is sufficient to meet its operating

and capital requirements for at least the next twelve months from the date these financial statements are issued.

Thereafter, the

Company may need to raise further capital, through the sale of additional equity or debt securities, to support its future operations.

The Company’s operating needs include the planned costs to operate its business, including amounts required to fund research

and development activities including clinical studies, working capital and capital expenditures.

The Company’s future capital

requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully

manufacture its products and commercialize its products and services, competing technological and market developments, and the

need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its

product and service offerings.

If the Company is unable to secure additional capital, it may be required to curtail its research

and development initiatives and take additional measures to reduce costs in order to conserve its cash.

In the clinical trials, the Optejet has demonstrated that Eyenovia’s targeted horizontal

microdose delivery can achieve a significantly higher rate of successful ocular topical delivery compared to the established rate reported

with traditional eye drops (~ 90% vs.

Using its proprietary delivery technology, Eyenovia is developing the next generation of

smart ophthalmic therapies which target new indications or new combinations where there are currently no comparable drug therapies approved

Food and Drug Administration (the “FDA”).

Eyenovia’s microdose therapeutics follow the FDA-designated pharmaceutical

registration and regulatory process.

Its products are classified by the FDA as drugs, and not medical devices or drug-device combination

The accompanying unaudited condensed financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they

do not include all of the information and disclosures required by U.S.

GAAP for complete financial statements.

In the opinion of management,

such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation

of the condensed financial statements of the Company as of March 31, 2021 and for the three months ended March 31, 2021 and 2020.

results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year

ending December 31, 2021 or any other period.

These unaudited condensed financial statements should be read in conjunction with the audited

financial statements and related disclosures of the Company as of December 31, 2020 and for the year then ended, which were included in

the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2021.

Note 2 –

Summary of Significant Accounting

Since the date of the Company’s Annual Report

on Form 10-K for the year ended December 31, 2020, there have been no material changes to the Company’s significant accounting policies,

except as disclosed below.

Liquidity and Going Concern

As of March 31, 2021, the Company had cash of

approximately $24.9 million and an accumulated deficit of approximately $82.8 million.

For the three months ended March 31, 2021 and 2020,

the Company incurred net losses of approximately $5.4 million and $5.5 million, respectively, and used cash in operations of approximately

$4.6 million and $5.9 million, respectively.

The Company does not have recurring revenue and has not yet achieved profitability.

expects to continue to incur cash outflows from operations.

The Company expects that its research and development and general and administrative

expenses will continue to increase and, as a result, it will eventually need to generate significant product revenues to achieve profitability.

These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from

the date that these financial statements are issued.

Implementation of the Company’s plans and its ability to continue as a going

concern will depend upon the Company’s ability to raise further capital, through the sale of additional equity or debt securities

or otherwise, to support its future operations.

The Company’s operating needs include the

planned costs to operate its business, including amounts required to fund working capital and capital expenditures.

The Company’s

future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability

to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations

with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.

If the Company

is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures

to reduce costs in order to conserve its cash.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 2 – Summary of Significant

Accounting Policies – Continued

Cash and Cash Equivalents

The Company considers all highly liquid

investments with an original maturity of three months or less to be cash equivalents in the financial statements.

The Company has cash deposits in a financial

institution which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions.

As of September 30, 2020 and December 31, 2019, the Company had cash balances in excess of FDIC insurance limits of $22,614,578

and $13,902,601, respectively.

Derivative Instruments

The Company evaluates its embedded conversion

options and any freestanding instruments to determine if those contracts or embedded components of those contracts qualify as derivative

financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board ("FASB")

Accounting Standards Codification (“ASC”).

The accounting treatment of derivative financial instruments requires that

the Company record them at their fair values as of the inception date of the agreement and at fair value as of each subsequent

balance sheet date.

Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period

at each balance sheet date.

The Company reassesses the classification of its derivative instruments at each balance sheet date.

If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event

that caused the reclassification.

The Company considers all highly liquid investments

with an original maturity of three months or less to be cash equivalents in the financial statements.

The Company has cash deposits in a financial institution

which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

The Company has not

experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions.

As of March 31, 2021

and December 31, 2020, the Company had cash balances in excess of FDIC insurance limits of $24,657,048 and $28,121,828, respectively.

Net Loss Per Common Share

Basic net loss per common share is computed

by dividing net loss by the weighted average number of common shares outstanding during the period.

Diluted earnings per share

reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted

into common stock.

The following securities are excluded from

the calculation of weighted average diluted common shares because their inclusion would have been anti-dilutive:

September 30,

Basic net loss per common share is computed by

dividing net loss by the weighted average number of common shares outstanding during the period plus fully vested shares that are subject

to issuance for little or no monetary consideration.

Diluted earnings per share reflects the potential dilution that could occur if securities

or other instruments to issue common stock were exercised or converted into common stock.

The following securities are excluded from the

calculation of weighted average diluted common shares because their inclusion would have been anti-dilutive:

Restricted stock units

Total potentially dilutive shares

Revenue Recognition

Our revenues are generated primarily through research,

development and commercialization agreements.

The terms of such agreements may contain multiple promised goods and services, which may

include (i) licenses to our intellectual property, and (ii) in certain cases, payment in connection with the manufacturing and delivery

of clinical supply materials.

Payments to us under these arrangements typically include one or more of the following:

non-refundable,

upfront license fees;

milestone payments;

payments for clinical product supply, and royalties on future product sales.

We analyze our arrangements to assess whether

such arrangements involve joint operating activities.

For collaboration arrangements that are deemed to be within the scope of Accounting

Standards Codification (“ASC”) Topic 808, “Collaborative Arrangements”

(“ASC 808”), we allocate the

contract consideration between such joint operating activities and elements that are reflective of a vendor-customer relationship and,

therefore, within the scope of ASC Topic 606, “Revenue from Contracts with Customers”

(“ASC 606”).

is to recognize amounts allocated to joint operating activities as a reduction in research and development expense.

Under ASC 606, we recognize revenue when our customers

obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for

those goods or services.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform

the following five steps:

Identify the contract with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when the company satisfies a performance obligation.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 2 – Summary of Significant

Accounting Policies – Continued

Recently Adopted Accounting Pronouncements

In July 2017, the FASB issued ASU No.

“Earnings Per Share (Topic 260) and Derivatives and Hedging (Topic 815)- Accounting for Certain Financial Instruments with

Down Round Features” (“ASU 2017-11”).

Equity-linked instruments, such as warrants and convertible instruments

may contain down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings.

Under ASU 2017-11, a down round feature will no longer require a freestanding equity-linked instrument (or embedded conversion

option) to be classified as a liability that is remeasured at fair value through the income statement (i.e.

marked-to-market).

However, other features of the equity-linked instrument (or embedded conversion option) must still be evaluated to determine whether

liability or equity classification is appropriate.

Equity classified instruments are not marked-to-market.

For earnings per share

("EPS") reporting, the ASU requires companies to recognize the effect of the down round feature only when it is triggered

by treating it as a dividend and as a reduction of income available to common shareholders in basic EPS.

The amendments in this

ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15,

This standard, which the Company adopted on January 1, 2020, did not have a material impact on the Company’s financial

position, results of operations or cash flows.

In March 2020, the FASB issued ASU 2020-03,

“Codification Improvements to Financial Instruments” (“ASU 2020-03”).

ASU 2020-03 improves and clarifies

various financial instruments topics.

ASU 2020-03 includes seven different issues that describe the areas of improvement and the

related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing

clarifications.

The Company adopted ASU 2020-03 upon issuance, which did not have a material impact on the Company’s unaudited

condensed financial statements.

Note 3 – Prepaid Expenses and

Other Current Assets

As of September 30, 2020 and December 31,

2019, prepaid expenses and other current assets consisted of the following:

September 30,

Prepaid insurance expenses

We must make significant judgments in our revenue

recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to

include in the transaction price and allocating the transaction price to each performance obligation.

In addition, arrangements that include

rights to additional goods or services that are exercisable at a customer’s discretion are generally considered discretionary purchase

We assess if these options provide a material right to the customer and if so, they are considered performance obligations.

For upfront license fees, we must consider how

many performance obligations are in the contract and, if more than one, how to allocate the fee to those performance obligations upon

satisfaction of the performance obligation(s).

Milestone payments represent variable consideration that will be recognized when the performance

obligation is achieved.

Sales-based royalty payments derived from usage of intellectual property are recognized when those sales occur.

During 2020, the Company entered into a license

agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic Vision”) and

a license agreement (the “Bausch License Agreement”) with Bausch Health Companies, Inc.

(“Bausch Health”).

license has three revenue components:

1) an upfront license fee;

2) milestone payments;

and 3) royalty payments.

See Note 7 –

and Contingencies for additional details.

Deferred License Fee

The Company enters into license agreements which provide for the receipt

of non-refundable, upfront licensing payments.

These payments are recorded as deferred license fees and will be earned and recognized

as revenue upon the satisfaction of performance obligations.

See Note 7 –

Commitments and Contingencies for additional details.

Deferred License Costs

The Company enters into license agreements which

provide for payment of license costs in connection with the Company’s receipt of license fees.

These payments are recorded as deferred

license costs and will be recorded as an expense when the related license fee revenue is recognized.

See Note 8 –

Related Party

Transactions for additional details.

Recently Adopted Accounting Standards

In August 2018, the FASB issued Accounting

Standards Update (“ASU”) No.

2018-13 “Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to

the Disclosure Requirements for Fair Value Measurement”

(“ASU 2018-13”).

The amendments in ASU 2018-13 modify the disclosure

requirements on fair value measurements based on the concepts in the FASB Concepts Statement, including the consideration of costs and

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs

used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively

for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied

retrospectively to all periods presented upon their effective date.

The amendments are effective for fiscal years beginning after December 15,

The Company adopted ASU 2018-13 effective January 1, 2021.

This standard did not have a material impact on the Company’s financial

position, results of operations or cash flow.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02

“Leases (Topic 842)”

(“ASU 2016-02”).

ASU 2016-02 requires that a lessee recognize the assets and liabilities

that arise from operating leases.

A lessee should recognize in the statement of financial position a liability to make lease payments

(the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.

For leases with

a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize

lease assets and lease liabilities.

In transition, lessees and lessors are required to recognize and measure leases at the beginning of

the earliest period presented using a modified retrospective approach.

ASU 2016-02, as amended, is now effective for fiscal years beginning

after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The FASB issued ASU 2019-01

“Leases (Topic 842) Codification Improvements”

in March 2019 and ASU 2018-10 “Codification Improvements to Topic

842, Leases”

and ASU 2018-11 “Leases (Topic 842) Targeted Improvements”

in July 2018, and ASU 2018-20 “Leases

(Topic 842) - Narrow Scope Improvements for Lessors”

in December 2018.

ASU 2019-01, ASU 2018-10 and ASU 2018-20 provide certain

amendments that affect narrow aspects of the guidance issued in ASU 2016-02.

ASU 2018-11 allows all entities adopting ASU 2016-02 to choose

an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption

date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

is currently evaluating ASU 2016-02 and its impact on its financial position, results of operations, and cash flows.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,”

which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general

principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for

fiscal years beginning after December 15, 2021.

The Company is currently evaluating ASU 2019-12 and its impact on its financial

position, results of operations, and cash flows.

Note 3 –

Prepaid Expenses and Other Current Assets

As of March 31, 2021 and December 31, 2020, prepaid expenses and other

current assets consisted of the following:

Payroll tax receivable

Arctic Vision expense reimbursement receivable

Prepaid research and development expenses

Prepaid Board of Director fees

Prepaid subscription fees

Prepaid insurance expenses

Prepaid general and administrative expenses

Prepaid licenses and subscriptions

Prepaid conference expenses

Prepaid board of directors expenses

Prepaid rent and security deposit

Prepaid patent expenses

Total prepaid expenses and other current assets

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 4 – Accrued Compensation

As of September 30, 2020 and December 31,

2019, accrued compensation consisted of the following:

September 30,

Note 4 –

Accrued Compensation

As of March 31, 2021 and December 31, 2020, accrued compensation consisted

of the following:

Accrued bonus expenses

1 unchanged sentence

Total accrued compensation

Note 5 – Accrued Expenses and

Other Current Liabilities

As of September 30, 2020 and December 31,

2019, accrued expenses and other current liabilities consisted of the following:

September 30,

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 5 –

Accrued Expenses and Other Current Liabilities

As of March 31, 2021 and December 31, 2020, accrued

expenses and other current liabilities consisted of the following:

Accrued research and development expenses

Accrued public offering costs

Accrued professional services

Accrued legal expenses

Accrued franchise tax

Accrued consulting and professional services

Credit card payable

Leasehold improvements

Accrued travel and entertainment expenses

Accrued franchise tax

Accrued licensing fees

Accrued interest

Accrued expense reimbursements

Total accrued expenses and other current liabilities

Note 6 – Notes Payable

As of September 30, 2020 and December 31,

Note 6 –

Notes Payable

As of March 31, 2021 and December 31, 2020,

notes payable consisted of the following:

Paycheck Protection

and officers insurance policy loan

On February 24, 2020, the Company issued

a note payable (the “Note”) for the purchase of a directors’ and officers’ liability insurance policy.

The Note is payable in nine monthly payments of $53,750 for an aggregate principal amount of $475,216.

The Note accrues interest

at a rate of 4.29% per year and matures on November 24, 2020.

During the nine months ended September 30, 2020, the Company repaid

principal on the Note in the aggregate amount of $368,289.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 6 – Notes Payable –

March 31, 2021

December 31, 2020

BankDirect Capital Finance loan

Paycheck Protection Program loan

On February 24, 2021, the Company issued a note

payable for the purchase of a directors and officers liability insurance policy.

The note payable is payable in nine monthly payments

consisting of principal and interest amounting to $79,343 for an aggregate principal amount of $705,360.

The note accrues interest at

a rate of 2.96% per year and matures on November 24, 2021.

On May 8, 2020, the Company received cash

proceeds of $463,353 pursuant to a loan provided in connection with the Paycheck Protection Program under the CARES Act (the “PPP

Loan”).

The PPP Loan provides for monthly installment payments of $19,508 beginning in August 2021 with the remaining balance

1 unchanged sentence

The PPP Loan bears interest at a fixed rate of 1.00% per annum.

Under the terms of the CARES Act, as amended

by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all

or a portion of its PPP Loan.

Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds

for certain permissible purposes as set forth in the PPP Loan, including, but not limited to, payroll costs and mortgage interest,

rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and

on the maintenance of employee and compensation levels following the funding of the PPP Loan.

The Company intends to use the proceeds

of its PPP Loan for Qualifying Expenses.

However, no assurance is provided that the Company will be able to obtain forgiveness

of its PPP Loan in whole or in part.

Any amounts that are not forgiven incur interest at 1.0% per annum and monthly repayments

of principal and interest are deferred until six months after the Small Business Administration makes a determination on forgiveness.

While the PPP Loan currently has a two-year maturity, the amended law permits the borrower to request a five-year maturity from

the three months ended September 30, 2020 and 2019, the Company recorded interest expense of $3,824 and $0, respectively, and $9,855

and $0 for the nine months ended September 30, 2020 and 2019, respectively .

Note 7 – Commitments and Contingencies

See Note 8 – Related Party Transactions

Under the terms of the CARES Act, as amended by

the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all or a portion

of its PPP Loan.

The Company applied for loan forgiveness on the PPP Loan in March 2021.

Such forgiveness will be determined, subject

to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP Loan, including, but not

limited to, payroll costs and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during

the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels following the funding of the PPP Loan.

The Company has used the proceeds of its PPP Loan for Qualifying Expenses.

However, no assurance is provided that the Company will be

able to obtain forgiveness of its PPP Loan in whole or in part.

Any amounts that are not forgiven incur interest at 1.0% per annum and

monthly repayments of principal and interest are deferred until six months after the Small Business Administration makes a determination

on forgiveness.

While the PPP Loan currently has a two-year maturity, the amended law permits the borrower to request a five-year maturity

from its lender.

During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of $1,151 and $0, respectively.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 7 –

Commitments and Contingencies

See Note 8 –

Related Party Transactions

for certain commitments and contingencies entered into with certain related parties.

5 unchanged sentences

Arctic Vision License Agreement

On August 10, 2020, the Company entered

into a License Agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic

Vision”) pursuant to which Arctic Vision may develop and commercialize MicroPine for the treatment of progressive myopia

and MicroLine for the treatment of presbyopia in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea.

Under the terms of the Arctic Vision License

Agreement, the Company received an upfront payment of $4.0 million, before any payments to Senju Pharmaceutical Co., Ltd.

On August 10, 2020, the Company entered into

the Arctic Vision License Agreement pursuant to which Arctic Vision may develop and commercialize MicroPine for the treatment of progressive

myopia and MicroLine for the treatment of presbyopia in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea.

Under the terms of the Arctic Vision License Agreement,

the Company received a non-refundable, upfront payment of $4.0 million, before any payments to Senju Pharmaceutical Co., Ltd.

(“Senju”),

The Company will record this payment as a deferred license fee in the unaudited condensed balance sheet until the payment is earned.

The Company will consider payment earned once certain trial data has been submitted to Arctic Vision, permitting Arctic Vision

to obtain regulatory approval with the National Medical Products Administration.

due under the Exclusive License Agreement between the Company and Senju, as amended on April 8, 2020 and a Letter Agreement dated August

10, 2020 (the “Senju License Agreement”).

The Company had recorded the $4.0 million payment as a deferred license fee until

the payment is earned.

The Company considers payment earned once certain trial data has been fully submitted to Arctic Vision, permitting

Arctic Vision to obtain regulatory approval with the National Medical Products Administration.

The trial data for one of the two products

(MicroPine) was fully submitted to Arctic Vision by March 31, 2021.

Therefore, one half of the upfront payment, or $2.0 million, has been

As a result, the Company will recognize $2.0 million of deferred license fees and recognize $0.8 million of deferred license costs

related to the Senju payment as of March 31, 2021.

In addition, the Company may receive up to a total

2 unchanged sentences

Arctic Vision also will purchase its supply of

MicroPine and MicroLine from the Company or, for such products not supplied by the Company, pay the Company a mid-single digit

percentage royalty on net sales of such products, subject to certain adjustments.

The Company will pay a mid-double digit percentage

of such payments, royalties, or net proceeds of such supply to Senju pursuant to its Exclusive License Agreement with Senju, as

MicroPine and MicroLine from the Company or, for such products not supplied by the Company, pay the Company a mid-single digit percentage

royalty on net sales of such products, subject to certain adjustments.

No royalty payments were earned through March 31, 2021.

will pay a mid-double digit percentage of such payments, royalties, or net proceeds of such supply to Senju pursuant to the Senju License

See Note 8 –

Related Party Transactions.

During the three and nine months ended September 30, 2020, the Company

did not earn any fees related to the Arctic Vision License Agreement.

Related Party Transactions for additional details.

Bausch License Agreement

On October 9, 2020, the Company entered into

the Bausch License Agreement pursuant to which Bausch Health may develop and commercialize the Bausch Licensed Product in the Licensed

In connection with the Bausch License Agreement,

Bausch Health paid the Company a non-refundable, upfront payment of $10.0 million.

The Company has recorded this payment as a deferred

license fee until the payment is earned.

The Company will consider payment earned once certain trial data has been fully submitted to

Bausch Health and certain administrative functions are transferred to Bausch Health, permitting Bausch Health to assume supervisory oversight

of the ongoing MicroPine study (the CHAPERONE study).

The upfront payment had not been earned as of March 31, 2021.

Bausch Health could also pay the Company up to

an aggregate of approximately $35.0 million in additional payments, depending on the achievement of certain regulatory and launch-based

No milestone payments were earned through March 31, 2021.

Under the terms of the Bausch License Agreement,

on a country-to-country basis and Bausch Licensed Product-by- Bausch Licensed Product basis, Bausch Health will pay the Company royalties

on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from the sales of the Bausch Licensed Product

in the Licensed Territory, subject to certain adjustments in the event of generic entry, negative gross profits or patent expiration,

for a period of the later to occur of the 10th anniversary of the first commercial sale of a Bausch Licensed Product in such country in

the Licensed Territory or the expiration of the last valid patent claim for a Bausch Licensed Product in such country in the Licensed

No royalty payments were earned through March 31, 2021.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 8 – Related Party Transactions

Consulting Agreements

A company in which a member of the Company’s

Board of Directors is part owner was a party to a consulting agreement with the Company, dated July 6, 2017, which provided for

the payment of $9,567 per month, and $250 per hour for any additional work, for advisory services performed by such director.

consulting agreement was terminated on September 1, 2020.

The director remains on the Board.

The Company incurred expenses of $19,134

and $49,451 for the three months ended September 30, 2020 and 2019, respectively, and $57,402 and $151,853 for the nine months

ended September 30, 2020 and 2019, respectively, related to the agreement which was included within general and administrative

expenses on the unaudited condensed statements of operations.

Note 8 –

Related Party Transactions

Lease Agreements

The Company’s Vice President of Research

and Development and Manufacturing (“VP of R&D”) owns a company that entered into a lease agreement with the Company

on September 15, 2016 to lease 953 square feet of space located in Reno, NV with respect to its research and development activities.

The Company’s Vice President of Research

and Development and Manufacturing (“VP of R&D”) owns a company that entered into a lease agreement with the Company on

September 15, 2016 to lease 953 square feet of space located in Reno, Nevada with respect to its research and development activities.

The initial monthly base rent was $3,895 per month over the term of the lease and the security deposit was $3,895.

15, 2018, the Company amended the lease agreement to extend it until September 14, 2020 and increase the monthly base rent and

security deposit to $4,012.

The lease agreement was amended again on April 6, 2020 to lease additional space and increase the monthly

base rent and security deposit to $5,247.

On September 15, 2020, the Company agreed to extend the lease term until September 14,

2022 and increase the monthly base rent and security deposit to $5,404.

The Company made $70,000 of leasehold improvements related

to this lease which are included on the balance sheet.

The Company’s rent expense amounted to $15,982 and $12,036 for

the three months ended September 30, 2020 and 2019, respectively, and $43,512 and $36,108 for the nine months ended September 30,

2020 and 2019, respectively.

Research and Development Activities

The VP of R&D is the sole owner and

President of a company that performs contract engineering services for the Company.

During the three and nine months ended September

30, 2020, the Company recognized research and development expense of $323,187 and $795,992, respectively, related to services provided

by such vendor.

During the three and nine months ended September 30, 2019, the Company recognized research and development expense

of $197,543 and $728,103, respectively, related to services provided by such vendor.

The Company had a liability of $120,584 and

$89,052 to the vendor as of September 30, 2020 and December 31, 2019, respectively.

The Company recognized $46,050 and $143,437

of compensation expense related to the VP of R&D’s salary during the three and nine months ended September 30, 2020,

On September 15, 2018,

the Company amended the lease agreement to extend it until September 14, 2020 and increase the monthly base rent and security deposit

On September 15, 2020, the Company amended the lease agreement to extend it until September 14, 2022 and increase

the monthly base rent and security deposit to $5,404.

The Company made $82,500 of leasehold improvements related to this lease which are

included on the condensed balance sheet.

The Company’s rent expense for this space is recorded in Research and Development

on the condensed statement of operations and amounted to $17,020 and $12,036 for the three months ended March 31, 2021 and 2020,

respectively.

The Company recognized $46,010 and $140,110 of compensation expense related to the VP of R&D’s salary during

the three and nine months ended September 30, 2019, respectively.

Senju License Agreement

During 2015, the Company entered into an Exclusive

License Agreement with Senju whereby the Company agreed to grant to Senju an exclusive, royalty-bearing license for its microdose product

candidates for Asia to sublicense, develop, make, have made, manufacture, use, import, market, sell, and otherwise distribute the microdose

product candidates.

In consideration for the license, Senju agreed to pay to Eyenovia five percent (5%) royalties for the term of the

license agreement.

On March 8, 2015, the Company entered into

an Exclusive License Agreement (the “Exclusive License Agreement”) with Senju whereby the Company agreed to grant to

Senju an exclusive, royalty-bearing license, with rights of sublicense, for its medical device technology for the piezoelectric

delivery of ophthalmic medications to develop, make, have made, manufacture, use, import, market, sell, and otherwise distribute

such products in Asia.

In consideration for the license, Senju agreed to pay to Eyenovia 5% royalties on sales (net of certain

manufacturing costs) for the term of the Exclusive License Agreement, subject to certain adjustments upon the loss of patent coverage.

The Exclusive License Agreement will continue in full force and effect, on a country-by-country basis, until the later to occur

(i) the tenth (10th) anniversary of the first commercial sale of such a product candidate in a country or (ii) the expiration

of the licensed patents in a country.

As of the date of this filing, there had been no commercial sales of such a product in Asia,

and, therefore, no royalties had been earned.

Senju is owned by the family of a former member of the Company’s Board of Directors

and, together, they beneficially own greater than 5% of the Company’s common stock.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 8 – Related Party Transactions - Continued

License Agreement – Continued

On April 8, 2020, Eyenovia entered into an amendment (the “License

Amendment”) to the Exclusive License Agreement.

Pursuant to the License Amendment, the Company can license to any third party

the right to research, develop, commercialize, manufacture or use certain products identified below (the “Senju Licensed

Products”) previously licensed to Senju in China (including the People’s Republic of China, Hong Kong, Macao, and Taiwan)

and South Korea (the “Territory”) if such a license is executed by the Company by April 8, 2021.

The agreement will continue in full force and effect, on a country-by-country basis, until the latest to occur of:

(i) the tenth (10th) anniversary of the first commercial sale of a microdose product candidate in Asia;

or (ii) the expiration of the

licensed patents.

As of the date of this filing, there had been no commercial sales of a microdose product candidate in Asia, such that

no royalties had been earned.

Senju is owned by the family of a former member of the Company’s Board of Directors and, together,

they beneficially own greater than 5% of the Company’s common stock.

On April 8, 2020, Eyenovia entered into an

amendment (the “License Amendment”) to the Exclusive License Agreement.

Pursuant to the License Amendment, the Company can

license to any third party the right to research, develop, commercialize, manufacture or use certain products identified below (the “Senju

Licensed Products”) previously licensed to Senju in China (including the People’s Republic of China, Hong Kong, Macao, and

Taiwan) and South Korea (the “Territory”) if such a license is executed by the Company by April 8, 2021.

The Senju Licensed

1 unchanged sentence

to treat myopia in humans and (ii) pilocarpine as its sole active ingredient to treat presbyopia in humans.

Pursuant to the License Amendment, the

Company must pay Senju (a) close to a mid-double digit percentage of revenue on any lump-sum payments the Company receives from

the third party, revenue (net of costs) obtained by the Company from contract research and/or development of the Senju Licensed

Product in the Territory, and revenue (net of costs) obtained by the Company from contract manufacture for the device of the Senju

Licensed Product in the Territory, the aggregate of which must be at least a high seven figure dollar amount minimum payment to

and (b) a lower-double digit percentage of any sales royalty revenue the Company receives from the third party.

third-party license is executed by the Company prior to April 8, 2021 (in which case, subject to early termination the License

Amendment shall remain in effect for the duration of such license), the License Amendment terminates on April 8, 2021, but may

be terminated earlier by Senju upon the Company’s material breach of the License Amendment, subject to a 60-day cure period.

The Exclusive License Agreement was further

amended in a Letter Agreement by and between the Company and Senju on August 10, 2020 (the “Letter Agreement”).

to the Letter Agreement, the Company will pay a mid-double digit percentage of certain payments, royalties, or net proceeds received

from Arctic Vision in connection with the Arctic Vision License Agreement to Senju.

During the nine months ended September 30,

2020, the Company paid Senju $1.6 million in connection with the Arctic Vision License Agreement which was recorded as deferred

license costs in the Company’s unaudited condensed balance sheet and will be recognized as expense upon earning the related

See Note 7 – Commitments and Contingencies for additional details.

Note 9 – Stockholders’ Equity

Equity Incentive Plan

On April 7, 2020, the Company’s Board

of Directors approved the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan (the “Restated Plan”),

which stockholders approved on June 30, 2020.

The Restated Plan makes certain changes to the Company’s 2018 Omnibus Stock

Incentive Plan, as amended (the “2018 Plan”).

For example, the Restated Plan increases the number of shares of Company’s

common stock reserved for issuance under the 2018 Plan to 2,950,000 shares.

The Restated Plan requires that all equity awards issued

under the Restated Plan vest at least twelve months from the applicable grant date, subject to accelerated vesting, and provides

that no dividend or dividend equivalent will be paid on any unvested equity award, although dividends with respect to unvested

portions of equity may accrue and be paid when, and if, the awards later vest and the shares are actually issued to the grantee.

In addition, the Restated Plan sets an annual limit on the grant date fair value of awards to any non-employee director, together

with any cash fees paid during the year, of $150,000, subject to certain exceptions for a non-executive chair of the Board.

the Restated Plan makes several administrative changes to the 2018 Plan, including to clarify that awards made under the Restated

Plan are intended to be exempt from or comply with Section 409(A) of the Internal Revenue Code of 1986, as amended.

Pursuant to the License Amendment, the Company

must pay Senju (a) close to a mid-double digit percentage of revenue on any lump-sum payments the Company receives from the third

party, revenue (net of costs) obtained by the Company from contract research and/or development of the Senju Licensed Product in the Territory,

and revenue (net of costs) obtained by the Company from contract manufacture for the device of the Senju Licensed Product in the Territory,

the aggregate of which must be at least a high seven figure dollar amount minimum payment to Senju;

and (b) a lower-double digit

percentage of any sales royalty revenue the Company receives from the third party.

Since the Company executed a third-party license prior

to April 8, 2021, the License Amendment will remain in effect for the duration of the license, subject to early termination.

The Exclusive License Agreement was further amended

in a Letter Agreement by and between the Company and Senju on August 10, 2020 (the “Letter Agreement”).

Pursuant to the

Letter Agreement, the Company will pay a mid-double digit percentage of certain payments, royalties, or net proceeds received from Arctic

Vision in connection with the Arctic Vision License Agreement to Senju.

See Note 7 –

Commitments and Contingencies

Arctic Vision License Agreement for additional details.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9 – Stockholders’ Equity – Continued

Note 9 –

Stockholders’

Securities Purchase Agreement

On March 24, 2020, the Company closed on

a private placement of approximately $6.0 million of Units.

Each Unit consists of (i) one share of the Company’s common stock,

(ii) a one-year warrant to purchase 0.5 of a share of common stock (“Class A Warrant”), and (iii) a five-year warrant

to purchase 0.75 of a share of common stock (“Class B Warrant”) (collectively, the Class A Warrants and Class B Warrants,

the “Warrants”).

The Units were sold to the public at a price of $2.21425 per Unit and to certain directors and executive

officers at a price of $2.42625 per Unit.

The Company generated approximately $5.45 million of net proceeds in the offering after

deducting placement agent fees and offering expenses of $0.53 million.

In the offering, the Company issued an aggregate of 2,675,293

shares of common stock, Class A Warrants to purchase up to 1,337,659 shares of common stock, and Class B Warrants to purchase up

to 2,006,495 shares of common stock.

The exercise price of the Class A Warrants issued to the public is $2.058 per share and the

exercise price of the Class A Warrants issued to the directors and officers is $2.27 per share.

The exercise price of the Class

B Warrants issued to the public is $2.4696 per share and the exercise price of the Class B Warrants issued to the directors and

officers is $2.724 per share.

See “Warrants” below for additional details.

In connection with the private placement,

on March 23, 2020, the Company also entered into a Registration Rights Agreement with the investors.

Pursuant to the Registration

Rights Agreement, the Company agreed to file with the SEC, no later than 30 days following the date on which the Company files

its Form 10-K for the year ended December 31, 2019 with the SEC, a registration statement on Form S-3 covering the shares of common

stock issued in the offering and the shares of common stock underlying the Warrants.

The Company timely filed the registration

statement on Form S-3 (Registration Statement No.

333-237790), which was declared and has remained effective with the SEC since

May 13, 2020.

A summary of the Warrant activity during the nine months ended

September 30, 2020 is presented below:

Outstanding January 1, 2020

Outstanding September 30, 2020

Exercisable September 30, 2020

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9 – Stockholders’ Equity – Continued

Warrants – Continued

The following table presents information related to Warrants

as of September 30, 2020:

Warrants Outstanding

Warants Exercisable

Remaining Life

During the three months ended September

30, 2020, Warrants for the purchase of 1,080,497 shares of the Company’s common stock with exercise prices of either $2.058

or $2.4696 per share, respectively, were exercised for aggregate proceeds of approximately $2.3 million.

During the nine months

ended September 30, 2020, Warrants for the purchase of 1,248,161 shares of the Company’s common stock with exercise prices

of either $2.058 or $2.4696 per share, respectively, were exercised for aggregate proceeds of approximately $2.6 million.

Underwritten Public Offering

On August 19, 2020, the Company entered

into an Underwriting Agreement (the “Underwriting Agreement”) with several underwriters (the “Underwriters”)

in connection with the public offering (the “Offering”) of 3,333,334 shares of the Company’s common stock at

a price of $3.60 per share, less underwriting discounts and commissions.

In addition, pursuant to the terms of the Underwriting

Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 500,000 shares of the Company’s

common stock at the same price.

The Underwriting Agreement contains customary representations, warranties and covenants of the

Company and also provides for customary indemnification by the Company and the Underwriters against certain liabilities and customary

contribution provisions in respect of those liabilities.

The closing of the Offering occurred on

August 21, 2020.

At closing, the Company issued 3,833,334 shares of common stock and received net proceeds of approximately $12.5

million after deducting underwriting discounts and commissions and offering expenses of approximately $1.3 million.

The Offering was made pursuant to the Company’s

effective registration statement on Form S-3 (Registration Statement No.

333-229365), including the prospectus dated February 12,

2019, as supplemented by the prospectus supplement dated August 19, 2020.

On March 24, 2020, the Company closed on a private

placement of approximately $6.0 million of Units.

Each Unit consists of (i) one share of the Company’s common stock, (ii) a one-year

warrant to purchase 0.5 of a share of common stock (“Class A Warrant”), and (iii) a five-year warrant to purchase 0.75 of

a share of common stock (“Class B Warrant”) (collectively, the Class A Warrants and Class B Warrants, the “Warrants”).

The Units were sold to the public at a price of $2.21425 per Unit and to certain directors and executive officers at a price of $2.42625

The Company generated approximately $5.3 million of net proceeds in the offering after deducting placement agent fees and offering

In the offering, the Company issued an aggregate of 2,675,293 shares of common stock, Class A Warrants to purchase up to 1,337,659

shares of common stock, and Class B Warrants to purchase up to 2,006,495 shares of common stock.

The exercise price of the Class A Warrants

issued to the public is $2.058 per share and the exercise price of the Class A Warrants issued to the directors and officers is $2.27

The exercise price of the Class B Warrants issued to the public is $2.4696 per share and the exercise price of the Class B

Warrants issued to the directors and officers is $2.724 per share.

In connection with the private placement, on March

23, 2020, the Company also entered into a Registration Rights Agreement with the investors.

Pursuant to the Registration Rights Agreement,

the Company must file with the SEC, no later than 30 days following the date on which the Company files its Form 10-K for the year ended

December 31, 2019 with the SEC, a registration statement on Form S-3 covering the shares of common stock issued in the offering and the

shares of common stock underlying the Warrants.

The Company timely filed the registration statement on Form S-3 (Registration Statement

333-237790), which was declared and has remained effective with the SEC since May 13, 2020.

Stock Options

On January 31, 2020, the Company

granted ten-year stock options to purchase 25,000 shares of common stock to its employees under the 2018 Plan.

vest over three years from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the

balance vesting monthly over the remaining 24 months.

The stock options have an exercise price of $4.68 per share, which

represents the Company’s closing stock price on the date of grant.

The stock options had a grant date fair value of

$89,400, which the Company expects to recognize over the vesting period.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9 – Stockholders’ Equity – Continued

Stock Options - Continued

On May 28, 2020, the Company granted ten-year

stock options to purchase 263,500 shares of common stock to its employees under the Restated Plan.

The shares vest over three years

from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly

over the remaining 24 months.

The stock options have an exercise price of $2.89 per share, which represents the Company’s

closing stock price on the date of grant.

The stock options had a grant date fair value of $587,100, which the Company expects

to recognize over the vesting period.

On June 3, 2020, the Company granted ten-year

stock options to purchase 764,419 shares of common stock to its executive officers under the Restated Plan.

The shares vest over

three years from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting

monthly over the remaining 24 months.

The stock options have an exercise price of $2.72 per share, which represents the Company’s

closing stock price on the date of grant.

The stock options had a grant date fair value of $1,603,600, which the Company expects

to recognize over the vesting period.

On July 28, 2020, the Company granted ten-year

stock options to purchase 43,000 shares of common stock to an employee under the Restated Plan.

The shares vest over three years

from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly

over the remaining 24 months.

The stock options have an exercise price of $3.71 per share, which represents the Company’s

closing stock price on the date of grant.

The stock options had a grant date fair value of $122,400, which the Company expects

to recognize over the vesting period.

On September 8, 2020, the Company granted

ten-year stock options to purchase 45,000 shares of common stock to employees and consultants under the Restated Plan.

vest over three years from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance

vesting monthly over the remaining 24 months.

The stock options have an exercise price of $3.48 per share, which represents the

Company’s closing stock price on the date of grant.

The stock options had a grant date fair value of $126,700, which the

Company expects to recognize over the vesting period.

On September 11, 2020, the Company granted

ten-year stock options to purchase 58,920 shares of common stock under the Restated Plan to members of its Board of Directors.

The shares vest on the earlier of (i) the one-year anniversary of the date of grant and (ii) the date of the 2021 annual stockholders

meeting, subject to the grantee remaining on the Board until then.

The stock options have an exercise price of $3.43 per share,

which represents the Company’s closing stock price on the date of grant.

The stock options had a grant date fair value of

$155,400, which the Company expects to recognize over the vesting period.

In applying the Black-Scholes option pricing

model to stock options granted, the Company used the following approximate assumptions:

In applying the Black-Scholes option pricing model to stock options

granted, the Company used the following approximate assumptions:

For the Three Months Ended

For the Nine Months Ended

September 30,

Expected term (years)

Risk free interest rate

0.26% - 0.69%

1.42% - 1.55%

0.26% - 1.32%

1.42% - 2.53%

Expected volatility

Expected dividends

The Company has computed the fair

value of stock options granted using the Black-Scholes option pricing model.

Option forfeitures are accounted for at the time

of occurrence.

The expected term is the estimated period of time that options granted are expected to be outstanding.

Company utilizes the “simplified” method to develop an estimate of the expected term of “plain

vanilla” employee option grants.

The Company does not have a trading history to support its historical volatility

calculations.

Accordingly, the Company used a blended volatility whereby it uses its historical volatility for the period

from its IPO through the valuation date and uses the average of peer-group data of six comparable entities to supplement its

own historical data for the preceding years in computing its expected volatility.

The risk-free interest rate was determined

from the implied yields from U.S.

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the

instrument being valued.

The Company has computed the fair value of stock

options granted using the Black-Scholes option pricing model.

Option forfeitures are accounted for at the time of occurrence.

term is the estimated period of time that options granted are expected to be outstanding.

The Company utilizes the “simplified”

method to develop an estimate of the expected term of “plain vanilla”

employee option grants.

The Company does not yet have

a trading history to support its historical volatility calculations.

Accordingly, the Company is utilizing an expected volatility figure

based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument

being valued.

The risk-free interest rate was determined from the implied yields from U.S.

Treasury zero-coupon bonds with a remaining

term consistent with the expected term of the instrument being valued.

The weighted average estimated grant date fair value of the stock options

granted for the three months ended March 31, 2021 and 2020 was approximately $3.82 and $4.13 per share, respectively.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9 – Stockholders’ Equity – Continued

Stock Options – Continued

The weighted average estimated grant date

fair value of the stock options granted for the three months ended September 30, 2020 and 2019 was approximately $2.71 and $3.11

per share, respectively.

The weighted average estimated grant date fair value of the stock options granted for the nine months

ended September 30, 2020 and 2019 was approximately $2.24 and $3.10 per share, respectively.

A summary of the stock option activity during the nine months

ended September 30, 2020 is presented below:

A summary of the option activity during the three months ended March

31, 2021 is presented below:

Outstanding January 1, 2021

Outstanding September 30, 2020

Exercisable September 30, 2020

The following table presents information related to stock options

as of September 30, 2020:

Outstanding March 31, 2021

Exercisable March 31, 2021

The following table presents information related to stock options as

of March 31, 2021:

Options Outstanding

3 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9 – Stockholders’ Equity – Continued

Stock Option Exercises

During the three and nine months ended

September 30, 2020, stock options for the purchase of 26,737 shares of the Company’s common stock with an exercise price

of $1.95 per share was exercised for proceeds of $52,137.

Restricted Stock Units

On September 11, 2020, the Company granted members of its Board

of Directors an aggregate of 43,728 restricted stock units (“RSUs”) under the Restated Plan.

Each RSU is subject to

settlement into one share of the Company’s common stock.

The RSUs vest on the earlier of (i) the one-year anniversary of

the date of grant and (ii) the date of the 2021 annual stockholders meeting, subject to the grantee remaining on the Board until

The RSUs had a grant date fair value of $150,000, which will be recognized over the vesting period.

A summary of the Warrant activity for the three months ended March

31, 2021 is presented below:

Outstanding January 1, 2021

Outstanding March 31, 2021

Exercisable March 31, 2021

The following table presents information related to Warrants as of

March 31, 2021:

Warrants Outstanding

Warrants Exercisable

Remaining Life

Stock-Based Compensation Expense

The Company recorded stock-based

compensation expense related to stock options and RSUs.

During the three months ended September 30, 2020 and 2019, the

Company recorded expense of $609,930 ($346,293 of which was included within research and development expenses and $263,637 of

which was included within general and administrative expenses on the condensed statement of operations) and $476,843

($255,323 of which was included within research and development expenses and $221,520 of which was included within general

and administrative expenses on the condensed statement of operations), respectively.

During the nine months ended September

30, 2020 and 2019, the Company recorded expense of $1,826,941 ($1,002,149 of which was included within research and

development expenses and $824,792 was included within general and administrative expenses on the condensed statement of

operations) and $1,933,822 ($1,156,241 of which was included within research and development expenses and $777,581 was

included within general and administrative expenses on the condensed statement of operations), respectively.

As of September

30, 2020, there was $4,145,595 of unrecognized stock-based compensation expense which the Company expects to recognize over a

weighted average period of 2.1 years.

Note 10 – Employee Benefit Plans

In April 2019, the Company adopted the

Eyenovia 401(k) Plan (the “Plan”), which went into effect in May 2019.

All Company employees are able to participate

in the Plan, subject to eligibility requirements as outlined in the Plan documents.

Under the terms of the Plan, eligible employees

are able to defer a percentage of their pay every pay period up to annual limitations set by Congress and the Internal Revenue

Service under Section 401(k) of the Internal Revenue Code.

For 2020, the Company’s Board of Directors has approved a matching

contribution equal to 100% of elective deferrals up to 4% of eligible earnings with the matching contribution subject to certain

vesting requirements as outlined in the Plan documents.

During the three months ended September 30, 2020 and 2019, the Company

recorded expense of $25,535 and $26,989 associated with its matching contributions, respectively.

During the nine months ended

September 30, 2020 and 2019, the Company recorded expense of $106,021 and $43,032 associated with its matching contributions, respectively.

Note 11 – Subsequent Events

Bausch License Agreement

On October 9, 2020, the Company entered

into the Bausch License Agreement pursuant to which Bausch Health may develop and commercialize the Company’s MicroPine

therapeutic candidate (the “Bausch Licensed Product”) in the United States and Canada (the “Licensed Territory”).

The Company recorded stock-based compensation

expense related to stock options and restricted stock units of $656,913 ($329,713 of which was included within research and development

expenses and $327,200 was included within general and administrative expenses on the condensed statements of operations) and $583,865

($307,409 of which was included within research and development expenses and $276,456 was included within general and administrative expenses

on the condensed statements of operations) during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021,

there was $3,069,508 of unrecognized stock-based compensation expense which the Company expects to recognize over a weighted average period

of 1.8 years.

Note 10 –

Employee Benefit Plans

In April 2019, the Company adopted the Eyenovia

401(k) Plan (the “Plan”), which went into effect in May 2019.

All Company employees are able to participate in the Plan, subject

to eligibility requirements as outlined in the Plan documents.

Under the terms of the Plan, eligible employees are able to defer a percentage

of their pay every pay period up to annual limitations set by Congress and the Internal Revenue Service under Section 401(k) of the Internal

Revenue Code.

For 2021, the Company’s Board of Directors has approved a matching contribution equal to 100% of elective deferrals

up to 4% of eligible earnings with the matching contribution subject to certain vesting requirements as outlined in the Plan documents.

During the three months ended March 31, 2021 and 2020, the Company recorded expense of $64,178 and $57,971 associated with its matching

contributions, respectively.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 11 – Subsequent Events – Continued

Bausch Health License Agreement - Continued

In connection with the Bausch License

Agreement, Bausch Health paid the Company an upfront payment of $10.0 million.

Bausch Health might also pay the Company up to

an aggregate of approximately $35.0 million in additional payments, depending on the achievement of certain regulatory and launch-based

Under the terms of the Bausch License Agreement, on a country-to-country basis and Bausch Licensed Product-by- Bausch

Licensed Product basis, Bausch Health will pay the Company a royalties on a tiered basis (ranging from mid-single digit to mid-teen

percentages) on gross profits from the sales of the Bausch Licensed Product in the United States and Canada, subject to certain

adjustments in the event of generic entry, negative gross profits or patent expiration, for a period of the later to occur of

the 10th anniversary of the first commercial sale of a Bausch Licensed Product in such country in the Licensed Territory or the

expiration of the last valid patent claim for a Bausch Licensed Product in such country in the Licensed Territory.

Under the terms

of the Bausch License Agreement, Bausch Health also has assumed oversight and costs related to the ongoing MicroPine study (the

CHAPERONE study).

Bausch Health may terminate the Bausch

License Agreement, with respect to the Bausch Licensed Product to either country in the Licensed Territory, at any time for convenience

upon 90 days’

written notice.

Both parties have the right to terminate the Bausch License Agreement in the event of (i) an

uncured material breach after a 60-day period or (ii) a bankruptcy event.

Note 11 –

Subsequent Events

Stock Warrant Exercises

Subsequent to March 31, 2021, the Company

issued an aggregate of 232,022 shares of common stock pursuant to the exercise of warrants for aggregate proceeds of $573,001 at an exercise

price of $2.4696.

Loan and Security Agreement

On May 7, 2021, the Company entered into a Loan

and Security Agreement (the “Loan”) with Silicon Valley Bank (the “Lender”) for an aggregate principal amount

of up to $25.0 million.

The Loan bears interest at annual rate equal to the greater of (a) the sum of 1.25% plus the prime rate as reported

in The Wall Street Journal and (b) 5.00%.

The Loan matures on May 1, 2025.

The initial tranche in the amount of $7.5 million was received

by the Company on May 7, 2021.

In connection with the Loan, the Company issued to the Lender warrants to purchase 91,884 shares of common

stock at an exercise price per share equal to $4.76.

The warrants are exercisable for a period of ten years from the date of issuance.

At the Company’s option, Eyenovia has the ability to draw down the remaining $17.5 million in gross proceeds in two tranches over

the next two years based upon the achievement of several milestones in accordance with the terms of the agreement.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

The following discussion

and analysis of the results of operations and financial condition of Eyenovia, Inc.

(“Eyenovia,”

the “Company,”

“we,”

“us”

and “our”) as of March 31, 2021 and for the three months ended March 31, 2021 and 2020

should be read in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly

Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the

year ended December 31, 2020 as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2021.

Forward Looking Statements

This report contains “forward-looking

statements.”

Specifically, all statements other than statements of historical facts included in this report, including regarding

our financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements.

These forward-looking statements are based on the beliefs of management at the time these statements were made, as well as assumptions

made by and information currently available to management.

When used in this report, the words “anticipate,”

“believe,”

“estimate,”

“expect,”

“may,”

“might,”

“will,”

“continue”

“intend,”

and “plan”

and words or phrases of similar import are intended to identify forward-looking statements.

These statements reflect

our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors that

could cause actual results and the timing of events to differ materially from future results expressed or implied by such forward-looking

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section

titled “Risk Factors”

included in our most recent Annual report on Form 10-K filed with the SEC.

Furthermore, such forward-looking

statements speak only as of this Quarterly Report on Form 10-Q.

Except as required by law, we undertake no obligation to update any forward-looking

statements to reflect events or circumstances after the date of such statements.

We are a clinical stage ophthalmic

company developing a pipeline of advanced therapeutics based on our proprietary microdose array print (MAP™) platform technology.

We aim to achieve clinical microdosing of next-generation formulations of novel and existing ophthalmic pharmaceutical agents using our

high-precision targeted ocular delivery system, branded the Optejet®.

Optejet µ-therapeutics have the potential to replace conventional

eye dropper delivery and improve safety, tolerability, patient compliance and topical delivery success for ophthalmic eye treatments.

In the clinical trials, the Optejet has demonstrated that our targeted horizontal microdose delivery can achieve a significantly higher

rate of successful ocular topical delivery compared to the established rate reported with traditional eye drops (~ 90% vs.

technology is designed to achieve single-digit µl-volume physiologic drug delivery with up to a 75% reduction in ocular drug and

preservative topical dosing and has demonstrated significant improvement in the therapeutic index in drugs used for mydriasis and IOP

lowering through three Phase II and Phase III trials.

Conventional eye formulations lack high-precision micro-volume delivery and expose

the ocular surface to approximately 300% more medication and preservatives than are physiologically indicated leading to clinically recognized

ocular and non-ocular side effects.

Using the Optejet, we are developing the next generation of smart ophthalmic therapeutics which target

new indications or new combinations where there are currently no comparable drug therapies approved by the U.S.

Food and Drug Administration,

Our microdose therapeutics follow the FDA-designated pharmaceutical registration and regulatory process.

Our products are

classified by the FDA as drugs, and not medical devices or drug-device combination products.

Our pipeline is currently

focused on the late-stage development of novel, potential first-in-class therapeutic indications for an estimated over five million potential

patients with progressive myopia in the United States and estimated over one hundred million potential patients with age-related near

vision impairment, or presbyopia –

indications where there is tremendous unmet need and no known existing FDA-approved therapies.

We are also developing the first microdose fixed combination ophthalmic pharmaceutical for mydriasis to address the estimated over 100

million annual comprehensive eye exams with pupil dilation.

MicroPine is our first-in-class

topical therapy for the treatment of progressive myopia, a back-of-the-eye ocular disease associated with pathologic axial elongation

and sclero-retinal stretching.

In the United States, myopia is estimated to affect approximately 25 million children, with up to five

million considered to be at risk for high myopia.

In February 2019, the FDA accepted our investigational new drug application, or

IND, to initiate a Phase III registration trial of MicroPine (the CHAPERONE study) to reduce the progression of myopia in children.

enrolled the first patient in the CHAPERONE study in June 2019.

Due to the COVID-19 pandemic, we previously experienced delays in

trial enrollment and initiation as a result of reduced clinical trial activities and operations at investigator sites.

However, we have

since been able to resume enrollment in the CHAPERONE study.

On October 9, 2020, we

entered into a License Agreement (the “Bausch License Agreement”) with a subsidiary of Bausch Health Companies Inc.

(“Bausch

Health”) pursuant to which Bausch Health may develop and commercialize MicroPine in the United States and Canada.

terms of the Bausch License Agreement, we received an upfront payment of $10.0 million and we may receive up to a total of $35.0 million

in additional payments, based on the achievement of certain regulatory and launch-based milestones.

Bausch Health also will pay us royalties

on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States

and Canada, subject to certain adjustments.

Under the terms of the Bausch License Agreement, Bausch Health is in the process of assuming

oversight and has assumed the costs related to the ongoing CHAPERONE study.

MicroLine is our pharmacologic

treatment for presbyopia.

Presbyopia is a non-preventable, age-related hardening of the lens, which causes the gradual loss of the eye’s

ability to focus at near and impairs near visual acuity.

There currently are no known FDA-approved drugs for the improvement of near vision

in patients with presbyopia, although other companies have related therapies in their pipeline.

We have two planned Phase III VISION trials

for MicroLine, and initiated the first of these trials in December 2020.

On August 10, 2020, we

entered into a License Agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic

Vision”), pursuant to which Arctic Vision may develop and commercialize MicroPine and MicroLine in Greater China (mainland China,

Hong Kong, Macau and Taiwan) and South Korea.

Under the terms of the Arctic Vision License Agreement, we received an upfront payment of

$4.0 million before any payments to Senju Pharmaceutical Co., Ltd.

(“Senju”).

In addition, we may receive up to a total

of $41.75 million in additional payments, based on various development and regulatory milestones, including the initiation of clinical

research and approvals in Greater China and South Korea, and development costs.

Arctic Vision also will purchase its supply of MicroPine

and MicroLine from us or, for such products not supplied by us, pay us a mid-single digit percentage royalty on net sales of such products,

subject to certain adjustments.

We will pay a mid-double digit percentage of such payments, royalties, or net proceeds of such supply

to Senju pursuant to the Exclusive License Agreement with Senju dated March 8, 2015, as amended by the License Amendment dated April 8,

2020, and a Letter Agreement dated August 10, 2020 (the “Senju License Agreement”).

MydCombi™

(or MicroStat)

is our fixed combination formulation of phenylephrine-tropicamide for mydriasis, designed to be a novel approach for the estimated over

one hundred million office-based comprehensive and diabetic eye exams performed every year in the United States.

We have completed two

Phase III trials for MydCombi and announced positive results from these studies, known as MIST-1 and MIST-2.

In March 2021, the FDA

accepted our new drug application, or NDA, for MydCombi with an expected Prescription Drug User Fee Act, or PDUFA, date of October 28,

We have not completed development of any product

candidate and we have therefore not generated any revenues from product sales.

Historically, we have financed

our operations principally through equity offerings, including our initial public offering, numerous public offerings in 2018, 2019 and

August 2020, and our private placement that closed in March 2020.

Recently we also have generated cash through licensing arrangements

and our credit facility with Silicon Valley Bank.

However, based upon our current operating plan, there is substantial doubt about our

ability to continue as a going concern for a period of at least the next twelve months.

Our ability to continue as a going concern depends

on our ability to raise additional capital, through the sale of equity or debt securities to support our future operations.

unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to

reduce costs.

Our net losses were $5.4 million

for the three months ended March 31, 2021.

As of March 31, 2021, we had working capital and an accumulated deficit of $11.7

million and $82.8 million, respectively.

Financial Overview

Revenue and Cost of Revenue

In August and October 2020,

we entered into the Arctic Vision License Agreement and Bausch License Agreement, respectively.

Both of these agreements provide for the

Company to earn revenue from an upfront licensing fee, the achievement of various development and regulatory milestones, and royalty income

on sales of licensed products.

Pursuant to the Senju License Agreement, we will pay a mid-double digit percentage of such payments from

the Arctic Vision License Agreement to Senju.

See Note 7 –

Commitments and Contingencies and Note 8 –

Related Party Transactions.

Research and Development Expenses

Research and development expenses

are incurred in connection with the research and development of our microdose-therapeutics and consist primarily of contract service expenses.

Given where we are in our life cycle, we do not separately track research and development expenses by project.

Our research and development

expenses consist of:

direct clinical and non-clinical expenses, which include expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and costs associated with preclinical activities, development activities and regulatory activities;

personnel-related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries and other compensation of employees that is attributable to research and development activities;

facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, marketing, insurance and other supplies used in research and development activities.

We expense research and development

costs as incurred.

We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to

completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide

In addition, our license agreements

with Arctic Vision and Bausch Health require them to assume or reimburse us for specified research and development costs.

We expect that our research

and development expenses will increase with the continuation of the aforementioned initiatives.

General and Administrative Expenses

General and administrative

expenses consist primarily of payroll and related expenses, legal and other professional services, as well as non-cash stock-based compensation

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support

our continued research and development and the potential commercialization of our product candidates.

We also anticipate increased expenses

related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements.

In addition, director and officer insurance premiums and investor relations costs associated with being a public company are expected

to increase in future periods.

Results of Operations

Three Months Ended March 31, 2021 Compared

with Three Months Ended March 31, 2020

Revenue and Cost of Revenue

In August 2020, we received

a $4.0 million upfront payment under the Arctic Vision License Agreement, and made a related payment of $1.6 million to Senju.

payment was recorded as $4.0 million of deferred license fee and $1.6 million of deferred cost of revenue.

The trial data for one of the

two products (MicroPine) was fully submitted to Arctic Vision during the three months ended March 31, 2021.

Therefore, one half of the

upfront payment, or $2.0 million, has been earned.

As a result, the Company will recognize $2.0 million of deferred license fees and recognize

$0.8 million of deferred license costs related to the Senju payment for the three months ended March 31, 2021.

There was no revenue or

cost of revenue for the three months ended March 31, 2020.

Research and Development Expenses

Research and development expenses for the three months ended March

31, 2021 totaled $4.2 million, an increase of $0.6 million, or 17%, as compared to $3.6 million recorded for the three

months ended March 31, 2020.

Research and development expenses consisted of the following:

For the Three Months Ended

Direct clinical and non-clinical expenses

Personnel-related expenses

Supplies and materials

Non-cash stock-based compensation expenses

Total research and development expenses

The increase in direct clinical

and non-clinical expenses was primarily due to an increase in production and testing for MydCombi and the formulation of MicroLine and

fewer COVID–19 restrictions.

The increase in personnel-related expenses was primarily due to new hires.

The decrease in supplies

and materials was primarily due to there already being an adequate supply of materials required for the Chaperone study.

in non-cash stock-based compensation expense was primarily due to the amortization of several stock options granted in the second half

General and Administrative Expenses

General and administrative

expense for the three months ended March 31, 2021 totaled $2.3 million, an increase of $0.5 million, or 25%, as compared to

$1.8 million recorded for the three months ended March 31, 2020.

This increase was primarily attributable to a $0.2 million increase

in personnel-related expenses which resulted from new hires and the increase in non-cash stock-based compensation expense, a $0.2 million

increase in sales and marketing expenses mainly due to an increase in promotional materials and a $0.1 million increase in directors and

officers insurance premium.

Liquidity and Capital Resources

Since inception, we have experienced

negative cash flows from operations.

As of March 31, 2021, our accumulated deficit since inception was $82.8 million.

As of March 31, 2021, we had

a cash balance of $24.9 million, working capital of $11.7 million and stockholders’

equity of $12.1 million.

of March 31, 2021 and December 31, 2020, we had $1.1 million and $0.5 million, respectively, of debt outstanding.

These conditions raise substantial doubt about our ability to continue

as a going concern for at least one year from the date that the financial statements included elsewhere in this Quarterly Report on Form

10-Q are issued.

Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that

may be necessary should we be unable to continue as a going concern.

Our ability to continue as a going concern depends on our ability

to raise additional capital through the sale of equity or debt securities to support our future operations.

Our operating needs include

the planned costs to operate our business, including amounts required to fund research and development activities including clinical studies,

working capital and capital expenditures.

Our future capital requirements and the adequacy of our available funds will depend on many

factors, including our ability to successfully commercialize our products and services, competing technological and market developments,

and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our

product and service offerings.

If we are unable to secure additional capital, we may be required to curtail our research and development

initiatives and take additional measures to reduce costs in order to conserve our cash.

During the three months ended

March 31, 2021 and 2020, our sources and uses of cash were as follows:

Net cash used in operating

activities for the three months ended March 31, 2021 was $4.6 million, which includes cash used to fund a net loss of $5.4 million,

reduced by $0.7 million of non-cash expenses and $0.1 million of cash provided by changes in operating assets and liabilities.

used in operating activities for the three months ended March 31, 2020 was $5.9 million, which includes cash used to fund a net loss of

$5.5 million, reduced by $0.6 million of non-cash expenses, plus $1.1 million of cash used to fund changes in operating assets and liabilities.

Cash used in investing activities

for the three months ended March 31, 2021 was $0.3 million, which was related to leasehold improvement expenditures and the purchase

of property and equipment.

There was less than $0.1 million used in investing activities for purchases of leasehold improvements and property

and equipment for the three months ended March 31, 2020.

Net cash provided by financing

activities for the three months ended March 31, 2021 totaled $1.5 million, which was mainly attributable to aggregate proceeds from

the exercise of stock warrants.

Cash provided by financing activities for the three months ended March 31, 2020 totaled $5.5 million,

which was primarily attributable to aggregate proceeds from the sale of common stock and warrants in a private placement.

On May 7, 2021, the Company

entered into a Loan and Security Agreement (the “Loan”) with Silicon Valley Bank (the “Lender”) for an aggregate

principal amount of up to $25.0 million.

The Loan bears interest at annual rate equal to the greater of (a) the sum of 1.25% plus the

prime rate as reported in The Wall Street Journal and (b) 5.00%.

The Loan matures on May 1, 2025.

The initial tranche in the amount of

$7.5 million was received by the Company on May 7, 2021.

In connection with the Loan, the Company issued to the Lender warrants to purchase

91,884 shares of common stock at an exercise price per share equal to $4.76.

The warrants are exercisable for a period of ten years from

the date of issuance.

At the Company’s option, Eyenovia has the ability to draw down the remaining $17.5 million in gross proceeds

in two tranches over the next two years based upon the achievement of several milestones in accordance with the terms of the agreement.

Off-Balance Sheet Arrangements

There are no off-balance sheet

arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions,

changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that

is material to stockholders.

Critical Accounting Policies

For a description of our critical

accounting policies, see Note 2 –

Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form

Recently Adopted Accounting Standards

For a description of recently adopted accounting standards, including

adoption dates and estimated effects, if any, on our condensed financial statements, see Note 2 –

Summary of Significant Accounting

Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Quantitative and Qualitative Disclosures

About Market Risk.

Smaller reporting companies such as us are not required to provide

the information required by this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements