What changed in this filing

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Item 9A. Controls and Procedures

2022-03-30 compared with 2021-03-30 · 692 added, 1136 removed, 372 unchanged (83% of the section changed)

Controls and Procedures.

Evaluation of Disclosure Controls and

As of the end of the

period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation

of our management, including our principal executive officer and principal financial and accounting officer, of the effectiveness

of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of

the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

In designing and evaluating

our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed

and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure

controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its

judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on their evaluation,

our principal executive officer and principal financial and accounting officer concluded that as of December 31, 2020 our

disclosure controls and procedures were designed to, and were effective to, provide assurance at a reasonable level that the information

we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported

within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our

management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow

timely decisions regarding required disclosures as of December 31, 2020.

Management's Report on Internal Control

over Financial Reporting

Our management, including

our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal

control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with U.S.

Our internal control over financial

reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and

expenditures are being made only in accordance with authorizations of our management and directors;

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on their evaluation, our principal executive officer and principal financial and accounting officer concluded that as of December 31, 2021 our disclosure controls and procedures were designed to, and were effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosures as of December 31, 2021.

Management’s Report on Internal Control over Financial Reporting

Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

and (iii) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have

a material effect on the financial statements.

Under the supervision

and with the participation of our management, including our principal executive officer and principal financial officer, we conducted

an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the

Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)

(2013 Framework).

Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer

have concluded that our internal control over financial reporting was effective as of December 31, 2020.

Changes in Internal Control over Financial

There has been no change

in our internal control over financial reporting that occurred during the fourth quarter of 2020 that has materially affected,

or is reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Registered Public

Accounting Firm

This Annual Report

on Form 10-K does not include an attestation report of our independent registered public accounting firm due to an exemption

established by the JOBS Act for emerging growth companies.

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework).

Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer have concluded that our internal control over financial reporting was effective as of December 31, 2021.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for emerging growth companies.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers, and Corporate Governance.

Information required

by this Item concerning our directors is incorporated by reference from the sections captioned “Election of Directors”

and “Corporate Governance Matters”

contained in our proxy statement related to the 2021 Annual Meeting of Stockholders

currently scheduled to be held on June 16, 2021, which we intend to file with the SEC within 120 days of the end of our fiscal

year pursuant to General Instruction G(3) of Form 10-K.

The information required

by this Item concerning our Audit Committee is incorporated by reference from the section captioned “Corporate Governance

Matters—Board Committees—Audit Committee”

contained in our proxy statement related to the 2021 Annual Meeting

of Stockholders.

We have adopted a code

of business conduct and ethics relating to the conduct of our business by all of our employees, executive officers, and directors.

Information required by this Item concerning our directors is incorporated by reference from the sections captioned “Election of Directors” and “Corporate Governance Matters” contained in our proxy statement related to the 2022 Annual Meeting of Stockholders currently scheduled to be held on June 16, 2022, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

The information required by this Item concerning our Audit Committee is incorporated by reference from the section captioned “Corporate Governance Matters—Board Committees—Audit Committee” contained in our proxy statement related to the 2022 Annual Meeting of Stockholders.

We have adopted a code of business conduct and ethics relating to the conduct of our business by all of our employees, executive officers, and directors.

The policy is posted on our website, www.eyenoviabio.com .

The information required

by this Item concerning our executive officers is set forth at the end of Part I of this Annual Report on Form 10-K.

The information required

by this Item concerning compliance with Section 16(a) of the Exchange Act is incorporated by reference from the section

of the proxy statement captioned “Delinquent Section 16(a) Reports.”

The information required by this Item concerning our executive officers is incorporated by reference from the section captioned “Executive Officers” contained in our proxy statement related to the 2022 Annual Meeting of Stockholders.

The information required by this Item concerning compliance with Section 16(a) of the Exchange Act is incorporated by reference from the section of the proxy statement captioned “Delinquent Section 16(a) Reports.”

Executive Compensation.

The information required

by this Item is incorporated by reference to the information under the sections captioned “Executive Compensation,”

and “Director Compensation”

in the proxy statement.

Security Ownership of Certain Beneficial Owners and

Management and Related Stockholder Matters.

The following table

provides information as of December 31, 2020 about our common stock that may be issued upon the exercise of options, warrants

and rights under all of our existing equity compensation plans (including individual arrangements):

The information required by this Item is incorporated by reference to the information under the sections captioned “Executive Compensation,” and “Director Compensation” in the proxy statement for the 2022 Annual Meeting of Stockholders.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table provides information as of December 31, 2021 about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans (including individual arrangements):

Equity Compensation Plan Information

Plan Category

Number of securities

to be issued upon

securities to be

remaining available for

exercise price

future issuance under

of outstanding

equity compensation

plans (excluding

options, warrants,

Weighted-average

exercise price of

outstanding options,

warrants and rights

securities remaining

available for future issuance

under equity compensation

plans (excluding securities

reflected in column (a))

securities reflected in

Plan Category

Equity compensation plans approved by security holders

2 unchanged sentences

Equity compensation plans not approved by security holders

The other information

required by this Item is incorporated by reference to the information under the section captioned “Security Ownership of

Certain Beneficial Owners and Management”

contained in the proxy statement.

The other information required by this Item is incorporated by reference to the information under the section captioned “Security Ownership of Certain Beneficial Owners and Management” contained in the proxy statement for the 2022 Annual Meeting of Stockholders.

Certain Relationships and Related Transactions, and Director Independence.

The information required

by this Item is incorporated by reference to the information under the section captioned “Certain Relationships and Related-Party

Transactions”

and “Corporate Governance Matters”

in the proxy statement.

The information required by this Item is incorporated by reference to the information under the section captioned “Certain Relationships and Related-Party Transactions” and “Corporate Governance Matters” in the proxy statement for the 2022 Annual Meeting of Stockholders.

Principal Accounting Fees and Services.

The information required

by this Item is incorporated by reference to the information under the section captioned “Audit Committee Report”

the proxy statement.

The information required by this Item is incorporated by reference to the information under the section captioned “Audit Committee Report” in the proxy statement for the 2022 Annual Meeting of Stockholders.

Exhibits, Financial Statement Schedules.

List of documents filed as part of this report:

(a) List of documents filed as part of this report:

Financial Statements:

The financial statements of

the Company and the related reports of the Company’s independent registered public accounting firm thereon have been filed

under Item 8 hereof.

The financial statements of the Company and the related reports of the Company’s independent registered public accounting firm thereon have been filed under Item 8 hereof.

Financial Statement Schedules:

Exhibit Index

The following is a list of

exhibits filed as part of this Annual Report on Form 10-K:

Incorporated by Reference (Unless Otherwise Indicated)

The following is a list of exhibits filed as part of this Annual Report on Form 10-K:

Incorporated by Reference from Filings as Noted Below (Unless

Otherwise Indicated)

Exhibit Description

3 unchanged sentences

June 14, 2018

Amended and Restated Bylaws

March 12, 2018

Second Amended and Restated Bylaws

February 7, 2022

Description of Securities

4 unchanged sentences

March 25, 2020

Form of Warrant issued on May 7, 2021

Form of Pre-Funded Warrant issued on March 7, 2022

March 9, 2022

Form of Warrant issued on March 7, 2022

March 9, 2022

Exclusive License Agreement, dated March 18, 2015, between Eyenovia, Inc.

14 unchanged sentences

February 19, 2019

Executive Employment Agreement, dated February 15, 2019, by and between the Company and Luke Clauson.

February 19, 2019

Executive Employment Agreement, dated February 15, 2019, by and between the Company and Michael Rowe.

February 19, 2019

Executive Employment Agreement, dated February 15, 2019, by and between the Company and Jennifer Clasby.

February 19, 2019

Form of Nondisclosure, Assignment of Inventions and Noncompetition Agreement.

11 unchanged sentences

Amended and Restated 2018 Omnibus Stock Incentive Plan

August 12, 2021

Form of Notice of Stock Option Grant and Award Agreement

3 unchanged sentences

License Agreement by and between Eyenovia, Inc.

and Artic Vision (Hong Kong) Limited, dated August 10, 2020

and Arctic Vision (Hong Kong) Limited, dated August 10, 2020

August 14, 2020

2 unchanged sentences

October 13, 2020

First Amendment to Executive Employment Agreement, dated February 1, 2021, by and between the Company and Michael M.

February 3, 2021

Loan and Security Agreement, by and between Eyenovia, Inc.

and Silicon Valley Bank, dated May 7, 2021

First Amendment to Loan and Security Agreement, by and between Eyenovia, Inc.

and Silicon Valley Bank, dated September 29, 2021

November 12, 2021

Waiver Agreement, by and between Eyenovia, Inc.

and Silicon Valley Bank, dated November 30, 2021

December 3, 2021

Sales Agreement, by and between Eyenovia, Inc.

and SVB Leerink LLC, dated December 14, 2021

December 14, 2021

Securities Purchase Agreement by and between Eyenovia, Inc.

and Armistice Capital Master Fund Ltd., dated March 3, 2022

March 7, 2022

Director Compensation Policy

Filed herewith

Addendum to Executive Employment Agreement, dated March 10, 2022, by and between the Company and Tsontcho Ianchulev

Filed herewith

Addendum to Executive Employment Agreement, dated March 10, 2022, by and between the Company and John Gandolfo

Filed herewith

Addendum to Executive Employment Agreement, dated March 10, 2022, by and between the Company and Michael Rowe

Filed herewith

Consent of Marcum LLP

8 unchanged sentences

Filed herewith

Interactive data files pursuant to Rule 405 of Regulation S-T:

Inline interactive data files pursuant to Rule 405 of Regulation S-T:

(i) Balance Sheets as of December 31, 2021 and 2020;

(ii) Statements of Operations for the Years Ended December 31, 2021 and 2020;

(iii) Statements of Changes in Stockholders’

Equity for the Years Ended December 31, 2020 and 2019;

(iii) Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020;

(iv) Statements of Cash Flows for the Years Ended December 31, 2021 and 2020;

1 unchanged sentence

Filed herewith

Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101

Filed herewith

Management contract or other compensatory plan.

# Portions of this exhibit have been redacted

in compliance with Regulation S-K Item 601(b)(10).

Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).

Form 10-K Summary.

Pursuant to the requirements

of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on

its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EYENOVIA, INC.

4 unchanged sentences

(Principal Executive Officer)

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Tsontcho Ianchulev

8 unchanged sentences

(Principal Financial and Accounting Officer)

/s/ Fredric N.

Chairman of the Board and Director

/s/ Stephen Benjamin

March 30, 2022

Stephen Benjamin

March 30, 2022

/s/ Kenneth B.

/s/ Rachel Jacobson

March 30, 2022

/s/ Ernest Mario

Rachel Jacobson

March 30, 2022

/s/ Kenneth B.

March 30, 2022

/s/ Charles E.

5 unchanged sentences

Years Ended December 31, 2021 and 2020

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Changes in Stockholders’

Equity for the Years Ended December 31, 2020 and 2019

Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

Shareholders and Board of Directors of

Opinion on the Financial

We have audited the accompanying

balance sheets of Eyenovia, Inc.

(the “Company”) as of December 31, 2020 and 2019, the related statements of operations, changes

in stockholders’

equity and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows

for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United

States of America .

Explanatory Paragraph –

Going Concern

The accompanying

financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2,

the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations for

a reasonable period of time, which is considered to be one year from the issuance of the financial statements.

These conditions raise

substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Eyenovia, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Eyenovia, Inc.

(the “Company”) as of December 31, 2021 and 2020, the related statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations for a reasonable period of time, which is considered to be one year from the issuance of the financial statements.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not

required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we

are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company's internal control over financial reporting.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/ s/ Marcum LLP

We have served as the Company’s

auditor since 2017.

We have served as the Company’s auditor since 2017.

March 30, 2022

4 unchanged sentences

Deferred license costs

License receivable

License fee and expense reimbursements receivable

Prepaid expenses and other current assets

Total Current Assets

Restricted cash

Property and equipment, net

Security deposit

Security and equipment deposits

Liabilities and Stockholders’ Equity

5 unchanged sentences

Deferred license fee

Notes payable - current portion

Notes payable - current portion, net

Total Current Liabilities

Deferred rent - non-current portion

Notes payable - non-current portion

Notes payable - non-current portion, net

Total Liabilities

2 unchanged sentences

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

0 shares issued and outstanding as of December 31, 2020 and

2019, respectively

0 shares issued and outstanding as of December 31, 2021 and 2020, respectively

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

24,978,585 and 17,100,726 shares issued and outstanding

as of December 31, 2020 and 2019, respectively

28,426,616 and 24,978,585 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Additional paid-in capital

10 unchanged sentences

Cost of revenue

( 1,600,000 )

Operating Expenses:

8 unchanged sentences

Injury Disaster Grant

Extinguishment of PPP 7(a) loan

Other income, net

Interest expense

2 unchanged sentences

( 19,769,867 )

Net Loss Per Share

- Basic and Diluted

Weighted Average Number of

Common Shares Outstanding

- Basic and Diluted

Net Loss Per Share - Basic and Diluted

Weighted Average Number of Common Shares Outstanding - Basic and Diluted

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

EYENOVIA, INC.

of Changes in Stockholders' Equity

Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2021 and 2020

2 unchanged sentences

( 57,671,052 )

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

Issuance of common stock in public offering [2]

Exercise of stock options on cashless basis

Exercise of stock warrants

Exercise of stock options

4 unchanged sentences

( 77,440,919 )

Issuance of common stock and warrants

in private placement [2]

Issuance of common stock in public offering [3]

Issuance of common stock in At the Market offering [3]

Exercise of stock warrants

Exercise of stock options

Shares withheld from option exercise for employee tax liability

Issuance of SVB warrants [4]

Stock-based compensation

Issuance of common stock related to vested restricted stock units

( 12,778,387 )

2 unchanged sentences

( 90,219,306 )

gross proceeds of $14,030,001, less total issuance costs of $1,071,426.

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

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

accompanying notes are an integral part of these financial statements.

[1] 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 .

[3] Includes gross proceeds of $ 12,785,483 , less total issuance costs of $ 383,564 .

[4] Allocated fair value of warrants of $ 354,539 , less allocated issuance costs of $ 3,149 .

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

EYENOVIA, INC.

6 unchanged sentences

used in operating activities:

Depreciation of property and equipment

Stock-based compensation

Depreciation of property and equipment

Amortization of debt discount

Gain on forgiveness of PPP 7(a) Loan

Expense reimbursement

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

License receivable

License fee and expense reimbursements receivables

( 2,966,039 )

Deferred license costs

( 1,600,000 )

Accounts payable

2 unchanged sentences

Deferred license fee

Security deposit

( 14,000,000 )

Security and equipment deposits

Deferred rent

1 unchanged sentence

( 20,874,432 )

( 6,384,276 )

Cash Flows From Investing Activities

Purchases of property and equipment

( 1,226,576 )

Vendor deposits for property and equipment

Net Cash Used In Investing Activities

( 1,618,517 )

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 [1]

Proceeds from sale of common stock in public offering [2]

Issuance of common stock in At the Market Offering- October-November 2021 [3]

Proceeds from exercise of stock warrants

Proceeds from PPP 7(a) loan

Proceeds from SVB loan

Repayments of notes payable

Payment of offering issuance costs

Payment of loan issuance costs

Proceeds from exercise of stock options

Net Cash Provided By Financing Activities

Net Increase (Decrease) in Cash and Cash Equivalents

Cash and cash equivalents - Beginning of Year

Cash and cash equivalents - End of Year

[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.

Net (Decrease) Increase in Cash and Cash Equivalents

( 1,034,978 )

Cash and cash equivalents - Beginning of Period

Cash and cash equivalents - End of Period

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

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

[3] Includes gross proceeds of $ 12,785,483 , less total issuance costs of $ 383,564 .

Cash, cash equivalents and restricted cash consisted of the following:

Cash and cash equivalents

Restricted cash

Supplemental Disclosure of Cash Flow Information:

1 unchanged sentence

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Exercise of stock options on a cashless basis

Accrued purchases of leasehold improvements

Purchase of insurance premium financed by note payable

Shares withheld from option exercise for employee tax liability

Issuance of common stock related to vested restriced stock units

Warrants issued for debt issuance costs

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

1 unchanged sentence

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 1 –

Business Organization and Nature of Operations

Eyenovia, Inc.

(“Eyenovia”

or the “Company”) was organized as a corporation under the laws of the State of Florida on March 12, 2014 under

the name, PGP Holdings V, Inc.

On May 5, 2014, PGP Holdings V, Inc.

changed its name to Eyenovia, Inc.

On October 6,

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 1 – Business Organization and Nature of Operations

Eyenovia, Inc.

reincorporated in the State of Delaware by merging into Eyenovia, Inc., a Delaware corporation.

(“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 Opejet ®

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.

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 by the U.S.

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 products.

(“Eyenovia” or the “Company”) is a clinical stage ophthalmic company developing a pipeline of advanced therapeutics based on the Company’s proprietary microdose array print (MAP TM ) platform technology.

The Company 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®.

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 clinic, the Optejet has demonstrated that its 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.

The Company’s 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 presbyopia, mydriasis and IOP lowering through six 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, the Company is developing the next generation of smart ophthalmic therapeutics which target new indications or new combinations where there are currently none or few drug therapies approved by the U.S.

Food and Drug Administration, or the FDA.

The Company’s microdose therapeutics follow the FDA-designated combination product registration and regulatory process.

The Company’s products are classified by the FDA as drug-device combination products with drug primary mode of action, meaning that the Center for Drug Evaluation and Research, or CDER, is designated as the lead center with primary jurisdictional oversight.

Accordingly, the product candidates are submitted to FDA CDER for premarket review and approval under new drug applications, or NDAs.

Risks and Uncertainties

Due to the COVID-19 pandemic, the Company initially

experienced delays in trial enrollment and initiation of its Phase III registration trial of its MicroPine drug candidate (the CHAPERONE

study) as a result of reduced clinical trial activities and operations at trial sites.

However, the Company has since been able to resume

enrollment in that study.

Summary of Significant Accounting Policies

Due to the COVID-19 pandemic, there have been delays in trial enrollment as a result of supply chain issues with the Company’s third party suppliers, which in turn diminished the Company’s inventory supply.

Note 2 – Summary of Significant Accounting Policies

Liquidity and Going Concern

As of December 31, 2020, the Company had cash and cash equivalents of approximately $28.4 million and an accumulated deficit of approximately

$77.4 million.

For the year ended December 31, 2020, the Company incurred net losses of approximately $19.8 million and used cash in operations

of approximately $6.4 million.

As of December 31, 2021, the Company had unrestricted cash and cash equivalents of approximately $ 19.5 million and an accumulated deficit of approximately $ 90.2 million.

For the years ended December 31, 2021 and 2020, the Company incurred net losses of approximately $ 12.8 million and $ 19.8 million, respectively, and used cash in operations of approximately $ 20.9 million and $ 6.4 million, respectively.

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

The Company 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.

The Company 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 generate sufficient recurring revenues or 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 generate sufficient recurring revenues or 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.

On March 3, 2022, the Company raised approximately $ 15 million through the issuance and sale of 3,000,000 shares of common stock, pre-funded warrants to purchase an aggregate of 1,870,130 shares of common stock and warrants to purchase an aggregate of 4,870,130 shares of common stock at an exercise price of $ 3.54 per share.

See Note 13 – Subsequent Events – Securities Purchase Agreement.

Subsequent to December 31, 2021, the Company received approximately $ 0.9 million in gross and net proceeds from the sale of 252,449 shares of its common stock pursuant to the December 2021 Sales Agreement.

See Note 11 – Stockholders’ Equity - At-The-Market Offering and Note 13 – Subsequent Events – December 2021 Sales Agreement.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant

Accounting Policies –

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Use of Estimates

Preparation of financial statements in

conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management

to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and the amounts disclosed

in the related notes to the financial statements.

The Company bases its estimates and judgments on historical experience and on

various other assumptions that it believes are reasonable under the circumstances.

The amounts of assets and liabilities reported

in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates

and assumptions, which are used for, but not limited to, fair value calculations for equity securities, establishment of valuation

allowances for deferred tax assets, stock-based compensation, the recoverability and useful lives of long-lived assets, the recovery

of deferred costs and the deferral of revenues.

Certain of the Company’s estimates could be affected by external conditions,

including those unique to the Company and general economic conditions.

It is reasonably possible that actual results could differ

from those estimates.

See Note 2 - Summary of Significant Accounting

Policies — Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair

value of the Company’s common stock.

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.

Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and the amounts disclosed in the related notes to the financial statements.

The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances.

The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, fair value calculations for equity securities, establishment of valuation allowances for deferred tax assets, revenue recognition, the recoverability and useful lives of long-lived assets, the recovery of deferred costs and the deferral of revenues.

Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions.

It is reasonably possible that actual results could differ from those estimates.

See Note 2 - Summary of Significant Accounting Policies — Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of the Company’s common stock.

Reclassifications

Certain prior period balances have been reclassified in order to conform to current period presentation.

These reclassifications have no effect on previously reported results of operations or loss per share.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents in the financial statements.

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain executed agreements are recorded as restricted cash on the balance sheets, such as the collateralized money market account pursuant to the Loan and Security Agreement, dated May 7, 2021 with Silicon Valley Bank (“SVB”), as amended on September 29, 2021 by the First Amendment to the Loan and Security Agreement.

See Note 7 - Notes Payable - Silicon Valley Bank Loan.

In connection with this loan, the Company has pledged to establish and maintain a collateralized money market account in the amount of $ 7,875,000 .

The restricted cash is classified as non-current because management does not expect the restricted cash to be available to satisfy current liabilities during the next twelve months.

The Company has cash deposits and U.S.

bills in financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance

treasury bills in financial institutions 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 December 31, 2020 and 2019, the Company had cash and cash equivalent balances in excess of FDIC insurance limits of $28,121,828

and $13,902,601, respectively.

As of December 31, 2021 and 2020, the Company had cash and cash equivalent balances in excess of FDIC insurance limits of $ 19,211,850 and $ 28,121,828 , respectively.

Property and Equipment, Net

Property and equipment are stated at cost,

net of accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient

to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 1 to 10 years.

improvements are amortized over the lesser of (a) the useful life of the asset;

Property and equipment are stated at cost, net of accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 1 to 10 years .

Leasehold improvements are amortized over the lesser of (a) the useful life of the asset;

or (b) the remaining lease term.

and repairs are charged to operations as incurred.

The Company capitalizes costs attributable to the betterment of property and

equipment when such betterment extends the useful life of the assets.

Maintenance and repairs are charged to operations as incurred.

The Company capitalizes costs attributable to the betterment of property and equipment when such betterment extends the useful life of the assets.

Impairment of Long-lived Assets

The Company reviews for the impairment

of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable.

An impairment would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual

disposition are less than its carrying amount.

The Company did not record any impairment losses during the years ended December 31,

2020 and 2019.

The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable.

An impairment would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

The Company did not record any impairment losses during the years ended December 31, 2021 and 2020.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant

Accounting Policies –

Preferred Stock

The Company applies the accounting standards

for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock.

shares subject to mandatory redemption are classified as liability instruments and are measured at fair value.

Conditionally redeemable

preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or

subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as

temporary equity.

At all other times, preferred shares are classified as stockholders’

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Fair Value of Financial Instruments

The Company measures the fair value of

financial assets and liabilities based on Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements

and Disclosures”

(“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and

expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange

price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous

market for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes

a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable

inputs when measuring fair value.

The Company measures the fair value of financial assets and liabilities based on Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 —

quoted prices in active

markets for identical assets or liabilities;

Level 2 —

quoted prices for similar

assets and liabilities in active markets or inputs that are observable;

Level 3 —

inputs that are unobservable

(for example, cash flow modeling inputs based on assumptions).

The carrying amounts of the Company’s

financial instruments, such as cash and cash equivalents, accounts payable, accrued expenses and other current liabilities approximate

fair values due to the short-term nature of these instruments.

The Company is subject to Federal, New

York State and City, and State of California income taxes and files tax returns in those jurisdictions.

The Company recognizes deferred tax

assets and liabilities for the expected future tax consequences of items that have been included or excluded in the

consolidated financial statements or tax returns.

Deferred tax assets and liabilities are determined on the basis of the

difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary

differences”) at enacted tax rates in effect for the years in which such temporary differences are expected to

The Company utilizes a recognition threshold

and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in

a tax return.

The Company’s policy is to classify

assessments, if any, for tax-related interest as interest expense and penalties as general and administrative expenses in the consolidated

statements of operations.

Level 1 — quoted prices in active markets for identical assets or liabilities;

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable;

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

The carrying amounts of the Company’s financial instruments, such as cash and cash equivalents, accounts payable, and notes payable approximate fair values due to the short-term nature or effective interest rates of these instruments.

The Company is subject to Federal, New York State and City, and State of California income taxes and files tax returns in those jurisdictions.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns.

Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which such temporary differences are expected to reverse.

The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company’s policy is to classify assessments, if any, for tax-related interest as interest expense and penalties as general and administrative expenses in the statements of operations.

Deferred License Fee

The Company enters into license agreements which provides 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 Revenue Recognition below for additional details.

Deferred License Costs

The Company enters into license agreements which provides 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 10 – Related Party Transactions for additional details.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant

Accounting Policies –

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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:

The Company’s 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 its 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 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”).

Our policy 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:

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

The Company analyzes its arrangements to assess whether such arrangements involve joint operating activities.

For collaboration arrangements that are deemed to be within the scope of ASC Topic 808, “Collaborative Arrangements” (“ASC 808”), the Company allocates 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”).

The Company’s policy is to recognize amounts allocated to joint operating activities as a reduction in research and development expense.

Under ASC 606, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

Identify the contract with the customer;

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Recognize revenue when the company satisfies a performance obligation.

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

In addition, arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion

are generally considered discretionary purchase options.

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:

The Company must make significant judgments in its 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 options.

The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations.

For upfront license fees, the Company 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”).

Each license has three revenue components:

1) an upfront license fee;

2) milestone payments and 3) royalty payments.

See Note 9 –

and Contingencies for additional details.

2) milestone payments and

3) royalty payments.

Arctic Vision License Agreement

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.

On September 14, 2021, the Company and Arctic Vision executed Amendment 1 to the Arctic Vision License Agreement (“Arctic Vision Amendment 1”), pursuant to which Arctic Vision may develop and commercialize MicroStat for the treatment of mydriasis in Greater China and South Korea.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant

Accounting Policies –

Deferred License Fee

The Company enters into license agreements which provides 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 9 –

Commitments and Contingencies for additional details.

Deferred License Costs

The Company enters into license agreements which

provides 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 10 –

Party Transactions for additional details.

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Upfront License Fees

Under the terms of the Arctic Vision License Agreement, in August 2020, the Company received a non-refundable, upfront payment of $ 4.0 million, which was recorded as deferred license fees until such time that the related performance obligation was satisfied and the payment was earned.

Payment is earned and revenue is recognized once certain trial data has been fully submitted to Arctic Vision, permitting Arctic Vision to seek regulatory approval with the National Medical Products Administration of China.

The trial data for one of the two products (MicroPine) was fully submitted to Arctic Vision in March 2021 and trial data for the other product (MicroLine) was fully submitted to Arctic Vision in June 2021.

As a result, the Company recognized the deferred license fees during the year ended December 31, 2021.

Pursuant to the terms of the Senju License Agreement (see Note 10 – Related Party Transactions) the Company is required to pay Senju a percentage of payments received from Arctic Vision.

Accordingly, the Company paid $ 1.6 million to Senju in connection with the $ 4.0 million upfront license fees received from Arctic Vision, which is reflected as cost of revenue in the accompanying statements of operations.

In connection with Arctic Vision Amendment 1, Arctic Vision paid the Company a $ 250,000 upfront fee, which in turn, the Company paid to Senju in connection with Senju Amendment 2 (see Note 10 – Related Party Transactions).

The Company did not recognize revenue for the $ 250,000 upfront payment because it was passed through to Senju.

Milestone Payments

The Company may receive up to a total of $ 43.75 million in milestone payments in connection with the Arctic Vision License Agreement, as amended, based on various development and regulatory milestones, including the initiation of clinical research and regulatory approvals in Greater China and South Korea, which could result in payments of up to $ 39.75 million (including aggregate potential milestone revenues related to the filing of Marketing Authorization Applications (“MAA”s) of approximately $ 15.23 million and the receipt of regulatory approvals of approximately $ 24.52 million), and development costs of up to $ 4.0 million.

In December 2020, the Company satisfied a milestone performance obligation to file an MAA for a MicroStat product in the United States of America (the “United States”) whereby the Company earned and recognized $ 2.0 million of milestone revenues.

The Company currently anticipates the remaining milestone related performance obligations to be achieved between late 2023 and late 2025.

Royalty Payments

Arctic Vision also will purchase its supply of MicroPine, MicroLine and MicroStat 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 December 31, 2021.

The Company will pay a percentage in the range from 30 to 40 percent of such payments, royalties, or net proceeds of such supply to Senju pursuant to the Senju License Agreement.

See Note 10—Related Party Transactions—Senju License Agreement 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 Territory.

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.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Upfront License Fees

In connection with the Bausch License Agreement, Bausch Health paid the Company a non-refundable, upfront payment of $ 10.0 million on October 14, 2020.

The Company recorded this payment as a deferred license fee until certain trial data were fully submitted to Bausch Health and clinical trial supervisory oversight was transferred to Bausch Health, permitting Bausch Health to assume supervisory oversight of the ongoing MicroPine study (the CHAPERONE study).

The required trial data and oversight functions were transferred to Bausch Health during the fourth quarter of 2021.

Accordingly, the upfront payment was earned and recognized as revenue during the year ended December 31, 2021.

Milestone Payments

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 milestones.

No milestone payments were earned during the year ended December 31, 2021.

The Company currently anticipates that the aforementioned milestone payments will be earned between late 2024 and late 2025.

Royalty Payments

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 10 th 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.

No royalty payments were earned during the year ended December 31, 2021.

Research and Development

Research and development expenses are charged

to operations as incurred.

The Company records prepaid expenses on its balance sheet for the payment of research and development

expenses in advance of services being provided.

Research and development expenses are charged to operations as incurred.

The Company records prepaid expenses on its balance sheet for the payment of research and development expenses in advance of services being provided.

The Company’s license agreements were determined to represent collaborative arrangements.

Pursuant to these collaborative arrangements, the licensee is required to reimburse the Company for certain research and development expenses.

Providing research and development activities in the context of a collaboration agreement is not an ordinary activity for the Company.

Accordingly, the licensee is not a customer with respect to the reimbursements and such payments are not subject to ASC 606 – Revenue Recognition.

The Company’s policy is to recognize the reimbursements as contra – research and development expense.

The receivable for such payments, plus other license payments, is included in “license fee and expense reimbursements receivable” on the accompanying balance sheets.

Stock-Based Compensation

The Company measures the cost of services

received in exchange for an award of equity instruments based on the fair value of the award.

The fair value of the award is measured

on the grant date and the fair value amount is then recognized over the period during which services are required to be provided

in exchange for the award, usually the vesting period.

Upon the exercise of an option, the Company issues new shares of common

stock out of the shares reserved for issuance under its equity plans.

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

The fair value of the award is measured on the grant date and the fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.

Upon the exercise of an option, the Company issues new shares of common stock out of the shares reserved for issuance under its equity plans.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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 loss 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 dilutive common shares because their inclusion would have been anti-dilutive:

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 loss 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 dilutive common shares because their inclusion would have been anti-dilutive:

Restricted stock units

1 unchanged sentence

Subsequent Events

The Company has evaluated subsequent events

through the date which the financial statements were issued.

Based upon the evaluation, the Company did not identify any recognized

or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In July 2017, the FASB issued Accounting

Standards Update (“ASU”) 2017-11 “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

The Company has evaluated subsequent events through the date which the financial statements were issued.

Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed.

Recently Adopted Accounting Standards

In July 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-11 “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).

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, 2019.

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

financial position, results of operations or cash flow.

Recently Issued Accounting Pronouncements

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.

The Company intends

to adopt the ASU effective January 1, 2021 with no material impact.

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, 2019.

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 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 benefits.

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, 2020.

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.

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 financial position, results of operations or cash flow.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 2 –

Summary of Significant Accounting Policies

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU

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 benefits.

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, 2020.

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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.

In June 2020, the FASB issued ASC 2020-05, which defers the effective date for non-public and emerging growth companies until fiscal years ended after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

The Company expects that the adoption of this ASU will have a material impact on the Company’s financial statements, primarily as a result of recording right of use assets and lease liabilities for its operating leases.

In 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 does not expect the adoption of ASU 2019-12 to have a material impact financial position, results of operations, and cash flows.

On May 3, 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.” This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange.

This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard.

Early adoption is permitted, including adoption in an interim period.

The Company is currently evaluating

ASU 2018-13 and its impact on its financial position, results of operations and cash flows.

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.

is effective for fiscal years beginning after December 15, 2021.

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

financial position, results of operations, and cash flows.

Note 3 –

Prepaid Expenses and

Other Current Assets

As of December 31, 2020 and 2019,

prepaid expenses and other current assets consisted of the following:

If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period.

The Company does not expect the adoption of ASU 2021-04 to have a material impact on its financial position, results of operations, and cash flows.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 3 – Prepaid Expenses and Other Current Assets

As of December 31, 2021 and 2020, prepaid expenses and other current assets consisted of the following:

Payroll tax receivable

Prepaid insurance expenses

Prepaid research and development expenses

Prepaid licenses and subscriptions

Prepaid general and administrative expenses

Prepaid board of directors fees

Prepaid patent expenses

Prepaid conference expenses

Prepaid board of directors expenses

Prepaid rent and security deposit

Prepaid conference expenses

Prepaid licenses and subscriptions

Total prepaid expenses and other current assets

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 4 –

Property and Equipment,

As of December 31, 2020 and 2019,

property and equipment consisted of the following:

Note 4 – Property and Equipment, Net

As of December 31, 2021 and 2020, property and equipment consisted of the following:

Equipment not yet placed in service

Leasehold improvements

1 unchanged sentence

Property and equipment, net

Depreciation and amortization expense was

$95,415 and $15,343 for the years ended December 31, 2020 and 2019, respectively, of which $67,595 and $9,762 was included

within research and development expenses and $27,820 and $5,581 was included in general and administrative expenses in the statements

of operations for the years ended December 31, 2020 and 2019, respectively.

Note 5 –

Accrued Expenses and

Other Current Liabilities

As of December 31, 2020 and 2019,

accrued expenses and other current liabilities consisted of the following:

Depreciation expense was $ 221,563 and $ 95,415 for the years ended December 31, 2021 and 2020, respectively, of which $ 211,604 and $ 67,595 was included within research and development expenses and $ 9,959 and $ 27,820 was included in general and administrative expenses in the statements of operations for the years ended December 31, 2021 and 2020, respectively.

In December 2021, the Company sold equipment used in the CHAPERONE trial with a book value of $ 130,168 to Bausch Health.

The gross proceeds of the sale were $ 185,362 , which resulted in a gain on sale of $ 55,194 .

As of December 31, 2021, the Company had $ 391,941 of outstanding deposits for equipment purchases which are included within Security and Equipment Deposits in the accompanying balance sheet.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 5 – Accrued Expenses and Other Current Liabilities

As of December 31, 2021 and 2020, accrued expenses and other current liabilities consisted of the following:

Accrued research and development expenses

Accrued consulting and professional services

Accrued interest

Credit card payable

Leasehold improvements

Accrued franchise tax

Accrued travel and entertainment expenses

Accrued licensing fees

Accrued interest

Accrued expense reimbursements

Total accrued expenses and other current liabilities

Note 6 –

Accrued Compensation

As of December 31, 2020 and 2019, accrued compensation

consisted of the following:

Note 6 – Accrued Compensation

As of December 31, 2021 and 2020, accrued compensation consisted of the following:

Accrued bonus expenses

1 unchanged sentence

Total accrued compensation

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 7 –

Notes Payable

As of December 31, 2020 and 2019,

notes payable consisted of the following:

Note 7 – Notes Payable

As of December 31, 2021 and 2020, notes payable consisted of the following:

December 31, 2021

December 31, 2020

Notes Payable

Debt Discount

Notes Payable

Debt Discount

Paycheck Protection Program 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 was 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 matured on November 24, 2020.

During the year ended December 31, 2020, the Company repaid

the principal amount of the Note.

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 due on May 3, 2022, the maturity date.

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

Company will be applying for loan forgiveness on the PPP Loan.

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

During the years ended December 31,

2020 and 2019, the Company recorded interest expense of $17,042 and $0, respectively.

Note 8 –

Silicon Valley Bank loan

Current portion

Paycheck Protection Program loan

Silicon Valley Bank loan

( 7,500,000 )

( 7,150,368 )

Notes Payable, Non-Current

BankDirect Capital Finance 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 was payable in nine monthly payments consisting of principal and interest amounting to $ 79,343 for an aggregate amount of $ 705,360 .

The note accrued interest at a rate of 2.96 % per year and matured on November 24, 2021 .The note payable was repaid during the year ended December 31, 2021.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Paycheck Protection Program Loan

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 provided for monthly installment payments of $ 19,508 beginning in August 2021 with the remaining balance due on May 3, 2022, the maturity date.

The PPP Loan incurred 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 was 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.

The Company received notification in August 2021 that it had received approval for full loan forgiveness of the PPP Loan in the amount of $ 463,353 .

The Company has recorded this extinguishment as other income in the statements of operations for the year ended December 31, 2021.

The Company also received notification of forgiveness of accrued interest payable of $ 5,738 , which has been reversed from interest expense.

Silicon Valley Bank Loan

On May 7, 2021 (the “Effective Date”), the Company entered into a Loan and Security Agreement (the “Loan”) with Silicon Valley Bank (“SVB”) for an aggregate principal amount of up to $ 25.0 million.

The Loan bears interest at an 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 is secured by all of the Company’s tangible assets.

The Loan matures on May 1, 2025 .

The Loan requires monthly interest-only payments until June 1, 2022.

The interest-only period can be extended to June 1, 2023, upon the occurrence of a milestone event.

Upon the end of the interest-only period, the Company will make regular monthly amortizing payments of principal and interest through the maturity date.

The Loan indicates a prepayment fee of 1.0 % to 3.0 %, as follows:

i) prepayment fee of 3.0 % of the principal balance made on or prior to the first anniversary of the Effective Date;

ii) prepayment fee of 2.0 % of the principal balance made on or prior to the second anniversary of the Effective Date;

or iii) prepayment fee of 1.0 % of the principal balance made on or prior to the third anniversary of the Effective Date.

The Loan also provides for a final payment in an amount equal to the original aggregate principal amount of the multiplied by 5.0 %.

The final payment is in addition to and not a substitution for the regular monthly payments of principal plus accrued interest and is due on the earliest to occur of the loan maturity date, the repayment of the loan in full or the termination of the Loan Agreement.

The Company is accreting the final payment as accrued interest over the term of the Loan.

The initial tranche of the Loan, in the amount of $ 7.5 million was received by the Company on May 7, 2021.

At the Company’s option, the Company 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 Loan.

On September 29, 2021, the Company and SVB executed the First Amendment to the Loan and Security Agreement (the “Amendment”).

In accordance with the Amendment, the Company must maintain a collateralized money market account in the amount of $ 7,875,000 .

The Company has recorded this amount as restricted cash.

See Note 2 - Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash.

This account must be maintained until the Release Event occurs, which was defined as when the Company has received approval by the FDA of Mydcombi and has achieved the minimum equity raise under the terms of the amended agreement, on or prior to November 30, 2021.

On October 25, 2021, the Company announced the reclassification of Mydcombi as a drug-device combination product by the FDA in a CRL received on October 22, 2021.

The Company has prepared the necessary documents for expedited resubmission of the NDA for Mydcombi in response to the CRL.

Given the FDA’s recent reclassification of Mydcombi as a drug-device combination and the need to file an NDA resubmission in 2022, the restricted cash became callable on November 30, 2021, at SVB’s election, to satisfy the Loan obligations.

Therefore, the Loan has been fully classified as a current note payable.

On February 8, 2022, the Company issued a press release announcing that it successfully completed a Type A meeting with the FDA related to the filing of the NDA resubmission for Mydcombi.

Following the Type A meeting, the Company and the FDA reached alignment on the path forward toward an NDA resubmission.

The Company expects to file the NDA resubmission during the third quarter of 2022.

On November 30, 2021, the Company entered into a Waiver Agreement, pursuant to which SVB waived the Company’s existing default related to the Company’s failure to comply with the minimum equity raise financial covenant set forth in the Loan.

However, the Loan is currently callable by SVB due to the Company having not yet received FDA approval of Mydcombi.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

In connection with the Loan, the Company issued warrants to SVB 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.

The Company determined that the warrants should be equity-classified and that the relative fair value was $ 354,539 , by using the Black-Scholes option pricing methodology using the following assumptions:

stock price of $ 4.76 ;

expected term of 10.0 years;

volatility of 89.0 % and a risk-free interest rate of 1.60 %.

The Company incurred $ 66,618 of debt issuance costs, of which $ 63,469 was allocated to the debt and $ 3,149 was allocated to the warrants.

The relative fair value of the warrants and the issuance costs allocated to the debt were recorded as debt discount and are being amortized over the four-year term of the note.

During the year ended December 31, 2021, the Company recorded interest expense relating to the Loan of $ 317,333 , including amortization of debt discount of $ 68,376 .

Note 8 – Income Taxes

The provision for income taxes consists of the following expenses (benefits):

1 unchanged sentence

Deferred tax provision (benefit):

( 1,248,043 )

( 3,797,052 )

State and local

( 2,358,623 )

( 3,606,666 )

( 4,231,134 )

Change in valuation allowance

Provision for income taxes

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 8 –

Income Taxes –

The provision for income taxes differs from the United States Federal statutory rate as follows:

7 unchanged sentences

Effective income tax rate

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Deferred tax assets consist of the following:

For The Years Ended

Net operating loss carryforwards

Net operating loss carry forwards

Stock-based compensation

8 unchanged sentences

Deferred tax assets, net

As of December 31, 2020, the Company had approximately $60,000,000 of domestic Federal net operating loss carryforwards ("NOLs") that

may be available to offset future Federal taxable income.

Approximately $10,800,000 of those NOLs will expire during the years ranging

from 2034 to 2037.

As of December 31, 2021, the Company had approximately $ 72,000,000 of domestic federal net operating loss carryforwards (“NOLs”) that may be available to offset future federal taxable income.

Approximately $ 10,800,000 of those NOLs will expire during the years ranging from 2034 to 2037 .

The remaining NOLs of approximately $ 61,200,000 have no expiration dates.

Internal Revenue Code Section 382 limits

the utilization of approximately $35,000,000 of those NOLs to approximately $918,000 on an annual basis as a result of ownership changes

that occurred through July 15, 2019.

As of December 31, 2020, the Company had (a) minimal state net operating loss carryforwards that

may be available to offset future state taxable income as it conducted most of its operations in Nevada which does not tax corporate income;

and (b) approximately $5,500,000 of New York City net operating loss carryforwards.

The Company has assessed the likelihood that deferred

tax assets will be realized in accordance with the provisions of ASC 740 “Income Taxes Accounting”

("ASC 740").

ASC 740 requires that such a review considers all available positive and negative evidence, including the scheduled reversal of deferred

tax liabilities, projected future taxable income, and tax planning strategies.

ASC 740 requires that a valuation allowance be established

when it is “more likely than not”

that all, or a portion of, deferred tax assets will not be realized.

After the performance

of such reviews as of December 31, 2020 and 2019, management believes that uncertainty exists with respect to future realization of its

deferred tax assets and has, therefore, established a full valuation allowance as of those dates.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 8 –

Income Taxes –

Management has evaluated and concluded that there were no material

uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2020 and 2019.

Internal Revenue Code Section 382 limits the utilization of approximately $ 35,000,000 of those NOLs to approximately $ 918,000 on an annual basis as a result of ownership changes that occurred through July 15, 2019.

As of December 31, 2021, the Company had approximately $ 27,200,000 of state NOLs and $ 7,400,000 of local NOLs.

The state NOLs expire in 2040, while the local NOLs have no expiration date.

The Company has assessed the likelihood that deferred tax assets will be realized in accordance with the provisions of ASC 740 “Income Taxes Accounting” (“ASC 740”).

ASC 740 requires that such a review considers all available positive and negative evidence, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

ASC 740 requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized.

After the performance of such reviews as of December 31, 2021 and 2020, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of those dates.

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2021 and 2020.

The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.

No tax audits were commenced or were in process during the years ended December 31, 2021 and 2020.

No tax related interest or penalties

were incurred during the years ended December 31, 2020 and 2019.

The Company's Federal, State and Local income tax returns beginning with

the year ended December 31, 2017 remain subject to examination.

Note 9 –

Commitments and Contingencies

No tax related interest or penalties were incurred during the years ended December 31, 2021 and 2020.

The Company’s federal, state and local income tax returns beginning with the year ended December 31, 2018 remain subject to examination.

Note 9 – Commitments and Contingencies

Employment Agreements

Effective February 15, 2019, the Company entered into at-will executive employment agreements (the “Executive Employment Agreements”) with Tsontcho Ianchulev, its Chief Executive Officer and Chief Medical Officer, John Gandolfo, its Chief Financial Officer, and Michael Rowe, its Chief Commercial Officer.

Rowe’s Executive Employment Agreement was amended on February 1, 2021 to provide for his new role at the Company.

In addition, on February 14, 2022, the Compensation Committee of the Board approved amendments to the Executive Employment Agreements to provide for twelve months of severance pay for each of the executive officers.

See Note 13 – Subsequent Events – Employment Agreement Addendums for details regarding further amendments to the Executive Employment Agreements.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Prior to the amendments to the Executive Employment Agreements, each of the Executive Employment Agreements provided that if the executive’s employment is terminated by the Company without “Cause” or the executive suffers an “Involuntarily Termination” (each as defined in the Executive Employment Agreements), provided that the executive has signed a full release of all claims, the executive will be entitled to receive:

(i) severance pay equal to three months of his or her then-current base salary (currently estimated at approximately $ 332,750 in the aggregate), and (ii) a reimbursement for health insurance benefits under COBRA for the executive and his or her spouse and dependents for a period of three months or until the executive becomes eligible for comparable insurance benefits from another employer, whichever is earlier.

Prior to the amendments to the Executive Employment Agreements, each of the Executive Employment Agreements also provided that if, within 12 months following any “Corporate Transaction” (as defined in the Executive Employment Agreements) of the Company, the executive’s employment is terminated by the Company without Cause or the executive suffers an Involuntary Termination, provided that the executive has signed a full release of all claims, the executive will be entitled to receive, in lieu of what is described in the above paragraph:

(i) severance pay equal to 12 months of his or her then-current base salary (currently estimated at approximately $ 1,331,000 in the aggregate), and (ii) a reimbursement for health insurance benefits under COBRA for the executive and his or her spouse and dependents for a period of 12 months or until the executive becomes eligible for comparable insurance benefits from another employer, whichever is earlier.

Operating Leases

On August 8, 2018, the Company entered

into a lease agreement to lease approximately 3,800 square feet of office space in New York, NY.

The monthly base rent ranges

from $19,633 to $22,486 per month over the term of the lease.

On August 8, 2018, the Company entered into a lease agreement to lease approximately 3,800 square feet of office space in New York, NY.

The monthly base rent ranges from $ 19,633 to $ 22,486 per month over the term of the lease.

The lease expires on September 30, 2023 .

The security deposit

is approximately $119,000.

On July 17, 2020, the Company entered into a lease agreement

to lease approximately 3,000 square feet of office space in Redwood City, California (the “Gross Industrial Lease”).

The monthly base rent was for $7,500 per month over the term of the lease through August 31, 2021 with a security deposit

On December 1, 2020, the Company agreed to amend the terms of the Gross Industrial Lease for a base rent that

ranges from $7,500 to $7,957 per month over the term of the lease.

The security deposit is approximately $ 119,000 .

On January 20, 2020, the Company entered into a lease agreement to lease 660 square feet of office space in Laguna Hills, California.

The monthly base rent was $ 1,234 per month.

The lease term was one year .

The lease has been renewed each year since.

The current renewal term expires on April 30, 2022.

The monthly base rent is $ 1,292 per month.

In addition, the Company agreed to lease the adjoining premises as part of the lease extension.

The additional office space is 660 square feet.

The lease term for this space expires April 30, 2023.

The monthly rent ranges from $ 1,750 to $ 1,838 per month.

On July 17, 2020, the Company entered into a lease agreement to lease approximately 3,000 square feet of office space in Redwood City, California (the “Gross Industrial Lease”).

The monthly base rent was for $ 7,500 per month over the term of the lease through August 31, 2021 with a security deposit of $ 7,500 .

On December 1, 2020, the Company agreed to amend the terms of the Gross Industrial Lease for a base rent that ranges from $ 7,500 to $ 7,957 per month over the term of the lease.

The amended Gross Industrial Lease expires on August 31, 2023 .

Concurrent with the amendment to the Gross Industrial Lease

on December 1, 2020, the Company entered into a lease agreement to lease approximately 1,500 square feet of additional office

space in Redwood City, California.

Concurrent with the amendment to the Gross Industrial Lease on December 1, 2020, the Company entered into a lease agreement to lease approximately 1,500 square feet of additional office space in Redwood City, California.

The monthly base rent ranges from $ 3,000 to $ 3,183 per month over the term of the lease.

lease expires on August 31, 2023.

The lease expires on August 31, 2023 .

The security deposit is $ 3,000 .

Future minimum payments under this operating lease agreement

are as follows as:

For the Year Ending

Minimum Lease

See Note 10 –

Related Party Transactions

Lease Agreements for details of a lease agreement with a related party.

Employment Agreements

Effective February 15, 2019, the

Company entered into at-will executive employment agreements with Tsontcho Ianchulev, its Chief Executive Officer and Chief Medical

Officer, John Gandolfo, its Chief Financial Officer, Jennifer Clasby, now its Vice President of Regulatory and Clinical, Luke

Clauson, its Vice President, Research and Development and Manufacturing (“VP of R&D”), and Michael Rowe, now its

Chief Commercial Officer.

Clasby and Mr.

Rowe’s employment agreements were amended on February 1, 2021

to provide for their new roles at the Company.

Each of the employment agreements provides

that if the executive’s employment is terminated by the Company without “Cause”

or the executive suffers an

“Involuntarily Termination”

(each as defined in the employment agreements), provided that the executive has signed

a full release of all claims, the executive will be entitled to receive:

(i) severance pay equal to three months of his or

her then-current base salary (currently estimated at approximately $419,000 in the aggregate), and (ii) a reimbursement for

health insurance benefits under COBRA for the executive and his or her spouse and dependents for a period of three months or until

the executive becomes eligible for comparable insurance benefits from another employer, whichever is earlier.

Also concurrent with the amendment to the Gross Industrial Lease on December 1, 2020, the Company entered into an additional lease agreement to lease 2,169 square feet of additional office space in Redwood City, California.

The monthly base rent ranges from $ 4,468 to $ 4,602 per month over the term of the lease.

The lease expires on August 31, 2023.

The security deposit is $ 4,468 .

The Company leases 953 square feet of office space in Reno, NV for research and development activities from a company owned by the Company’s Former VP of R&D.

The lease, as amended, expires on September 14, 2022 and provides for lease payments of $ 5,404 per month and a security deposit in the amount of $ 5,404 .

Since the inception of the lease, the Company made $ 112,600 of leasehold improvements related to this lease which are included in property and equipment, net on the accompanying balance sheets.

The Company’s rent expense amounted to $ 64,848 and $ 59,724 for the years ended December 31, 2021 and 2020, respectively.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 9 –

Commitments and Contingencies - Continued

Employment Agreements - Continued

Each of the employment agreements also

provides that if, within 12 months following any “Corporate Transaction”

(as defined in the employment agreements)

of the Company, the executive’s employment is terminated by the Company without Cause or the executive suffers an Involuntary

Termination, provided that the executive has signed a full release of all claims, the executive will be entitled to receive, in

lieu of what is described in the above paragraph:

(i) severance pay equal to 12 months of his or her then-current base salary

(currently estimated at approximately $1,677,000 in the aggregate), and (ii) a reimbursement for health insurance benefits

under COBRA for the executive and his or her spouse and dependents for a period of 12 months or until the executive becomes eligible

for comparable insurance benefits from another employer, whichever is earlier.

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Future minimum payments under the Company’s operating lease agreements are as follows :

For the Year Ending

Minimum Lease Payments

Litigations, Claims and Assessments

In the normal course of business, the

Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business.

The Company records

legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Arctic Vision License Agreement

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.

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

The upfront payment had not been earned as of December 31, 2020.

In addition, the Company 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.

During December 2020, the Company satisfied a performance

obligation which resulted in the Company recognizing $2.0 million of milestone revenues, pursuant to the Arctic Vision License Agreement.

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.

No royalty payments were earned during the year ended December

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

to the Senju License Agreement.

See Note 2 –

Summary of Significant Accounting Policies and Note 10 –

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 December 31, 2020.

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 during the year ended December 31, 2020.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 9 –

Commitments and Contingencies

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 during the year ended December 31, 2020.

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.

See Note 2 –

Summary of Significant Accounting

Policies for additional details.

Note 10 –

Related Party Transactions

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business.

The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Note 10 – Related Party Transactions

See Note 9 - Commitments and Contingencies for certain commitments and contingencies entered into with certain related parties.

Consulting Agreements

A company in which a member of the Company’s

Board of Directors is part owner is a party to a consulting agreement with the Company dated July 6, 2017 that provides for the payment

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

The consulting agreement

was terminated on September 1, 2020.

A company of which a member of the Company’s Board of Directors is part owner is a party to a consulting agreement with the Company dated July 6, 2017 that provides for the payment of $ 9,567 per month, and $ 250 per hour for any additional work, for advisory services performed by such director.

The consulting agreement was terminated on September 1, 2020.

The director remains on the Board.

The Company incurred expenses of $76,536 and $213,521 for

the years ended December 31, 2020 and 2019, respectively, related to the agreement which was included within general and administrative

expenses on the statements of operations.

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, 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

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 balance sheet.

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

Development on the income statement and amounted to $59,724 and $48,144 for the years ended December 31, 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 years ended December 31, 2020 and 2019, the

Company recognized research and development expense of $1,024,430 and $851,746, respectively, related to services provided by such vendor.

The Company had a liability of $0 and $89,052 to the vendor as of December 31, 2020 and 2019, respectively.

The Company recognized

$239,460 and $186,160 of compensation expense related to the VP of R&D during the years ended December 31, 2020 and 2019, respectively.

The Company incurred expenses of $ 76,536 during the year ended December 31, 2020 related to the agreement which is included within general and administrative expenses on the statements of operations.

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 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 for the term of the license agreement.

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 such a product candidate in a country;

During 2015, the Company entered into an exclusive license agreement with Senju (the “Senju License Agreement ” ) 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 on sales (net of certain manufacturing costs) for the term of the Senju License Agreement, subject to certain adjustments upon the loss of patent coverage for the term of the license agreement.

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 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 a such a product in Asia, so 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 THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 10 –

Related Party Transactions - 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 Senju Licensed Products are those using piezo-print technology in a microdose dispenser

with (i) atropine sulfate as its sole active ingredient 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.

a 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

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.

During the year ended

December 31, 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 balance sheet and will be recognized as expense upon earning the related fee.

See Note 2- Summary of Significant Accounting Policies –

Revenue Recognition and Note 9 –

Commitments and Contingencies

for additional details.

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

therefore, no royalties have 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 “Senju License Amendment”) to the Senju License Agreement.

Pursuant to the Senju 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”) in the agreement executed by the Company on April 8, 2021.

The Senju Licensed Products are those using piezo-print technology in a microdose dispenser with (i) atropine sulfate as its sole active ingredient to treat myopia in humans and (ii) pilocarpine as its sole active ingredient to treat presbyopia in humans.

Pursuant to the Senju License Amendment, the Company must pay Senju (a) a percentage in the range of 30 to 40 percent 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 $ 9 million minimum payment to Senju;

and (b) a percentage in the range of 30 to 40 percent of any sales royalty revenue the Company receives

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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 Senju 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 percentage in the range of 30 to 40 percent of certain payments, royalties, or net proceeds received from Arctic Vision in connection with the Arctic Vision License Agreement to Senju.The Senju License Agreement was amended further by the License Amendment 2, effective September 14, 2021 (the “Amendment 2”).

The Amendment 2 excludes Greater China and South Korea from the territory in which Senju was granted an exclusive royalty-bearing license from the Company.

In consideration for this exclusion, and upon and after the execution of Amendment 1 with Arctic Vision, the Company must make payments to Senju based on non-royalty license revenue and sales revenue, including the following:

a one-time upfront payment of $ 250,000 , paid on September 17, 2021, which represented an inducement to Senju to approve Amendment 1 of the Arctic Vision License Agreement related to the MicroStat product.

a percentage in the range from thirty percent to forty percent of any upfront or milestone lump sum payments, or net revenues received by the Company in connection with any licensed product using piezo-print technology in a microdose dispenser containing:

(a) the chemical substance atropine sulfate as its sole active ingredient and that is used for the treatment of myopia in humans;

(b) the chemical substance pilocarpine as its sole active ingredient and that is used for the treatment of presbyopia in humans;

or (c) the chemical substances phenylephrine and tropicamide in combination as active ingredients that are used for pharmaceutical mydriasis in humans (the “LA2 Licensed Product”) from certain third parties, and

a percentage in the range from thirty to forty percent of the amounts received by the Company in connection with sales of the LA2 Licensed Product in China and South Korea by certain third parties.

See Note 2 – Summary of Significant Accounting Policies – Revenue - Arctic Vision License Agreement for additional details regarding the Arctic Vision License Agreement.

Note 11 – Stockholders’ Equity

Authorized Capital

The Company is authorized to issue 90,000,000

shares of common stock, par value of $0.0001 per share, and 6,000,000 shares of preferred stock, par value of $0.0001

The holders of the Company’s common stock are entitled to one vote per share.

The Board of Directors is empowered,

without stockholder approval, to issue preferred stock with dividend, liquidation, redemption, voting or other rights.

The Company is authorized to issue 90,000,000 shares of common stock, par value of $ 0.0001 per share, and 6,000,000 shares of preferred stock, par value of $ 0.0001 per share.

The holders of the Company’s common stock are entitled to one vote per share.

The Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, redemption, voting or other rights.

Equity Incentive Plans

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, as amended”).

The Restated Plan increases the number of shares of

Company’s common stock reserved for issuance under the 2018 Plan, as amended 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.

Finally, the Restated Plan makes several administrative changes to the 2018 Plan, as amended, 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.

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, as amended”).

The Restated Plan increases the number of shares of the Company’s common stock reserved for issuance under the 2018 Plan, as amended 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.

Finally, the Restated Plan made several administrative changes to the 2018 Plan, as amended, 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.

The Restated Plan was further amended (the “Amended Restated Plan”) on June 30, 2021 to increase the number of shares of the Company’s common stock reserved for future issuance under the Restated Plan to 4,200,000 shares.

As of December 31, 2021, the number of securities remaining available for future issuance under equity compensation plans was 700,741 .

A summary of the Warrant activity during the year ended December 31,

2020 is presented below:

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

A summary of the warrant activity during the year ended December 31, 2021 is presented below:

Outstanding January 1, 2021

1 unchanged sentence

Exercisable December 31, 2021

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

Equity - Continued

Warrants –

The following table presents information

related to Warrants as of December 31, 2020:

The following table presents information related to warrants as of December 31, 2021:

Warrants Outstanding

Warrants Exercisable

Warants Exercisable

Remaining Life

During the year ended December 31,

2020, Warrants for the purchase of 1,332,841 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 $2.8 million.

Public Offerings

On July 15, 2019, the Company closed

an underwritten public offering of 4,388,490 shares of its common stock at a public offering price of $2.78 per share.

granted the underwriters a 30-day over-allotment option to purchase up to an additional 658,273 shares of the Company’s

common stock at the same price, which was exercised in full on July 16, 2019.

Including the over-allotment shares, the Company

issued a total of 5,046,763 shares in the underwritten public offering, and received gross proceeds of approximately $14.0 million

and net proceeds of approximately $13.0 million, after deducting underwriting discounts, commissions and other offering expenses,

which were recorded as a reduction of additional paid-in capital.

During the year ended December 31, 2021, warrants for the purchase of 885,482 shares of the Company’s common stock with exercise prices between $ 2.058 and $ 2.4696 per share, respectively, were exercised for aggregate proceeds of approximately $ 2.1 million.

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 $5.3 million of net proceeds in the offering

after deducting placement agent fees and offering expenses.

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.

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” above 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 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 No.

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

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 filed 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 effective on May 13, 2020 and remains in effect.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

Equity - Continued

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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 $1.2 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 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 $ 1.2 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.

Stock-Based Compensation Expense

The Company records stock-based compensation

expense related to stock options and restricted stock units (“RSUs”).

For the years ended December 31, 2020 and

2019, the Company recorded expense of $2,483,172 ($1,350,894 of which was included within research and development expenses and

$1,132,278 was included within general and administrative expenses on the statements of operations) and $2,511,944 ($1,459,055

of which was included within research and development expenses and $1,052,889 was included within general and administrative expenses

on the statements of operations), respectively.

As of December 31, 2020, there was $3,720,221 of unrecognized stock-based

compensation expense which will be recognized over a weighted average period of 2.0 years.

The Company records stock-based compensation expense related to stock options and restricted stock units (“RSUs”).

For the years ended December 31, 2021 and 2020, the Company recorded expense of $ 2,886,102 ($ 1,612,942 of which was included within research and development expenses and $ 1,273,160 was included within general and administrative expenses on the statements of operations) and $ 2,483,172 ($ 1,350,894 of which was included within research and development expenses and $ 1,132,278 was included within general and administrative expenses on the statements of operations), respectively.

Restricted Stock Units

On August 16, 2019, the Company granted

to members of its Board of Directors an aggregate of 40,190 RSU under the 2018 Plan, as amended.

The grants vest on the earlier

of (i) the one-year anniversary of the date of grant and (ii) the date of the 2020 annual stockholders meeting, subject

to the grantee remaining on the Board until then.

The RSUs had a grant date fair value of $125,000, which were recognized over

the vesting period.

On September 11, 2020, the Company

granted members of its Board of Directors an aggregate of 43,728 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 then.

A summary of the restricted stock units activity during the year ended December 31, 2021 is presented below:

RSUs non-vested January 1, 2021

RSUs non-vested December 31, 2021

On September 11, 2020, the Company granted members of its Board of Directors an aggregate of 43,728 RSUs under the Restated Plan.

Each RSU is subject to settlement into one share of the Company’s common stock.

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

Stock Option Exercises

During the year ended December 31,

2020, stock options for the purchase of an aggregate of 36,391 shares of the Company’s common stock with exercise prices

ranging from $1.95 to $3.11 per share were exercised for aggregate proceeds of $82,161.

Stock Options

On January 2, 2019, stock options

to purchase 180,000 and 133,686 shares of common stock with an exercise price of $1.24 and $1.95 per share, respectively, were

exercised for aggregate proceeds of $483,888.

In connection with the exercise of the stock options, the Company remitted a portion

of an employee’s payroll taxes of $62,193 to the Internal Revenue Service.

The Company was reimbursed in full by the employee.

On January 14, 2019, the Company

granted ten-year stock options to purchase an aggregate of 11,000 shares of common stock to its employees under the 2018 Plan.

The 11,000 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, subject to continued service to the Company.

options have an exercise price of $2.74 per share, which represents the Company’s closing stock price on the date of grant.

The stock options had a grant date value of $27,500, which the Company expects to recognize over the vesting period.

On February 6, 2019, stock options

to purchase an aggregate of 320,001 shares of common stock with an exercise price of $1.24 per share were exercised on a cashless

basis, which resulted in the issuance of an aggregate of 236,466 shares of common stock.

On February 13, 2019, the Board of

Directors of the Company approved the acceleration and immediate vesting of 124,210 stock options originally granted to Dr.

on July 24, 2018 in connection with his employment.

In connection with the acceleration and immediate vesting, the Company

recognized $609,322 of stock-based compensation expense during the year ended December 31, 2019, which represents the remaining

unamortized grant date fair value of the award.

Between March 31, 2021 and November 17, 2021 the Company granted members of its Board of Directors an aggregate of 49,964 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 2022 annual stockholders meeting, subject to the grantee remaining on the Board until then.

The RSUs had a grant date fair value of $ 181,200 , which will be recognized over the vesting period.

As of December 31, 2021, there was $ 121,875 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.9 years.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

Equity - Continued

Stock Options - Continued

On May 14, 2019, stock options to

purchase 34,815 shares of common stock with an exercise price of $1.95 per share were exercised for aggregate proceeds of $67,889.

On August 16, 2019, the Company granted

ten-year stock options to purchase an aggregate of 681,572 shares of common stock to its employees, consultants and directors

under the 2018 Plan, as amended.

Of the 681,572 shares, (i) 636,287 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, subject

to continued service to the Company and (ii) 45,285 vest on the earlier of the one-year anniversary of the date of grant

and the date of the 2020 annual stockholders meeting, subject to continued service to the Company.

The stock options have an exercise

price of $3.11 per share, which represents the Company’s closing stock price on the date of grant.

The stock options had

a grant date value of $1,909,700, which the Company expects to recognize over the vesting period.

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, as amended.

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 $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 $103,400, which

the Company expects to recognize over the vesting period.

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.

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.

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 $3.48 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.

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

At-The-Market Offering

May 2021 Sales Agreement

On May 14, 2021, the Company entered into a Sales Agreement (the “May 2021 Sales Agreement”) with SVB Leerink LLC (“SVB Leerink”) under which the Company was able to offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $ 30 million through SVB Leerink as its sales agent.

Subject to the terms and conditions of the May 2021 Sales Agreement, SVB Leerink was able to sell the common stock by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

SVB Leerink was obligated to use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company had to pay SVB Leerink a commission equal to three percent ( 3.0 )% of the gross sales proceeds of any common stock sold through SVB Leerink under the May 2021 Sales Agreement.

Pursuant to the May 2021 Sales Agreement, the Company commenced sales of its common stock on October 6, 2021.

During the year ended December 31, 2021, the Company received approximately $ 12.8 million in gross proceeds and $ 12.4 million in net proceeds from the sale of 2,435,604 shares of its common stock under the May 2021 Sales Agreement.

December 2021 Sales Agreement

On December 14, 2021, the Company entered into a Sales Agreement (the “December 2021 Sales Agreement”) with SVB Leerink under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock for gross proceeds of up to $ 50.0 million through SVB Leerink as its sales agent (the “Offering”).

The May 2021 Sales Agreement was terminated upon the effectiveness of the December 2021 Sales Agreement.

The issuance and sale of shares, if any, of common stock by the Company under the December 2021 Sales Agreement will be pursuant to the Company’s Registration Statement on Form S-3 (File No.

333-261638) filed with the SEC on December 14, 2021 (the “Registration Statement”), and the prospectus relating to the Offering filed therewith that forms a part of the Registration Statement.

Subject to the terms and conditions of the December 2021 Sales Agreement, SVB Leerink may sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

SVB Leerink will use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company will pay SVB Leerink a commission equal to three percent ( 3.0 )% of the gross sales proceeds of any common stock sold through SVB Leerink under the December 2021 Sales Agreement, and also has provided SVB Leerink with certain indemnification rights.

The Company did not sell any shares of its Common Stock pursuant to the December 2021 Sales Agreement during the fiscal year ended December 31, 2021.

Stock Option Exercises

During the year ended December 31, 2021, stock options for the purchase of an aggregate of 121,261 shares of common stock, with exercise prices ranging from $ 1.95 to $ 3.11 per share, were exercised.

One of the exercises was a cashless exercise, whereby 13,675 shares were withheld and not issued, to cover the cost to exercise and payroll taxes.

Consequently, the exercises resulted in the issuance of 107,586 shares of common stock and the receipt of $ 203,125 of cash proceeds.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

Stock Options - Continued

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.

options had a grant date fair value of $155,400, which the Company expects to recognize over the vesting period.

On December 23, 2020, the Company

granted ten-year stock options to purchase 50,000 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 $5.77 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 $218,700, 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:

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Stock Options

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following approximate assumptions:

For the Year Ended

5 unchanged sentences

Expected dividends

The Company has computed the fair value of stock

options granted using the Black-Scholes option pricing model.

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 used for options issued 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”

option grants.

does not currently have a sufficient 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 three comparable entities over a period of time equivalent

to the expected life of the instrument being valued.

The expected term used for options issued 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” option grants.

The Company does not currently have a sufficient 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 three 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.

zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

The Company has not declared

dividends, is currently in the development stage and has no plan to declare future dividends at this time.

The weighted average estimated grant date

fair value of the stock options granted for the years ended December 31, 2020 and 2019 was approximately $3.01 and $3.10

per share, respectively.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 11 –

Stockholders’

Equity - Continued

Stock Options - Continued

A summary of the option activity during

the year ended December 31, 2020 is presented below:

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

The Company has not declared dividends, is currently in the development stage and has no plan to declare future dividends at this time.

The weighted average estimated grant date fair value of the stock options granted for the years ended December 31, 2021 and 2020 was approximately $ 5.39 and $ 3.01 per share, respectively.

A summary of the option activity during the year ended December 31, 2021 is presented below:

Outstanding, January 1, 2021

1 unchanged sentence

Exercisable, December 31, 2021

The following table presents information

related to stock options as of December 31, 2020:

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The following table presents information related to stock options as of December 31, 2021:

Options Outstanding

1 unchanged sentence

Remaining Life

As of December 31, 2021, there was $ 5,260,000 of unrecognized stock-based compensation expense related to stock options which will be recognized over a weighted average period of 1.9 years.

Note 12 – 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 2019, 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.

For the years ended December 31, 2021 and 2020, the Company recorded expense of $ 175,352 and $ 138,785 associated with its matching contributions, respectively.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020

Note 12 –

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 2019, 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.

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

the Company recorded expense of $138,785 and $71,285 associated with its matching contributions, respectively.

Subsequent Events

Management Option Grants

Subsequent to December 31, 2020, the Company granted

options to its executive officers for a total of 652,899 shares, which grants are subject to stockholder approval of an amendment to the

Restated Plan to increase the share reserve thereunder at the 2021 Annual Meeting of Stockholders.

The options, would have a ten year

term, vesting one-third on the one year anniversary of the date of grant and then in equal increments on each of the 24 one-month anniversaries

thereafter, subject to continued employment, and bear an exercise price of $6.01 per share for total possible consideration to the Company

of approximately $3.9 million.

Stock Warrant Exercises

Subsequent to December 31, 2020, the Company

issued an aggregate of 644,992 shares of common stock pursuant to the exercise of warrants for aggregate proceeds of $1,530,989 at exercise

prices ranging from $2.06 to $2.47.

Note 13 – Subsequent Events

December 2021 Sales Agreement

Securities Purchase Agreement

On March 3, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with a certain institutional and accredited investor (the “Purchaser”), relating to the issuance and sale of 3,000,000 shares (the “Shares”) of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 1,870,130 shares of Common Stock and warrants to purchase an aggregate of 4,870,130 shares of common stock (the “Investor Warrants”), (the “March 2022 Offering”).

The offering price for the Shares was $ 3.08 per Share and the offering price for the Pre-Funded Warrants was $ 3.07 per Pre-Funded Warrant, which represents the per Share public offering price less $ 0.01 per share exercise price for each Pre-Funded Warrant.

The Investor Warrants will have an exercise price of $ 3.54 per share and each Investor Warrant will be exercisable for one share of Common Stock.

The Investor Warrants will be exercisable beginning six months from the date of issuance and the Pre-Funded Warrants will be exercisable immediately upon issuance.

The Pre-Funded Warrants shall terminate when fully exercised and the Investor Warrants will terminate five years from the initial exercisability date.

The aggregate gross proceeds to the Company from the March 2022 Offering were approximately $ 15 million, excluding the proceeds, if any, from the exercise of the Pre-Funded Warrants and the Investor Warrants.

No underwriter or placement agent participated in the March 2022 Offering.

The March 2022 Offering was made pursuant to an effective registration statement on Form S-3 (Registration Statement No.

333-261638), as previously filed with and declared effective by the Securities and Exchange Commission and a related prospectus.

Employment Agreement Addendums

On March 10, 2022, the Compensation Committee of the Board approved amendments to the Executive Employment Agreements (the “Employment Agreement Addendums”) for three executive officers.

Each of the Employment Agreement Addendums provides that if the executive’s employment is terminated by the Company without “Cause” or the executive suffers an “Involuntarily Termination” (each as defined in the employment agreements), provided that the executive has signed a full release of all claims, the executive will be entitled to receive:

(i) severance pay equal to twelve months of his or her then-current base salary (currently estimated at approximately $ 1,331,000 in the aggregate), and (ii) a reimbursement for health insurance benefits under COBRA for the executive and his or her spouse and dependents for a period of twelve months or until the executive becomes eligible for comparable insurance benefits from another employer, whichever is earlier.

Stock Options

Subsequent to December 31, 2021, the Company issued ten-year stock options to certain employees and consultants to purchase an aggregate of 389,422 shares of common stock of the Company at exercise prices ranging from $ 3.10 to $ 3.60 per share.

The options vest as follows:

(i) one-third of the shares vest on the one-year anniversary of the issuance date;

and (ii) the remaining two-thirds vest in equal installments beginning 13 months from the issuance date and ending 36 months from the issuance date.

The fair value of the options will be recognized over the vesting period.

Restricted Stock Units

Subsequent to December 31, 2021, the Company approved to amend the terms of an aggregate amount of 13,926 unvested RSUs issued to certain former directors that had been forfeited on their departure date.

Pursuant to the amendment, the unvested RSUs shall continue to vest until the earlier of:

(i) twelve months from the date of grant;

or (ii) the Company’s 2022 annual meeting of stockholders.

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-K

Item 9A. Controls and Procedures