What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-30 · 510 added, 403 removed, 661 unchanged (58% of the section changed)

1 unchanged sentence

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.

2 unchanged sentences

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).

Our management, including our principal executive officer and principal financial and accounting 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.

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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, 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.

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 and accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022, 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 and accounting officer have concluded that our internal control over financial reporting was effective as of December 31, 2022.

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.

There has been no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Registered Public Accounting Firm

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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 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.

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 2023 Annual Meeting of Stockholders currently scheduled to be held on June 12, 2023, or 2023 Proxy Statement, 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.

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 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.”

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

The information required by this Item concerning our executive officers is incorporated by reference from the section captioned “Executive Officers” contained in our 2023 Proxy Statement.

The information required by this Item concerning compliance with Section 16(a) of the Exchange Act is incorporated by reference from the section of our 2023 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 for the 2022 Annual Meeting of Stockholders.

The information required by this Item is incorporated by reference to the information under the sections captioned “Executive Compensation,” and “Director Compensation” in our 2023 Proxy Statement.

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

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Number of securities

securities to be

remaining available for

Number of securities

exercise price

future issuance under

remaining available for

to be issued upon

of outstanding

equity compensation

plans (excluding

options, warrants,

securities reflected in

future issuance under

equity compensation plans

outstanding options,

(excluding securities

Plan Category

warrants, and rights

reflected in column (a))

Equity compensation plans approved by security holders

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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 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 for the 2022 Annual Meeting of Stockholders.

Principal Accounting Fees and Services.

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Financial Statement Schedules:

Exhibit Index

Exhibits Index

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

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February 19, 2019

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

Executive Employment Agreement, dated February 15, 2019, by and between the Company and John Gandolfo

February 19, 2019

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Amended and Restated 2018 Omnibus Stock Incentive Plan

August 12, 2021

June 17, 2022

Form of Notice of Stock Option Grant and Award Agreement

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Director Compensation Policy

Filed herewith

March 30, 2022

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

Filed herewith

March 30, 2022

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

Filed herewith

March 30, 2022

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

March 30, 2022

Third Amendment to Loan and Security Agreement, dated as of May 6, 2022, by and between Eyenovia, Inc.

and Silicon Valley Bank.

Employment Agreement, dated July 26, 2022, by and between Eyenovia, Inc, and Michael Rowe

August 11, 2022

Executive Chair Agreement, dated August 1, 2022, by and between, Eyenovia, Inc.

and Tsontcho Ianchulev

August 11, 2022

Non-Employee Director Compensation Policy, as amended

November 14, 202

Loan and Security Agreement, dated November 22, 2022, by among Eyenovia, Inc., Avenue Capital Management II, L.P., Avenue Venture Opportunities Fund, L.P.

and Avenue Venture Opportunities Fund II, L.P.

Filed herewith

Supplement to the Loan and Security Agreement, dated November 22, 2022, by among Eyenovia, Inc., Avenue Capital Management II, L.P., Avenue Venture Opportunities Fund, L.P.

and Avenue Venture Opportunities Fund II, L.P.

Filed herewith

Subscription Agreement, dated November 22, 2022, by and among Eyenovia, Inc., Avenue Venture Opportunities Fund, L.P.

and Avenue Venture Opportunities Fund II, L.P.

Filed herewith

Employment Agreement, dated December 19, 2022, by and between Eyenovia, Inc.

and Bren Kern

Filed herewith

Consent of Marcum LLP

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Management contract or other compensatory plan.

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

Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) is the type of information that the Company treats as private or confidential.

Form 10-K Summary.

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March 31, 2023

/s/ Tsontcho Ianchulev

Tsontcho Ianchulev

/s/ Michael Rowe

Chief Executive Officer

1 unchanged sentence

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

/s/ Michael Rowe

Chief Executive Officer

March 31, 2023

Tsontcho Ianchulev

(Principal Executive Officer) and Director

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(Principal Financial and Accounting Officer)

/s/ Stephen Benjamin

March 30, 2022

Stephen Benjamin

/s/ Tsontcho Ianchulev

March 31, 2023

Tsontcho Ianchulev

/s/ Rachel Jacobson

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Rachel Jacobson

March 30, 2022

/s/ Kenneth B.

March 30, 2022

/s/ Charles E.

March 31, 2023

/s/ Anthony Y.

/s/ Ram Palanki

March 31, 2023

/s/ Ellen Strahlman

March 31, 2023

Ellen Strahlman

EYENOVIA, INC.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Eyenovia, Inc.

To the Stockholders and Board of Directors of Eyenovia, Inc.

Opinion on the Financial Statements

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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.

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.

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

1 unchanged sentence

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

Change in Accounting Principle

As discussed in Note 2 and Note 9 to the financial statements, the Company has changed its method of accounting for leases in 2022 due to the adoption of the guidance in ASC Topic 842, Leases effective January 1, 2022.

Basis for Opinion

19 unchanged sentences

Cash and cash equivalents

Deferred license costs

Deferred clinical supply costs

License fee and expense reimbursements receivable

Security deposits, current

Prepaid expenses and other current assets

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Property and equipment, net

Security and equipment deposits

Security deposits, non-current

Operating lease right-of-use asset

Equipment deposits

Liabilities and Stockholders’ Equity

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Deferred rent - current portion

Deferred license fee

Notes payable - current portion, net

Operating lease liabilities - current portion

Notes payable - current portion, net of debt discount of $ 33,885 and $ 349,632 as of December 31, 2022 and 2021, respectively

Convertible notes payable - current portion, net of debt discount of $ 33,885 and $ 0 as of December 31, 2022 and 2021, respectively

Total Current Liabilities

Deferred rent - non-current portion

Notes payable - non-current portion, net

Operating lease liabilities - non-current portion

Notes payable - non-current portion, net of debt discount of $ 813,229 and $ 0 as of December 31, 2022 and 2021, respectively

Convertible notes payable - non-current portion, net of debt discount of $ 813,229 and $ 0 as of December 31, 2022 and 2021, respectively

Total Liabilities

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Other Income (Expense):

Small Business Administration Economic

Injury Disaster Grant

Extinguishment of PPP 7(a) loan

1 unchanged sentence

Interest expense

( 1,380,058 )

Interest income

10 unchanged sentences

( 77,440,919 )

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

Issuance of common stock in public offering [2]

Issuance of common stock in At the Market offering [1]

Exercise of stock warrants

Exercise of stock options

Shares withheld from option exercise for employee tax liability

Issuance of SVB warrants [2]

Stock-based compensation

Issuance of common stock related to vested restricted stock units

( 12,778,387 )

2 unchanged sentences

( 90,219,306 )

Issuance of common stock and warrants in direct offering [3]

Issuance of common stock in debt financing [4]

Origination costs related to equity in debt financing

Issuance of common stock in At the Market offering [5]

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

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

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

[3] Includes gross proceeds of $ 14,981,299 less total issuance costs of $ 83,391 .

[4] Relative fair value of stock issued in connection with debt.

[5] Includes gross proceeds of $ 5,445,130 , less total issuance costs of $ 163,354 .

[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.

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Amortization of debt discount

Write-off of property and equipment

Gain on forgiveness of PPP 7(a) Loan

Non-cash rent expense

Expense reimbursement

3 unchanged sentences

License fee and expense reimbursements receivables

Deferred clinical supply costs

( 2,284,931 )

Deferred license costs

( 1,600,000 )

Security deposits

Accounts payable

3 unchanged sentences

( 14,000,000 )

Security and equipment deposits

Deferred rent

Lease liabilities

Net Cash Used In Operating Activities

8 unchanged sentences

Cash Flows From Financing Activities

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 sale of common stock and warrants in direct offering [1]

Payment of issuance costs in registered direct offering

Proceeds from sale of common stock in At the Market offering

Payment of issuance costs for At the Market offering

Proceeds from exercise of stock warrants

Proceeds from PPP 7(a) loan

Proceeds from SVB loan

Payment of SVB loan issuance costs

Proceeds from notes and equity issued to Avenue

Payment of issuance costs for equity issued to Avenue

Payment of issuance costs for notes issued to Avenue

Repayments of notes payable

Payment of offering issuance costs

Payment of loan issuance costs

( 8,175,332 )

Proceeds from exercise of stock options

Net Cash Provided By Financing Activities

Net (Decrease) Increase in Cash and Cash Equivalents

Net Decrease in Cash and Cash Equivalents

( 4,473,330 )

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 .

( 1,034,978 )

Cash and cash equivalents - Beginning of Year

Cash and cash equivalents - End of Year

[1] Includes gross proceeds of $ 14,981,299 , of which $ 5,741,299 is pre-funded warrants.

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

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Supplemental Disclosure of Cash Flow Information:

Cash paid during the periods for:

Cash paid during the year for:

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Purchase of insurance premium financed by note payable

Recognition of right-of-use asset for lease liability upon adoption of ASU 2016-02

Right-of-use assets obtained in exchange for lease liabilities

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

Common shares issued recorded as debt discount for Avenue Loan

Issuance of common stock related to vested restricted stock units

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

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Note 1 – Business Organization and Nature of Operations

Eyenovia, Inc.

(“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, 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.

Eyenovia, Inc., or Eyenovia or the Company, is a pre-commercial ophthalmic technology company developing the Optejet® delivery system for use both in combination with its own drug-device therapeutic programs as well as out-licensing for additional indications.

Eyenovia’s aim is to improve the delivery of topical ophthalmic medication through ergonomic design that facilitates ease-of-use and delivery of more physiologically appropriate medication volume, with the goal to reduce side effects and improve tolerability, and introduce digital health technology to improve therapy compliance and ultimately medical outcomes.

The ergonomic and functional design of the Optejet® allows for horizontal drug delivery and eliminates the need to tilt the head back or the manual dexterity to squeeze a bottle to administer medications.

Drug is delivered in a microscopic array of droplets faster than the blink reflex to help ensure instillation success.

The precise delivery of a low-volume columnar spray by the Optejet® device minimizes contamination with a non-protruding nozzle and self-closing shutter.

In clinical trials, the Optejet® has demonstrated that its targeted delivery achieves a high rate of successful administration, with 98 % of sprays being accurately delivered upon first attempt compared to the established rate reported with traditional eye drops of ~ 50 %.

A more physiologically appropriate volume of medication in the range of seven to nine microliters is delivered by the Optejet, approximately one fifth of the 35 to 50 microliter dose typically delivered in a single eye drop.

Lower volume of medication exposes the ocular surface to less active ingredient and preservatives, potentially reducing ocular stress and surface damage and improving tolerability.

The lower volume also minimizes the potential for drug to enter systemic circulation, with the goal of avoiding some common side effects that are related to overdosing of the eye.

Versions of the Optejet are being developed with on-board digital technology to provide reminders via Bluetooth to smart devices and date and time stamp device use.

This information can then be used by practitioners and health care systems to measure treatment compliance and improve medical decision making.

In this way, the Optejet could serve as an extension of the physician’s office by providing information that is not currently possible to collect except through the use of diaries.

To address unmet medical needs, the Company is developing the next generation of smart ophthalmic therapeutics to target new indications or new combinations where there are currently no or few drug therapies approved by the U.S.

Food and Drug Administration, or FDA.

The Company’s investigational 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 the FDA and CDER for premarket review and approval under new drug applications, or NDAs.

Note 2 – Summary of Significant Accounting Policies

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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 to continue to incur cash outflows from operations for the near future.

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.

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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, 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.

Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or 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.

The amounts of assets and liabilities

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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.

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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.

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.

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.

As of December 31, 2021, the Company had restricted cash in the amount of $ 7,875,000 , which consisted of cash held in a money market account pledged as collateral for a note payable to Silicon Valley Bank, or the SVB Loan.

The restricted cash was used in the repayment of the SVB Loan in November 2022.

See Note 7 – Notes Payable and Convertible Notes Payable – Silicon Valley Bank Loan.

As of December 31, 2022 and 2021, the Company had cash and cash equivalent balances in excess of FDIC insurance limits of $ 22,613,520 and $ 19,211,850 , respectively.

On March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation, or FDIC, was appointed as receiver.

The Company has a deposit account at SVB.

The standard deposit insurance amount is up to $ 250,000 per depositor, per insured bank, for each account ownership category.

As of the date of filing, the Company had approximately $ 194,000 in a deposit account at SVB.

Property and Equipment, Net

8 unchanged sentences

The Company did not record any impairment losses during the years ended December 31, 2022 and 2021.

Fair Value of Financial Instruments

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

EYENOVIA, INC.

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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.

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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 carrying amounts of the Company’s financial instruments, such as cash and cash equivalents, restricted cash, 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.

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, or 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, 2021 AND 2020

Revenue Recognition

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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”).

For collaboration arrangements that are deemed to be within the scope of ASC Topic 808, “Collaborative Arrangements”, or 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”, or ASC 606.

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

3 unchanged sentences

Identify the performance obligations in the contract;

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Determine the transaction price;

2 unchanged sentences

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”).

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.

During 2020, the Company entered into a license agreement, or the Arctic Vision License Agreement, with Arctic Vision (Hong Kong) Limited, or Arctic Vision, and a license agreement, or the Bausch License Agreement, with Bausch Health Companies, Inc., or Bausch + Lomb.

Each license has three revenue components:

4 unchanged sentences

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, 2021 AND 2020

On September 14, 2021, the Company and Arctic Vision executed Amendment 1 to the Arctic Vision License Agreement, or 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.

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.

During the year ended December 31, 2021, the Company recognized $ 4.0 million in revenue, pursuant to the Arctic Vision license agreement, upon the submission of certain trial data to Arctic Vision, permitting Arctic Vision to seek regulatory approval with the National Medical Products Administration of China.

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.

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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 may receive an additional $ 37.7 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, related to the filing of Marketing Authorization Applications of approximately $ 13.2 million and the receipt of regulatory approvals of approximately $ 24.5 million.

The Company currently anticipates the remaining milestone related performance obligations to be achieved between late 2024 and late 2025.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Royalty Payments

1 unchanged sentence

No royalty payments were earned through December 31, 2022.

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.

The Company will pay a percentage in the range from 30 % to 40 % 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.

On October 9, 2020, the Company entered into the Bausch License Agreement pursuant to which Bausch + Lomb may develop and commercialize the Bausch Licensed Product in the Licensed Territory.

Bausch + Lomb 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.

During the year ended December 31, 2021, the Company recognized revenue of $ 10.0 million upon the submission of certain trial to Bausch + Lomb and the transfer of supervisory oversight of the clinical trial to Bausch + Lomb, permitting Bausch + Lomb to assume supervisory oversight of the ongoing MicroPine study, or the CHAPERONE study.

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.

Bausch + Lomb 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 through December 31, 2022.

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.

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

No royalty payments were earned through December 31, 2022.

Clinical Supply Arrangements

Bausch + Lomb and Arctic Vision have contracted with the Company to manufacture and supply them with the appropriate drug-device combination products to conduct their clinical trials on a cost plus 10 % mark-up basis.

Our licensing agreements with Bausch + Lomb and Arctic Vision represent collaborative arrangements and they are not a customer with respect to the clinical supply arrangements.

The Company’s policy is to (a) defer the materials and manufacturing costs in order to properly match them up against the income from the clinical supply arrangements;

and (b) to report the net income from the clinical supply arrangements as other income.

Deferred clinical supply costs were $ 2.3 million at December 31, 2022.

Net income from the sale of clinical supplies was included in other income and amounted to $ 0.2 million for the year ended December 31, 2022.

Operating Leases

The Company adopted the Accounting Standards Update, or ASU 2016-02,“Leases (Topic 842)” as of December 31, 2022, effective January 1, 2022.

The Company leases its facilities under non-cancellable operating leases.

The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the ROU asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term.

The Company recognizes a

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”.

The lease liability is measured at the present value of the remaining lease payments, discounted at the Company's incremental borrowing rate.

The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments.

The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset.

Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset.

Research and Development

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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.

See Note 11 – Stockholders’ Equity – Stock Options for additional information related to estimating the fair value of stock options.

EYENOVIA, INC.

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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.

Net Loss Per Share of Common Stock

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock 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:

The following table presents the computation of basic and diluted net loss per common share:

For the Years Ended

Net income (loss)

( 28,011,157 )

( 12,778,387 )

Net loss attributable to common stockholders

( 28,011,157 )

( 12,778,387 )

Denominator (weighted average quantities):

Common shares issued

Prefunded warrants

Undelivered vested restricted shares

Denominator for basic and diluted net loss per share

Basic and diluted net loss per share of common stock

The following securities are excluded from the calculation of weighted average dilutive shares of common stock because their inclusion would have been anti-dilutive:

Restricted stock units

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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).

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, 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.

On May 3, 2021, the Financial Accounting Standards Board, or 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):

2 unchanged sentences

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.

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.

The Company adopted ASU 2021-04 effective January 1, 2022.

This standard did not have a material impact on the Company’s financial position, results of operations or cash flow.

EYENOVIA, INC.

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, or ASU 2016-02.

ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases.

ASU 2016-02, as amended, is now effective for emerging growth companies for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company adopted ASU 2016-02 on December 31, 2022, effective January 1, 2022 and the adoption of this ASU had 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 the approximate amounts of $ 580,000 and $ 619,000 , and derecognizing deferred rent in the approximate amount of $ 39,000 .

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326).

Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates.

The Company will be required to adopt the provisions of this ASU on January 1, 2023, with early adoption permitted for certain amendments.

Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings.

The adoption of Topic 326 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to clarify the accounting for certain financial instruments with characteristics of liabilities and equity.

The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature model.

Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital.

In addition, this ASU improves disclosure requirements for convertible instruments and earnings-per-share guidance.

The ASU also revises the derivative scope exception guidance to reduce form-over-substance-based accounting conclusions driven by remote contingent events.

The amendments in this update are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted, but not earlier than for fiscal years beginning after December 15, 2020.

The Company early adopted ASU 2020-06 effective January 1, 2023 which eliminates the need to assess whether a beneficial conversion feature needs to be recognized upon the issuance of new convertible instruments.

The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 3 – Prepaid Expenses and Other Current Assets

2 unchanged sentences

Prepaid insurance expenses

Prepaid conference expenses

Prepaid general and administrative expenses

Prepaid board of directors fees

Prepaid patent expenses

Prepaid rent and security deposit

Prepaid conference expenses

Prepaid licenses and subscriptions

Prepaid patent expenses

Prepaid research and development expenses

Prepaid board of directors fees

Total prepaid expenses and other current assets

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 4 - Property and Equipment, Net

4 unchanged sentences

Property and equipment, net

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

Depreciation expense was $ 307,430 and $ 221,563 for the years ended December 31, 2022 and 2021, respectively, of which $ 301,205 and $ 211,604 , respectively, was included within research and development expenses and $ 6,225 and $ 9,959 , respectively, was included in general and administrative expenses in the accompanying statements of operations.

As of December 31, 2022 and 2021, the Company had $ 726,326 and $ 391,941 of outstanding deposits for equipment purchases.

Note 5 – Accrued Expenses and Other Current Liabilities

As of December 31, 2022 and 2021, accrued expenses and other current liabilities consisted of the following:

Accrued research and development expenses

Accrued consulting and professional services

Accrued interest

Accrued leasehold improvements

Credit card payable

Accrued research and development expenses

Accrued interest

Accrued franchise tax

Accrued licensing fees

Accrued expense reimbursements

Total accrued expenses and other current liabilities

4 unchanged sentences

Total accrued compensation

Note 7 – Notes Payable

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

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 7 – Notes Payable and Convertible Notes Payable

As of December 31, 2022 and 2021, notes payable and convertible notes payable consisted of the following:

December 31, 2022

4 unchanged sentences

Debt Discount

Paycheck Protection Program loan

Silicon Valley Bank loan

Avenue - Note payable

Avenue - Convertible note payable

( 1,694,228 )

Current portion

Paycheck Protection Program loan

Silicon Valley Bank loan

1 unchanged sentence

( 7,150,368 )

Avenue - Note payable

Avenue - Convertible note payable

Notes Payable, Non-Current

( 1,626,458 )

The non-current portion of notes payable and convertible notes payable includes a notes payable and a convertible note payable, each in the amount, net of discount, of $ 4,190,938 .

BankDirect Capital Finance Loan

1 unchanged sentence

The note payable was payable in nine monthly payments consisting of principal and interest amounting to $ 79,343 for an aggregate amount of $ 714,087 .

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

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

Interest expense was $ 8,727 for the year ended December 31, 2021.

On February 24, 2022, the Company issued a note payable for the purchase of a directors and officers’ liability insurance policy.

The note payable was payable in six monthly payments consisting of principal and interest amounting to $ 113,628 for an aggregate amount of $ 681,768 .

The note accrued interest at a rate of 3.26 % per year and matured on August 24, 2022 .

The note payable was repaid in full during the year ended December 31, 2022.

Interest expense was $ 6,436 for the year ended December 31, 2022.

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.

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, or 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 original maturity date.

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

3 unchanged sentences

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.

The Company also received notification of forgiveness of accrued interest payable of $ 5,738 , which was 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.

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

The interest rate on the Loan was 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 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.

The maturity date of the Loan was May 1, 2025 .

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

indicated a prepayment fee of 2.0 % of the principal balance made on or prior to the second anniversary of the Effective Date.

The Loan also provided for a final payment in an amount equal to the original aggregate principal amount of the Loan 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 was due upon the repayment of the loan in full.

On September 29, 2021, the Company and SVB executed the First Amendment to the Loan and Security Agreement, or the Amendment.

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

The Company recorded this amount as restricted cash.

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.

Therefore, the Loan was fully classified as a current note payable as of December 31, 2021.

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 .

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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 .

The relative fair value of the warrants and the issuance costs allocated to the debt were recorded as debt discount.

On November 4, 2022, the Company repaid the SVB Loan in full.

The full amount of the payment was $ 8,025,000 , and included the principal amount of the loan ($ 7,500,000 ), the final payment ($ 375,000 ) and a 2 % prepayment fee ($ 150,000 ).

The final payment and prepayment fee were recorded as interest expense.

The entire restricted cash account in the amount of $ 7,875,000 was used to make the substantial amount of the payment.

During the years ended December 31, 2022 and 2021, the Company recorded interest expense relating to the Loan of $ 1,174,736 and $ 317,333 , respectively, including the amortization of debt discount of $ 349,632 and $ 68,376 , respectively.

Avenue Ventures Loan

On November 22, 2022, the Company entered into a Loan and Security Agreement, or the Avenue Loan, with Avenue Venture Opportunities Fund, L.P., or Avenue 1, and Avenue Venture Opportunities Fund, L.P.

II, or Avenue 2, and together with Avenue, the Lender, for an aggregate principal amount of up to $ 15,000,000 .

The initial tranche of the Avenue Loan is $ 10,000,000 , consisting of $ 4,000,000 from Avenue and $ 6,000,000 from Avenue 2.

Up to $ 5,000,000 of the principal amount outstanding may be converted at the option of the Lender into shares of the Company’s common stock at a conversion price of $ 2.148 per share, subject to typical anti-dilution adjustments, or the Convertible Loan.

The Avenue Loan bears interest at an annual rate equal to the greater of (A) 7.0 % and (B) the prime rate as reported in The Wall Street Journal plus 4.45 %.

The Avenue Loan maturity date is November 1, 2025.

The Company may request an additional $ 5,000,000 of gross funding between April 1, 2023 and July 31, 2023, subject to agreed-upon conditions.

The Company must also make an incremental final payment equal to 4.25 % of the aggregate funding, or the Final Payment, amounting to a premium of $ 425,000 .

The Company will make monthly interest-only payments during the first twelve months of the Avenue Loan, which could be increased to up to eighteen months upon the achievement of specified performance milestones.

Following the interest-only period, the Company will make equal monthly payments of principal and interest until the maturity date, plus interest.

If the Company prepays the Avenue Loan, it will be required to pay a prepayment fee of 3 % if the Avenue Loan is prepaid during the first year, 2 % if the Avenue Loan is prepaid during the second year and 1 % if the Avenue Loan is repaid during the third year.

The Avenue Loan requires the Company to make and maintain representations and warranties and other agreements that are customary in loan agreements of this type.

The Avenue Loan is secured by all of the Company’s assets globally, including intellectual property.

The Avenue Loan also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments.

Upon the occurrence of an event of default, all interest and principal will be accelerated and

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

immediately become due and payable.

In addition, Avenue will have the right to exercise any other right or remedy provided by applicable law.

The Company paid a portfolio management fee of 1 % of the total commitment of $ 15,000,000 , or $ 150,000 of cash on December 1, 2022.

This has been accounted for as a component of debt discount.

In connection with the Loan, the Company granted an aggregate of 547,807 shares of its common stock to the Lender, or the Avenue Private Placement Shares.

Based on the Company’s stock price of $ 1.79 per share on the closing date, the shares have a gross value of $ 980,575 and a relative fair value of $ 859,734 .

This is accounted for as a component of debt discount.

The following is a breakdown of the allocation of debt discount and origination costs:

Allocation of Debt Discount

Non-Convertible Note

Convertible Note

Private Placement Shares

Withheld From Closing Proceeds:

Legal Reimbursement

Eyenovia Origination Costs:

Avenue Management Fee

Total debt discount of $ 1,756,516 less the current year amortization of the Avenue loan in the amount of $ 62,288 resulted in unamortized debt discount of $ 1,694,228 at December 31, 2022.

The following is a summary of the Avenue loan:

December 31, 2022

Non-Convertible

Initial loan funding

Final payment

Unamortized debt discount

( 1,694,228 )

Current portion

Notes Payable, Non-Current

During the year ended December 31, 2022, the Company recorded interest expense relating to the Loan of $ 189,510 , including the amortization of debt discount of $ 62,288 .

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 8 – Income Taxes

3 unchanged sentences

( 1,248,043 )

( 3,797,052 )

State and local

1 unchanged sentence

( 3,606,666 )

( 4,231,134 )

Change in valuation allowance

( 5,670,556 )

Provision for income taxes

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Prior period adjustments and other

Rate and apportionment changes

Change in valuation allowance

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 carry forwards

Deferred tax assets:

Net operating loss carryforwards

Research and development tax credits

Capitalized research and development costs

Stock-based compensation

Intangible assets

Research and development tax credits

Deferred tax assets, gross

Lease liability

Total gross deferred tax assets

Deferred tax liabilities

Property and equipment

Right ot use asset

Deferred tax assets, net before allowance

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Deferred tax assets, net

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.

Changes in valuation allowance

( 5,670,556 )

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

As of December 31, 2022, the Company had approximately $ 85,900,000 of domestic federal net operating loss carryforwards, or 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 .

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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.

As of December 31, 2022, the Company had approximately $ 25,400,000 of state NOLs, of which approximately $ 25,300,000 will expire during the years ranging from 2040 to 2042 , and approximately $ 100,000 will not expire, and had approximately $ 6,400,000 of local NOLs which do not expire.

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

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.

The assessment considers all available positive or negative evidence, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

After the performance of such reviews as of December 31, 2022 and 2021, 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.

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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.

On February 14, 2022, the Compensation Committee of the Board approved amendments to the Executive Employment Agreements, or 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, 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.

Transition of Chief Executive Officer

On July 27, 2022, the Company announced the appointment of Michael Rowe as its new Chief Executive Officer, or CEO, effective August 1, 2022, with Dr.

Tsontcho Ianchulev (the former CEO) becoming Executive Chairman of the Board.

Rowe is also serving as a member of the Board.

On July 26, 2022, the Company entered into an Employment Agreement, or the Employment Agreement, with Mr.

Rowe under which he will serve as Chief Executive Officer of the Company.

Under the terms of the Employment Agreement, Mr.

Rowe will receive an annual salary of $ 575,000 .

He is eligible to receive a cash bonus of up to 60 % of his base salary.

Additionally, Mr.

Rowe received an option to purchase 440,000 shares of the Company’s common stock, exercisable at $ 1.66 per share, pursuant to the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan, as amended.

Rowe will also continue to participate in any and all benefit plans, from time to time, in effect for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time.

As a result of the change of salary, the aggregate potential severance pay for the executive officers of the Company is approximately $ 1,004,000 .

The Company also entered into an agreement with Dr.

Ianchulev, or the Executive Chairman Agreement, pursuant to which Dr.

Ianchulev will provide medical expertise and consultation related to the Company’s research and development programs, and such other matters as reasonably requested by the Company for an initial period of one year .

In consideration for Dr.

Ianchulev’s services, the

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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.

Company has agreed to provide Dr.

Ianchulev with a $ 5,000 monthly retainer throughout the term of the agreement, in addition to the compensation payable to all non-employee members of the Board.

Operating Leases

2 unchanged sentences

The lease expires on September 30, 2023 .

The security deposit is approximately $ 119,000 .

The security deposit is approximately $ 118,000 , which has been classified as a current asset.

The Company’s rent expense for this space is recorded in general and administrative expense and amounted to $ 242,067 for each of the years ended December 31, 2022 and 2021, respectively.

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 was one year and the lease was renewed each year until it expired on April 30, 2022 .

The monthly base rent ranged from $ 1,254 to $ 1,292 per month over the term of the lease.

The Company received its $ 1,254 security deposit after the lease expired.

The Company had also agreed to lease the adjoining premises as part of the lease extension.

The additional office space is also 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 security deposit is $ 1,750 and has been classified as a current asset.

The Company’s rent expense for the space in this location is recorded in general and administrative expense and amounted to $ 20,501 and $ 29,424 for the years ended December 31, 2022 and 2021, respectively.

On April 8, 2022, the Company entered into a new lease agreement for 3,916 square feet in Laguna Hills, California.

The new lease term is five years and two months , commencing on June 1, 2022 and expiring on July 31, 2027 .

The monthly base rent ranges from $ 9,203 to $ 10,358 per month over the term of the lease.

The security deposit is $ 11,400 .

The Company’s rent expense for all Laguna Hills space is recorded in general and administrative expense and amounted to $ 66,196 and $ 0 for the years ended December 31, 2022 and 2021, respectively.

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, or 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 .

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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 lease commenced on January 1, 2022 and 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 .

The Company's rent expense for all Redwood City space is recorded in research and development expense and amounted to $ 180,240 and $ 128,560 for the years ended December 31, 2022 and 2021, respectively.

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 Vice President of Research and Development.

The lease, as amended in September 2022, expires on May 1, 2023 and provides for lease payments of $ 5,675 per month and a security deposit in the amount of $ 5,675 .

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.

The Company’s rent expense for this space is recorded in research and development expense and amounted to $ 68,498 and $ 64,848 for the years ended December 31, 2022 and 2021, respectively.

On May 19, 2022, the Company entered into a lease agreement to lease 10,880 square feet of office space in Reno, Nevada.

The lease term is five years and four months , commencing on May 23, 2022 and expiring on September 23, 2027 .

The monthly base rent ranges from $ 13,056 to $ 16,663 per month over the term of the lease.

The security deposit is $ 53,000 .

The Company’s rent expense for this space is recorded in research and development expense and amounted to $ 101,023 for the year ended December 31, 2022.

EYENOVIA, INC.

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

A summary of the Company’s right-of-use assets and liabilities is as follows:

For the Year Ended

December 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in operating activities

Right-of-use assets obtained in exchange for lease obligations

Operating leases

Weighted Average Remaining Lease Term (Years)

Operating leases

Weighted Average Discount Rate

Operating leases

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

1 unchanged sentence

Minimum Lease Payments

Total lease payments

Imputed interest

Present value of lease liabilities

current portion

Lease liabilities, non-current portion

Litigations, Claims and Assessments

3 unchanged sentences

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

Consulting Agreements

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 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 (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.

During 2015, the Company entered into an exclusive license agreement with Senju, or 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.

4 unchanged sentences

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

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

EYENOVIA, INC.

1 unchanged sentence

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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”).

On April 8, 2020, Eyenovia entered into an amendment, or 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, or 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, or the Territory.

Pursuant to the Senju License Amendment, the Company must pay Senju (a) a percentage in the range of 30 % to 40 % of revenue on (i) any lump-sum payments the Company receives from the third party, (ii) revenue (net of costs) obtained by the Company from contract research and/or development of the Senju Licensed Product in the Territory, and (iii) 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 % of any sales royalty revenue the Company receives from the third party.

Since the Company executed a third-party license prior to the April 8, 2021 expiration of the Senju License, the Senju 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, or the Letter Agreement.

Pursuant to the Letter Agreement, the Company will pay to Senju a percentage in the range of 30 % to 40 % of certain payments, royalties, or net proceeds received from Arctic Vision in connection with the Arctic Vision License Agreement.

The Senju License Agreement was amended further by the License Amendment 2, effective September 14, 2021, or 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.

1 unchanged sentence

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 percentage in the range from 30 % to 40 % 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;

2 unchanged sentences

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.

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

Note 11 – Stockholders’ Equity

5 unchanged sentences

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.

Under the Restated Plan, as amended on June 16, 2022, 5,700,000 shares of the Company’s common stock are reserved for issuance.

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.

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

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

As of December 31, 2022, the number of securities remaining available for future issuance under equity compensation plans was 1,011,245 .

At-The-Market Offering

May 2021 Sales Agreement

On May 14, 2021, the Company entered into a Sales Agreement, or the May 2021 Sales Agreement with SVB Securities LLC, or SVB Securities (formerly known as SVB Leerink LLC), 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 Securities as its sales agent.

Subject to the terms and conditions of the May 2021 Sales Agreement, SVB Securities 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 Securities 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 Securities a commission equal to three percent ( 3.0 )% of the gross sales proceeds of any common stock sold through SVB Securities 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, or the December 2021 Sales Agreement, with SVB Securities 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 Securities as its sales agent, or 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, or 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 Securities 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 Securities 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 Securities a commission equal to three percent ( 3.0 )% of the gross sales proceeds of any common stock sold through SVB Securities under the December 2021 Sales Agreement, and also has provided SVB Securities with certain indemnification rights.

During the year ended December 31, 2022, the Company received approximately $ 5.4 million in gross proceeds and $ 5.3 million in net proceeds from the sale of 2,716,061 shares of its common stock under the December 2021 Sales Agreement.

Securities Purchase Agreement

On March 3, 2022, the Company entered into a securities purchase agreement, or the Purchase Agreement with a certain institutional and accredited investor, or the Purchaser, pursuant to which the Company issued (i) 3,000,000 shares of common stock, (ii) pre-funded warrants, or the Pre-Funded Warrants, to purchase an aggregate of 1,870,130 shares of common stock and (iii) warrants to purchase an aggregate of 4,870,130 shares of common stock, or the Investor Warrants, or the March 2022 Offering.

The Company determined that the warrants qualified for equity classification.

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

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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 Company incurred issuance costs in the amount of $ 89,031 in connection with 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.

A summary of the warrant activity during the year ended December 31, 2022 is presented below:

Outstanding January 1, 2022

( 1,870,130 )

Outstanding December 31, 2022

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Remaining Life

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 $ 5.45 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 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.

During the year ended December 31, 2022, warrants for the purchase of 1,870,130 shares of the Company’s common stock with an exercise price $ 0.01 per share were exercised for aggregate proceeds of $ 18,701 .

Stock-Based Compensation Expense

The Company records stock-based compensation expense related to stock options and restricted stock units, or RSUs.

For the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense of $ 3,765,364 ($ 1,809,305 of which was included within research and development expenses and $ 1,956,059 was included within general and administrative expenses on the statements of operations) and $ 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), respectively.

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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.

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, 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

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RSUs non-vested December 31, 2022

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

Vested RSUs undelivered December 31, 2022

To date, the RSUs have only been granted to directors in accordance with the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan.

The Company’s policy is not to deliver shares underlying the RSUs until the termination of service.

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 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 vest on the earlier of (i) the one-year anniversary of the date of grant and (ii) June 16, 2022 (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.

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.

Between February 14, 2022 and August 18, 2022 the Company granted members of its Board of Directors an aggregate of 193,304 RSUs under the Restated Plan.

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

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As of December 31, 2022, there was $ 149,158 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.5 years.

EYENOVIA, INC.

NOTES TO THE FINANCIAL STATEMENTS

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.

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.

Stock Options

A summary of the option activity during the year ended December 31, 2022 is presented below:

Outstanding, January 1, 2022

Outstanding, December 31, 2022

Exercisable, December 31, 2022

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Stock Options

The following table presents information related to stock options as of December 31, 2022:

Options Outstanding

Options Exercisable

Remaining Life

$ 1.00 - $ 1.99

$ 2.00 - $ 2.99

$ 3.00 - $ 3.99

$ 4.00 - $ 4.99

$ 5.00 - $ 5.99

$ 6.00 - $ 6.99

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

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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 Company uses a blended volatility calculation, the components of which are the Company’s historical volatility for the period from its initial public offering through the valuation date and the average peer-group data of six comparable entities to supplement the Company’s own historical data for the preceding years in computing the expected volatility.

Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued.

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

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The weighted average estimated grant date fair value of the stock options granted for the years ended December 31, 2022 and 2021 was approximately $ 1.60 and $ 5.39 per share, respectively.

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

Outstanding, January 1, 2021

Outstanding, December 31, 2021

Exercisable, December 31, 2021

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

Options Exercisable

Remaining Life

As of December 31, 2022, there was $ 3,621,440 of unrecognized stock-based compensation expense related to stock options which will be recognized over a weighted average period of 1.5 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.

In April 2019, the Company adopted the Eyenovia 401(k) Plan, or 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.

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

EYENOVIA, INC.

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FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

vesting requirements as outlined in the Plan documents.

For the years ended December 31, 2022 and 2021, the Company recorded expense of $ 208,006 and $ 175,352 associated with its matching contributions, respectively.

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.

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.

(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.

Stock Option Grants

Subsequent to December 31, 2022, the Company issued ten-year stock options to certain employees and consultants to purchase an aggregate of 421,735 shares of common stock of the Company at an exercise price $ 2.16 per share.

The options vest as follows:

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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.

December 2021 Sales Agreement

Subsequent to December 31, 2022, the Company received approximately $ 3.5 million of net proceeds from the sale of 1,299,947 shares of its common stock pursuant to the December 2021 Sales Agreement with SVB Securities.

Development Collaboration Agreement With Formosa

On February 15, 2023, the Company announced that they had entered into a Development Collaboration Agreement, or the Agreement with Formosa Pharmaceuticals, Inc., or Formosa, a Taiwan-based company.

The Agreement combines the Company’s Optejet dispensing technology with Formosa’s unique APNT nanoparticle formulation platform for the potential development of new topical ophthalmic therapeutics that employ the Optejet dispenser.

In 2023, the Company will conduct feasibility testing of novel APNT formulations in the Optejet and request a pre-IND meeting with the FDA.

Formosa will develop and optimize new APNT formulations for use in Optejet and deliver to the Company for device qualification and validation.

Appointment of Chief Operating Officer

Effective January 1, 2023, the Company appointed Bren Kern, the Company’s Senior Vice President of Manufacturing and Operations, as the Company’s Chief Operating Officer.

The Company entered into an Employment Agreement with Mr.

Kern, under which Mr.

Kern receives an annual salary of $ 345,000 .

He is eligible to receive a cash bonus of up to 30 % of his base salary.

Additionally, Mr.

Kern received an option to purchase 120,000 shares of its common stock.

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