What changed in this filing

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Item 1. Financial Statements

2023-05-12 compared with 2022-11-14 · 175 added, 302 removed, 202 unchanged (70% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

September 30,

Current Assets:

Cash and cash equivalents

Restricted cash

Deferred clinical supply costs

License fee and expense reimbursements receivable

Security deposits, current

Prepaid expenses and other current assets

1 unchanged sentence

Property and equipment, net

Security deposits

Security deposits, non-current

Operating lease right-of-use asset

Equipment deposits

4 unchanged sentences

Accrued expenses and other current liabilities

Deferred rent - current portion

Notes payable

Operating lease liabilities - current portion

Notes payable - current portion, net of debt discount of $ 123,480 and $ 33,885 as of March 31, 2023 and December 31, 2022, respectively

Convertible notes payable - current portion, net of debt discount of $ 123,480 and $ 33,885 as of March 31, 2023 and December 31, 2022, respectively

Total Current Liabilities

Deferred rent - non-current portion

Operating lease liabilities - non-current portion

Notes payable - non-current portion, net of debt discount of $ 648,889 and $ 813,229 as of March 31, 2023 and December 31, 2022, respectively

Convertible notes payable - non-current portion, net of debt discount of $ 648,889 and $ 813,229 as of March 31, 2023 and December 31, 2022, respectively

Total Liabilities

2 unchanged sentences

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

0 shares issued and outstanding as of September 30, 2022 and December 31, 2021

0 shares issued and outstanding as of March 31, 2023 and December 31, 2022

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

35,525,689 and 28,426,616 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

37,991,746 and 36,668,980 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

8 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Operating Income

Cost of revenue

( 1,600,000 )

Operating Expenses:

5 unchanged sentences

( 7,187,549 )

( 21,539,233 )

( 16,073,845 )

Other Income (Expense):

Extinguishment of PPP 7(a) loan

Other income, net

Other income (expense), net

Interest expense

2 unchanged sentences

( 7,339,665 )

( 21,887,761 )

( 15,761,665 )

Net Loss Per Share - Basic and Diluted

3 unchanged sentences

Condensed Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

Stockholders’

1 unchanged sentence

( 118,230,463 )

Issuance of common stock and warrants in registered direct offering [1]

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

Cashless exercise of stock options

Stock-based compensation

4 unchanged sentences

( 123,969,829 )

Exercise of stock warrants

Stock-based compensation

Issuance of common stock related to vested restricted stock units

( 7,239,100 )

Balance - June 30, 2022

( 104,798,071 )

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

Stock-based compensation

Issuance of common stock related to vested restricted stock units

( 7,308,996 )

Balance - September 30, 2022

( 112,107,067 )

Includes gross proceeds of $ 3,607,827 less total issuance costs of $ 108,235 .

Includes gross proceeds of $ 886,974 , less total issuance costs of $ 26,609 .

Includes gross proceeds of $ 3,194,530 , less total issuance costs of $ 95,836 .

For the Three and Nine Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

Stockholders’

1 unchanged sentence

( 90,219,306 )

Exercise of stock warrants

Issuance of common stock and warrants in registered direct offering [1]

Issuance of common stock in At the Market offering [2]

Stock-based compensation

Issuance of common stock related to vested restricted stock units

( 7,339,665 )

2 unchanged sentences

( 97,558,971 )

Exercise of stock warrants

Exercise of stock options

Issuance of SVB warrants [1]

Stock-based compensation

( 4,841,400 )

Balance - June 30, 2021

( 87,633,986 )

Exercise of stock options

Stock-based compensation

( 5,568,598 )

Balance – September 30, 2021

( 93,202,584 )

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

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

Includes gross proceeds of $ 886,974 , less total issuance costs of $ 26,609 .

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

1 unchanged sentence

Condensed Statements of Cash Flows

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash Flows From Operating Activities

5 unchanged sentences

Amortization of debt discount

Write-off of property and equipment

Extinguishment of PPP 7(a) Loan

Amortization of operating lease right-of-use asset

Changes in operating assets and liabilities:

3 unchanged sentences

( 1,067,714 )

Deferred license costs

Security deposits

Accounts payable

Accrued compensation

Accrued expenses and other current liabilities

Deferred license fee

( 1,110,002 )

Deferred rent

Accrued expenses and other current liabilities

Lease liabilities

Net Cash Used In Operating Activities

3 unchanged sentences

Purchases of property and equipment

( 1,165,066 )

Vendor deposits for property and equipment

Net Cash Used In Investing Activities

( 1,165,066 )

Cash Flows From Financing Activities

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

Net issuance of common stock in At the Market Offering [2]

Proceeds from exercise of stock warrants

Proceeds from SVB loan

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

Proceeds from sale of common stock in At the Market offering [2]

Payment of issuance costs for At the Market offering [3]

Repayments of notes payable

Payment of offering issuance costs

Payment of loan issuance costs

Proceeds from exercise of stock options

Net Cash Provided By Financing Activities

Net Decrease in Cash and Cash Equivalents and Restricted Cash

( 2,063,245 )

Net (Decrease) Increase in Cash and Cash Equivalents

( 4,397,198 )

7 unchanged sentences

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

Issuance of SVB stock warrants

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

Cashless exercise of stock options

Issuance of common stock related to vested restricted stock units

4 unchanged sentences

Eyenovia, Inc.

(“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.

The Company aims to achieve precision in ophthalmic drug delivery of novel and existing ophthalmic pharmaceutical agents.

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

The Company believes that this technology could ultimately replace eye droppers by advancing drug delivery beyond the limitations of patient coordination, drug overexposure, gravity, contamination potential, and discomfort towards a more precise, comfortable, and successful drug administration for improved patient care.

The ergonomic and functional design of the Optejet® delivers microdroplets horizontally faster than the blink reflex to minimize instillation discomfort and overflow spillage, providing a more comfortable experience.

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

The diagnostics and therapeutics in the Company’s pipeline have been tested in randomized controlled trials and demonstrated significant results in improving the benefit to risk profile for drug delivery.

For example, the Company’s deliberately designed technology provides a 75 % reduction in ocular drug and preservative exposure to significantly improve the therapeutic index in drugs used for presbyopia, mydriasis and intraocular pressure (“IOP”) lowering through eight clinical trials.

Eyedrops expose the ocular surface to approximately 300 % more medication and preservatives that can lead to unintended effects and induce collateral tissue damage.

Drug delivery via the Optejet device reduces ocular exposure to preservatives comparable to that of non-preserved formulations demonstrating potentially less surface damage from ocular stress.

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 (“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 (“CDER”) is designated as the lead center with primary jurisdictional oversight.

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

(“Eyenovia” or the “Company”) is an ophthalmic technology company developing the Optejet® delivery system for use both in combination with its own drug-device therapeutic programs in mydriasis (pupil dilation), presbyopia and pediatric progressive myopia as well as out-licensing for additional indications.

The Company’s investigational products are classified by the Food and Drug Administration (“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.

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

2 unchanged sentences

GAAP for complete financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed financial statements of the Company as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021.

The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period.

These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2021 and for the year then ended, which were included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.

Note 2 – Summary of Significant Accounting Policies

Since the date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting policies.

Liquidity and Going Concern

As of September 30, 2022, the Company had unrestricted cash of approximately $ 17.4 million and an accumulated deficit of approximately $ 112.1 million.

For the nine months ended September 30, 2022 and 2021, the Company incurred net losses of approximately $ 21.9 million and $ 15.8 million, respectively, and used cash in operations of approximately $ 19.7 million and $ 15.0 million, respectively.

Subsequent to September 30, 2022, the Company received approximately $ 1.3 million in net proceeds from the sale of 587,298 shares of common stock pursuant to the Company’s At-the-Market Offering program with SVB Leerink.

Also subsequent to September 30, 2022, the Company used its $ 7.9 million of restricted cash and $ 0.1 million of unrestricted cash in order to repay the Loan and Security Agreement, dated May 7, 2021 (the “SVB Loan”) with Silicon Valley Bank (“SVB”), including $ 7.5 million of principal, a final payment of $ 0.4 million and a prepayment fee of $ 0.1 million.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed financial statements of the Company as of March 31, 2023 and for the three months ended March 31, 2023 and 2022.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 or any other period.

These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2022 and for the year then ended, which were included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023, as amended by Amendment No.

1, filed with the SEC on May 1, 2023.

Note 2 – Going Concern and Summary of Significant Accounting Policies

Since the date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, there have been no material changes to the Company’s significant accounting policies, except as disclosed below.

Going Concern

As of March 31, 2023, the Company had unrestricted cash and cash equivalents in the aggregate amount of approximately $ 18.5 million.

For the three months ended March 31, 2023 and 2022, the Company incurred net losses of approximately $ 5.7 million and $ 7.3 million, respectively, and used cash in operations of approximately $ 7.0 million and $ 8.2 million, respectively.

The Company does not have recurring revenue, has not yet achieved profitability and may not become profitable.

The Company expects to continue to incur cash outflows from operations.

1 unchanged sentence

These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date that these financial statements are issued.

Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to commercialize its products and raise further capital, through licensing transactions, the sale of additional equity or debt securities or otherwise, to support its future operations.

Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to raise further capital, through the sale of additional equity or debt securities or otherwise, to support its future operations.

The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures.

The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.

If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce general and administrative and sales and marketing costs in order to conserve its cash.

Cash and Cash Equivalents

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

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 SVB Loan, as amended on September 29, 2021 by the First Amendment to the Loan and Security Agreement (the “First Amendment”).

See Note 6 - Notes Payable.

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

Subsequent to September 30, 2022, the Company used this entire collateralized money market account plus $ 0.1 million of unrestricted cash in order to repay the SVB Loan, including $ 7.5 million of principal, a final payment of $ 0.4 million and a prepayment fee of $ 0.1 million.

The Company has cash deposits in a financial institution which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and/or take additional measures to reduce costs in order to conserve its cash.

Reclassifications

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

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

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents in the financial statements.As of March 31, 2023, the Company had Treasury bills with original maturity dates of three months or less in the amount of $ 15,910,834 .

The Company has cash deposits in a financial institution that, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

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

As of September 30, 2022 and December 31, 2021, the Company had cash balances in excess of FDIC insurance limits of $ 24,773,605 and $ 26,836,850 , respectively.

As of March 31, 2023 and December 31, 2022, the Company had cash balances in excess of FDIC insurance limits of $ 2,055,488 and $ 22,613,520 , 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 deposit accounts 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 $ 305,000 in a deposit account at SVB.

Net Loss Per Common Share

1 unchanged sentence

Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock.

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

For the Three Months Ended

( 5,739,366 )

( 7,339,665 )

Net loss attributable to common stockholders

( 5,739,366 )

( 7,339,665 )

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 common share

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

September 30,

Restricted stock units

2 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS

Revenue Recognition

The Company’s revenues are generated primarily through research, development and commercialization agreements.

The terms of such agreements may contain multiple promised goods and services, which may include (i) licenses to its intellectual property, and (ii) in certain cases, payment in connection with the manufacturing and delivery of clinical supply materials.

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

non-refundable, upfront license fees;

milestone payments;

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

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 Accounting Standards Codification (“ASC”) Topic 808, “Collaborative Arrangements” (“ASC 808”), the Company allocates the contract consideration between such joint operating activities and elements that are reflective of a vendor-customer relationship and, therefore, within the scope of ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”).

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

Under ASC 606, we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

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

Identify the contract with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

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

Recognize revenue when the company satisfies a performance obligation.

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 whether 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 + Lomb, Inc.

(“Bausch + Lomb”).

Each license has three revenue components:

1) an upfront license fee;

2) milestone payments and

3) royalty payments.

Deferred License Fee

The Company enters into license agreements which provide for the receipt of non-refundable, upfront licensing payments.

These payments are recorded as deferred license fees and will be earned and recognized as revenue upon the satisfaction of performance obligations.

See Note 7 – Commitments and Contingencies for additional details.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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.

Bausch + Lomb, Inc.

(“B+L”) and Arctic Vision (Hong Kong) Limited (“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.

The Company’s licensing agreements with B+L 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.

Reclassifications

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

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

Recently Adopted Accounting Standards

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

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

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

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

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

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.

Soon To Be Adopted 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.

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 plans to adopt ASU 2016-02 on December 31, 2022 and 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 the approximate amounts of $ 1.3 million and $ 1.4 million, respectively.

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 adopted ASU 2016-13 on January 1, 2023.

The adoption of ASU 2016-13 did not 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, ASU 2020-06 improves disclosure requirements for convertible instruments and earnings-per-share guidance.

ASU 2020-06 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.

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

Note 3 – Prepaid Expenses and Other Current Assets

As of September 30, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following:

September 30,

Payroll tax receivable

As of March 31, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following:

Prepaid insurance expenses

Payroll tax receivable

Prepaid general and administrative expenses

Prepaid conference expenses

Prepaid patent expenses

Prepaid security deposits

Prepaid board of directors fees

Prepaid patent expenses

Prepaid rent and security deposit

Prepaid research and development expenses

Total prepaid expenses and other current assets

2 unchanged sentences

Note 4 – Accrued Compensation

As of September 30, 2022 and December 31, 2021, accrued compensation consisted of the following:

September 30,

As of March 31, 2023 and December 31, 2022, accrued compensation consisted of the following:

Accrued bonus expenses

2 unchanged sentences

Note 5 – Accrued Expenses and Other Current Liabilities

As of September 30, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

September 30,

Accrued research and development expenses

As of March 31, 2023 and December 31, 2022, accrued expenses and other current liabilities consisted of the following:

Accrued consulting and professional services

Accrued interest

Accrued research and development expenses

Credit card payable

Accrued franchise tax

Accrued travel and entertainment expenses

Accrued franchise tax

Accrued leasehold improvements

Total accrued expenses and other current liabilities

Note 6 – Notes Payable

As of September 30, 2022 and December 31, 2021, notes payable consisted of the following:

September 30, 2022

As of March 31, 2023 and December 31, 2022, notes payable consisted of the following:

March 31, 2023

December 31, 2022

3 unchanged sentences

Debt Discount

Silicon Valley Bank loan

On February 24, 2022, the Company issued a note payable for the purchase of directors and officers liability insurance policy (the “D&O Loan”).

The D&O Loan had an aggregate principal balance of $ 675,332 and was payable in six monthly payments consisting of principal and interest amounting to $ 113,628 per payment.

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

During the nine months ended September 30, 2022, the Company repaid the full principal balance of $ 675,332 on the D&O Loan.

During the three months ended September 30, 2022, the Company recorded interest expense of $ 177,138 , of which $ 176,215 is related to the SVB Loan (including amortization of debt discount of $ 26,214 ) and $ 923 is related to the D&O Loan.

During the nine months ended September 30, 2022, the Company recorded interest expense of $ 475,811 , of which $ 469,376 is related to the SVB Loan (including amortization of debt discount of $ 78,645 ) and $ 6,435 is related to the D&O Loan.

SVB Loan Amendment

On May 6, 2022, the Company and SVB agreed to amend the terms of the SVB Loan dated May 7, 2021.

Pursuant to the amendment, the repayment term of the SVB Loan is reduced to 24 consecutive calendar months and the date that the first payment is due by the Company is extended to June 1, 2023.

The amendment did not result in a 10 % change in the net present value of the SVB Loan cash flows and, accordingly, the amendment was accounted for as a modification (a continuation of the original loan).

D&O insurance policy loan

Avenue - Note payable

Avenue - Convertible note payable

( 1,544,738 )

( 1,694,228 )

Current portion

D&O insurance policy loan

Avenue - Note payable

Avenue - Convertible note payable

Notes Payable, Current

Notes Payable, Non-Current

( 1,297,778 )

( 1,626,458 )

On February 24, 2023, the Company issued a note payable in the amount of $ 609,140 for the purchase of a directors and officers’ liability insurance policy (the “D&O Loan”).

The note accrues interest at a rate of 7.11 % per year and matures on August 24, 2023.

The D&O Loan is payable in six monthly payments of $ 103,639 consisting of principal and interest.

During the three months ended March 31, 2023, the Company repaid $ 100,030 of principal owed on the D&O Loan.

During the three months ended March 31, 2023, the Company recorded interest expense of $ 454,003 , of which $ 450,394 is related to the Loan and Security Agreement with Avenue Capital Management II, L.P.

(“Avenue”) and related entities, (including amortization of

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The SVB Loan was repaid in full in November 2022.

See Note 10 – Subsequent Events.

debt discount of $ 149,490 ) and $ 3,609 is related to the D&O Loan.

During the three months ended March 31, 2022, the Company recorded interest expense of $ 145,237 , of which $ 143,403 was related to a fully repaid loan and $ 1,834 was related to the D&O Loan.

Note 7 – Commitments and Contingencies

Employment Agreements

On February 14, 2022, the Compensation Committee of the Board of Directors of the Company (the “Board”) approved amendments to the Employment Agreements with its executive officers (the “Employment Agreement Addendums”).

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 “Involuntary 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 (estimated at approximately $ 1,517,000 in the aggregate as of the date of the Employment Agreement Addendums), 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, effective August 1, 2022, with Dr.

Tsontcho Ianchulev 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 (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, 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 (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 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

The Company leased 953 square feet of office space in Reno, Nevada for research and development activities from a company owned by the Company’s former Vice President of Research and Development.

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

The Company has remained in the premises on a month-to-month basis at the same rental rate.

Since the inception of the lease, the Company has made $ 112,600 of leasehold improvements related to this lease which have been fully amortized on the accompanying balance sheets.

The Company’s rent expense for this space is recorded in Research and Development on the condensed statement of operations and amounted to $ 16,212 for the three months ended September 30, 2022 and 2021, and $ 48,636 for the nine months ended September 30, 2022 and 2021.

On April 8, 2022, the Company agreed to enter into a lease agreement for a new office space of 3,916 square feet commencing on June 1, 2022 in Laguna Hills, CA.

The lease expires on July 31, 2027 and provides for lease payments of $ 9,203 per month payable on the first day of each month commencing September 1, 2022, and a security deposit of $ 11,400 .

The Company’s rent expense for this space is recorded in General and Administrative on the condensed statement of operations and amounted to $ 28,371 during the three months ended September 30, 2022 and $ 37,828 during the nine months ended September 30, 2022.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

On May 19, 2022, the Company agreed to enter into a lease agreement with a non-related party for a new office space located in Reno, Nevada of 10,881 square feet commencing on May 23, 2022.

The amended lease expires on September 23, 2027 with an option to extend the lease for an additional period of 60 months , and provides for lease payments ranging from $ 13,056 per month to $ 16,663 per month and a security deposit of $ 53,000 .

The Company’s rent expense for this space is recorded in Research and Development on the condensed statement of operations and amounted to $ 41,238 during the three months ended September 30, 2022 and $ 59,787 during the nine months ended September 30, 2022.

In February 2023, the Company exercised its options to renew its three leases in Redwood City, California, for a total of approximately 6,700 square feet.

The leases were due to expire on August 31, 2023 .

The leases were extended from September 1, 2023 to August 31, 2025.

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

For the Three Months Ended

March 31, 2023

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 all of the Company’s operating lease agreements are as follows:

For the Year Ending December 31,

Minimum Lease Payments

Total future minimum lease payments

amount representing imputed interest

Present value of lease liabilities

current portion

Lease liabilities, non current portion

Litigations, Claims and Assessments

1 unchanged sentence

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

Note 8 – Stockholders’ Equity

At-The-Market Offerings

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 “At-the-Market Offering”).

The Company’s prior sales agreement, with SVB Leerink, entered into in May 2021, 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 At-the-Market 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.

Through September 30, 2022, the Company received approximately $ 4.0 million in net proceeds from the sale of 2,128,763 shares of its common stock pursuant to the December 2021 Sales Agreement.

Securities Purchase Agreement

On March 3, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an 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”) in a registered direct offering (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 have an exercise price of $ 3.54 per share and each Investor Warrant is 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 are exercisable immediately upon issuance.

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

The aggregate gross proceeds to the Company from the March 2022 Offering were approximately $ 15 million with aggregate issuance costs of approximately $ 83,000 , 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.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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.

Equity Incentive Plan

On June 16, 2022, the stockholders approved an amendment to the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan, reserving an additional 1,500,000 shares of common stock for further issuance under such plan.

Note 8 – Stockholders’ Equity

At-The-Market Offering

During the three months ended March 31, 2023, the Company received approximately $ 3.5 million in net proceeds from the sale of 1,299,947 shares of its common stock pursuant to its Sales Agreement with SVB Securities LLC (“SVB Securities”) in an ”at-the-market” offering.

Stock-Based Compensation Expense

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

For the three months ended September 30, 2022 and 2021, the Company recorded expense of $ 928,733 ($ 420,619 of which was included within research and development expenses and $ 508,114 was included within general and administrative expenses on the statements of operations) and $ 777,467 ($ 489,121 of which was included within research and development expenses and $ 288,343 was included within general and administrative expenses on the statements of operations), respectively.

For the nine months ended September 30, 2022 and 2021, the Company recorded expense of $ 2,874,646 ($ 1,438,469 of which was included within research and development expenses and $ 1,436,177 was included within general and administrative expenses on the statements of operations) and $ 2,071,735 ($ 1,138,331 of which was included within research and development expenses and $ 933,401 was included within general and administrative expenses on the statements of operations), respectively.

For the three months ended March 31, 2023 and 2022, the Company recorded expense of $ 819,064 ($ 375,130 of which was included within research and development expenses and $ 443,934 was included within general and administrative expenses on the statements of operations) and $ 908,987 ($ 501,181 of which was included within research and development expenses and $ 407,806 was included within general and administrative expenses on the statements of operations), respectively.

Restricted Stock Units

A summary of the restricted stock units activity during the nine months ended September 30, 2022 is presented below:

A summary of RSU activity during the three months ended March 31, 2023 is presented below:

Grant Date Value

RSUs non-vested January 1, 2023

RSUs non-vested September 30, 2022

Vested RSUs undelivered September 30, 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.

As of September 30, 2022, there was $ 254,152 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.8 years.

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

RSUs non-vested March 31, 2023

Vested RSUs undelivered March 31, 2023

To date, 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 to defer settlement of such RSUs until the termination of such director’s service on the Company’s board of directors.

On February 28, 2023, the Company delivered 3,289 shares of common stock in respect of RSUs upon the resignation of a director.

As of March 31, 2023, there was $ 62,079 of unrecognized stock-based compensation expense related to RSUs that will be recognized over a weighted average period of 0.3 years.

Stock Options

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Expected term (years)

2 unchanged sentences

0.76 % - 1.98 %

0.45 % - 1.58 %

Expected volatility

Expected dividends

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model.

Option forfeitures are accounted for at the time of occurrence.

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

The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants.

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

The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants.

The Company 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.

2 unchanged sentences

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

The weighted average estimated grant date fair value of the stock options granted for the three months ended September 30, 2022 and 2021 was approximately $ 1.22 and $ 3.56 per share, respectively.

The weighted average estimated grant date fair value of the stock options granted for the nine months ended September 30, 2022 and 2021 was approximately $ 1.61 and $ 4.16 per share, respectively.

A summary of the option activity during the nine months ended September 30, 2022 is presented below:

Outstanding, January 1, 2022

Outstanding, September 30, 2022

Exercisable, September 30, 2022

EYENOVIA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The following table presents information related to stock options as of September 30, 2022:

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

The weighted average estimated grant date fair value of the stock options granted for the three months ended March 31, 2023 and 2022 was approximately $ 1.61 and $ 2.28 per share, respectively.

On January 25, 2023, the Company issued 19,530 shares of common stock pursuant to the cashless exercise of 73,334 stock options.

A summary of the option activity during the three months ended March 31, 2023 is presented below:

Outstanding as of January 1, 2023

Outstanding as of March 31, 2023

Exercisable as of March 31, 2023

The following table presents information related to stock options as of March 31, 2023:

Options Outstanding

7 unchanged sentences

$ 6.00 - $ 6.99

As of September 30, 2022, there was $ 4,058,569 of unrecognized stock-based compensation expense related to stock options which will be recognized over a weighted average period of 1.6 years.

A summary of the warrant activity for the nine months ended September 30, 2022 is presented below:

Outstanding January 1, 2022

( 1,870,130 )

Outstanding September 30, 2022

Exercisable September 30, 2022

The following table presents information related to warrants as of September 30, 2022:

Warrants Outstanding

Warants Exercisable

Remaining Life

Stock Warrant Exercises

During the nine months ended September 30, 2022, the Company issued an aggregate of 1,870,130 shares of common stock pursuant to the exercise of pre-funded warrants for aggregate proceeds of $ 18,701 at an exercise price of $ 0.01 per share.

As of March 31, 2023, there was $ 3,228,544 of unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted average period of 1.6 years.

EYENOVIA, INC.

4 unchanged sentences

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 2022 and 2021, the Board has approved a matching contribution equal to 100 % of elective deferrals up to 4 % of eligible earnings with the matching contribution subject to certain vesting requirements as outlined in the Plan documents.

During the three months ended September 30, 2022 and 2021, the Company recorded expense of $ 39,914 and $ 34,076 associated with its matching contributions, respectively.

During the nine months ended September 30, 2022 and 2021, the Company recorded expense of $ 173,896 and $ 144,917 associated with its matching contributions, respectively.

Note 10 – Subsequent Events

At-the-Market Offering Program

Subsequent to September 30, 2022, the Company received approximately $ 1.4 million in gross proceeds ($ 1.3 million in net proceeds) from the sale of 587,298 shares of our common stock pursuant to our At-the-Market Offering program with SVB Leerink.

SVB Loan Repayment

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

The full amount of the payment was $ 8.0 million, and included the principal amount of the loan ($ 7,500,000 ), the final payment ($ 375,000 ) and a 2 % prepayment fee ($ 150,000 ).

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

For 2023 and 2022, the Company’s Board of Directors approved a matching contribution equal to 100 % of elective deferrals up to 4 % of eligible earnings with the matching contribution subject to certain vesting requirements as outlined in the Plan documents.

During the three months ended March 31, 2023 and 2022, the Company recorded expense of $ 78,969 and $ 86,099 , respectively, associated with its matching contributions, respectively.

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

What changed 10-Q

Item 1. Financial Statements