NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 – Business Organization,
Nature of Operations and Basis of Presentation
Eyenovia. Inc. (“Eyenovia”
or the “Company”) is a clinical stage ophthalmic biopharmaceutical company developing a pipeline of microdose
array print (MAP™) therapeutics. Eyenovia aims to achieve clinical microdosing of next-generation formulations of well-established
ophthalmic pharmaceutical agents using its high-precision targeted ocular delivery system branded the Optejet®,
which has the potential to replace conventional eye dropper delivery and improve safety, tolerability, patient compliance and topical
delivery success for ophthalmic eye treatments. In the clinic, the Optejet has demonstrated the ability to horizontally deliver
ophthalmic medication with a success rate significantly higher than that of traditional eye drops (~ 90% vs. ~ 50%). Using its
proprietary delivery technology, Eyenovia is developing the next generation of smart ophthalmic therapies which target new indications
or new combinations where there are currently no comparable drug therapies approved by the U.S. Food and Drug Administration (the
“FDA”). Eyenovia’s microdose therapeutics follow the FDA-designated pharmaceutical registration and regulatory
process. Its products are classified by the FDA as drugs, and not medical devices or drug-device combination products.
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion
of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary
for a fair presentation of the condensed financial statements of the Company as of June 30, 2020 and for the three and six months
ended June 30, 2020 and 2019. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative
of the operating results for the full year ending December 31, 2020 or any other period. These unaudited condensed financial statements
should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2019
and for the year then ended, which were included in the Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission (“SEC”) on March 30, 2020.
Note 2 – Summary of Significant
Accounting Policies
Since the date of the Company’s Annual
Report on Form 10-K for the year ended December 31, 2019, there have been no material changes to the Company’s significant
accounting policies, except as disclosed below.
Liquidity and Going Concern
As of June 30, 2020,
the Company had cash and cash equivalents of approximately $10.2 million and an accumulated deficit of approximately $68.1 million.
For the six months ended June 30, 2020 and 2019, the Company incurred net losses of approximately $10.5 million and $11.3 million,
respectively, and used cash in operations of approximately $9.9 million and $11.0 million, respectively. Subsequent to June 30,
2020, we entered into a License Agreement with Arctic Vision (Hong Kong) Limited (“Arctic Vision”) pursuant to which
we received an upfront payment of $4.0 million before any payments to Senju Pharmaceutical Co., Ltd. (“Senju”). In
addition, we received approximately $1.3 million from the exercise of warrants issued in our private placement of common stock
and warrants that closed on March 24, 2020. See Note 11 – Subsequent Events for details.
The Company has not
yet generated revenues or achieved profitability and expects to continue to incur cash outflows from operations. The Company expects
that its research and development and general and administrative expenses will continue to increase and, as a result, it will eventually
need to generate significant product revenues to achieve profitability. These circumstances raise substantial doubt about the Company’s
ability to continue as a going concern within one year after the date that these financial statements are issued. Implementation
of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to raise
further capital, through the sale of additional equity or debt securities or otherwise, to support its future operations.
The Company’s operating needs include
the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s
future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s
ability to successfully commercialize its products and services, competing technological and market developments, and the need
to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product
and service offerings. If the Company is unable to secure additional capital, it may be required to curtail its research and development
initiatives and take additional measures to reduce costs in order to conserve its cash.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 2 – Summary of Significant
Accounting Policies – Continued
Cash and Cash Equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents in the financial statements.
The Company has cash deposits in a financial
institution which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The
Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions.
As of June 30, 2020 and December 31, 2019, the Company had cash balances in excess of FDIC insurance limits of $9,936,171 and $13,902,601,
respectively.
Stock-Based Compensation
The Company measures the cost of services
received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured
on the grant date and the fair value amount is then recognized over the period during which services are required to be provided
in exchange for the award, usually the vesting period. Upon the exercise of an option, the Company issues new shares of common
stock out of the shares reserved for issuance under its equity plans.
Convertible Instruments
The Company evaluates its convertible instruments
to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately
accounted for in accordance with Topic 815 of the Financial Accounting Standards Board ("FASB") Accounting Standards
Codification (“ASC”). The accounting treatment of derivative financial instruments requires that the Company record
embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement
and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income
or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments
at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified
as of the date of the event that caused the reclassification. Embedded conversion options and any related freestanding instruments
are recorded as a discount to the host instrument.
If the instrument is determined to not
be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the commitment
date fair value to the effective conversion price of the instrument.
Net Loss Per Common Share
Basic net loss per common share is computed
by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share
reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted
into common stock.
The following securities are excluded from
the calculation of weighted average diluted common shares because their inclusion would have been anti-dilutive:
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Options
|
|
|
3,290,357
|
|
|
|
1,563,366
|
|
Warrants
|
|
|
3,344,154
|
|
|
|
-
|
|
Restricted stock units
|
|
|
60,355
|
|
|
|
20,165
|
|
Total potentially dilutive shares
|
|
|
6,694,866
|
|
|
|
1,583,531
|
|
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 2 – Summary of Significant
Accounting Policies – Continued
Recently Adopted Accounting Pronouncements
In July 2017, the FASB issued ASU No. 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 was adopted on January 1, 2020 and 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 June 30, 2020 and December 31, 2019,
prepaid expenses and other current assets consisted of the following:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Prepaid insurance expenses
|
|
$
|
433,639
|
|
|
$
|
33,923
|
|
Payroll tax receivable
|
|
|
176,385
|
|
|
|
95,233
|
|
Prepaid Nasdaq annual fees
|
|
|
65,420
|
|
|
|
-
|
|
Prepaid research and development expenses
|
|
|
26,660
|
|
|
|
17,978
|
|
Prepaid patent expenses
|
|
|
35,916
|
|
|
|
12,404
|
|
Prepaid conference expenses
|
|
|
35,003
|
|
|
|
10,600
|
|
Prepaid rent and security deposit
|
|
|
21,994
|
|
|
|
2,463
|
|
Other
|
|
|
14,066
|
|
|
|
24,079
|
|
Total prepaid expenses and other current assets
|
|
$
|
809,083
|
|
|
$
|
196,680
|
|
Note 4 – Accrued Compensation
As of June 30, 2020 and December 31, 2019,
accrued compensation consisted of the following:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Accrued bonus expenses
|
|
$
|
380,320
|
|
|
$
|
897,839
|
|
Accrued payroll expenses
|
|
|
193,586
|
|
|
|
19,034
|
|
Total accrued compensation
|
|
$
|
573,906
|
|
|
$
|
916,873
|
|
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 5 – Accrued Expenses and Other Current Liabilities
As of June 30, 2020 and December 31, 2019,
accrued expenses and other current liabilities consisted of the following:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Accrued legal expenses
|
|
$
|
409,074
|
|
|
$
|
-
|
|
Accrued research and development expenses
|
|
|
201,794
|
|
|
|
208,175
|
|
Accrued professional services
|
|
|
44,368
|
|
|
|
97,396
|
|
Credit card payable
|
|
|
19,887
|
|
|
|
56,979
|
|
Leasehold improvements
|
|
|
-
|
|
|
|
42,500
|
|
Accrued franchise tax
|
|
|
-
|
|
|
|
40,995
|
|
Accrued travel and entertainment expenses
|
|
|
5,730
|
|
|
|
7,385
|
|
Other
|
|
|
372
|
|
|
|
-
|
|
Total accrued expenses and other current liabilities
|
|
$
|
681,225
|
|
|
$
|
453,430
|
|
Note 6 – Notes Payable
As of June 30, 2020 and December 31, 2019,
notes payable consisted of the following:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Paycheck Protection Program loan
|
|
$
|
463,353
|
|
|
$
|
-
|
|
Directors and officers insurance policy loan
|
|
|
265,892
|
|
|
|
-
|
|
|
|
|
729,245
|
|
|
|
-
|
|
Less current maturities
|
|
|
(421,599
|
)
|
|
|
-
|
|
|
|
$
|
307,646
|
|
|
$
|
-
|
|
On February 24, 2020, the Company issued
a note payable (the “Note”) for the purchase of a directors and officers liability insurance policy. The Note is payable
in 9 monthly payments of $53,750 for an aggregate principal amount of $475,216. The Note accrues interest at a rate of 4.29% per
year and matures on November 24, 2020. During the six months ended June 30, 2020, the Company repaid principal on the Note of $209,324.
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 matures on May 3, 2022, and bears interest at a fixed rate of 1.00% per annum.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 6 – Notes Payable –
Continued
Under the terms of the CARES Act, as amended
by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all
or a portion of its PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds
for certain permissible purposes as set forth in the PPP Loan, including, but not limited to, payroll costs and mortgage interest,
rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and
on the maintenance of employee and compensation levels following the funding of the PPP Loan. The Company intends to use the proceeds
of its PPP Loan for Qualifying Expenses. However, no assurance is provided that the Company will be able to obtain forgiveness
of its PPP Loan in whole or in part. Any amounts that are not forgiven incur interest at 1.0% per annum and monthly repayments
of principal and interest are deferred until six months after the Small Business Administration makes a determination on forgiveness.
While the PPP Loan currently has a two-year maturity, the amended law permits the borrower to request a five-year maturity from
its lender.
During the three months ended June 30,
2020 and 2019, the Company recorded interest expense of $4,333 and $0, respectively, and $6,032 and $0 for the six months ended
June 30, 2020 and 2019, respectively.
Note 7 – Commitments and Contingencies
Litigations, Claims and Assessments
The Company may be involved in legal proceedings,
claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies
as incurred and accrues for all probable and estimable settlements.
Note 8 – Related Party Transactions
Consulting Agreements
A company in which a member of the Company’s
Board of Directors is part owner is a party to a consulting agreement with the Company dated July 6, 2017 that provides for the
payment of $9,567 per month, and $250 per hour for any additional work, for advisory services performed by such director. The Company
incurred expenses of $28,701 and $50,634 for the three months ended June 30, 2020 and 2019, respectively, and $57,402 and $98,835
for the six months ended June 30, 2020 and 2019, respectively, related to the agreement which was included within general and administrative
expenses on the condensed statements of operations.
Lease Agreements
The Company’s Vice President of Research
and Development and Manufacturing (“VP of R&D”) owns a company that entered into a lease agreement with the Company
on September 15, 2016 to lease 953 square feet of space located in Reno, NV with respect to its research and development activities.
The initial monthly base rent was $3,895 per month over the term of the lease and the security deposit was $3,895. On September
15, 2018, the Company amended the lease agreement to extend it until September 14, 2020 and increase the monthly base rent and
security deposit to $4,012. The lease agreement was amended again on April 6, 2020 to lease additional space and increase the monthly
base rent and security deposit to $5,247. The Company made $70,000 of leasehold improvements related to this lease which are included
on the balance sheet. The Company’s rent expense amounted to $15,494 and $12,036 for the three months ended June 30,
2020 and 2019, respectively, and $27,530 and $24,072, respectively, for the six months ended June 30, 2020 and 2019, respectively.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8 – Related Party Transactions - Continued
Research and Development Activities
The VP of R&D is the sole owner and
President of a company that performs contract engineering services for the Company. During the three and six months ended June
30, 2020, the Company recognized research and development expense of $229,034 and $472,805, respectively, related to services provided
by such vendor. During the three and six months ended June 30, 2019, the Company recognized research and development expense of
$210,420 and $530,560, respectively, related to services provided by such vendor. The Company had a liability of $95,087 and $89,052
to the vendor as of June 30, 2020 and December 31, 2019, respectively.
The Company recognized $46,050 and $97,387
of compensation expense related to the VP of R&D’s salary during the three and six months ended June 30, 2020, respectively.
The Company recognized $46,050 and $94,100 of compensation expense during the three and six months ended June 30, 2019, respectively.
License Agreement
On March 8, 2015, the Company entered
into an Exclusive License Agreement (the “Exclusive License Agreement”) with Senju whereby the Company agreed to
grant to Senju an exclusive, royalty-bearing license, with rights of sublicense, for its medical device technology for the
piezoelectric delivery of ophthalmic medications to develop, make, have made, manufacture, use, import, market, sell, and
otherwise distribute such products in Asia. In consideration for the license, Senju agreed to pay to Eyenovia five percent
(5%) royalties on sales (net of certain manufacturing costs) for the term of the Exclusive License Agreement, subject to
certain adjustments upon the loss of patent coverage. The Exclusive License Agreement will continue in full force and effect,
on a country-by-country basis, until the later to occur of: (i) the tenth (10th) anniversary of the first commercial sale of
such a product candidate in a country or (ii) the expiration of the licensed patents in a country. As of the date of this
filing, there had been no commercial sales of such a product in Asia, and, therefore, no royalties had been earned. Senju is
owned by the family of a former member of the Company’s Board of Directors and, together, they beneficially own greater
than 5% of the Company’s common stock.
On April 8, 2020, Eyenovia entered into
an amendment (the “License Amendment”) to the Exclusive License Agreement. Pursuant to the License Amendment, the Company
can license to any third party the right to research, develop, commercialize, manufacture or use certain products identified below
(the “Licensed Products”) previously licensed to Senju in China (including the People’s Republic of China, Hong
Kong, Macao, and Taiwan) and South Korea (the “Territory”) if such a license is executed by the Company by April 8,
2021. The Licensed Products are those using piezo-print technology in a microdose dispenser with (i) atropine sulfate as its sole
active ingredient to treat myopia in humans and (ii) pilocarpine as its sole active ingredient to treat presbyopia in humans.
Pursuant to the License Amendment, the
Company must pay Senju (a) close to a mid-double digit percentage of revenue on any lump-sum payments the Company receives from
the third party, revenue (net of costs) obtained by the Company from contract research and/or development of the Licensed Product
in the Territory, and revenue (net of costs) obtained by the Company from contract manufacture for the device of the Licensed Product
in the Territory, the aggregate of which must be at least a high seven figure dollar amount minimum payment to Senju; and (b) a
lower-double digit percentage of any sales royalty revenue the Company receives from the third party. Unless a third-party license
is executed by the Company prior to April 8, 2021 (in which case, subject to early termination the License Amendment shall remain
in effect for the duration of such license), the License Amendment terminates on April 8, 2021, but may be terminated earlier by
Senju upon the Company’s material breach of the License Amendment, subject to a 60-day cure period.
The Exclusive License Agreement was further amended in a Letter
Agreement by and between the Company and Senju on August 10, 2020 (the “Letter Agreement”). See Note 11 –
Subsequent Events for details.
EYENOVIA, INC.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
Note 9 – Stockholders’ Equity
Equity Incentive Plan
On April 7, 2020, the Company’s Board
of Directors approved the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan (the “Restated Plan”),
which stockholders approved on June 30, 2020. The Restated Plan makes certain changes to the Company’s 2018 Omnibus Stock
Incentive Plan, as amended (the “2018 Plan”). For example, the Restated Plan increases the number of shares of Company’s
common stock reserved for issuance under the 2018 Plan to 2,950,000 shares. The Restated Plan requires that all equity awards issued
under the Restated Plan vest at least twelve months from the applicable grant date, subject to accelerated vesting, and provides
that no dividend or dividend equivalent will be paid on any unvested equity award, although dividends with respect to unvested
portions of equity may accrue and be paid when, and if, the awards later vest and the shares are actually issued to the grantee.
In addition, the Restated Plan sets an annual limit on the grant date fair value of awards to any non-employee director, together
with any cash fees paid during the year, of $150,000, subject to certain exceptions for a non-executive chair of the Board. Finally,
the Restated Plan makes several administrative changes to the 2018 Plan, including to clarify that awards made under the Restated
Plan are intended to be exempt from or comply with Section 409(A) of the Internal Revenue Code of 1986, as amended.
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. These Warrants, taken together,
had an intrinsic value of $1,012,815 as of June 30, 2020. 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. These Warrants,
taken together, had an intrinsic value of $659,930 at June 30, 2020.
In connection with the offering, on March 23, 2020, the Company
also entered into a Registration Rights Agreement with the investors. Pursuant to the Registration Rights Agreement, the Company
agreed to file with the SEC, no later than 30 days following the date on which the Company files its Form 10-K for the year ended
December 31, 2019 with the SEC, a registration statement on Form S-3 covering the shares of common stock issued in the offering
and the shares of common stock underlying the Warrants. The Company timely filed the registration statement on Form S-3, which
was declared effective by the SEC on May 13, 2020.
Stock Options
On January 31, 2020, the Company granted
ten-year stock options to purchase 25,000 shares of common stock to its employees under the 2018 Plan. The shares vest over three
years from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly
over the remaining 24 months. The stock options have an exercise price of $4.68 per share, which represents the Company’s
closing stock price on the date of grant. The stock options had a grant date fair value of $89,400, which the Company expects to
recognize over the vesting period.
On May 28, 2020, the Company granted ten-year
stock options to purchase 263,500 shares of common stock to its employees under the Restated Plan. The shares vest over three years
from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly
over the remaining 24 months. The stock options have an exercise price of $2.89 per share, which represents the Company’s
closing stock price on the date of grant. The stock options had a grant date fair value of $587,100, which the Company expects
to recognize over the vesting period.
EYENOVIA, INC.
NOTES TO CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
Note 9 – Stockholders’ Equity – Continued
Stock Options - Continued
On June 3, 2020, the Company granted ten-year
stock options to purchase 764,419 shares of common stock to its executive directors under the Restated Plan. The shares vest over
three years from the date of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting
monthly over the remaining 24 months. The stock options have an exercise price of $2.72 per share, which represents the Company’s
closing stock price on the date of grant. The stock options had a grant date fair value of $1,603,600, which the Company expects
to recognize over the vesting period.
In applying the Black-Scholes option pricing
model to stock options granted, the Company used the following approximate assumptions:
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Expected term (years)
|
|
|
5.85
|
|
|
|
n/a
|
|
|
|
5.85
|
|
|
|
5.85
|
|
Risk free interest rate
|
|
|
0.34% - 0.38%
|
|
|
|
n/a
|
|
|
|
0.34% - 1.32%
|
|
|
|
2.53%
|
|
Expected volatility
|
|
|
99%
|
|
|
|
n/a
|
|
|
|
96% - 99%
|
|
|
|
139%
|
|
Expected dividends
|
|
|
0.00%
|
|
|
|
n/a
|
|
|
|
0.00%
|
|
|
|
0.00%
|
|
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 Company does not have a trading history to support its historical volatility calculations. Accordingly, the Company used a
blended volatility whereby it uses its historical volatility for the period from its IPO through the valuation date and uses the
average of peer-group data of six comparable entities to supplement its own historical data for the preceding years in computing
its expected volatility. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds
with a remaining term consistent with the expected term of the instrument being valued.
The weighted average estimated grant date fair value of the
stock options granted for the three months ended June 30, 2020 was approximately $2.13 per share. There were no stock options granted
during the three months ended June 30, 2019. The weighted average estimated grant date fair value of the stock options granted
for the six months ended June 30, 2020 and 2019 was approximately $2.17 and $2.50 per share, respectively.
A summary of the option activity during the six months ended
June 30, 2020 is presented below:
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Weighted
|
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|
|
|
|
|
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Weighted
|
|
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Average
|
|
|
|
|
|
|
|
|
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Average
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Remaining
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Aggregate
|
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Number of
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Exercise
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Life
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Intrinsic
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Options
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Price
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In Years
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Value
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Outstanding January 1, 2020
|
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2,237,438
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$
|
3.51
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|
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Granted
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1,052,919
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2.81
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Exercised
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|
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-
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-
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|
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|
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Outstanding June 30, 2020
|
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3,290,357
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$
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3.29
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|
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8.3
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$
|
1,131,580
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Exercisable June 30, 2020
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1,436,735
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$
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3.38
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6.9
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$
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1,019,817
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EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 9 – Stockholders’ Equity - Continued
Stock Options – Continued
The following table presents information related to stock options
as of June 30, 2020:
Options Outstanding
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Options Exercisable
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Weighted
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Outstanding
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Average
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Exercisable
|
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Exercise
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Number of
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Remaining Life
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Number of
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Price
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Options
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In Years
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Options
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|
$
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1.24
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260,000
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4.7
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260,000
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$
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1.95
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|
|
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700,281
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7.0
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|
|
|
678,127
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$
|
2.72
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|
|
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764,419
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|
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|
-
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|
-
|
|
$
|
2.74
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|
|
|
6,000
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|
|
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8.5
|
|
|
|
2,833
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$
|
2.89
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|
|
|
263,500
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|
|
|
-
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|
|
|
-
|
|
$
|
3.11
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|
|
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681,572
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|
|
9.1
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|
|
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45,285
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$
|
4.00
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|
|
2,000
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8.4
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|
|
|
1,056
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$
|
4.68
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25,000
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|
|
|
-
|
|
|
|
-
|
|
$
|
5.10
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|
|
|
6,000
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|
|
|
8.2
|
|
|
|
3,500
|
|
$
|
5.19
|
|
|
|
16,500
|
|
|
|
8.2
|
|
|
|
9,625
|
|
$
|
5.25
|
|
|
|
26,668
|
|
|
|
6.3
|
|
|
|
24,582
|
|
$
|
6.20
|
|
|
|
311,499
|
|
|
|
8.1
|
|
|
|
251,933
|
|
$
|
6.30
|
|
|
|
60,000
|
|
|
|
8.0
|
|
|
|
38,333
|
|
$
|
8.72
|
|
|
|
166,918
|
|
|
|
7.8
|
|
|
|
121,461
|
|
|
|
|
|
|
3,290,357
|
|
|
|
6.9
|
|
|
|
1,436,735
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|
Stock-Based Compensation Expense
The Company recorded stock-based
compensation expense related to stock options and restricted stock units. During the three months ended June 30, 2020 and
2019, the Company recorded expense of $633,146 ($348,447 of which was included within research and development expenses and
$284,699 was included within general and administrative expenses on the condensed statement of operations) and $424,019
($206,834 of which was included within research and development expenses and $217,185 was included within general and
administrative expenses on the condensed statements of operations), respectively. During the six months ended June 30, 2020
and 2019, the Company recorded expense of $1,217,011 ($655,856 of which was included within research and development expenses
and $561,155 was included within general and administrative expenses on the condensed statements of operations) and
$1,456,979 ($900,917 of which was included within research and development expenses and $556,062 was included within general
and administrative expenses on the condensed statements of operations) during the six months ended June 30, 2020 and 2019,
respectively. As of June 30, 2020, there was $4,312,311 of unrecognized stock-based compensation expense which the Company
expects to recognize over a weighted average period of 2.3 years.
Warrant Exercises
During the three and six months ended June
30, 2020, Warrants to purchase 91,453 and 76,211 shares of common stock with an exercise price of $2.058 and $2.4696 per share,
respectively, were exercised for aggregate proceeds of $376,421.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 10 – Employee Benefit Plans
401(k) Plan
In April 2019, the Company adopted the
Eyenovia 401(k) Plan (the “Plan”), which went into effect in May 2019. All Company employees are able to participate
in the Plan, subject to eligibility requirements as outlined in the Plan documents. Under the terms of the Plan, eligible employees
are able to defer a percentage of their pay every pay period up to annual limitations set by Congress and the Internal Revenue
Service under Section 401(k) of the Internal Revenue Code. For 2020, the Company’s Board of Directors has approved a matching
contribution equal to 100% of elective deferrals up to 4% of eligible earnings with the matching contribution subject to certain
vesting requirements as outlined in the Plan documents. During the six months ended June 30, 2020 and 2019, the Company recorded
expense of $80,486 and $16,043 associated with its matching contributions, respectively. During the three months ended June 30,
2020 and 2019, the Company recorded expense of $22,515 and $0 associated with its matching contributions, respectively.
Note 11 – Subsequent Events
Warrant Exercises
Subsequent to June 30, 2020, Warrants to
purchase 497,908 and 94,840 shares of common stock with an exercise price of $2.058 and $2.4696 per share, respectively, were exercised
for aggregate proceeds of approximately $1.3 million.
License Agreements
On August 10, 2020, Eyenovia entered into
a License Agreement (the “License Agreement”) with Arctic Vision pursuant to which Arctic Vision may develop
and commercialize MicroPine for the treatment progressive myopia and MicroLine for the treatment of presbyopia in Greater China
(mainland China, Hong Kong, Macau and Taiwan) and South Korea.
Under the terms of the License Agreement, Eyenovia received
an upfront payment of $4.0 million before any payments to Senju. In addition, Eyenovia may receive up to a total of $41.75 million
in additional payments, based on various development and regulatory milestones, including the initiation of clinical research and
approvals in Greater China and South Korea, and development costs. Arctic Vision also will purchase its supply of MicroPine and
MicroLine from Eyenovia or, for such products not supplied by Eyenovia, pay Eyenovia a mid-single digit percentage royalty on net
sales of such products, subject to certain adjustments. Eyenovia will pay a mid-double digit percentage of such payments, royalties,
or net proceeds of such supply to Senju pursuant to the Exclusive License Agreement with Senju, as amended by the License Amendment
dated April 8, 2020, and a Letter Agreement dated August 10, 2020.