[1] Includes gross proceeds of $27,300,000, less issuance costs of $2,211,000 deducted directly from the offering proceeds.
[2] Includes gross proceeds of $14,030,001, less issuance costs of $815,052 deducted directly from the offering proceeds.
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
therapeutics utilizing its patented piezo-print delivery technology, branded the OptejetTM. Eyenovia aims to achieve
clinical microdosing of next-generation formulations of well-established ophthalmic pharmaceutical agents using its high-precision
targeted ocular delivery system, 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, Optejet has demonstrated up to a
75% reduction in ocular drug and preservative exposure, with successful topical delivery that is consistent with the efficacy of
traditional eyedrop administration. Using its proprietary delivery technology, Eyenovia is developing the next generation of smart
ophthalmic therapies while targeting new indications for which there are currently no 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 not classified by the FDA as 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 September 30, 2019 and for the three and nine
months ended September 30, 2019 and 2018. The results of operations for the three and nine months ended September 30, 2019 are
not necessarily indicative of the operating results for the full year ending December 31, 2019 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, 2018 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”)
on Form 10-K on March 27, 2019.
Note 2 – Summary of Significant
Accounting Policies
Since the date of the Annual Report, there
have been no material changes to the Company’s significant accounting policies, except as disclosed below.
Liquidity and Financial Condition
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. On October 29, 2019, the Company announced that it is advancing
its MicroLine program for the improvement in near vision in patients with presbyopia towards Phase III development. As a result
of prioritizing MicroLine, in tandem with its Mircropine (progressive myopia) and MicroStat (mydriasis) programs, the Company
has deferred development activities for its MicroProst (glaucoma and ocular hypertension) and MicroTears (red eye and itch relief
lubrication) programs. The Company believes the re-prioritization of its programs will yield overall cost savings of approximately
$1.5 million to $1.9 million in 2020.
The Company believes its current cash
on hand, including the proceeds received from public offerings following its initial public offering, is sufficient to meet its
operating and capital requirements for at least the next twelve months from the date these financial statements are issued. Thereafter,
the Company may need to raise further capital, through the sale of additional equity or debt securities, to support its future
operations. The Company’s operating needs include the planned costs to operate its business, including amounts required
to fund 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 and U.S.
treasury bills 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 September 30, 2019 and December 31, 2018, the Company had cash and cash equivalent balances in excess
of FDIC insurance limits of $18,045,962 and $19,478,200, 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.
Net Loss Per Common Share
Basic net loss per common share is computed
by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share
reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted
into common stock.
The following securities are excluded from
the calculation of weighted average diluted common shares because their inclusion would have been anti-dilutive:
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Options
|
|
|
2,237,438
|
|
|
|
2,225,118
|
|
Restricted Stock Units
|
|
|
60,355
|
|
|
|
20,165
|
|
Total potentially dilutive shares
|
|
|
2,297,793
|
|
|
|
2,245,283
|
|
Recently Adopted Accounting Pronouncements
In August 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Statement
of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new
standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement
of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018. The new standard requires adoption
on a retrospective basis unless it is impracticable to apply, in which case a company would be required to apply the amendments
prospectively as of the earliest date practicable. This standard was adopted on January 1, 2019 and did not have a material impact
on the Company’s financial position, results of operations or cash flows.
In June 2018, the FASB issued ASU
No. 2018-07, “Compensation — Stock Compensation (Topic 718)” (“ASU 2018-07”). ASU 2018-07 is
intended to reduce cost and complexity of financial reporting for non-employee share-based payments. Currently, the
accounting requirements for non-employee and employee share-based payments are significantly different. ASU 2018-07 expands
the scope of Topic 718, which currently only includes share-based payments to employees, to include share-based payments to
non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees
will be substantially aligned. This ASU supersedes Subtopic 505-50, “Equity — Equity-Based Payments to
Nonemployees.” The amendments to ASU 2018 - 07 are effective for fiscal years beginning after December 15, 2019, and
interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a
company’s adoption date of ASU No. 2014-09, (Topic 606), “Revenue from Contracts with Customers.” This
standard was adopted on January 1, 2019 and did not have a material impact on the Company’s financial position, results
of operations or cash flows.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3 – Prepaid Expenses and Other Current Assets
As of September 30, 2019 and December 31,
2018, prepaid expenses and other current assets consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(unaudited)
|
|
|
|
|
Prepaid insurance expenses
|
|
$
|
152,940
|
|
|
$
|
39,465
|
|
Payroll tax credit receivable
|
|
|
85,932
|
|
|
|
-
|
|
Prepaid conference expenses
|
|
|
71,196
|
|
|
|
7,000
|
|
Prepaid research & development expenses
|
|
|
25,528
|
|
|
|
-
|
|
Prepaid patent expenses
|
|
|
19,848
|
|
|
|
10,562
|
|
Prepaid advertising and marketing
|
|
|
16,400
|
|
|
|
-
|
|
Prepaid rent and security deposit
|
|
|
16,213
|
|
|
|
75,729
|
|
Other
|
|
|
8,920
|
|
|
|
-
|
|
Total prepaid expenses and other current assets
|
|
$
|
396,977
|
|
|
$
|
132,756
|
|
Note 4 – Accrued Compensation
As of September 30, 2019 and December 31,
2018, accrued compensation consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(unaudited)
|
|
|
|
|
Accrued bonus expenses
|
|
$
|
516,360
|
|
|
$
|
694,490
|
|
Accrued payroll expenses
|
|
|
75,134
|
|
|
|
217,614
|
|
Total accrued compensation
|
|
$
|
591,494
|
|
|
$
|
912,104
|
|
Note 5 – Accrued Expenses and Other Current Liabilities
As of September 30, 2019 and December 31,
2018, accrued expenses and other current liabilities consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(unaudited)
|
|
|
|
|
Accrued research and development expenses
|
|
$
|
150,139
|
|
|
$
|
375,204
|
|
Credit card payable
|
|
|
45,594
|
|
|
|
9,466
|
|
Accrued franchise tax
|
|
|
34,246
|
|
|
|
-
|
|
Accrued travel and entertainment expenses
|
|
|
10,728
|
|
|
|
-
|
|
Accrued professional services
|
|
|
5,667
|
|
|
|
111,728
|
|
Accrued legal expenses
|
|
|
-
|
|
|
|
168,650
|
|
Other
|
|
|
-
|
|
|
|
12,165
|
|
Total accrued expenses and other current liabilities
|
|
$
|
246,374
|
|
|
$
|
677,213
|
|
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 6 – Commitments and Contingencies
Employment Agreements
Effective February 15, 2019, the Company
entered into at-will executive employment agreements with Tsontcho Ianchulev, its Chief Executive Officer and Chief Medical Officer,
John Gandolfo, its Chief Financial Officer, Jennifer Clasby, its Vice President, Clinical Operations, Luke Clauson, its Vice President,
Research and Development and Manufacturing, and Michael Rowe, now its Vice President, Commercial.
Each of the employment agreements provides
that if the executive’s employment is terminated by the Company without “Cause” or the executive suffers an “Involuntarily
Termination” (each as defined in the employment agreements), provided that the executive has signed a full release of all
claims, the executive will be entitled to receive: (i) severance pay equal to three months of his or her then-current base salary
(currently estimated at approximately $419,000 in the aggregate), and (ii) a reimbursement for health insurance benefits under
COBRA for the executive and his or her spouse and dependents for a period of three months or until the executive becomes eligible
for comparable insurance benefits from another employer, whichever is earlier.
Each of the employment agreements also
provides that if within 12 months following any “Corporate Transaction” (as defined in the employment agreements) of
the Company, if the executive’s employment is terminated by the Company without Cause or the executive suffers an Involuntary
Termination, provided that the executive has signed a full release of all claims, the executive will be entitled to receive, in
lieu of what is described in the above paragraph: (i) severance pay equal to 12 months of his or her then-current base salary (currently
estimated at approximately $1,677,000 in the aggregate), and (ii) a reimbursement for health insurance benefits under COBRA for
the executive and his or her spouse and dependents for a period of 12 months or until the executive becomes eligible for comparable
insurance benefits from another employer, whichever is earlier.
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 7 – 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 $49,451 and $35,018 for the three months ended September 30, 2019 and 2018, respectively, and $151,853 and
$127,478 for the nine months ended September 30, 2019 and 2018, respectively, related to the agreement which was included within
general and administrative expenses on the condensed statements of operations.
Lease Agreements
The Company paid $3,000 and $4,000 per
month as of July 2016 and January 2018, respectively, to a company controlled by a member of its Board of Directors for office
space in New York, NY for its Chief Executive Officer. The Company left the space on August 31, 2018. During the three months ended
September 30, 2019 and 2018, the Company recorded rent expense of $0 and $8,000, respectively, and $0 and $32,000 for the nine
months ended September 30, 2019 and 2018, respectively, related to the office space which was included within general and administrative
expenses on the condensed statements of operations.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 7 – Related Party Transactions – Continued
Lease Agreements – Continued
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 Company made $40,000 of leasehold improvements related to this lease which are included on the
balance sheet. The Company’s rent expense amounted to $12,036 and $11,747 for the three months ended September 30, 2019
and 2018, respectively, and $36,108 and $35,117, respectively, for the nine months ended September 30, 2019 and 2018, respectively.
Research and Development Activities
The VP of R&D is the sole owner and
President of a company that performs contract engineering services for the Company. During the three and nine months ended September
30, 2019, the Company recognized research and development expense of $197,543 and $728,103, respectively, related to services provided
by such vendor. During the three and nine months ended September 30, 2018, the Company recognized research and development expense
of $243,614 and $672,057, respectively, related to services provided by such vendor. The Company had a liability of $133,251 and
$100,667 to the vendor as of September 30, 2019 and December 31, 2018, respectively.
The Company recognized $46,010 and $140,110
of compensation expense related to the VP of R&D’s salary during the three and nine months ended September 30, 2019,
respectively. The Company recognized $46,050 and $128,550 of compensation expense during the three and nine months ended September
30, 2018, respectively.
License Agreement
During 2015, the Company entered into a
license agreement with Senju Pharmaceuticals Co., Ltd. (“Senju”) whereby the Company agreed to grant to Senju an exclusive,
royalty-bearing license for its microdose product candidates for Asia to sublicense, develop, make, have made, manufacture, use,
import, market, sell, and otherwise distribute the microdose product candidates. In consideration for the license, Senju agreed
to pay to Eyenovia five percent (5%) royalties for the term of the license agreement. The agreement will continue in full force
and effect, on a country-by-country basis, until the latest to occur of: (i) the tenth (10th) anniversary of the first commercial
sale of a microdose product candidate in Asia; or (ii) the expiration of the licensed patents. As of the date of this filing, there
had been no commercial sales of a microdose product candidate in Asia, such that no royalties had been earned. Senju is owned by
the family of a former member of the Company’s Board of Directors and, together, they beneficially own greater than 5% of
the Company’s common stock.
Note 8 – Stockholders’ Equity
Public Offering
On July 15, 2019, the Company closed an
underwritten public offering of 4,388,490 shares of its common stock at a public offering price of $2.78 per share. The Company
granted the underwriters a 30-day over-allotment option to purchase up to an additional 658,273 shares of the Company’s common
stock at the same price, which was exercised in full on July 16, 2019. Including the over-allotment shares, the Company issued
a total of 5,046,763 shares in the underwritten public offering, and received gross proceeds of approximately $14.0 million and
net proceeds of approximately $13.0 million, after deducting underwriting discounts, commissions and other offering expenses.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8 – Stockholders’ Equity
– Continued
Stock Options
On January 2, 2019, stock options to purchase
180,000 and 133,686 shares of common stock with an exercise price of $1.24 and $1.95 per share, respectively, were exercised for
aggregate proceeds of $483,888.
On January 14, 2019, the Company granted
ten-year stock options to purchase an aggregate of 11,000 shares of common stock to its employees under the Company’s 2018
Omnibus Stock Incentive Plan (the “2018 Plan”). The 11,000 shares vest over three years from the date of grant with
one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly over the remaining 24 months,
subject to continued service to the Company. The stock options have an exercise price of $2.74 per share, which represents the
Company’s closing stock price on the date of grant. The stock options had a grant date value of $27,500, which the Company
expects to recognize over the vesting period.
On February 6, 2019, stock options to purchase
an aggregate of 320,001 shares of common stock with an exercise price of $1.24 per share were exercised on a cashless basis, which
resulted in the issuance of an aggregate of 236,466 shares of common stock.
On February 13, 2019, the Board of Directors
of the Company approved the acceleration and immediate vesting of 124,210 stock options originally granted to Dr. Ianchulev on
July 24, 2018 in connection with his employment. In connection with the acceleration and immediate vesting, the Company recognized
$609,322 of stock-based compensation expense during the six months ended June 30, 2019, which represents the remaining unamortized
grant date fair value of the award.
On May 14, 2019, stock options to purchase
34,815 shares of common stock with an exercise price of $1.95 per share were exercised for aggregate proceeds of $67,889.
During the three months ended September
30, 2019, the Company granted ten-year stock options to purchase an aggregate of 681,572 shares of common stock to its employees,
consultants and directors under the 2018 Plan, as amended. Of the 681,572 shares, (i) 636,287 vest over three years from the date
of grant with one-third vesting on the one-year anniversary of the date of grant and the balance vesting monthly over the remaining
24 months, subject to continued service to the Company and (ii) 45,285 vest on the earlier of the one-year anniversary of the
date of grant and the date of the 2020 annual stockholders meeting, subject to continued service to the Company. The stock options
have an exercise price of $3.11 per share, which represents the Company’s closing stock price on the date of grant. The
stock options had a grant date value of $1,909,700, which the Company expects to recognize over the vesting period.
In applying the Black-Scholes option pricing
model to stock options granted, the Company used the following approximate assumptions:
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Expected term (years)
|
|
5.85 - 10.00
|
|
5.50 - 10.00
|
|
5.85 - 10.00
|
|
5.50 - 10.00
|
Risk free interest rate
|
|
1.42% - 1.55%
|
|
2.74% - 2.95%
|
|
1.42% - 2.53%
|
|
2.69% - 2.95%
|
Expected volatility
|
|
134%
|
|
141%
|
|
134% - 139%
|
|
140 - 141%
|
Expected dividends
|
|
0.00%
|
|
0.00%
|
|
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 yet have a trading history to support its historical volatility calculations. Accordingly, the Company is
utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of
time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied
yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
The weighted average estimated grant date fair value of the
stock options granted for the three and nine months ended September 30, 2019 was approximately $3.11 and $3.10 per share, respectively.
The weighted average estimated grant date fair value of the stock options granted for the three and nine months ended September
30, 2018 was approximately $5.66 and $6.39 per share, respectively.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8 – Stockholders’ Equity
– Continued
Stock Options – Continued
A summary of the option activity during the nine months ended
September 30, 2019 is presented below:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Life
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
In Years
|
|
|
Value
|
|
Outstanding January 1, 2019
|
|
|
2,220,868
|
|
|
$
|
3.01
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
692,572
|
|
|
|
3.10
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(668,502
|
)
|
|
|
1.42
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(7,500
|
)
|
|
|
4.73
|
|
|
|
|
|
|
|
|
|
Outstanding September 30, 2019
|
|
|
2,237,438
|
|
|
$
|
3.51
|
|
|
|
8.4
|
|
|
$
|
2,273,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable September 30, 2019
|
|
|
1,040,178
|
|
|
$
|
3.34
|
|
|
|
7.5
|
|
|
$
|
1,407,386
|
|
The following table presents information related to stock options
as of September 30, 2019:
Options
Outstanding
|
|
|
Options
Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Average
|
|
|
Exercisable
|
|
Exercise
|
|
|
Number of
|
|
|
Remaining Life
|
|
|
Number of
|
|
Price
|
|
|
Options
|
|
|
In
Years
|
|
|
Options
|
|
$
|
1.24
|
|
|
|
260,000
|
|
|
|
5.5
|
|
|
|
260,000
|
|
$
|
1.95
|
|
|
|
700,281
|
|
|
|
7.8
|
|
|
|
438,363
|
|
$
|
2.74
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
3.11
|
|
|
|
681,572
|
|
|
|
-
|
|
|
|
-
|
|
$
|
4.00
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
$
|
5.10
|
|
|
|
6,000
|
|
|
|
8.9
|
|
|
|
2,167
|
|
$
|
5.19
|
|
|
|
16,500
|
|
|
|
8.9
|
|
|
|
5,500
|
|
$
|
5.25
|
|
|
|
26,668
|
|
|
|
7.0
|
|
|
|
19,582
|
|
$
|
6.20
|
|
|
|
311,499
|
|
|
|
8.8
|
|
|
|
210,690
|
|
$
|
6.30
|
|
|
|
60,000
|
|
|
|
8.8
|
|
|
|
23,333
|
|
$
|
8.72
|
|
|
|
166,918
|
|
|
|
8.5
|
|
|
|
80,542
|
|
|
|
|
|
|
2,237,438
|
|
|
|
7.5
|
|
|
|
1,040,178
|
|
Restricted Stock Units
On August 16, 2019, the Company granted
to members of its Board of Directors an aggregate of 40,190 restricted stock units (“RSUs”) under the 2018 Plan, as
amended. The grants vest on the earlier of (i) the one-year anniversary of the date of grant and (ii) the date of the 2020 annual
stockholders meeting, subject to the grantee remaining on the Board until then. The RSUs had a grant date fair value of $125,000,
which will be recognized over the vesting period.
EYENOVIA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8 – Stockholders’
Equity – Continued
Stock-Based Compensation Expense
The Company records stock-based compensation
expense related to stock options and RSUs. During the three months ended September 30, 2019 and 2018, the Company recorded expense
of $476,843 ($255,323 of which was included within research and development expenses and $221,520 was included within general and
administrative expenses on the condensed statements of operations) and $462,945 ($240,432 of which was included within research
and development expenses and $222,513 was included within general and administrative expenses on the condensed statements of operations
which includes a credit associated with the mark-to-market of non-employee options), respectively. During the nine months ended
September 30, 2019 and 2018, the Company recorded expense of $1,933,822 ($1,156,241 of which was included within research and development
expenses and $777,581 was included within general and administrative expenses on the condensed statements of operations) and $1,115,034
($556,721 of which was included within research and development expenses and $558,313 was included within general and administrative
expenses on the condensed statements of operations), respectively. As of September 30, 2019, there was $3,827,342 of unrecognized
stock-based compensation expense which will be recognized over a weighted average period of 2.1 years.
Note 9 – 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 2019, the Company’s Board of Directors has approved a matching
contribution equal to 100% of elective deferrals up to 4% of eligible earnings with the matching contribution subject to certain
vesting requirements as outlined in the Plan documents. During the three and nine months ended September 30, 2019, the Company
recorded expense of $26,989 and $43,032 associated with its matching contributions, respectively.
Note 10 – Subsequent Events
On October 29, 2019, the Company announced that it is advancing its MicroLine program for
the improvement in near vision in patients with presbyopia towards Phase III development. As a result of prioritizing MicroLine,
in tandem with its MicroPine (progressive myopia) and MicroStat (mydriasis) programs, the Company has deferred development activities
for its MicroProst (glaucoma and ocular hypertension) and MicroTears (red eye and itch relief lubrication) programs. The Company
believes the reprioritization of its programs will yield overall cost savings of approximately $1.5 million to $1.9 million in
2020.