UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended:
OR
For the transition period from to
COMMISSION FILE NUMBER:
(Exact name of Registrant as Specified in Its Charter)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any news or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The number of outstanding shares of the registrant’s common stock was
EYENOVIA, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
1
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
EYENOVIA, INC.
Condensed Balance Sheets
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Assets |
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Current Assets: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Deferred clinical supply costs | | — | ||||
License fee and expense reimbursements receivable | | | ||||
Prepaid expenses and other current assets |
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Total Current Assets |
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Property and equipment, net |
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Security deposits |
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Equipment deposits |
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Total Assets | $ | | $ | | ||
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued compensation |
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Accrued expenses and other current liabilities |
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Deferred rent - current portion | | | ||||
Notes payable | | | ||||
Total Current Liabilities |
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Deferred rent - non-current portion |
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Total Liabilities |
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Commitments and contingencies (Note 7) |
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Stockholders’ Equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Equity | | | ||||
Total Liabilities and Stockholders’ Equity | $ | | $ | | ||
The accompanying notes are an integral part of these condensed financial statements.
2
EYENOVIA, INC.
Condensed Statements of Operations
(unaudited)
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
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Operating Income | ||||||||||||
Revenue | $ | | $ | | $ | | $ | | ||||
Cost of revenue | | | | ( | ||||||||
Gross Profit | | | | | ||||||||
Operating Expenses: |
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General and administrative |
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Total Operating Expenses |
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Loss From Operations |
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Other Income (Expense): |
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Extinguishment of PPP 7(a) loan | — | | — | | ||||||||
Other income, net | | | | | ||||||||
Interest expense | ( |
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Interest income |
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Net Loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
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Net Loss Per Share - Basic and Diluted | ( | ( | ( | ( | ||||||||
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Weighted Average Number of Common Shares Outstanding - Basic and Diluted |
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The accompanying notes are an integral part of these condensed financial statements.
3
EYENOVIA, INC.
Condensed Statements of Changes in Stockholders’ Equity
(unaudited)
For the Three and Nine Months Ended September 30, 2022 | ||||||||||||||
Additional | Total | |||||||||||||
Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||
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| Capital |
| Deficit |
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Balance - January 1, 2022 |
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Issuance of common stock and warrants in registered direct offering [1] |
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Issuance of common stock in At the Market offering [2] |
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Stock-based compensation |
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Issuance of common stock related to vested restricted stock units |
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Net loss | | | | ( | ( | |||||||||
Balance - March 31, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Exercise of stock warrants | | | | | | |||||||||
Stock-based compensation | | | | | | |||||||||
Issuance of common stock related to vested restricted stock units | | | ( | | | |||||||||
Net loss | | | | ( | ( | |||||||||
Balance - June 30, 2022 | | $ | | $ | | $ | ( | $ | | |||||
Issuance of common stock in At the Market offering [3] | | | | — | | |||||||||
Stock-based compensation | | | | | | |||||||||
Issuance of common stock related to vested restricted stock units | | | ( | — | — | |||||||||
Net loss | | | | ( | ( | |||||||||
Balance - September 30, 2022 |
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[1] |
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For the Three and Nine Months Ended September 30, 2021 | ||||||||||||||
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Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||
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| Deficit |
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Balance - January 1, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Exercise of stock warrants | | | | | | |||||||||
Stock-based compensation | | | | | | |||||||||
Net loss | | | | ( | ( | |||||||||
Balance - March 31, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Exercise of stock warrants | | | | | | |||||||||
Exercise of stock options | | | | | | |||||||||
Issuance of SVB warrants [1] | | | | | | |||||||||
Stock-based compensation | | | | | | |||||||||
Net loss | | | | ( | ( | |||||||||
Balance - June 30, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Exercise of stock options | | | | | | |||||||||
Stock-based compensation | | | | | | |||||||||
Net loss | | | | ( | ( | |||||||||
Balance – September 30, 2021 | | $ | | $ | | $ | ( | $ | | |||||
[1] |
The accompanying notes are an integral part of these condensed financial statements.
4
EYENOVIA, INC.
Condensed Statements of Cash Flows
(unaudited)
For the Nine Months Ended | ||||||
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Cash Flows From Operating Activities |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation | | | ||||
Depreciation of property and equipment |
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Amortization of debt discount | | | ||||
Write-off of property and equipment | | | ||||
Extinguishment of PPP 7(a) Loan |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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License fee and expense reimbursements receivables | | | ||||
Deferred clinical supply costs | ( | | ||||
Deferred license costs | | | ||||
Security deposits | ( | | ||||
Accounts payable |
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Accrued compensation |
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Accrued expenses and other current liabilities |
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Deferred license fee | | ( | ||||
Deferred rent |
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Net Cash Used In Operating Activities |
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Cash Flows From Investing Activities | ||||||
Purchases of property and equipment | ( | ( | ||||
Vendor deposits for property and equipment | ( | | ||||
Net Cash Used In Investing Activities | ( | ( | ||||
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Cash Flows From Financing Activities |
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Proceeds from sale of common stock and warrants in registered direct offering [1] |
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Net issuance of common stock in At the Market Offering [2] | | | ||||
Proceeds from exercise of stock warrants | | | ||||
Proceeds from SVB loan | | | ||||
Repayments of notes payable | ( | ( | ||||
Payment of offering issuance costs | ( | | ||||
Payment of loan issuance costs | | ( | ||||
Proceeds from exercise of stock options | | | ||||
Net Cash Provided By Financing Activities |
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Net Decrease in Cash and Cash Equivalents and Restricted Cash |
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Cash, cash equivalents and restricted cash - Beginning of Period |
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Cash, cash equivalents and restricted cash - End of Period | $ | | $ | | ||
[1] |
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5
Cash, cash equivalents and restricted cash consisted of the following: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the periods for: | ||||||
Interest | $ | | $ | | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||
Purchase of insurance premium financed by note payable | $ | | $ | | ||
Issuance of SVB stock warrants | $ | — | $ | | ||
Issuance of common stock related to vested restricted stock units | $ | | $ | — |
The accompanying notes are an integral part of these condensed financial statements.
6
Note 1 – Business Organization, Nature of Operations and Basis of Presentation
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
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, 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 $
7
The Company does not have recurring revenue and has not yet achieved profitability. The Company expects to continue to incur cash outflows from operations. The Company expects that its research and development and general and administrative expenses will continue to increase and, as a result, it will eventually need to generate significant product revenues to achieve profitability. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date that these financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to 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.
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 $
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 September 30, 2022 and December 31, 2021, the Company had cash balances in excess of FDIC insurance limits of $
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 plus fully vested shares that are subject to issuance for little or no monetary consideration. 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, | ||||
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Options |
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8
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:
| ● | Step 1: Identify the contract with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: 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.
9
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
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 $
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, |
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| 2021 | |||
Payroll tax receivable | | | ||||
Prepaid insurance expenses | | | ||||
Prepaid general and administrative expenses |
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Prepaid conference expenses | | | ||||
Prepaid patent expenses | | | ||||
Other |
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Prepaid board of directors fees | | | ||||
Total prepaid expenses and other current assets | $ | | $ | | ||
10
Note 4 – Accrued Compensation
As of September 30, 2022 and December 31, 2021, accrued compensation consisted of the following:
| September 30, |
| December 31, | |||
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| 2021 | |||
Accrued bonus expenses | $ | | $ | | ||
Accrued payroll expenses |
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Total accrued compensation | $ | | $ | | ||
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, |
| December 31, | |||
| 2022 |
| 2021 | |||
Accrued research and development expenses | $ | | $ | | ||
Accrued consulting and professional services | | | ||||
Accrued interest | | | ||||
Credit card payable |
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Accrued franchise tax |
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Other |
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Accrued travel and entertainment expenses | | | ||||
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 |
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| Notes Payable |
| Debt Discount |
| Net |
| Notes Payable |
| Debt Discount |
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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 $
During the three months ended September 30, 2022, the Company recorded interest expense of $
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
11
The SVB Loan was repaid in full in November 2022. See Note 10 – Subsequent Events.
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 $
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. Mr. 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 $
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
Operating Leases
The Company leased
On April 8, 2022, the Company agreed to enter into a lease agreement for a new office space of
12
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
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 – 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 $
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 (
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
The offering price for the Shares was $
13
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
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 $
Restricted Stock Units
A summary of the restricted stock units activity during the nine months ended September 30, 2022 is presented below:
Weighted | |||||
Average | |||||
Number of | Grant Date Value | ||||
| RSUs |
| Per Share | ||
RSUs non-vested January 1, 2022 |
| | $ | | |
Granted |
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Vested |
| ( |
| | |
Forfeited |
| ( |
| | |
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 $
14
Stock Options
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, | |||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |
Expected term (years) |
|
|
| |||||
Risk free interest rate | ||||||||
Expected volatility | ||||||||
Expected dividends | ||||||||
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 uses a blended volatility calculation, the components of which are the Company’s historical volatility for the period from its initial public offering through the valuation date and the average peer-group data of six comparable entities to supplement the Company’s own historical data for the preceding years in computing the expected volatility. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. 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 $
A summary of the option activity during the nine months ended September 30, 2022 is presented below:
|
|
|
|
| Weighted |
|
| |||
| Weighted |
| Average | |||||||
| Average |
| Remaining |
| Aggregate | |||||
| Number of |
| Exercise |
| Life |
| Intrinsic | |||
| Options |
| Price |
| In Years |
| Value | |||
Outstanding, January 1, 2022 |
| | |
|
|
|
| |||
Granted |
| |
| |
|
|
|
| ||
Forfeited |
| ( |
| |
|
|
|
| ||
Outstanding, September 30, 2022 |
| | $ | |
| $ | | |||
|
|
|
| |||||||
Exercisable, September 30, 2022 |
| | $ | |
| $ | | |||
15
The following table presents information related to stock options as of September 30, 2022:
Options Outstanding |
| Options Exercisable | |||||
| Weighted | ||||||
| Outstanding |
| Average |
| Exercisable | ||
Exercise |
| Number of |
| Remaining Life |
| Number of | |
Price |
| Options |
| In Years |
| Options | |
$ |
| |
| | |||
$ |
| |
| | |||
$ |
| |
| | |||
$ |
| |
| | |||
$ |
| |
| | |||
$ |
| |
| | |||
$ |
| |
| | |||
| | ||||||
As of September 30, 2022, there was $
Warrants
A summary of the warrant activity for the nine months ended September 30, 2022 is presented below:
Weighted | ||||||||||
Weighted | Average | |||||||||
Average | Remaining | Aggregate | ||||||||
Number of | Exercise | Life | Intrinsic | |||||||
| Warrants |
| Price |
| In Years |
| Value | |||
Outstanding January 1, 2022 |
| | $ | |
|
|
|
| ||
Granted |
| |
| |
|
|
|
| ||
Exercised | ( | | ||||||||
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 | |||||
| Weighted | |||||
| Outstanding | Average | Exercisable | |||
Exercise | Number of | Remaining Life | Number of | |||
Price |
| Warrants |
| In Years |
| Warrants |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ | | | ||||
| |
|
| | ||
Stock Warrant Exercises
During the nine months ended September 30, 2022, the Company issued an aggregate of
16
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 2022 and 2021, the Board has approved a matching contribution equal to
Note 10 – Subsequent Events
At-the-Market Offering Program
Subsequent to September 30, 2022, the Company received approximately $
SVB Loan Repayment
On November 4, 2022, the Company repaid the SVB Loan in full. The full amount of the payment was $
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the results of operations and financial condition of Eyenovia, Inc. (“Eyenovia,” the “Company,” “we,” “us” and “our”) as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 should be read in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.
Forward Looking Statements
This report contains “forward-looking statements.” Specifically, all statements other than statements of historical facts included in this report, including regarding our financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These forward-looking statements are based on the beliefs of management at the time these statements were made, as well as assumptions made by and information currently available to management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “continue” “intend,” and “plan” and words or phrases of similar import are intended to identify forward-looking statements. These statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors that could cause actual results and the timing of events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K filed with the SEC. Furthermore, such forward-looking statements speak only as of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
We are 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. We aim 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”).
Our pipeline is currently focused on the late-stage development of novel, potential first-in-class therapeutic indications for an estimated 25 million potential pediatric patients with progressive myopia in the United States and an estimated over 100 million potential patients with age-related near vision impairment, or presbyopia—indications where there is tremendous unmet need and, to our knowledge, there exists only one known FDA-approved therapy, developed by Allergan. We are also developing the first microdose fixed combination ophthalmic pharmaceutical for mydriasis to address the estimated over 100 million annual comprehensive eye exams involving pupil dilation.
18
MicroPine is our first-in-class topical therapy for the treatment of progressive myopia, a back-of-the-eye ocular disease associated with pathologic axial elongation and sclero-retinal stretching. In the United States, myopia is estimated to affect approximately 25 million children, with up to five million considered to be at high risk for progressive myopia. In February 2019, the FDA accepted our investigational new drug application (“IND”) to initiate a Phase III registration trial of MicroPine (the “CHAPERONE study”) to reduce the progression of myopia in children. We enrolled the first patient in the CHAPERONE study in June 2019. Due to the COVID-19 pandemic, we experienced delays in trial enrollment as a result of supply chain issues with our third party suppliers, which in turn diminished our inventory supply. As of December 2021, per our license agreement described below, Bausch + Lomb, Inc. (“Bausch + Lomb”) manages enrollment of the CHAPERONE study. We have successfully expanded our manufacturing capabilities with our partnership with Coastline International, Inc. and the construction of our Redwood City, CA fill finish facility, and we have been able to reliably supply this study with clinical product as of the third quarter of 2022.
On October 9, 2020, we entered into a license agreement (the “Bausch License Agreement”) with Bausch + Lomb, pursuant to which Bausch + Lomb may develop and commercialize MicroPine in the United States and Canada. Under the terms of the Bausch License Agreement, we received an upfront payment of $10.0 million and we may receive up to a total of $35.0 million in additional payments, based on the achievement of certain regulatory and launch-based milestones. Bausch + Lomb also will pay us royalties on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States and Canada, subject to certain adjustments. Under the terms of the Bausch License Agreement, Bausch + Lomb assumed sponsorship of the IND as well as oversight and the costs related to the ongoing CHAPERONE study.
MicroLine is our investigational pharmacologic treatment for presbyopia. Presbyopia is a non-preventable, age-related hardening of the lens, which causes the gradual loss of the eye’s ability to focus on near objects and impairs near visual acuity. Allergan recently received FDA approval for and launched VuityTM, which is a pilocarpine solution for the treatment of presbyopia. Our second Phase III study, VISION-2, used the same molecule, but with the advantages of our Optejet delivery system. We released positive top-line results from VISION-2 in the fourth quarter of 2022.
Mydcombi™ (or MicroStat) is our fixed combination formulation of tropicamide-phenylephrine for mydriasis, designed to be a novel approach for the estimated over 100 million office-based comprehensive and diabetic eye exams performed every year in the United States. We have completed two Phase III trials for Mydcombi and announced positive results from these studies, known as MIST-1 and MIST-2, and have submitted an NDA to the FDA seeking approval to market the product in the U.S. In October 2021, we received a complete response letter (“CRL”) in response to our NDA, which in part informed us that pre-filled or co-packaged ophthalmic drug dispenser products like Mydcombi have been reclassified as drug-device combination products. This reclassification was based upon the U.S. Court of Appeals for the D.C. Circuit’s decision in Genus Medical Technologies v. FDA, not involving Eyenovia, which ordered that products meeting the statutory definition of a device but were previously classified by the FDA as drugs must be regulated as devices. Before this ruling, the FDA regulated pre-filled or co-packaged ophthalmic dispensers as part of the approved ophthalmic drug distributed and sold with the dispenser. After the ruling, however, the dispenser must be considered as a distinct device constituent part of a drug-device combination product. We are in the process of providing additional non-clinical device information and expect to file our NDA resubmission in November 2022.
On August 10, 2020, we entered into a license agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic Vision”), which was amended on September 14, 2021, pursuant to which Arctic Vision may develop and commercialize MicroPine, MicroLine and Mydcombi in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea. Under the terms of the Arctic Vision License Agreement, as amended, we received an upfront payment of $4.25 million before any payments to Senju Pharmaceutical Co., Ltd. (“Senju”). In addition, we may receive up to a total of $43.75 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, MicroLine and Mydcombi from us or, for such products not supplied by us, pay us a mid-single digit percentage royalty on net sales of such products, subject to certain adjustments. We will pay between 30 and 40 percent of such payments, royalties, or net proceeds of such supply to Senju pursuant to an exclusive license agreement with Senju dated March 8, 2015, as amended. For a description of the Senju license agreement, see Note 2 — Summary of Significant Accounting Policies — Arctic Vision License Agreement and Note 10 — Related Party Transactions — Senju License Agreement to our audited financial statements included in the Annual Report on Form 10-K filed with the SEC on March 30, 2022.
Historically, we have financed our operations principally through equity offerings. We have also generated cash through licensing arrangements and our credit facility with Silicon Valley Bank (“SVB”). However, based upon our current operating plan, there is substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements
19
included elsewhere in this Quarterly Report on Form 10-Q are issued. Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions or raise additional capital, through licensing transactions, the sale of equity or debt securities to support our future operations. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs.
Our net losses were $7.3 million and $21.9 million for the three and nine months ended September 30, 2022. As of September 30, 2022, we had working capital and an accumulated deficit of $18.4 million and $112.1 million, respectively.
Financial Overview
Revenue and Cost of Revenue
In August and October 2020, we entered into the Arctic Vision License Agreement and Bausch License Agreement, respectively. Both of these agreements provide for the Company to earn revenue from an upfront licensing fee, the achievement of various development and regulatory milestones, and royalty income on sales of licensed products. Pursuant to the Senju license agreement, we will pay a percentage between 30 and 40 percent of such payments from the Arctic Vision License Agreement to Senju.
Research and Development Expenses
Research and development expenses are incurred in connection with the research and development of our microdose-therapeutics and consist primarily of contract service expenses. Given where we are in our life cycle, we do not separately track research and development expenses by project. Our research and development expenses consist of:
| ● | direct clinical and non-clinical expenses, which include expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and costs associated with preclinical activities, development activities and regulatory activities; |
| ● | personnel-related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries and other compensation of employees that is attributable to research and development activities; and |
| ● | facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, marketing, insurance and other supplies used in research and development activities. |
We expense research and development costs as incurred. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide to us.
In addition, our license agreements with Arctic Vision and Bausch + Lomb require them to assume or reimburse us for specified research and development costs.
We expect that our research and development expenses will increase with the continuation of the aforementioned initiatives.
General and Administrative Expenses
General and administrative expenses consist primarily of payroll and related expenses, legal and other professional services, as well as non-cash stock-based compensation expense. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and the potential commercialization of our product candidates.
No payments related to the Arctic Vision License Agreement or Senju license agreement were earned or recognized during the three and nine months ended September 30, 2022.
20
Results of Operations
Three Months Ended September 30, 2022 Compared with Three Months Ended September 30, 2021
Research and Development Expenses
Research and development expenses for the three months ended September 30, 2022 totaled $3.9 million, an increase of $0.3 million, or 8%, as compared to $3.6 million recorded for the three months ended September 30, 2021. Research and development expenses consisted of the following:
For the Three Months Ended September 30, | ||||||
| 2022 |
| 2021 | |||
Direct clinical and non-clinical expenses | $ | 1,619,948 | $ | 692,409 | ||
Personnel-related expenses | 1,187,195 | 1,415,615 | ||||
Non-cash stock-based compensation expenses | 420,619 | 489,121 | ||||
Other expenses |
| 229,749 |
| 103,512 | ||
Facilities expenses |
| 212,584 |
| 297,784 | ||
Supplies and materials |
| 206,781 |
| 553,627 | ||
Total research and development expenses | $ | 3,876,876 | $ | 3,552,068 | ||
The increase in direct clinical and non-clinical expenses was primarily due to the VISION-2 Phase III MicroLine study in 2022. The decrease in personnel-related expenses and facilities expenses mainly resulted from an increase in such costs being allocated to clinical supplies. The decrease in non-cash stock-based compensation expenses resulted from stock grant forfeitures. The decrease in supplies and materials was mainly due to the delay in the commercialization of Mydcombi.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30, 2022 totaled $3.4 million, an increase of $1.0 million, or 42%, as compared to $2.4 million recorded for the three months ended September 30, 2021. General and administrative expenses consisted of the following:
For the Three Months Ended September 30, | ||||||
| 2022 |
| 2021 | |||
Professional fees | $ | 793,842 | $ | 377,977 | ||
Salaries and benefits |
| 900,506 |
| 744,683 | ||
Stock-based compensation |
| 508,114 |
| 288,343 | ||
Sales and marketing |
| 407,737 |
| 394,850 | ||
Insurance expense |
| 269,840 |
| 245,390 | ||
Other | 239,135 | 198,042 | ||||
Facilities expense |
| 120,636 |
| 46,714 | ||
Director fees and expense |
| 113,542 |
| 77,000 | ||
Total general and administrative expenses | $ | 3,353,352 | $ | 2,372,999 | ||
The increase in salaries and benefits was mainly attributable to staff additions made in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch. The increase in professional services was primarily due to increased legal and professional recruiting expenses related to the addition of new directors in 2022. The increase in stock-based compensation expense was due to new grants awarded in late 2021 and early 2022. The increase in facilities expense was primarily due to the new lease entered into in 2022.
Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021
Revenue and Cost of Revenue
In August 2020, we received a $4.0 million upfront payment under the Arctic Vision License Agreement, and made a related payment of $1.6 million to Senju. This upfront payment was recorded as $4.0 million of deferred license fees and $1.6 million of deferred cost of revenue. Trial data for two of the product candidates that are subject to the Arctic Vision License Agreement (MicroPine and
21
MicroLine) was fully submitted to Arctic Vision during the nine months ended September 30, 2021. As a result, we recognized the $4.0 million of revenue and recognized $1.6 million of cost of revenue related to the Senju payment during the nine months ended September 30, 2021. We had no revenues during the nine months ended September 30, 2022.
Research and Development Expenses
Research and development expenses for the nine months ended September 30, 2022 totaled $11.2 million, a decrease of $0.4 million, or 3%, as compared to $11.6 million recorded for the nine months ended September 30, 2021. Research and development expenses consisted of the following:
For the Nine Months Ended September 30, | ||||||
| 2022 |
| 2021 | |||
Personnel-related expenses | $ | 4,159,905 | $ | 4,003,192 | ||
Direct clinical and non-clinical expenses |
| 3,494,633 |
| 4,291,192 | ||
Non-cash stock-based compensation expenses |
| 1,438,469 |
| 1,138,331 | ||
Supplies and materials |
| 898,683 |
| 993,455 | ||
Facilities expenses |
| 720,917 |
| 871,938 | ||
Other expenses | 463,719 | 261,256 | ||||
Total research and development expenses | $ | 11,176,326 | $ | 11,559,364 | ||
The decrease in direct clinical and non-clinical expenses was mainly due to Mydcombi product testing expense that was primarily done in early 2021. Stock option grants for new hires resulted in the increase in non-cash stock-based compensation expenses. The increase in other expenses was mainly due to various outsourcing costs and higher depreciation expense.
General and Administrative Expenses
General and administrative expenses for the nine months ended September 30, 2022 totaled $10.4 million, an increase of $3.5 million, or 51%, as compared to $6.9 million recorded for the nine months ended September 30, 2021. General and administrative expenses consisted of the following:
| For the Nine Months Ended September 30, | |||||
2022 |
| 2021 | ||||
Professional fees | $ | 3,061,990 | $ | 1,311,626 | ||
Salaries and benefits |
| 2,834,306 |
| 2,051,269 | ||
Stock-based compensation |
| 1,436,177 |
| 933,401 | ||
Sales and marketing |
| 905,243 |
| 1,002,201 | ||
Insurance expense |
| 789,629 |
| 674,726 | ||
Other |
| 698,597 |
| 560,582 | ||
Facilities expense |
| 342,590 |
| 158,426 | ||
Director fees and expense |
| 294,375 |
| 222,250 | ||
Total general and administrative expenses | $ | 10,362,907 | $ | 6,914,481 | ||
The increase in professional fees was primarily due to higher legal and professional recruiting expenses related to the addition of new directors in 2022. The increase in salaries and benefits was mainly due to new staff additions made in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch. The increase in stock-based compensation was due to new grants awarded in late 2021 and early 2022. The increase in facilities expense was primarily due to the new lease entered into in 2022.
22
Liquidity and Capital Resources and Going Concern
We measure our liquidity in a number of ways, including the following:
September 30, | December 31, | |||||
| 2022 |
| 2021 | |||
Cash and cash equivalents | $ | 17,398,605 | $ | 19,461,850 | ||
Restricted cash |
| 7,875,000 |
| 7,875,000 | ||
Total | $ | 25,273,605 | $ | 27,336,850 | ||
Working capital | $ | 18,401,368 | $ | 18,690,859 | ||
Notes payable (gross) | $ | 7,500,000 | $ | 7,500,000 | ||
Since inception, we have experienced negative cash flows from operations. As of September 30, 2022, our accumulated deficit since inception was $112.1 million.
As of September 30, 2022, we had an unrestricted cash balance of $17.4 million, working capital of $18.4 million and stockholders’ equity of $20.3 million. As of September 30, 2022 and December 31, 2021, we had $7.5 million of notes payable (gross) outstanding. Subsequent to September 30, 2022, we received approximately $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. 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 SVB Loan, including $7.5 million of principal, a final payment of $0.4 million and a prepayment fee of $0.1 million.
These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to raise additional capital through the sale of equity or debt securities to support our future operations. Our operating needs include the planned costs to operate our business, including amounts required to fund research and development activities including clinical studies, working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our 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 our product and service offerings. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce general and administrative and sales and marketing costs in order to conserve our cash.
During the nine months ended September 30, 2022 and 2021, our sources and uses of cash were as follows:
Net cash used in operating activities for the nine months ended September 30, 2022 was $19.7 million, which includes cash used to fund a net loss of $21.9 million, reduced by $3.4 million of non-cash expenses, plus $1.2 million of cash used to fund changes in operating assets and liabilities. Net cash used in operating activities for the nine months ended September 30, 2021 was $15.0 million, which includes cash used to fund a net loss of $15.8 million, reduced by $1.8 million of non-cash expenses, plus $1.0 million of cash used to fund changes in operating assets and liabilities.
Cash used in investing activities for the nine months ended September 30, 2022 was $0.6 million, which was related to purchases of and vendor deposits for property and equipment. Cash used in investing activities for the nine months ended September 30, 2021 was $1.2 million, which was related to purchases of property and equipment.
Net cash provided by financing activities for the nine months ended September 30, 2022 totaled $18.2 million, which was attributable to $19.1 million of gross proceeds received from the March 2022 Offering and the At-the-Market Offering. This was slightly offset by the repayment of $0.7 million of notes payable and the $0.1 million payment of the March 2022 Offering issuance costs. Net cash provided by financing activities for the nine months ended September 30, 2021 totaled $9.2 million, which was primarily attributable to $7.5 million of proceeds from the SVB Loan and $2.3 million from the exercise of warrants and stock options. This was slightly offset by the repayment of notes payable and loan issuance costs of $0.6 million.
23
Contractual Obligations and Commitments
During the next twelve months we have commitments to pay: (a) $3.8 million to settle our September 30, 2022 accounts payable, accrued compensation, and accrued expenses and other current liabilities; (b) $0.7 million relating to our non-cancelable operating lease commitments; (c) $1.5 million of potential executive severance pay; and (d) $7.5 million of potential payments due under our notes payable.
After twelve months we have commitments to pay an additional $1.2 million relating to our non-cancelable operating lease commitments.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in estimates are reflected in reported results for the period in which they become known. Actual results could differ significantly from the estimates made by our management.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Adopted Accounting Standards
For a description of recently adopted accounting standards, including adoption dates and estimated effects, if any, on our condensed financial statements, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Smaller reporting companies such as Eyenovia are not required to provide the information required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
24
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on their evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2022, our disclosure controls and procedures were designed to, and were effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures as of September 30, 2022.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
Item 1A. Risk Factors.
There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 30, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
Exhibit | Incorporated by Reference from Filings as Noted Below (Unless | |||||||||
Number |
| Exhibit Description |
| Form |
| File No. |
| Exhibit |
| Filing Date |
10.1 | — | — | — | Filed herewith | ||||||
31.1 | — | — | — | Filed herewith | ||||||
31.2 | — | — | — | Filed herewith | ||||||
32.1* | — | — | — | Filed herewith | ||||||
32.2* | — | — | — | Filed herewith | ||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | — | — | — | Filed herewith | |||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | — | — | — | Filed herewith | |||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | — | — | — | Filed herewith | |||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | — | — | — | Filed herewith | |||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | — | — | — | Filed herewith | |||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | — | — | — | Filed herewith | |||||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101 | — | — | — | Filed herewith | |||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EYENOVIA, INC. | |
|
| |
Date: November 14, 2022 | By: | /s/ John Gandolfo |
|
| John Gandolfo |
|
| Chief Financial Officer (Principal Financial Officer) |
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Exhibit 10.1
EYENOVIA, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
Effective as of April 1, 2022; revised August 1, 2022
Non-employee members of the board of directors (the “Board”) of Eyenovia, Inc. (the “Company”) shall receive cash and equity compensation for their service on the Board as set forth in this Non-Employee Director Compensation Policy (this “Policy”). The cash and equity compensation described in this Policy shall be paid or issued, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any subsidiary of the Company (each, a “Non-Employee Director”) who is entitled to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. This Policy shall remain in effect until it is revised or rescinded by further action of the Board. This Policy may be amended, modified or terminated by the Board at any time in its sole discretion. The terms and conditions of this Policy shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors.
Cash Compensation
Annual Retainers. Each Non-Employee Director shall receive an annual retainer of $40,000 for service on the Board.
Additional Annual Retainers. In addition, Non-Employee Directors shall receive the following annual retainers, as applicable:
Audit Committee. A Non-Employee Director serving as Chair of the Audit Committee shall receive an additional annual retainer of $20,000 for such service. A Non-Employee Director serving as a member other than the Chair of the Audit Committee shall receive an additional annual retainer of $10,000 for such service.
Compensation Committee. A Non-Employee Director serving as Chair of the Compensation Committee shall receive an additional annual retainer of $15,000 for such service. A Non-Employee Director serving as a member other than the Chair of the Compensation Committee shall receive an additional annual retainer of $7,500 for such service.
Nominating and Corporate Governance Committee. A Non-Employee Director serving as Chair of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $10,000 for such service. A Non-Employee Director serving as a member other than the Chair of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $5,000 for such service.
Payment of Retainers. The retainers described in Sections I(A) and I(B) shall be earned on a quarterly basis based on a calendar quarter and shall be paid in cash by the Company the first week of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section I(B), for an entire calendar quarter, the retainer paid to such Non-Employee Director shall be considered earned for the calendar quarter it was paid as applicable.
Equity Compensation
Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan or any other applicable Company equity incentive plan then maintained by the Company (the “Equity Plan”) and shall be granted subject to award agreements, including attached exhibits, in substantially the form previously approved by the Board. All applicable terms of the Equity Plan apply to this Policy as if fully set forth herein, and all grants of stock options and restricted stock units (“RSUs”) hereby are subject in all respects to the terms of the Equity Plan and the applicable award agreements. For the avoidance of doubt, the share numbers in Sections II(A) and II(B) shall be subject to adjustment as provided in the Equity Plan.
Equity Awards. A Non-Employee Director who will continue to serve as a Non-Employee Director immediately following the annual meeting of the Company’s stockholders, shall receive $80,000 in annual equity awards, issued half in options (with an exercise price equal to the closing price of the Company’s common stock on the Nasdaq Capital Market on the date of grant), valued under Black Scholes, and half in RSUs (the settlement of such RSUs will be deferred until such Non-Employee Director ceases to be a Director), on the date of such annual meeting. The awards described in this Section II(A) shall be referred to as “Director Awards.” Any Non-Employee Director that joins the Board after the annual meeting of stockholders in any given year, but before the next annual meeting of stockholders, shall receive a prorated Director Award with a value calculated by: multiplying (a) $80,000 with (b) a fraction (i) the numerator of which is the number of days such Non-Employee Director has served on the Board prior to the next annual meeting, and (ii) the denominator of which is 365 days.
Termination of Employment of Employee Directors. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board to the extent that they are otherwise entitled, will receive, after termination of employment with the Company and any parent or subsidiary of the Company, Director Awards as described in Section II(A) above.
Terms of Awards Granted to Non-Employee Directors
Exercise Price. The per share exercise price of each option granted to a Non-Employee Director shall equal the Fair Market Value (as defined in the Equity Plan) of a share of the Company’s common stock on the date the option is granted.
Vesting. Unless the Board otherwise determines, each Director Award shall vest in full on the earlier of (1) one year from the date of grant and (2) the date of the next annual meeting of the stockholders of the Company. Unless the Board otherwise determines, any portion of a Director Award which is unvested or unexercisable at the time of a Non-Employee Director’s termination of service on the Board as a Non-Employee Director shall be immediately forfeited upon such termination of service and shall not thereafter become vested and exercisable.
Term. The maximum term of each stock option granted to a Non-Employee Director hereunder shall be ten (10) years from the date the option is granted.
* * * * *
In no event shall the aggregate grant date fair value (determined in accordance with ASC 718) of (1) equity awards to be granted and (2) any cash compensation paid to any Non-Employee Director exceed $200,000 in any fiscal year.
* * * * *
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Rowe, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Eyenovia, Inc. for the quarterly period ended September 30, 2022; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022 | /s/ Michael Rowe | |
| Name: | Michael Rowe |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John Gandolfo, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Eyenovia, Inc. for the quarterly period ended September 30, 2022; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022 | /s/ John Gandolfo | |
| Name: | John Gandolfo |
| Title: | Chief Financial Officer |
| | (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Eyenovia, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Rowe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 14, 2022 | /s/ Michael Rowe | |
| Name: | Michael Rowe |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Eyenovia, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Gandolfo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 14, 2022 | /s/ John Gandolfo | |
| Name: | John Gandolfo |
| Title: | Chief Financial Officer |
| | (Principal Financial Officer) |