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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies

Commitments and Contingencies

Note 8 – Commitments and Contingencies

Defective Clinical Supply

During the third quarter of 2023, a certain portion of clinical supply product sold to Bausch + Lomb had been determined to be defective. On April 23, 2024, the Company and Bausch + Lomb executed a letter agreement (the “Side Letter”) (see Note 11 – Subsequent Events), in which the parties agreed to an estimated value of $0.5 million related to defective clinical supply. Accordingly, the Company recorded an estimated charge equal to $0.4 million, which was included within other income (expense) during the year ended December 31, 2023, because the original sales to the licensee were recorded on that line item. During the three months ended March 31, 2024, the Company recorded an additional $0.1 million charge to other income (expense).

Bausch License Agreements

On October 9, 2020, the Company entered into a license agreement (the Bausch License Agreement”), pursuant to which Bausch + Lomb was permitted to develop and commercialize the Bausch Licensed Product (as defined in the Bausch License Agreement) in the United States and Canada (the “Licensed Territory”). Bausch + Lomb could terminate the Bausch License Agreement, with respect to the Bausch Licensed Product to either country in the Licensed Territory, at any time for convenience upon 90 days’ written notice.

On January 12, 2024, the Company and Bausch + Lomb entered into a mutual termination and reassignment agreement (the “Letter Agreement”), pursuant to which Eyenovia reacquired the rights to the Bausch Licensed Product. The terms of the agreement include the immediate transfer of the rights and the subsequent transfer of certain assets relating to the Bausch Licensed Product from Bausch + Lomb to the Company in exchange for cash and common stock consideration. In addition, under the terms of the Letter Agreement, the Company agreed to pay Bausch + Lomb a low single-digit royalty on its net sales of the Bausch Licensed Product in the United States and Canada for a period of ten years from the date of the first commercial sale by the Company (or its affiliates or licensees) of the Bausch Licensed Product in the United States. Under the Letter Agreement, (i) the Company will re-acquire any and all licenses and other rights granted by the Company to Bausch + Lomb under the original Bausch License Agreement, (ii) any and all licenses and other rights granted by Bausch + Lomb to the Company under the License Agreement are terminated, other than as set forth in the Letter Agreement, and (iii) other than as set forth in the Letter Agreement, Bausch + Lomb is released from all of their ongoing obligations under the License Agreement, including development and commercialization obligations.

Pursuant to the Letter Agreement, the Company paid Bausch + Lomb an upfront payment of $2.0 million in cash on January 22, 2024. The Company has recorded this amount as an operating expense. In connection with the entry into the Letter Agreement, the Company also agreed to issue Bausch + Lomb $3.0 million in shares of the Company’s common stock, within ten business days of the Regulatory Transfer Date, which occurred on April 11, 2024. See Note 11 – Subsequent Events for additional information.

Operating Leases

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


		For the Three Months Ended March 31,
		2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating activities		$	74,101		$	136,150

Right-of-use assets obtained in exchange for lease obligations
Operating leases		$	—		$	350,473

Weighted Average Remaining Lease Term (Years)
Operating leases			2.81 years			3.50 years

Weighted Average Discount Rate
Operating leases			10.0	%		10.0	%

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


For the Years Ending December 31,		Minimum Lease Payments
2024		$	542,718
2025			675,400
2026			560,996
2027			214,619
Total future minimum lease payments			1,993,733
Less: Imputed interest			(273,917)
Present value of lease liabilities			1,719,816
Less: current portion			(579,585)
Lease liabilities, non - current portion		$	1,140,231

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..