SCHEDULE 13D/A: Avenue Capital Funds Amend Eyenovia Loan Agreement, Cancel Conversion Rights, and Receive New Warrants

Avenue Capital Group's funds, significant investors in Eyenovia, Inc., have amended their loan agreement, cancelling previous debt conversion rights while simultaneously receiving new warrants to purchase common stock.

Summary

• Avenue Venture Opportunities Fund, L.P. and Avenue Venture Opportunities Fund II, L.P. (the "Lenders"), along with Avenue Capital Management II, L.P. as agent, entered into a Fourth Amendment to their Loan and Security Agreement with Eyenovia, Inc. on June 17, 2025.
• The amendment cancelled the Lenders' right to convert the outstanding principal of the Growth Capital Loan into Eyenovia common stock.
• In exchange, Avenue Venture Opportunities Fund, L.P. received a warrant to purchase 40,000 shares of Eyenovia common stock at an exercise price of $4.00 per share.
• Avenue Venture Opportunities Fund II, L.P. received a warrant to purchase 210,000 shares of Eyenovia common stock at an exercise price of $4.00 per share.
• Both warrants expire on June 17, 2030, and are exercisable at any time, subject to a 9.99% beneficial ownership blocker.
• The reporting persons' aggregate beneficial ownership is limited to 9.99% of Eyenovia's outstanding common stock, which currently excludes shares issuable upon exercise of these new warrants.
• This 9.99% blocker can be increased to up to 19.99% at the reporting persons' election with at least 61 days' notice to Eyenovia.
• As of June 5, 2025, Eyenovia had 4,358,755 shares of common stock outstanding.
• Avenue Venture Opportunities Fund, L.P. directly holds 174,175 shares (4.0% of class), excluding its 40,000 warrant shares.
• Avenue Venture Opportunities Fund II, L.P. directly holds 261,263 shares (5.99% of class), excluding its 210,000 warrant shares.
• Avenue Capital Management II, L.P. has sole voting and dispositive power over 435,438 shares (9.99% of class), which represents the combined direct holdings of the Funds, excluding the aggregate 250,000 warrant shares.

Sentiment

Score: 6

Explanation: The document is largely factual, detailing changes in an investor's holdings and financing terms. The cancellation of debt conversion rights could be seen as positive by preventing immediate dilution, but the issuance of new warrants introduces future dilution. Overall, it's a neutral update on a financial restructuring.

Positives

• The cancellation of the debt conversion right removes a potential source of immediate dilution from the conversion of the Growth Capital Loan principal for existing shareholders.
• The issuance of new warrants at a $4.00 exercise price indicates continued investment and a long-term interest in Eyenovia by Avenue Capital Group.

Negatives

• The issuance of new warrants introduces potential future dilution for existing shareholders if and when these warrants are exercised.
• The debt remains on the books as debt, rather than being converted to equity, which could be seen as a missed opportunity for balance sheet deleveraging through equity conversion.

Risks

• Potential future dilution from the exercise of 250,000 new warrants issued to Avenue Capital Group's funds.
• The reporting persons may dispose of some or all of their shares in the future, which could put downward pressure on the stock price.

Future Outlook

The reporting persons intend to continuously review their investment in Eyenovia based on various factors, including the company's business, financial condition, and market conditions. They may take future actions, including the disposal of some or all of their common stock, whether currently owned or acquired through warrant exercise or other transactions.

Industry Context

This Schedule 13D amendment reflects a specific financing arrangement and ownership stake by an investment group in a publicly traded company. It does not provide broader industry trends or competitive analysis, but rather details a strategic financial maneuver by a significant investor.

Related Party Transactions

• The Fourth Amendment to Supplement to Loan and Security Agreement and the issuance of warrants are transactions between Eyenovia, Inc. and its Lenders (Avenue Venture Opportunities Fund, L.P. and Avenue Venture Opportunities Fund II, L.P.), who are significant shareholders and have a pre-existing lending relationship.

Stakeholder Impact

• Shareholders: Potential future dilution from the exercise of 250,000 new warrants. The cancellation of the loan conversion right removes a different, immediate source of potential dilution from the debt itself.
• Creditors (Avenue Capital Group funds): Their investment structure has shifted from a convertible loan to a loan plus warrants, potentially altering their risk/reward profile.

Next Steps

• Reporting Persons will continue to review their investment in Eyenovia, Inc. based on various factors.
• Reporting Persons may dispose of some or all of their shares of common stock in the future.
• The 9.99% beneficial ownership blocker may be changed to up to 19.99% at the Reporting Persons' election upon at least 61 days' notice to the Issuer.

Key Dates

Keywords

Eyenovia Inc., Avenue Capital Group, Schedule 13D, Warrants, Loan Agreement Amendment, Beneficial Ownership, Common Stock, Dilution, Growth Capital Loan, SEC Filing