receipt of the cash proceeds that were payable on the Closing Date in connection with the Transaction; and

the Company’s use of a portion of the proceeds from the Transaction to repay the $30 million due under the Term Facility and approximately $1.5 million of associated interest and fees under the Term Facility and the Revolving Facility.

Assets

Current assets:

Cash and cash equivalents

Marketable securities

Accounts and other receivables, net

Prepaid expenses and other current assets

Inventory

Total current assets

Property and equipment, net

Operating lease right-of-use assets

Restricted cash

Total assets

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

Accrued expenses

Deferred revenue

Short-term borrowings

Other current liabilities

Total current liabilities

Long-term debt

Deferred revenue – noncurrent

Operating lease liabilities – noncurrent

Other long-term liabilities

Total liabilities

Stockholders’ equity

Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding

Common stock, $.001 par value, 300,000,000 shares authorized at March 31, 2023; 34,301,926 shares issued and outstanding at March 31, 2023

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income

Total shareholders’ equity

Revenues:

Product sales, net

License and collaboration agreements

Royalty income

Total revenues

Operating expenses:

Cost of sales, excluding amortization of acquired intangible assets

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest and other income, net

Interest expense

Total other income (expense), net

Net loss

Net loss per share – basic and diluted

Weighted average shares outstanding – basic and diluted

Revenues:

Product sales, net

License and collaboration agreements

Royalty income

Total revenues

Operating expenses:

Cost of sales, excluding amortization of acquired intangible assets

Research and development

Sales and marketing

General and administrative

Amortization of acquired intangible assets

Impairment of acquired intangible assets

Total operating expenses

Loss from operations

Other income (expense):

Interest and other income, net

Interest expense

Gain (loss) on extinguishment of debt

Total other income (expense), net

Net loss

Net loss per share – basic and diluted

Weighted average shares outstanding – basic and diluted

To reflect the preliminary accounting treatment for the cash proceeds of the $75.0 million Upfront Payment from the Transaction as deferred revenue at the Closing pursuant to the Product Rights Agreement. Based on the Company’s preliminary accounting analysis for the Product Rights Agreement and the Supply Agreement, the License and supply units to be delivered under both agreements comprise a single, combined performance obligation as Alimera will not have the right or ability to manufacture YUTIQ® (or have YUTIQ® manufactured by a third-party contract manufacturing organization) over the initial two-year term pursuant to the Supply Agreement. The combined performance obligation is satisfied over time using the units delivered output method to measure progress based on initial estimated supply units of YUTIQ® over the two-year term for purposes of recognizing revenue (the “Units Delivered Output method”). As there is no supply unit delivered to Alimera at the Closing, the Company records the full $75.0 million Upfront Payment as deferred revenue in the unaudited pro forma condensed consolidated balance sheet. The accounting analysis for the Transaction, particularly as it relates to the assessment of performance obligations, and the measurement and timing of revenue recognition, is preliminary. A determination that there is more than one standalone performance obligation could result in upfront recognition of the $75.0 million Upfront Payment and the $7.5 million Guaranteed Payments totaling $82.5 million as revenue (see Note (h)).

To reflect the reclassification of a prepaid asset of $0.2 million to other receivables to reflect the portion of the $0.2 million annual regulatory fee paid by the Company that is reimbursable by Alimera pursuant to the terms of the Product Rights Agreement.

To reflect the accrual of estimated direct transaction costs of $1.0 million in connection with the Transaction.

To reflect the repayment of $30.0 million outstanding under the Term Facility upon the Closing, pursuant to the terms of the Loan Agreement with First Citizens, as well as approximately $1.5 million of accrued interest and various fees under the Credit Facilities, for an aggregate payment of $31.5 million. The loss on extinguishment of debt of $1.3 million reflects the excess of the aggregate payment of $31.5 million over the net carrying value of the long-term debt of $30.3 million, comprised of (i) $30.0 million of principal, minus (ii) $0.6 million of unamortized debt discount plus (iii) $0.3 million of accrued interest (included in accrued expense), and (iv) $0.6 million of accrued exit fee (included in other long-term liabilities). The corresponding reduction to interest expense in the unaudited pro forma condensed consolidated statements of operations of $2.3 million and $0.8 million for the year ended December 31, 2022 and the three months ended March 31, 2023, respectively, which includes amortization of deferred debt discount, is reflected as if such debt had been repaid on January 1, 2022.

To reflect the subsequent repayment of the $5.3 million outstanding balance under the Revolving Facility in April 2023 which was included as short-term borrowings on the unaudited pro forma condensed consolidated balance sheet, as if the Loan Agreement was terminated and repaid on March 31, 2023.

To reflect the elimination of product revenues and operating expenses related to the License as if the Transaction had occurred on January 1, 2022. These operating expenses are specifically related to certain costs of commercialization activities of the License, including marketing, promoting, distributing and other expenses, as well as certain costs related to clinical trials and pharmacovigilance that Alimera will be responsible at its sole costs following the Closing Date pursuant to the terms of the Product Rights Agreement.

To reflect the revenue from products sold to Alimera under the Supply Agreement as if the Transaction had occurred on January 1, 2022. The product revenue of $2.0 million and $0.5 million for the year ended December 31, 2022 and the three months ended March 31, 2023, respectively, is based on the quantities of YUTIQ® sold by the Company during the periods presented, multiplied by the contractual price as set forth in the Supply Agreement. The actual quantities may be materially different than those disclosed in this unaudited pro forma condensed consolidated financial information.

To reflect the Company’s preliminary accounting treatment for the recognition of license revenue of $37.3 million and $9.5 million associated with the Transaction in the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2022 and the three months ended March 31, 2023, respectively, as if the Transaction had occurred on January 1, 2022. The license revenue is calculated using the aforementioned Units Delivered Output method by using the estimated aggregated transaction price of $82.5 million, comprised of $75.0 million Upfront Payment and $7.5 million Guaranteed Payments pursuant to the Product Rights Agreement, multiplied by the percentage of (i) the actual quantities of YUTIQ® sold by the Company during the periods presented over (ii) the total estimated supply units over the two-year initial term pursuant to the Supply Agreement which consist of the actual quantities of YUTIQ® sold in 2022 and the first quarter of 2023 and the initial estimated supply units of YUTIQ® for the following nine month of 2023.

To reflect the elimination of employee-related expenses of $2.9 million and $0.9 million in the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2022 and the three months ended March 31, 2023, respectively, as if the Transaction had occurred on January 1, 2022. These amounts represent the estimated average costs of a minimum number of employees whose work primarily relates to YUTIQ® as described in the Product Rights Agreement.

To reflect the elimination of the regulatory fee incurred by the Company as if the Transaction had occurred on January 1, 2022.

To reflect the elimination of the loss on extinguishment of debt of $1.6 million related to the early repayment of the CRG Loan in 2022 using the proceeds from the aforementioned Loan Agreement with First Citizens as if such debt with First Citizens had been repaid on January 1, 2022. The corresponding reduction to interest expense in the unaudited pro forma condensed consolidated statement of operations of $0.9 million for the year ended December 31, 2022, which includes amortization of deferred debt discount, is reflected as if the CRG Loan had been repaid on January 1, 2022.

Given the Company’s historic net operating loss carryforwards, associated valuation allowance and the positive and negative evidence upon the realization of its deferred tax assets, management recorded an annual effective income tax rate of 0%. Therefore, the pro forma adjustments to the unaudited pro forma condensed consolidated statements of operations resulted in no additional income tax expense or benefit.