Note 1 - Organization

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Nature of Operations [Text Block]

1.

Organization

Organization, Nature of Business

Avinger, Inc. (the “Company”), a Delaware corporation, was incorporated in

March 

2007.

The Company designs, manufactures and sells image-guided, catheter-based systems that are used by physicians to treat patients with peripheral artery disease (“PAD”). Patients with PAD have a build-up of plaque in the arteries that supply blood to areas away from the heart, particularly the pelvis and legs. The Company manufactures and sells a suite of products in the United States (“U.S.”) and in select international markets. The Company has developed its Lumivascular platform, which integrates optical coherence tomography (

“OCT”)

visualization with interventional catheters and is the industry’s only system that provides real-time intravascular imaging during the treatment portion of PAD procedures. The Company’s Lumivascular platform consists of a capital component, Lightbox, as well as a variety of disposable catheter products. The Company’s current products include its non-imaging catheters, Wildcat and Kittycat, as well as its Lumivascular platform products, Ocelot, Ocelot PIXL and Ocelot MVRX, all of which are designed to allow physicians to penetrate a total blockage in an artery, known as a chronic total occlusion (“CTO”). In

March 

2016,

the Company received

510

(k) clearance from the U.S. Food and Drug Administration (“FDA”) for commercialization of Pantheris, the Company’s image-guided atherectomy system, designed to allow physicians to precisely remove arterial plaque in PAD patients. In

May 2018,

the Company also received

510

(k) clearance from the FDA for its next-generation of Pantheris. In

April 2019,

the Company further received FDA clearance for Pantheris SV, a lower profile Pantheris, and commenced sales in

August 2019.

The Company has sales in the U.S. and select international markets. The Company is located in Redwood City, California.

Liquidity Matters

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)

No.

 

2014

-

15,

 

Presentation of Financial Statements - Going Concern (Subtopic

205

-

40

)

requires the Company to make certain disclosures if it concludes that there is substantial doubt about the entity’s ability to continue as a going concern within

one

year from the date of the issuance of these financial statements.

In the course of its activities, the Company has incurred losses and negative cash flows from operations since its inception. As of

December 31, 2019,

the Company had an accumulated deficit of

$348.3

 million. The Company expects to incur losses for the foreseeable future. The Company believes that its cash and cash equivalents of

$10.9

million at

December 31, 2019

and expected revenues and funds from operations will be sufficient to allow the Company to fund its current operations through at least the

third

quarter of

2020.

Even though we received net proceeds of

$3.7

million from the sale of our common stock in our

January 2020

offering, net proceeds of

$3.8

million from the sales of our common stock in our

August 2019

offering, proceeds from issuance of common stock upon the exercise of warrants during

April

and

May

of

2019

of

$8.0

million, net proceeds of

$10.2

million from the sale of our Series C preferred stock and common stock in our

November 2018

offering, net proceeds of

$3.0

million from the sale of common stock and warrants in our

July 2018

offering, and net proceeds of

$15.5

million from the sale of our Series B preferred stock and warrants in our

February 2018

offering, the Company will need to raise additional funds through future equity or debt financings within the next

twelve

months to meet its operational needs and capital requirements for product development, clinical trials and commercialization and

may

subsequently require additional fundraising.

The Company can provide

no

assurance that it will be successful in raising funds pursuant to additional equity or debt financings or that such funds will be raised at prices that do

not

create substantial dilution for our existing stockholders. Given the recent decline in the Company’s stock price, any financing that we undertake in the next

twelve

months could cause substantial dilution to our existing stockholders, there can be

no

assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable to it, the Company

may

have to significantly reduce its operations or delay, scale back or discontinue the development of

one

or more of its products. The financial statements do

not

include any adjustments that might result from the outcome of this uncertainty. The Company’s ultimate success will largely depend on its continued development of innovative medical technologies, its ability to successfully commercialize its products and its ability to raise significant additional funding.

Additionally, due to the substantial doubt about the Company’s ability to continue operating as a going concern and the material adverse change clause in the Loan Agreement with CRG Partners III L.P. and certain of its affiliated funds (collectively “CRG”), the entire amount of borrowings at

December 31, 2019

and

2018

has been classified as current in these financial statements. CRG has

not

invoked the material adverse change clause.

Public Offerings

On

February 

16,

2018,

we completed a public offering of

17,979

shares of Series B preferred stock and warrants to purchase

1,797,900

shares of common stock. As a result, we received net proceeds of approximately

$15.5

million after underwriting discounts, commissions, legal and accounting fees. The Series B preferred stock has a liquidation preference of

$0.001

per share, full ratchet price based anti-dilution protection, has

no

voting rights and is subject to certain ownership limitations. The Series B preferred stock is immediately convertible at the option of the holder, has

no

stated maturity, and does

not

pay regularly stated dividends or interest. Each share of Series B preferred stock is accompanied by

one

Series 

1

warrant that expires on the

seventh

anniversary of the date of issuance to purchase up to

50

shares of common stock and

one

Series 

2

warrant that expires on the earlier of (i) the

seventh

anniversary of the date of issuance or (ii) the

60th

calendar day following the receipt and announcement of FDA clearance of our Pantheris below-the-knee device (or the same or similar product with a different name) to purchase up to

50

shares of common stock; provided, however, if at any time during such

60

-day period the volume weighted average price for any trading day is less than the then effective exercise price, the termination date shall be extended to the

seven

year anniversary of the initial exercise date. FDA clearance of Pantheris SV was received in

April 2019,

triggering this

60

-day period. During the entire

60

-day period following clearance, the volume weighted average price was less than the then effective exercise price. As such, all Series

2

warrants are currently deemed to expire on the

seventh

anniversary of the date of issuance. In addition, pursuant to the Series A Purchase Agreement, we issued to CRG

41,800

shares of Series A preferred stock at the closing of the Series B Offering. The Series A preferred stock was issued in exchange for the conversion of

$38.0

million of the outstanding principal amount of their senior secured term loan (plus the back-end fee and prepayment premium applicable thereto), totaling approximately

$41.8

million. The Series A preferred stock is initially convertible into

2,090,000

shares of common stock subject to certain limitations contained in the Series A Purchase Agreement.

On

July 

12,

2018,

we entered into a securities purchase agreement with certain investors pursuant to which we agreed to sell and issue, in a registered direct offering, an aggregate of

216,618

shares of our common stock at an offering price of

$16.425

per share. In a concurrent private placement, or the Private Placement, we agreed to issue to these investors warrants exercisable for

one

share of our common stock for each

two

shares purchased in the registered direct offering, which equals an aggregate of

108,309

shares of common stock. The closing of such registered direct offering and the concurrent Private Placement occurred on

July 

16,

2018,

in connection with which we received net proceeds of approximately

$3.0

million after deducting placement agent fees and other expenses payable by us. The warrants have an exercise price of

$15.80

per share of our common stock and expire on

July 

16,

2021.

On

November 1, 2018,

we completed a public offering of

728,500

shares of common stock and

8,586

shares of Series C convertible preferred stock (the “Series C preferred stock”). As a result, we received net proceeds of approximately

$10.2

million after underwriting discounts, commissions, legal and accounting fees. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series C preferred stock will be entitled to receive distributions out of our assets, whether capital or surplus, of an amount equal to

$0.001

per share of Series C preferred stock before any distributions shall be made on the common stock but after distributions shall be made on any outstanding Series A preferred stock and any of our existing or future indebtedness. The Series C preferred stock has

no

voting rights.

On

August 26, 2019,

we completed a public offering of

3,813,559

shares of common stock at an offering price of

$1.18

per share. As a result, we received net proceeds of approximately

$3.8

million after underwriting discounts, commissions, legal and accounting fees and the conversion price of the outstanding shares of Series B preferred stock, issued in our

February 2018

offering, was reduced to

$1.18

per share as a result. 

On

January 31, 2020,

we completed a public offering of

6,428,572

shares of common stock at an offering price of

$0.70

per share. As a result, we received net proceeds of approximately

$3.7

million after underwriting discounts, commissions, legal and accounting fees, and other ancillary expenses. Due to anti-dilution provisions, the conversion price of the outstanding shares of Series B preferred stock, which was issued in our

February 2018

offering, was reduced to

$0.70

per share.