12.	Summary of Stock Options

Stock Option Plans

The Company has issued equity awards in the form of stock options and restricted stock awards (“RSAs”) from

two

employee benefit plans. The plans include the Viveve Amended and Restated

2006

Stock Plan (the

“2006

Plan”) and the Company’s Amended and Restated

2013

Stock Option and Incentive Plan (the

“2013

Plan”).

As of

December 31, 2019,

there are outstanding stock option awards issued from the

2006

Plan covering a total of

104

shares of the Company’s common stock and

shares are available for future awards. The weighted average exercise price of the outstanding stock options is

$992.00

per share and the weighted average remaining contractual term is

3.1

years.

The

2013

Plan was also adopted by the Company’s board of directors and approved by its stockholders. The

2013

Plan is administered by the compensation committee of the Company’s board of directors (the “Administrator”). Under the

2013

Plan, the Company

may

grant equity awards to eligible participants which

may

take the form of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted, deferred or unrestricted stock awards, performance-based awards or dividend equivalent rights. Awards

may

be granted to officers, employees, nonemployee directors (as defined in the

2013

Plan) and other key persons (including consultants and prospective employees). The term of any stock option award

may

not

exceed

years and

may

be subject to vesting conditions, as determined by the Administrator. Options granted generally vest over

four

years. Incentive stock options

may

be granted only to employees of the Company or any subsidiary that is a “subsidiary corporation” within the meaning of Section

424

(f) of the Internal Revenue Code. The exercise price of any stock option award cannot be less than the fair market value of the Company’s common stock, provided, however, that an incentive stock option granted to an employee who owns more than

10%

of the Company’s outstanding voting power must have an exercise price of

less than

110%

of the fair market value of the Company’s common stock and a term that does

not

exceed

five

years.

August 22, 2016,

the Company’s stockholders approved an amendment to the

2013

Plan to add an “evergreen” provision which will automatically increase annually, on the

first

day of each

January,

the maximum number of shares of common stock reserved and available under the

2013

plan (the “Stock Issuable”) by an amount equal to the lesser of (i) the number of shares that will increase the Stock Issuable by

of the total number of shares of common stock outstanding (on a fully diluted basis) or (ii) an amount determined by the board of directors.

December 2017,

the board of directors approved the

2018

evergreen increasing the total stock reserved for issuance under the

2013

Plan from

40,000

shares to a total of

49,140

shares, which was effective

January 1, 2018.

January 2019,

the board of directors approved the

2019

evergreen provision increasing the total stock reserved for issuance under the

2013

Plan by

20,431

shares from

49,140

shares to a total of

69,571

shares, which was effective

January 1, 2019.

September 2019,

the Company’s stockholders approved an amendment to the

2013

Plan to increase the number of shares of common stock reserved for issuance thereunder to equal

18%

of the issued and outstanding shares of common stock of the Company on a fully diluted basis calculated as of the earlier of: (

) the day immediately after the consummation of the Company’s next underwritten public equity offering with gross proceeds of

$5.0

million or more; or (

)

December 31, 2019.

Accordingly, the total stock reserved for issuance under the

2013

Plan increased to a total of

11,872,531

shares, which was effective

November 26, 2019.

As of

December 31, 2019,

there are outstanding stock option awards issued from the

2013

Plan covering a total of

10,087,574

shares of the Company’s common stock and there remain reserved for future awards

1,798,337

shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is

$2.21

per share, and the remaining contractual term is

9.9

years.

Activity under the

2006

Plan and the

2013

Plan is as follows:

	Year Ened December 31, 2019
						Weighted
				Weighted		Average
	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, January 1, 2018		26,903		$	579.81		8.6	$	249,154
Options granted		23,542		$	351.81
Options exercised		-		$	-
Options canceled		(10,301	)	$	548.13
Options outstanding, December 31, 2018		40,144		$	455.68		7.4	$	-
Options granted		10,065,844		$	1.14
Options exercised		-
Options canceled		(18,310	)	$	403.31
Options outstanding, December 31, 2019		10,087,678		$	2.22		9.9	$	3,928,715

Vested and exercisable and expected to vest, end of period		8,966,825		$	2.36		9.9	$	3,490,722

Vested and exercisable, end of period		222,582		$	41.49		9.5	$	77,540

The aggregate intrinsic value reflects the difference between the exercise price of the underlying stock options and the Company’s closing share price as of

December 31, 2019.

The options outstanding and exercisable as of

December 31,

2019

are as follows:

							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			December 31, 2019		Price		Term (Years)		December 31, 2019		Price

$0.86	-	$0.89		10,042,500	$	0.87		9.9		198,312	$	0.87
$38.00	-	$58.00		1,650	$	55.42		9.4		-	$	-
$100.00	-	$197.00		22,385	$	140.23		8.1		9,141	$	144.93
$202.00	-	$283.00		775	$	252.06		8.0		355	$	255.75
$311.00	-	$382.00		3,833	$	355.39		6.0		2,423	$	362.12
$430.00	-	$497.00		7,870	$	453.47		6.4		5,066	$	454.44
$501.00	-	$567.00		4,215	$	536.47		5.7		3,258	$	535.73
$600.00	-	$661.00		2,372	$	601.29		3.6		2,352	$	600.78
$700.00	-	$792.00		1,974	$	768.12		6.7		1,571	$	768.19
$992.00	-	$992.00		104	$	992.00		3.1		104	$	992.00
Total:				10,087,678	$	2.22		9.9		222,582	$	41.49

Stock Option Modifications

May 30, 2018,

under approval by the Company’s Board of Directors, the Company entered into a Separation and Release Agreement with the former Chief Executive Officer. The provisions of the agreement specify that the stock options previously granted to her will continue to vest through the earlier of the date she ends her consulting services to the Company or

December 31, 2019.

As of

May 30, 2018,

these stock options are being accounted for as a non-employee option through the consulting term and are being marked-to-market. Additionally, the former Chief Executive Officer will receive

six

months of accelerated vesting of the stock options and the post-termination exercise period was extended from

three

months to

one

year after the effective date of the agreement. The Company recognized stock-based compensation expense of

$97,000

for the incremental value of the accelerated vesting and the change in the exercise period upon the signing of the agreement.

Restricted Stock Awards

July 2019,

the Company issued

378

shares of common stock under the

2013

Plan to members of the Company’s board of directors with a weighted average grant date fair value of

$38.08

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

378

shares of common stock were issued.

June 2019,

the Company issued

250

shares to a consultant in connection with the vesting of an RSA granted to the consultant in

June 2018.

April 2019,

the Company issued

525

shares of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$91.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

525

shares of common stock were issued

January 2019,

the Company granted RSAs for

3,625

shares of common stock under the

2013

Plan to employees as part of their

2018

annual performance bonuses. The bonuses for

2018

performance were paid

50%

in cash and

50%

in the form of RSAs that will vest in full upon FDA approval of the Viveve System for improvement of sexual function or stress urinary incontinence in the United States. During the year ended

December 31, 2019,

a total of

1,255

shares pursuant to these RSAs were cancelled. As of

December 31, 2019,

zero

shares were vested and issued.

As of

December 31, 2019,

there are

2,640

shares of unvested restricted stock outstanding that have been granted pursuant to RSAs.

July 2019,

the Company granted RSAs for

378

of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$38.08

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

378

shares of common stock were issued.

April 2019,

the Company granted RSAs for

525

of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$91.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

525

shares of common stock were issued.

December 2018,

the Company granted RSAs for

407

of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$105.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

407

shares of common stock were issued.

October 2018,

the Company granted RSAs for

178

of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$248.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

178

shares of common stock were issued.

July 2018,

the Company granted RSAs for

181

of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$263.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

182

shares of common stock were issued.

June 2018,

the Company granted an RSA for

500

shares to a consultant with a weighted average grant date fair value of

$358.00

per share, based on the market price of the Company’s common stock on the award date. The RSA vests over

two

years beginning as of the award date. As of

December 31, 2019,

250

shares were vested and issued.

April 2018,

the Company granted RSAs for

144

shares of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$344.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

144

shares of common stock were issued.

January 2018,

the Company granted RSAs for

943

shares of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$519.00

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant and

shares of common stock were issued.

January 2018,

the Company granted an RSA for

250

shares to a consultant with a weighted average grant date fair value of

$497.00

per share, based on the market price of the Company’s common stock on the award date. The RSA vests over

one

year beginning as of the award date. As of

December 31, 2018,

250

shares were vested and issued.

2017

Employee Stock Purchase Plan

August 2017,

the stockholders approved the Company’s

2017

Employee Stock Purchase Plan (the

“2017

ESPP”). Eligible employees

may

purchase shares of common stock through periodic payroll deductions, with a maximum purchase of

200

shares of common stock in any offering period. The price of common stock purchased under the

2017

ESPP is equal to

85%

of the lesser of the fair market value of common stock on the

first

or last day of the offering period. Each offering period is for a period of

three

months. The

first

offering period under the

2017

ESPP began on

October 1, 2017

and ended on

December 31, 2017.

The

second

offering period under the Company’s

2017

ESPP began on

January 1, 2018

and ended on

March 31, 2018,

and

198

shares were issued on

March 29, 2018

at a purchase price of

$311.10.

The

third

offering period under the Company’s

2017

ESPP began on

April 1, 2018

and ended on

June 30, 2018,

and

243

shares were issued on

June 29, 2018

at a purchase price of

$231.20.

The

fourth

offering period under the Company’s

2017

ESPP began on

July 1, 2018

and ended on

September 30, 2018,

and

274

shares were issued on

September 28, 2018

at a purchase price of

$223.55.

The

fifth

offering period under the Company’s

2017

ESPP began on

October 1, 2018

and ended on

December 31, 2018,

and

494

shares were issued on

December 31, 2018

at a purchase price of

$89.25.

The

sixth

offering period under the Company’s

2017

ESPP began on

January 1, 2019

and ended on

March 31, 2019,

and

429

shares were issued on

March 29, 2019

at a purchase price of

$79.88.

The

seventh

offering period under the Company’s

2017

ESPP began on

April 1, 2019

and ended on

June 30, 2019,

and

602

shares were issued on

June 28, 2019

at a purchase price of

$32.30.

The

eighth

offering period under the Company’s

2017

ESPP began on

July 1, 2019

and ended on

September 30, 2019,

and

200

shares were issued on

September 30, 2019

at a purchase price of

$3.75.

The

ninth

offering period under the Company’s

2017

ESPP began on

October 1, 2019

and ended on

December 31, 2019,

and

300

shares were issued on

December 31, 2019

at a purchase price of

$1.07.

During the years ended

December 31,

2019

and

2018,

the Company’s

2017

ESPP issued

1,531

shares and

1,209

shares, respectively, for aggregate offering proceeds of approximately

$233,000

and

$56,000,

respectively.

As of

December 31, 2019,

the remaining shares available for issuance under the

2017

ESPP were

1,092

shares.

The Company estimates the fair value of purchase rights under the ESPP using a Black-Scholes valuation model. The fair value of each purchase right was estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following weighted-average assumptions:

	Year Ended
	December 31,
	2019	2018

Expected term (in years)	0.25	0.25
Average volatility	87%	72%
Risk-free interest rate	2.29%	1.92%
Dividend yield	0%	0%

The weighted average grant date fair value of the purchase rights issued under the

2017

ESPP during the years ended

December 31, 2019

and

2018

was

$22.75

and

$89.00

per share, respectively.

Stock-Based Compensation

During the years ended

December 31,

2019

and

2018,

the Company granted stock options to employees to purchase

9,528,869

and

21,419

shares of common stock with a weighted average grant date fair value of

$0.73

and

$224.35

per share, respectively. There were

stock options exercised by employees during the years ended

December 31, 2019

and

2018.

The Company estimated the fair value of stock options using the Black-Scholes option pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options granted was estimated using the following weighted average assumptions:

	Year Ended
	December 31,
	2019	2018

Expected term (in years)	6	5
Average volatility	70%	73%
Risk-free interest rate	1.62%	2.65%
Dividend yield	0%	0%

During the years ended

December 31,

2019

and

2018,

the Company granted stock options to nonemployees to purchase

536,975

and

2,123

shares of common stock, with a weighted average grant date fair value of

$0.61

and

$162.17

per share. There were

stock options exercised by nonemployees during the years ended

December 31, 2019

and

2018.

The fair value of nonemployee stock options granted was estimated using the following weighted average assumptions:

	Year Ended
	December 31,
	2019	2018

Expected term (in years)	6	9
Average volatility	70%	69%
Risk-free interest rate	1.69%	2.69%
Dividend yield	0%	0%

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history over a period commensurate with the expected term of the options, trading volume of comparable companies’ stock, look-back volatilities and the Company specific events that affected volatility in a prior period. The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the history of exercises and cancellations on all past option grants made by the Company, the contractual term, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options.

dividend yield is included as the Company has

not

issued any dividends and does

not

anticipate issuing any dividends in the future.

The following table shows stock-based compensation expense included in the consolidated statements of operations for the years ended

December 31, 2019

and

2018

(in thousands):

	Year Ended
	December 31,
	2019		2018

Cost of revenue	$	135	$	69
Research and development		192		328
Selling, general and administrative		2,073		2,638
Total	$	2,400	$	3,035

As of

December 31,

2019,

the total unrecognized compensation cost in connection with unvested stock options was approximately

$7,640,000.

These costs are expected to be recognized over a period of approximately

3.3

years.