Note 12 - Common Stock

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

12. Common Stock

Purchase Agreement with Lincoln Park Capital, LLC

On June 8, 2020, the Company entered into the Purchase Agreement with Lincoln Park LPC, pursuant to which provided that the Company had the right, in its sole discretion, to sell to LPC, and LPC has committed to purchase from us, up to $10,000,000 of our common stock, subject to certain limitations, from time to time over a 30 -month period pursuant to the terms of the Purchase Agreement.

The Purchase Agreement limited the Company’s sale of shares of common stock to LPC to 301,762 shares of common stock, representing 19.99% of the shares of the common stock outstanding on the date of the Purchase Agreement unless (i) shareholder approval was obtained to issue more than such amount or (ii) the average price of all applicable sales of common stock to LPC under the Purchase Agreement equaled or exceeded $6.46 per share, which represented the lower of (a) the closing price of our common stock on the Nasdaq Capital Market immediately preceding the date of the Purchase Agreement or (b) the average of the closing price of the common stock on the Nasdaq Capital Market for the five business days immediately preceding the date of the Purchase Agreement, as calculated in accordance with Nasdaq Rules. On June 9, 2020, LPC purchased 52,500 shares of common stock at a price per share of $6.50 (the “Initial Purchase Shares”) under the Purchase Agreement for gross proceeds of approximately $341,000. Transaction costs in connection with the Purchase Agreement with LPC totaled approximately $494,000. Included in these transaction costs was a commitment fee paid by the Company in the amount of $325,000. While this commitment fee relates to the entire offering and the purchases of common shares that will occur over time, the Company has recorded the entire commitment fee as issuance costs in additional paid-in capital at the time the commitment fee was paid because the offering has been consummated, and there is no guaranteed future economic benefit from this payment.

On March 31, 2021, the Company and LPC entered into the first amendment to the Purchase Agreement. The amendment limited the Company’s sale shares of common stock to LPC from the date thereof to 2,068,342 shares of shares of common stock, representing 19.99% of the shares of the common stock outstanding on the date of amendment unless (i) shareholder approval is obtained to issue more than such amount or (ii) the average price of all applicable sales of common stock to LPC under the Purchase Agreement, as amended equals or exceeds $2.99 per share, which represents the lower of (a) the closing price of the common stock on the Nasdaq Capital Market immediately preceding the date of the Amendment or (b) the average of the closing prices of our common stock on the Nasdaq Capital Market for the five business days immediately preceding the date of the Amendment, as calculated in accordance with Nasdaq Rules. Transaction costs in connection with the amendment to Purchase Agreement with LPC totaled approximately $70,000.

On May 4, 2021, pursuant to the provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares of common stock at price per share of $2.817 for gross proceeds of approximately $704,000.

On June 23, 2021, the Company’s stockholders approved the proposal for the potential issuance of 20% or more of the Company’s outstanding common stock to LPC pursuant to the provisions under the Purchase Agreement, as amended.  

As of December 31, 2021, the equity facility with LPC has a remaining financing commitment of approximately $9,000,000.

2021 Public Offering

On January 19, 2021, the Company closed an underwritten public offering of units (the “January 2021 Offering”) for gross proceeds of approximately $27,600,000, which included the exercise of the underwriter’s over-allotment option to purchase additional shares and warrants, prior to deducting underwriting discounts and commissions and offering expenses payable by Viveve.

The offering comprised of: (1) 4,607,940 Class A Units, priced at a public offering price of $3.40 per Class A Unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock, at an exercise price of $3.40 per share that expires on the fifth anniversary of the date of issuance; and (2) 2,450,880 Class B Units, priced at a public offering price of $3.40 per Class B Unit, with each unit consisting of one share of Series C convertible preferred stock and one warrant to purchase one share of common stock, at an exercise price of $3.40 per share that expires on the fifth anniversary of the date of issuance. The underwriter exercised an over-allotment option to purchase an additional 1,058,820 shares of common stock and warrants to purchase 1,058,820 shares of common stock in the offering. The net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company, were approximately $25,122,000.

A total of 2,450,880 shares of Series C convertible preferred stock were issued in the January 2021 Offering. In January 2021, all Series C convertible preferred stock were converted into common stock and there are no remaining shares of Series C convertible preferred stock outstanding.

Warrants to purchase a total of 8,117,640 shares of common stock were issued in the January 2021 Offering. In February and March 2021, holders exercised January 2021 warrants to purchase 12,760 shares of common stock for aggregate exercise proceeds to the Company of approximately $43,000. As of December 31, 2021, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock still remaining and outstanding.

Restricted Common Shares

There were no restricted common shares issued during the year ended December 31, 2021.

The activity of restricted common shares for the year ended December 31, 2020 is described as follows:

In March 2020, the Company issued 2,832 restricted shares of its common stock at an aggregate value of approximately $24,000.

In June 2020, the Company issued 3,453 restricted shares of its common stock at an aggregate value of approximately $25,000.

In September 2020, the Company issued 4,709 restricted shares of its common stock at an aggregate value of approximately $25,000.

Warrants for Common Stock

As of December 31, 2021, outstanding warrants to purchase shares of common stock were as follows: 

Issuance Date	Exercisable for	Expiration Date	Exercise Price		Number of Shares Outstanding Under Warrants
February 2015	Common Shares	February 17, 2025	$	4,000.00		79
March 2015	Common Shares	March 26, 2025	$	2,720.00		2
May 2015	Common Shares	May 12, 2025	$	4,240.00		37
December 2015	Common Shares	December 16, 2025	$	5,600.00		31
April 2016	Common Shares	April 1, 2026	$	6,080.00		25
June 2016	Common Shares	June 20, 2026	$	4,980.00		101
May 2017	Common Shares	May 25, 2027	$	9,500.00		223
November 2019	Common Shares	November 26, 2024	$	18.36		989,379
November 2019	Common Shares	November 26, 2024	$	2.82		285,632
April 2020	Common Shares	April 21, 2025	$	2.82		413,210
January 2021	Common Shares	January 19, 2026	$	3.40		8,104,880
						9,793,599

As of December 31, 2020, outstanding warrants to purchase shares of common stock were as follows: 

Issuance Date	Exercisable for	Expiration Date	Exercise Price		Number of Shares Outstanding Under Warrants
February 2015	Common Shares	February 17, 2025	$	4,000.00	79
March 2015	Common Shares	March 26, 2025	$	2,720.00	2
May 2015	Common Shares	May 12, 2025	$	4,240.00	37
December 2015	Common Shares	December 16, 2025	$	5,600.00	31
April 2016	Common Shares	April 1, 2026	$	6,080.00	25
May 2016	Common Shares	May 11, 2021	$	7,740.00	6
June 2016	Common Shares	June 20, 2026	$	4,980.00	101
May 2017	Common Shares	May 25, 2027	$	9,500.00	223
November 2019	Common Shares	November 26, 2024	$	6.10	325,632
November 2019	Common Shares	November 26, 2024	$	18.36	989,379
April 2020	Common Shares	April 21, 2025	$	6.37	413,210
					1,728,725

In connection with the 2017 Loan Agreement, the Company issued warrants to purchase a total of 223 shares of common stock at an exercise price of $9,500.00 per share. The warrants have a contractual life of ten years and are exercisable immediately in whole or in part. The fair value of the warrants, along with financing and legal fees, are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs are amortized to interest expense over the loan term. During the years ended December 31, 2021 and 2020, the Company recorded $4,000 and $3,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method. As of December 31, 2021, the unamortized debt discount was $5,000.

In connection with the CRG Debt Conversion, CRG received warrants exercisable for 989,379 shares of common stock, an amount equal to 15% of our common stock on a fully diluted basis after taking the November 2019 Offering into account (the “CRG Warrants”). The CRG Warrants have a contractual term of five years and an exercise price equal to 120% of the Series B convertible preferred stock conversion price of $15.30 or $18.36 per share. The Company determined the fair value of the warrants on the date of issuance to be approximately $3,502,000 using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 68.8%, risk free interest rate of 1.58% and a contractual life of five years. The fair value of the CRG warrants is recorded as additional paid-in capital as part of the accounting for the debt conversion.

In February 2020, a total of 102,626 shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately $1,591,000, and a total of 4,548 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $70,000. 

On April 15, 2020, the Company reduced the exercise price of the outstanding Series A warrants and Series B warrants from $15.50 per share to $6.10 per share. The Series A and B warrant exercise price adjustment to $6.10 per share from $15.50 per share resulted in the recognition of a modification expense on April 15, 2020, under the analogous guidance with respect to stock option modification under FASB ASC Topic 718, Stock-Based Compensation (ASC 718), wherein an exchange of warrants is deemed to be a modification of the initial warrant agreement by the replacement with a revised warrant agreement, requiring the incremental fair value, measured as the difference between the fair value immediately after the modification as compared to the fair value immediately before the modification, to the extent an increase, recognized as a modification expense. In this regard, the Series A warrants and Series B warrants exercise price adjustment resulted in the recognition of a current period modification expense of $1,838,000 included in other income (expense) in the consolidated statement of operations, with a corresponding increase to additional paid-in capital in the consolidated balance sheet. The modification expense incremental fair value was estimated using a Black-Scholes valuation model, using the following assumptions:

	Immediately before Modification			Immediately After Modification
Exercise price	$	15.50		$	6.10
Common stock price	$	6.30		$	6.30
Expected term (in years)		2.8			2.8
Average volatility		97	%		97	%
Risk-free interest rate		0.27	%		0.27	%
Dividend yield		0	%		0	%

On April 16, 2020, the Company entered into inducement letter agreements with certain institutional and accredited holders of Series A warrants and Series B warrants pursuant to which such holders agreed to exercise Series A warrants to purchase 482,059 shares of common stock and Series B warrants to purchase 24,279 shares of common stock for aggregate exercise proceeds to the Company of approximately $3,089,000.

In conjunction, the Company also agreed to issue new Series A-2 warrants to purchase up to 482,059 shares of common stock as an inducement for the exercise of Series A warrants, and new Series B-2 warrants to purchase up to 24,279 shares of common stock as an inducement for the exercise of Series B warrants, in each case at an exercise price of $6.371 per share and for a term of five years. The Company determined the fair value of the Series A-2 and the Series B-2 warrants on the date of issuance to be approximately $1,838,000 using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 84.1%, risk free interest rate of.35% and a contractual life of five years. The fair value of the Series A-2 and B-2 warrants is recorded as a cost of issuance of the offering and as additional paid-in capital. The transaction closed on April 20, 2020. Other transaction costs in connection with the 2020 Warrant Offering were approximately $334,000.

In May 2020, a total of 410 shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately $2,000.

In June 2020, a total of 2,761 shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately $17,000, and a total of 5,070 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $31,000. 

In August 2020, a total of 111,704 shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately $681,000, and a total of 380,913 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $2,324,000.

In August 2020, a total of 89,230 shares of common stock were issued in connection with the exercise of Series A-2 warrants for gross proceeds of approximately $568,000, and a total of 3,899 shares of common stock were issued in connection with the exercise of Series B-2 warrants for gross proceeds of approximately $25,000.

In September 2020, a total of 1,500 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $9,000.

In connection with the January 2021 Offering, warrants to purchase up to 8,117,640 shares of common stock were issued in the offering. The warrants to purchase one share of common stock have an exercise price of $3.40 per share and expires on the fifth anniversary of the date of issuance.

As a result of the closing of the January 2021 Offering at an effective price of $3.40 per share of its common stock, the per share exercise price of our previously issued Series B, A-2 and B-2 common stock warrants was automatically reduced pursuant to the terms of the warrants. The exercise price for Series B warrants was reduced from $6.10 per share to $3.40 per share. The exercise price for Series A-2 and B-2 warrants was reduced from $6.371 per share to $3.40 per share. There was no change to the quantity of warrant shares. The Company determined the incremental fair value on Series B, A-2 and B-2 warrants due to the reduction of exercise price on the date of such modification to be approximately $287,000 using the Black-Scholes option pricing model. Assumptions used were as follows: 

Series B Warrants	Immediately before Modification			Immediately After Modification
Exercise price	$	6.10		$	3.40
Common stock price	$	3.19		$	3.19
Expected term (in years)		3.9			3.9
Average volatility		90	%		90	%
Risk-free interest rate		0.33	%		0.33	%
Dividend yield		0	%		0	%

Series A-2 and B-2 Warrants	Immediately before Modification			Immediately After Modification
Exercise price	$	6.37		$	3.40
Common stock price	$	3.19		$	3.19
Expected term (in years)		4.3			4.3
Average volatility		90	%		90	%
Risk-free interest rate		0.33	%		0.33	%
Dividend yield		0	%		0	%

On May 4, 2021, pursuant to the provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares at $2.817 per share of the Company’s common stock. As a result, the per share exercise price of our previously issued Series B, A-2 and B-2 common stock warrants was automatically reduced from $3.40 to $2.817 pursuant to the terms of the warrants. There was no change to the quantity of warrant shares. The Company determined the incremental fair value on Series B, A-2 and B-2 warrants due to the reduction of exercise price on the date of such modification to be approximately $86,000 using the Black-Scholes option pricing model. Assumptions used were as follows:

Series B, A-2 and B-2 Warrants	Immediately before Modification			Immediately After Modification
Exercise price	$	3.40		$	2.82
Common stock price	$	3.01		$	3.01
Expected term (in years)		3.6			3.6
Average volatility		80	%		80	%
Risk-free interest rate		0.58	%		0.58	%
Dividend yield		0	%		0	%

The incremental fair value of the Series B, A-2 and B-2 warrants is included in other income (expense) in the consolidated statement of operations, with a corresponding increase to additional paid-in capital in the consolidated balance sheet.

In February 2021, a total of 40,000 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $136,000 and a total of 8,760 shares of common stock were issued in connection with the exercise of January 2021 warrants for gross proceeds of approximately $30,000.

In March 2021, a total of 4,000 shares of common stock were issued in connection with the exercise of January 2021 warrants for gross proceeds of approximately $13,000.

During the year ended December 31, 2021, a total of 52,760 shares were issued in connection with the exercise of warrants for gross proceeds of approximately $179,000. During the year ended December 31, 2020, a total of 1,209,000 shares were issued in connection with the exercise of warrants for gross proceeds of approximately $8,407,000.

No shares issuable pursuant to warrants have been cancelled during the year ended December 31, 2021 and 2020.

A total of 6 shares issuable pursuant to warrants expired during the year ended December 31, 2021. A total of 42,404 shares issuable pursuant to warrants expired during the year ended December 31, 2020.

As of December 31, 2021, there were no Series A warrants remaining to purchase shares of common stock and Series B warrants to purchase a total of 285,632 shares of common stock still remaining and outstanding.

As of December 31, 2021, there were Series A-2 warrants to purchase a total of 392,830 shares of common stock, and Series B-2 warrants to purchase a total of 20,380 shares of common stock still remaining and outstanding.

As of December 31, 2021, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock still remaining and outstanding.