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Note 13 - Summary of Stock Options
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

13.

Summary of Stock Options

 

Stock Option Plans

 

The Company has issued equity awards in the form of stock options (both incentive stock options and non-qualified stock options) and deferred restricted stock awards or units, 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, 2021, there were outstanding stock option awards issued from the 2006 Plan covering a total of 12 shares of the Company’s common stock and no shares are available for future awards. The weighted average exercise price of the outstanding stock options is $9,920.00 per share and the weighted average remaining contractual term is 1.1 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 10 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 no less than 110% of the fair market value of the Company’s common stock and a term that does not exceed five years.

 

On 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 4% 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. 

 

In January 2020, the board of directors approved the 2020 evergreen provision increasing the total stock reserved for issuance under the 2013 Plan by 263,993 shares from 1,187,253 shares to a total of 1,451,246 shares, which was effective January 1, 2020.

 

In January 2021, the total common stock reserved for issuance under the 2013 Plan was increased by 307,705 shares from 1,451,246 shares to a total of 1,758,951 shares under the evergreen provision of the 2013 Plan.

 

In June 2021, the Company’s stockholders approved an amendment to the 2013 Plan to increase the number of shares of common stock reserved for issuance thereunder from 1,758,951 to a total of 3,940,136 shares. See Note 17 for increase in common stock available for issuance under the 2013 Plan subsequent to December 31, 2021.

 

As of December 31, 2021, there were outstanding stock option awards issued from the 2013 Plan covering a total of 3,173,091 shares of the Company’s common stock and there remain reserved for future awards 94,392 shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is $7.48 per share, and the remaining contractual term is 9.0 years.

 

Activity under the 2006 Plan and the 2013 Plan is as follows:

 

  

 

Number

of

Shares

  

 

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term (years)

  

 

Aggregate

Intrinsic

Value

 

Options outstanding, January 1, 2021

  986,399  $19.10   8.9  $675 

Options granted

  2,251,000  $2.73         

Options exercised

  -            

Options canceled

  (64,296) $17.85         

Options outstanding, December 31, 2021

  3,173,103  $7.51   9.0  $- 
                 

Vested and exercisable and expected to vest, December 31, 2021

  2,947,472  $7.83   9.0  $- 
                 

Vested and exercisable, December 31, 2021

  774,800  $18.81   8.5  $- 

 

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, 2021.

 

The options outstanding and exercisable as of December 31, 2021 are as follows: 

 

Range of

Exercise Prices

 

Number

Outstanding

as of

December 31, 2021

  

Weighted

Average

Exercise

Price		  

Weighted

Average

Remaining

Contractual

Term (Years)		  

Number

Exercisable

as of

December 31, 2021		  

Weighted

Average

Exercise

Price		 
                       
$2.28-

$2.96

  2,208,063  $2.73   9.5   259,301  $2.73 
$3.06-

$3.40

  10,000  $3.20   9.2   -  $- 
$4.45-

$4.80

  11,900  $4.72   8.9   3,088  $4.71 
$5.10-

$5.40

  88,000  $5.28   8.8   62,219  $5.34 
$6.90-

$6.90

  5,400  $6.90   8.3   2,364  $6.90 
$8.60-

$8.91

  830,825  $8.69   7.9   433,263  $8.69 
$10.90-

$13.60

  15,500  $12.64   8.2   11,271  $13.00 
$380.00-

$9,920.00

  3,415  $2,873.63   6.2   3,294  $2,911.12 
Total: 

 

  3,173,103  $7.51   9.0   774,800  $18.81 

 

Deferred Restricted Stock Units

 

As of December 31, 2021, there are 674,000 shares of unvested restricted stock outstanding that have been granted by the Company pursuant to deferred restricted stock units (“RSUs”) under the 2013 Plan.

 

In January 2021, the Company granted annual equity awards to employees and board members for 690,000 shares of common stock issuable upon vesting of RSUs under the 2013 Plan. The RSUs vest in full on the second anniversary of the grant date.

 

During the year ended December 31, 2021, RSUs for 16,000 shares of common stock were cancelled.

 

During the year ended December 31, 2020, no RSUs for shares of common stock under the 2013 Plan were granted by the Company.

 

Deferred Restricted Stock Awards

 

As of December 31, 2021, there are 228 shares of unvested restricted stock outstanding that have been granted by the Company pursuant to deferred restricted stock awards (“RSAs”) under the 2013 Plan.

 

During the year ended December 31, 2021 and 2020, no RSAs for shares of common stock were granted by the Company.

 

During the year ended December 31, 2021 and 2020, RSAs for 6 and 18 shares of common stock were cancelled, respectively.

 

2017 Employee Stock Purchase Plan

 

In 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 activity of the Company’s 2017 ESPP for the year ended December 31, 2020 is described as follows:

 

 

●

The tenth offering period under the Company’s 2017 ESPP began on January 1, 2020 and ended on March 31, 2020, and 32 shares were issued on March 31, 2020 at a purchase price of $5.86.

 

 

●

The eleventh offering period under the Company’s 2017 ESPP began on April 1, 2020 and ended on June 30, 2020, and 30 shares were issued on June 30, 2020 at a purchase price of $4.79.

 

 

●

The twelfth offering period under the Company’s 2017 ESPP began on July 1, 2020, and ended on September 30, 2020, and 22 shares were issued on September 30, 2020 at a purchase price of $4.44.

 

In September 2020, the board of directors approved the suspension of the 2017 ESPP following the twelfth offering period and the ESPP purchase on September 30, 2020.

 

In June 2021, the Company’s stockholders approved an amendment to the 2017 ESPP to increase the number of shares of common stock reserved for issuance thereunder from 400 to 500,378 shares and to increase the number of shares available in an offering period from 2 to 2,000 per participant (subject to adjustment in the event of certain changes to the Company’s capital structure and other similar events).

 

Following the Company’s annual stockholders’ meeting, the board of directors approved to reactivate the ESPP effective with the offering period beginning on July 1, 2021. 

 

The activity of the Company’s 2017 ESPP for the year ended December 31, 2021 is described as follows:

 

 

●

The thirteenth offering period under the Company’s 2017 ESPP began on July 1, 2021, and ended on September 30, 2021, and 10,844 shares were issued on September 30, 2021 at a purchase price of $1.94.

 

 

●

The fourteenth offering period under the Company’s 2017 ESPP began on October 1, 2021, and ended on December 31, 2021, and 17,286 shares were issued on December 31, 2021 at a purchase price of $0.97.

 

The Company estimated the fair value of purchase rights under the ESPP using the Black-Scholes option valuation model and the straight-line attribution approach.

 

As of December 31, 2021, the remaining shares available for issuance under the 2017 ESPP were 471,870 shares.

 

Stock-Based Compensation

 

During the years ended December 31, 2021 and 2020, the Company granted stock options to employees and nonemployees to purchase 2,251,000 and 146,700 of common stock with a weighted average grant date fair value of $1.75 and $4.08 per share, respectively. There were no stock options exercised by employees and nonemployees during the years ended December 31, 2021 and 2020.

 

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

 

  

Year Ended

December 31,

 
  

2021

  

2020

 
         

Expected term (in years)

  6   5 

Average volatility

  76%  82%

Risk-free interest rate

  0.97%  0.37%

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. No 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 for options, RSUs and ESPP shares included in the consolidated statements of operations for the years ended December 31, 2021 and 2020 (in thousands):

 

  

Year Ended

December 31,

 
  

2021

  

2020

 
         

Cost of revenue

 $265  $208 

Research and development

  456   325 

Selling, general and administrative

  3,058   2,118 

Total

 $3,779  $2,651 

 

As of December 31, 2021, the total unrecognized compensation cost in connection with unvested stock options was approximately $5,831,000. These costs are expected to be recognized over a period of approximately 2.8 years. 

 

As of December 31, 2021, the total unrecognized compensation cost in connection with unvested RSUs was approximately $1,151,000. These costs are expected to be recognized over a period of approximately 1.1 years.