Note 12 - Summary of Stock Options

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

12. 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 March 31, 2022, 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 0.8 years.

Effective January 1, 2022, the total common stock reserved for issuance under the 2013 Plan was increased by 1,076,833 shares from 3,940,136 shares to a total of 5,016,969 shares under the evergreen provision of the 2013 Plan.

As of March 31, 2022, there were outstanding stock option awards issued from the 2013 Plan covering a total of 4,109,997 shares of the Company’s common stock and there remain reserved for future awards 234,319 shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is $6.05 per share and the remaining contractual term is 9.0 years. 

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

	Three Months Ended March 31, 2022
						Weighted
				Weighted		Average
	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, January 1, 2022		3,173,103		$	7.51		9.0	$	-
Options granted		941,000		$	1.26
Options exercised		-
Options canceled		(4,094	)	$	7.69
Options outstanding, March 31, 2022		4,110,009		$	6.08		9.0	$	-
Vested and exercisable and expected to vest, March 31, 2022		3,818,956		$	6.34		9.0	$	-
Vested and exercisable, March 31, 2022		995,692		$	15.65		8.4	$	-

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 March 31, 2022. 

The options outstanding and exercisable as of March 31, 2022 were as follows:

							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			March 31, 2022		Price		Term (Years)		March 31, 2022		Price
$1.26	-	$1.26		941,000	$	1.26		9.8		39,212	$	1.26
$2.28	-	$2.96		2,207,000	$	2.73		9.2		387,341	$	2.73
$3.06	-	$3.40		10,000	$	3.20		9.0		1,833	$	3.26
$4.45	-	$4.80		11,900	$	4.72		8.7		3,832	$	4.71
$5.10	-	$5.40		88,000	$	5.28		8.5		62,563	$	5.34
$6.90	-	$6.90		5,400	$	6.90		8.0		2,700	$	6.90
$8.60	-	$8.91		827,800	$	8.69		7.7		481,974	$	8.69
$10.90	-	$13.60		15,500	$	12.64		7.9		12,865	$	13.00
$380.00	-	$9,920.00		3,409	$	2,878.01		6.0		3,372	$	2,890.61
Total:				4,110,009	$	6.08		9.0		995,692	$	15.65

Deferred Restricted Stock Units

As of March 31, 2022, 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. 

During the three months ended March 31, 2022, no RSUs for shares of common stock were granted by the Company.

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 three months ended March 31, 2022, no RSUs for shares of common stock were cancelled. During the three months ended March 31, 2021, RSUs for 3,000 shares of common stock were cancelled.  

Deferred Restricted Stock Awards

As of March 31, 2022, 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 three months ended March 31, 2022 and 2021, no RSAs for shares of common stock were granted by the Company.

During the three months ended March 31, 2022, no RSAs for shares of common stock were cancelled. During the three months ended March 31, 2021, RSAs for 2 shares of common stock were cancelled.

2017 Employee Stock Purchase Plan

In September 2020, the board of directors approved the suspension of the Company’s 2017 Employee Stock Purchase Plan (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 three months ended March 31, 2022 is described as follows:

● The fifteenth offering period under the Company’s 2017 ESPP began on January 1, 2022, and ended on March 31, 2022, and 20,691 shares were issued on March 31, 2022 at a purchase price of $0.90.

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 March 31, 2022, the remaining shares available for issuance under the 2017 ESPP were 451,179 shares.

Stock-Based Compensation

During the three months ended March 31, 2022, the Company granted stock options to employees and nonemployees to purchase 941,000 shares of common stock with a weighted average grant date fair value of $0.92 per share. During the three months ended March 31, 2021, the Company granted stock options to employees and nonemployees to purchase 7,000 shares of common stock with a weighted average grant date fair value of $2.19 per share.

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: 

	Three Months Ended
	March 31,
	2022			2021
Expected term (in years)		6			5
Average volatility		88	%		87	%
Risk-free interest rate		1.43	%		0.82	%
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 condensed consolidated statements of operations for the three and nine months ended March 31, 2022 and 2021 (in thousands):

	March 31,
	2022		2021
Cost of revenue	$	65	$	55
Research and development		123		97
Selling, general and administrative		772		658
Total	$	960	$	810

As of March 31, 2022, the total unrecognized compensation cost in connection with unvested stock options was approximately $6,020,000. These costs are expected to be recognized over a period of approximately 2.8 years.   

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock. The fair value of the RSUs is recognized as expense ratably over the vesting period of two years. For the three months ended March 31, 2022 and 2021, the stock-based compensation expense for RSUs was $274,000 and $222,000, respectively.  

As of March 31, 2022, the total unrecognized compensation cost in connection with unvested RSUs was approximately $877,000. These costs are expected to be recognized over a period of approximately 0.8 years.  

For the three months ended March 31, 2022, the stock-based compensation expense for ESPP shares was not significant.