Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Summary of Stock Options

v3.20.1
Note 11 - Summary of Stock Options
3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]
1
1
.
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
March 31, 2020,
there are outstanding stock option awards issued from the
2006
Plan covering a total of
104
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
$992.00
per share and the weighted average remaining contractual term is
2.8
years.
  
As of
March 31, 2020,
there are outstanding stock option awards issued from the
2013
Plan covering a total of
10,432,550
shares of the Company’s common stock and there remain reserved for future awards
4,093,287
shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is
$1.94
per share, and the remaining contractual term is
9.7
years. 
 
In
January 2020,
the board of directors approved the
2020
evergreen provision increasing the total stock reserved for issuance under the
2013
Plan by
2,639,926
shares from 
11,872,531
shares to a total of
14,512,457
shares, which was effective
January 1, 2020.
 
Activity under the
2006
Plan and the
2013
Plan is as follows: 
 
   
Three Months Ended March 31, 2020
 
   
 
 
 
 
 
 
 
 
Weighted
   
 
 
 
   
 
 
 
 
Weighted
   
Average
   
 
 
 
   
Number
   
Average
   
Remaining
   
Aggregate
 
   
of
   
Exercise
   
Contractual
   
Intrinsic
 
   
Shares
   
Price
   
Term (years)
   
Value
 
Options outstanding, beginning of period
   
10,087,678
    $
2.22
     
9.9
    $
3,928,715
 
Options granted
   
468,000
    $
0.88
     
 
     
 
 
Options exercised
   
-
     
 
     
 
     
 
 
Options canceled
   
(123,024
)   $
20.25
     
 
     
 
 
Options outstanding, end of period
   
10,432,654
    $
1.95
     
9.7
    $
-
 
                                 
Vested and exercisable and expected to vest, end of period
   
9,404,561
    $
2.04
     
9.7
    $
-
 
                                 
Vested and exercisable, end of period
   
833,785
    $
9.63
     
9.6
    $
-
 
 
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, 2020. 
 
The options outstanding and exercisable as of
March 31, 2020
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
 
March 31, 2020
   
Price
   
Term (Years)
   
March 31, 2020
   
Price
 
                                             
$0.69
-
$0.89
   
10,238,979
    $
0.86
     
9.7
     
813,153
    $
0.87
 
$1.09
-
$1.36
   
155,000
    $
1.26
     
9.9
     
-
    $
-
 
$38.00
-
$58.00
   
1,600
    $
55.81
     
9.2
     
-
    $
-
 
$100.00
-
$197.00
   
20,352
    $
141.85
     
8.6
     
9,174
    $
147.74
 
$202.00
-
$283.00
   
743
    $
251.21
     
7.6
     
392
    $
254.90
 
$311.00
-
$382.00
   
2,625
    $
344.68
     
8.4
     
1,238
    $
345.28
 
$430.00
-
$497.00
   
6,707
    $
454.33
     
7.3
     
4,281
    $
455.78
 
$501.00
-
$567.00
   
3,215
    $
537.49
     
7.1
     
2,432
    $
536.76
 
$600.00
-
$661.00
   
1,392
    $
602.19
     
5.8
     
1,375
    $
601.46
 
$700.00
-
$792.00
   
1,937
    $
767.72
     
6.6
     
1,636
    $
767.47
 
$992.00
-
$992.00
   
104
    $
992.00
     
2.8
     
104
    $
992.00
 
Total:
 
 
   
10,432,654
    $
1.95
     
9.7
     
833,785
    $
9.63
 
 
Restricted Stock Awards
 
During the
three
months ended
March 31, 2020,
no
RSAs for shares of common stock under the
2013
Plan were granted by the Company.
 
In
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.
 
In
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.
 
In
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.
 
 
In
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
three
months ended
March 31, 2020,
zero
shares pursuant to these RSAs were cancelled. As of
March 31, 2020,
zero
shares were vested and issued.
 
As of
March 31, 2020,
there are
2,620
shares of unvested restricted stock awards outstanding that have been granted pursuant to RSAs.
 
2017
Employee Stock Purchase Plan
 
The
tenth
offering period under the Company’s
2017
Employee Stock Purchase Plan (the
“2017
ESPP”) began on
January 1, 2020
and ended on
March 31, 2020,
and
320
shares were issued on
March 31, 2020
at a purchase price of
$0.59.
 
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.
 
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
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
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.
  
As of
March 31, 2020,
the remaining shares available for issuance under the
2017
ESPP were
772
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:
          
   
Three Months Ended
 
   
March 31,
 
   
2020
   
2019
 
                 
Expected term (in years)
   
0.25
     
0.25
 
Average volatility
   
124%
     
74%
 
Risk-free interest rate
   
1.54%
     
2.45%
 
Dividend yield
   
0%
     
0%
 
 
The weighted average grant date fair value of the purchase rights issued under the
2017
ESPP during the
three
months ended
March 31, 2020
and
2019
was
$0.43
and
$33.00,
respectively.
 
Stock-Based Compensation
 
During the
three
months ended
March 31, 2020
and
2019,
the Company granted stock options to employees to purchase
368,000
and
21,175
shares of common stock, respectively, with a weighted average grant date fair value of
$0.75
and
$123.66
per share, respectively. There were
no
stock options exercised during the
three
months ended
March 31, 2020
and
2019.
 
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:   
 
   
Three Months Ended
 
   
March 31,
 
   
2020
   
2019
 
                 
Expected term (in years)
   
5
     
5
 
Average volatility
   
73%
     
73%
 
Risk-free interest rate
   
0.45%
     
2.53%
 
Dividend yield
   
0%
     
0%
 
  
During the
three
months ended
March 31, 2020
and
2019,
the Company granted stock options to nonemployees to purchase
100,000
and
275
shares of common stock with a weighted average grant date fair value of
$1.36
and
$121.82
per share, respectively. There were
no
stock options exercised by nonemployees during the
three
months ended
March 31, 2020
and
2019.
 
The fair value of nonemployee stock options granted was estimated using the following weighted average assumptions: 
 
   
Three Months Ended
 
   
March 31,
 
   
2020
   
2019
 
                 
Expected term (in years)
   
5
     
5
 
Average volatility
   
73%
     
73%
 
Risk-free interest rate
   
1.39%
     
2.49%
 
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 employee 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 included in the condensed consolidated statements of operations for the
three
months ended
March 31, 2020
and
2019
(in thousands):
 
   
Three Months Ended
 
   
March 31,
 
   
2020
   
2019
 
Cost of revenue
  $
60
    $
32
 
Research and development
   
87
     
40
 
Selling, general and administrative
   
564
     
424
 
Total
   
710
    $
496
 
 
As of
March 31, 2020,
the total unrecognized compensation cost in connection with unvested stock options was approximately
$7,341,000.
These costs are expected to be recognized over a period of approximately
3.1
years.