Annual report pursuant to Section 13 and 15(d)

Note 1 - The Company and Basis of Presentation

v3.20.4
Note 1 - The Company and Basis of Presentation
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
1.
The Company and Basis of Presentation
 
Viveve Medical, Inc. (“Viveve Medical”, the “Company”, “we”, “our”, or “us”) designs, develops, manufactures and markets a platform medical technology, which we refer to as
Cryogen-cooled Monopolar RadioFrequency
, or CMRF. Our proprietary CMRF technology is delivered through a radiofrequency generator, handpiece and treatment tip, which collectively, we refer to as the Viveve® System. Viveve Medical competes in the women's intimate health industry in some countries by marketing the Viveve System as a way to improve the overall well-being and quality of life of women suffering from vaginal introital laxity, for improved sexual function, or stress urinary incontinence, depending on the relevant country-specific clearance or approval.  In the United States, the Viveve System is currently indicated for use in general surgical procedures for electrocoagulation and hemostasis.
 
2021
Public Offering
 
On
January 19, 2021,
the Company closed an upsized 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.
 
In connection with the closing of the public offering, on
January 19, 2021,
the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (the “Series C Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series C Certificate of Designation provides for the issuance of shares of Series C convertible preferred stock. The shares of Series C convertible preferred stock rank on par with the shares of the common stock. With certain exceptions, as described in the Series C Certificate of Designation, the shares of Series C convertible preferred stock have
no
voting rights. Each share of Series C convertible preferred stock is convertible at any time at the holder's option into
one
share of common stock.
 
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 estimated offering expenses payable by the Company, are expected to be approximately
$25,223,000.
 
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.
 
Elimination of Series A Convertible Preferred Stock
 
On
December 16, 2020,
the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with the Delaware Secretary of State with respect to
547,345
authorized shares of Series A convertible preferred stock, par value
$0.0001
per share. The Series A convertible preferred stock had been designated pursuant to the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock filed with the Delaware Secretary of State on
November 25, 2019.
As of the date of the filing of the Certificate of Elimination,
no
shares of Series A convertible preferred stock were outstanding. Upon filing the Certificate of Elimination, the
547,345
authorized shares of Series A convertible preferred stock were returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series or rights, preferences, privileges or limitations.
 
Purchase Agreement with Lincoln Park Capital, LLC
 
On
June 8, 2020,
the Company entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company has the right to sell to LPC, and LPC has committed to purchase from us, from time to time, up to
$10,000,000
of our common stock, subject to certain limitations, during the
30
-month term of the Purchase Agreement.
 
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. Thereafter, under the Purchase Agreement, on any business day selected by us, the Company
may
direct LPC to purchase up to
25,000
shares (and in certain circumstances up to
50,000
shares) of our common stock. (See Note
12
– Common Stock.) LPC has
no
right to require the Company to sell any shares of common stock to LPC, but LPC is obligated to make purchases as the Company directs, subject to certain conditions. The purchase price per share for each such Regular Purchase will be based off of prevailing market prices of our common stock immediately preceding the time of sale without any fixed discount.
 
Other than as described above and Note
12
– Common Stock, there are
no
trading volume requirements or restrictions under the Purchase Agreement, and the Company will control the timing and amount of any sales of our common stock to LPC.
 
2020
Warrant Offering
 
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. 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 transaction closed on
April 20, 2020.
Transaction costs in connection with the
2020
Warrant Offering totaled approximately
$334,000.
(See Note
12
– Common Stock.) As of
December 31, 2020,
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.
 
2019
Public Offering and CRG Debt Conversion
 
In
November 2019,
the Company closed an underwritten public offering of units (the
“November 2019
Offering”) for gross proceeds of approximately
$11,500,000,
which included the full exercise of the underwriter's overallotment option to purchase additional shares and warrants. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses and payable by the Company, were approximately
$9,922,000.
 
 
The offering comprised of: (
1
) Class A Units, priced at a public offering price of
$15.50
per unit, with each unit consisting of
one
share of common stock,
a
Series A warrant to purchase
one
share of common stock at an exercise price of
$15.50
per share that expires on the
first
anniversary of the date of issuance and
a
Series B warrant to purchase
one
share of common stock at an exercise price of
$15.50
per share that expires on the
fifth
anniversary of the issuance; and (
2
) Class B Units, priced at a public offering price of
$15.50
per unit, with each unit consisting of
one
share of Series A convertible preferred stock, convertible into
one
share of common stock,
a
Series A warrant to purchase
one
share of common stock at an exercise price of
$15.50
per share that expires on the
first
anniversary of the date of issuance and
a
Series B warrant to purchase
one
share of common stock at an exercise price of
$15.50
per share that expires on the
fifth
anniversary of the issuance.
 
The securities comprising the units were immediately separable and were issued separately.
 
A total of
194,595
shares of common stock,
547,345
shares of Series A convertible preferred stock, Series A warrants to purchase up to
741,939
shares of common stock, and Series B warrants to purchase up to
741,939
shares of common stock were issued in the offering, including the full exercise of the over-allotment option. As of
December 31, 2020,
all Series A convertible preferred stock had been converted into common stock and there were
no
remaining shares of Series A convertible preferred stock outstanding. As of
December 31, 2020,
all Series A warrants to purchase shares of common stock had been exercised and there were
no
remaining Series A warrants outstanding. As of
December 31, 2020,
there were Series B warrants to purchase a total of
325,632
shares of common stock still remaining and outstanding. (See Note
11
– Preferred Stock; and Note
12
– Common Stock.)  
 
In connection with the closing of the
November 2019
Offering, the Company's secured lender, affiliates of CRG LP (“CRG”), converted approximately
$28,981,000
of the outstanding principal amount under its term loan with CRG (plus accrued interest, the prepayment premium and the back-end facility fee applicable thereto), for an aggregate amount of converted debt obligations of approximately
$31,300,000,
into
31,300
shares of the newly authorized Series B convertible preferred stock and issued warrants to purchase up to
989,379
shares of common stock (see Note
7
– Note Payable). These warrants have a term of
5
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. CRG also entered into a
one
year lock up agreement on all securities that it holds.
 
Liquidity and Management Plans
 
Management evaluates whether there are relevant conditions and events that, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern and to meet its obligations as they become due within
one
year after the date that the financial statements are issued.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, since inception, the Company has sustained significant operating losses and such losses are expected to continue for the foreseeable future. As of
December 31, 2020,
the Company had accumulated deficit of
$219,826,000,
cash and cash equivalents of
$6,523,000
and working capital of
$8,628,000.
Additionally, the Company used
$15,234,000
in cash for operations in the year ended
December 31, 2020.
The Company's financing activities provided cash of
$9,230,000
during the year ended
December 31, 2020,
which was primarily due to the exercise of common warrants. The Company will require additional cash funding to fund operations through
March 31, 2022.
Accordingly, the Company concluded there was substantial doubt about the Company's ability to continue as a going concern as of
December 31, 2020.
However, due to the Company's
January 2021
Offering for net proceeds of approximately
$25,223,000
and the remaining equity financing commitment of
$9,700,000
from LPC, management believes that this substantial doubt has been alleviated.
 
To fund further operations, the Company will need to raise additional capital. The Company
may
obtain additional financing in the future through the issuance of its common stock, or through other equity or debt financings. The Company's ability to continue as a going concern or meet the minimum liquidity requirements in the future is dependent on its ability to raise significant additional capital, of which there can be
no
assurance. If the necessary financing is
not
obtained or achieved, the Company will likely be required to reduce its planned expenditures, which could have an adverse impact on the results of operations, financial condition and the Company's ability to achieve its strategic objective. There can be
no
assurance that financing will be available on acceptable terms, or at all.