Annual report pursuant to Section 13 and 15(d)

Note 13 - Summary of Stock Options

v3.20.4
Note 13 - Summary of Stock Options
12 Months Ended
Dec. 31, 2020
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 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
December 31, 2020,
there are 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
2.1
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 2019,
the board of directors approved the
2019
evergreen provision increasing the total stock reserved for issuance under the
2013
Plan by
2,044
shares from 
4,914
shares to a total of
6,958
shares, which was effective
January 1, 2019.
 
In
September 2019,
the Company's stockholders approved an amendment to the
2013
Plan to increase the number of shares of common stock reserved for issuance thereunder to equal
18%
of the issued and outstanding shares of common stock of the Company on a fully diluted basis calculated as of the earlier of: (
1
) the day immediately after the consummation of the Company's next underwritten public equity offering with gross proceeds of
$5.0
million or more; or (
2
)
December 31, 2019.
Accordingly, the total stock reserved for issuance under the
2013
Plan increased to a total of
1,187,253
shares, which was effective
November 26, 2019.
 
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.
 
As of
December 31, 2020,
there are outstanding stock option awards issued from the
2013
Plan covering a total of
986,387
shares of the Company's common stock and there remain reserved for future awards
466,200
shares of the Company's common stock. The weighted average exercise price of the outstanding stock options is
$18.98
per share, and the remaining contractual term is
8.9
years.
 
Activity under the
2006
Plan and the
2013
Plan is as follows:
 
   
Year Ended December 31, 2020
 
   
 
 
 
 
 
 
 
 
Weighted
   
 
 
 
   
 
 
 
 
Weighted
   
Average
   
 
 
 
   
Number
   
Average
   
Remaining
   
Aggregate
 
   
of
   
Exercise
   
Contractual
   
Intrinsic
 
   
Shares
   
Price
   
Term (years)
   
Value
 
Options outstanding, January 1, 2019
   
4,098
    $
4,567.36
     
7.4
    $
-
 
Options granted
   
1,006,602
    $
11.42
     
 
     
 
 
Options exercised
   
-
     
 
     
 
     
 
 
Options canceled
   
(1,867
)   $
4,040.64
     
 
     
 
 
Options outstanding, December 31, 2019
   
1,008,833
    $
22.47
     
9.9
    $
3,928,715
 
Options granted
   
146,700
    $
6.36
     
 
     
 
 
Options exercised
   
-
     
 
     
 
     
 
 
Options canceled
   
(169,134
)   $
28.45
     
 
     
 
 
Options outstanding, December 31, 2020
   
986,399
    $
19.10
     
8.9
    $
675
 
                                 
Vested and exercisable and expected to vest, December 31, 2020
   
923,646
    $
19.77
     
8.9
    $
598
 
                                 
Vested and exercisable, December 31, 2020
   
245,445
    $
45.09
     
8.6
    $
-
 
 
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
December 31, 2020.
 
The options outstanding and exercisable as of
December 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
 
December 31, 2020
   
Price
   
Term (Years)
   
December 31, 2020
   
Price
 
                                             
$4.45
-
$8.91
   
967,288
    $
8.32
     
8.9
     
238,900
    $
8.69
 
$10.90
-
$13.60
   
15,500
    $
12.64
     
9.2
     
3,750
    $
13.60
 
$380.00
-
$580.00
   
125
    $
552.00
     
8.4
     
113
    $
567.61
 
$1,000.00
-
$1,970.00
   
1,954
    $
1,426.46
     
7.6
     
1,334
    $
1,437.21
 
$2,020.00
-
$2,830.00
   
74
    $
2,501.22
     
7.0
     
53
    $
2,520.19
 
$3,110.00
-
$3,580.00
   
189
    $
3,439.26
     
7.6
     
156
    $
3,455.90
 
$4,360.00
-
$4,970.00
   
619
    $
4,549.77
     
6.2
     
510
    $
4,554.04
 
$5,010.00
-
$5,670.00
   
300
    $
5,366.00
     
6.2
     
285
    $
5,356.84
 
$6,000.00
-
$6,000.00
   
138
    $
6,000.00
     
5.0
     
138
    $
6,000.00
 
$7,140.00
-
$7,920.00
   
200
    $
7,679.20
     
4.1
     
194
    $
7,676.29
 
$9,920.00
-
$9,920.00
   
12
    $
9,920.00
     
2.1
     
12
    $
9,920.00
 
Total:
 
 
   
986,399
    $
19.10
     
8.9
     
245,445
    $
45.09
 
 
Deferred Restricted Stock Awards
 
As of
December 31, 2020,
there are
234
shares of unvested restricted stock outstanding that have been granted pursuant to deferred restricted stock awards (“RSAs”).
 
During the year ended
December 31, 2020,
no
RSAs for shares of common stock under the
2013
Plan were granted by the Company.
 
In
June 2020,
the Company issued
25
shares of common stock to a consultant in connection with the annual vesting of an RSA granted to the consultant in
June 2018.
 
In
July 2019,
the Company issued
38
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
$380.80
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
38
shares of common stock were issued.
 
In
June 2019,
the Company issued
25
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
53
shares of common stock under the
2013
Plan to board members as director compensation with a weighted average grant date fair value of
$910.00
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
53
shares of common stock were issued.
 
In
January 2019,
the Company granted RSAs for
384
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 year ended
December 31, 2020,
a total of
18
shares pursuant to these RSAs were cancelled. During the year ended
December 31, 2019,
a total of
132
shares pursuant to these RSAs were cancelled. As of
December 31, 2020,
zero
shares were vested and issued.  
 
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. In
September 2020,
the board of directors approved the suspension of the Company's
2017
ESPP following the
twelfth
offering period and the ESPP purchase on
September 30, 2020.
 
During the years ended
December 31, 
2020
and
2019,
the Company's
2017
ESPP issued
84
shares and
154
shares, respectively, for aggregate offering proceeds of approximately
$1,000
and
$56,000,
respectively.
 
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, 2020,
the remaining shares available for issuance under the
2017
ESPP were
22
shares.
 
Stock-Based Compensation
 
During the years ended
December 31, 
2020
and
2019,
the Company granted stock options to employees and nonemployees to purchase
146,700
and
1,006,602
of common stock with a weighted average grant date fair value of
$4.08
and
$7.23
per share, respectively. There were
no
stock options exercised by employees and nonemployees during the years ended
December 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: 
 
   
Year Ended
 
   
December 31,
 
   
2020
   
2019
 
                 
Expected term (in years)
   
5
     
6
 
Average volatility
   
82
%    
70
%
Risk-free interest rate
   
0.37
%    
1.62
%
Dividend yield
   
-
     
-
 
 
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 included in the consolidated statements of operations for the years ended
December 31, 2020
and
2019
(in thousands):
 
   
Year Ended
 
   
December 31,
 
   
2020
   
2019
 
                 
Cost of revenue
  $
208
    $
135
 
Research and development
   
325
     
192
 
Selling, general and administrative
   
2,118
     
2,073
 
Total
  $
2,651
    $
2,400
 
 
As of
December 31, 
2020,
the total unrecognized compensation cost in connection with unvested stock options was approximately
$4,781,000.
These costs are expected to be recognized over a period of approximately
2.5
years.