Quarterly report pursuant to Section 13 or 15(d)

Note 1 - The Company and Basis of Presentation

v3.21.1
Note 1 - The Company and Basis of Presentation
3 Months Ended
Mar. 31, 2021
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.
 
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 offering expenses payable by the Company, were approximately
$25,122,000.
 
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.
 
Warrants to purchase a total of
8,117,640
shares of common stock were issued in the
January 2021
Offering. In
February
and
March 2021,
holders exercised
January 2021
warrants to purchase
12,760
shares of common stock for aggregate exercise proceeds to the Company of approximately
$43,000.
As of
March 31, 2021,
there were
January 2021
warrants to purchase a total of
8,104,880
shares of common stock still remaining and outstanding.
 
Series C Convertible Preferred Stock
 
In connection with the closing of the
January 2021
Offering, the Company filed the 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 the 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, in each case, as to dividend rights and distributions of assets upon liquidation, dissolution or winding up of the Company.
 
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, which conversion ratio will be subject to adjustment for stock splits, stock dividends, distributions, subdivisions and combinations and other similar transactions as specified in the Series C Certificate of Designation.
 
All Series C convertible preferred stock have been converted into common stock and there are
no
remaining shares outstanding.
 
November 2019
Offering
Amendment to Warrant Pricing Terms
 
On
January 19, 2021,
the Company closed a public offering at an effective price of
$3.40
per share of its common stock. As a result, the pricing terms of the previously issued Series B, A-
2
and B-
2
Common Stock Purchase Warrants (the “Warrants”) were modified so that each Warrant entitles the holder to purchase
one
share of common stock for an adjusted exercise price of
$3.40.
The exercise price for Series B Warrants was modified from
$6.10
per share to
$3.40
per share. The exercise price for Series A-
2
and B-
2
Warrants was modified from
$6.371
per share to
$3.40
per share. There was
no
change to the quantity of warrant shares. As a result of this modification, the Company recognized a charge of
$287,000.
 
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
 
The Company previously entered into a purchase agreement on
June 8, 2020 (
the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), which provided that the Company had the right, in its sole discretion, to sell to LPC, and LPC has committed to purchase from us, up to
$10,000,000
of our common stock, subject to certain limitations, from time to time over a
30
-month period pursuant to the terms of the Purchase Agreement. The Purchase Agreement limited the Company's sale of shares of common stock to LPC to
301,762
shares of common stock (after giving effect to the Company's reverse stock split in
December 2020),
representing
19.99%
of the shares of the common stock outstanding on the date of the Purchase Agreement unless (i) shareholder approval was obtained to issue more than such amount or (ii) the average price of all applicable sales of common stock to LPC under the Purchase Agreement equaled or exceeded
$6.46
per share (after giving effect to the Company's reverse stock split).
 
On
March 31, 2021,
the Company and LPC entered into a
first
amendment to Purchase Agreement. The amendment limited the Company's sale of shares of common stock to LPC from the date thereof to
2,068,342
shares of shares of common stock, representing
19.99%
of the shares of the common stock outstanding on the date of amendment unless (i) shareholder approval is obtained to issue more than such amount or (ii) the average price of all applicable sales of Common Stock to Lincoln Park under the Purchase Agreement, as amended equals or exceeds
$2.99
per share.
 
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
11
– Common Stock for the calculation of the modification expense for the Series A and B warrants and the issuance of Series A-
2
and B-
2
warrants.) As of
March 31, 2021,
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.
 
Interim Unaudited Financial Information
 
The accompanying unaudited condensed consolidated financial statements of Viveve Medical have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form
10
-Q and Article 
8
-
03
of Regulation S-
X.
Accordingly, they do
not
include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated financial statements have been included. 
 
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form
10
-K for the year ended
December 31, 2020,
which was filed with the Securities and Exchange Commission on
March 18, 2021.
The results of operations for the
three
months ended
March
31,2021
are
not
necessarily indicative of the results for the year ending
December 
31,
2021
or any future interim period.
 
Liquidity and Management Plans
 
The Company has adopted the Financial Accounting Standards Board's (“FASB”) Accounting Standard Codification (“ASC”) Topic
205
-
40,
Presentation of Financial Statements – Going Concern, which requires that management evaluate 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. The Company had an accumulated deficit of
$225,617,000
as of
March 31, 2021.
Additionally, the Company used
$3,253,000
in cash for operations in the
three
months ended
March 31, 2021.
However, the Company's financing activities provided cash of
$25,261,000
during the
three
months ended
March
31,2021
including
$25,122,000
in net proceeds from the
January 2021
Offering and
$179,000
proceeds from the exercise of common warrants. As of
March 31, 2021,
the Company had cash and cash equivalents of
$28,446,000
and working capital of
$29,598,000.
Accordingly, management expects that our cash will be sufficient to fund our activities for at least the next 
twelve
months through
May 2022;
however, we
may
require additional funds to fully implement our plan of operation.
 
To fund further operations, the Company
may
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.