Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Common Stock

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Note 11 - Common Stock
6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

11.

Common Stock

 

Purchase Agreement with Lincoln Park Capital, LLC

 

On June 8, 2020, the Company entered into the Purchase Agreement with 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), which represented the lower of (a) the closing price of our common stock on the Nasdaq Capital Market immediately preceding the date of the Purchase Agreement or (b) the average of the closing price of the common stock on the Nasdaq Capital Market for the five business days immediately preceding the date of the Purchase Agreement, as calculated in accordance with Nasdaq Rules. 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 for gross proceeds of approximately $341,000.

 

On March 31, 2021, the Company and LPC entered into the first amendment to the Purchase Agreement. The amendment limited the Company’s sale 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 LPC under the Purchase Agreement, as amended equals or exceeds $2.99 per share, which represents the lower of (a) the closing price of the common stock on the Nasdaq Capital Market immediately preceding the date of the Amendment or (b) the average of the closing prices of our common stock on the Nasdaq Capital Market for the five business days immediately preceding the date of the Amendment, as calculated in accordance with Nasdaq Rules. On May 4, 2021, pursuant to the provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares of common stock at price per share of $2.817 for gross proceeds of approximately $704,000.

 

As of June 30, 2021, the equity facility with LPC has a remaining financing commitment of approximately $9,000,000.

 

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 June 30, 2021, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock still remaining and outstanding.

 

Restricted Common Shares

 

There were no restricted common shares issued during the six months ended June 30, 2021.

 

The activity of restricted common shares during the six months ended June 30, 2020 is described as follows:

 

 

In June 2020, the Company issued 3,453 restricted shares of its common stock at an aggregate value of approximately $25,000.

 

 

In March 2020, the Company issued 2,832 restricted shares of its common stock at an aggregate value of approximately $24,000.

 

Warrants for Common Stock

 

As of June 30, 2021, outstanding warrants to purchase shares of common stock were as follows: 

 

                   

Number of

 
                   

Shares

 
                   

Outstanding

 
   

Exercisable

 

Expiration

 

Exercise

   

Under

 

Issuance Date

 

for

 

Date

 

Price

   

Warrants

 
                         

February 2015

 

Common Shares

 

February 17, 2025

  $ 4,000.00       79  

March 2015

 

Common Shares

 

March 26, 2025

  $ 2,720.00       2  

May 2015

 

Common Shares

 

May 12, 2025

  $ 4,240.00       37  

December 2015

 

Common Shares

 

December 16, 2025

  $ 5,600.00       31  

April 2016

 

Common Shares

 

April 1, 2026

  $ 6,080.00       25  

June 2016

 

Common Shares

 

June 20, 2026

  $ 4,980.00       101  

May 2017

 

Common Shares

 

May 25, 2027

  $ 9,500.00       223  

November 2019

 

Common Shares

 

November 26, 2024

  $ 18.36       989,379  

November 2019

 

Common Shares

 

November 26, 2024

  $ 2.82       285,632  

April 2020

 

Common Shares

 

April 21, 2025

  $ 2.82       413,210  

January 2021

 

Common Shares

 

January 19, 2026

  $ 3.40       8,104,880  
                      9,793,599  

 

In connection with the 2017 Loan Agreement, the Company issued warrants to purchase a total of 223 shares of common stock at an exercise price of $9,500.00 per share. The warrants have a contractual life of ten years and are exercisable immediately in whole or in part. The fair value of the warrants, along with financing and legal fees, are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs are amortized to interest expense over the loan term. During the three and six months ended June 30, 2021, the Company recorded $1,000 and $2,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method. During the three and six months ended June 30, 2020, the Company recorded $1,000 and $2,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method. As of June 30, 2021, the unamortized debt discount was $7,000.

 

In February 2020, a total of 102,626 shares of common stock were issued in connection with the exercise of Series A warrants for gross proceeds of approximately $1,591,000, and a total of 4,548 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $70,000. 

 

In connection with the January 2021 Offering, warrants to purchase up to 8,117,640 shares of common stock were issued in the offering. The warrants to purchase one share of common stock have an exercise price of $3.40 per share and expires on the fifth anniversary of the date of issuance.

 

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 per share exercise price of our previously issued Series B, A-2 and B-2 common stock warrants was automatically reduced pursuant to the terms of the warrants. The exercise price for Series B warrants was reduced from $6.10 per share to $3.40 per share. The exercise price for Series A-2 and B-2 warrants was reduced from $6.371 per share to $3.40 per share. There was no change to the quantity of warrant shares. The Company determined the incremental fair value on Series B, A-2 and B-2 warrants due to the reduction of exercise price on the date of such modification to be approximately $287,000 using the Black-Scholes option pricing model. Assumptions used were as follows:

 

   

Immediately

   

Immediately

 

Series B Warrants

 

before Modification

   

After Modification

 
             

Exercise price

  $6.10     $3.40  

Common stock price

  $3.19     $3.19  

Expected term (in years)

  3.9     3.9  

Average volatility

  90%     90%  

Risk-free interest rate

  0.33%     0.33%  

Dividend yield

  0%     0%  

 

   

Immediately

   

Immediately

 

Series A-2 and B-2 Warrants

 

before Modification

   

After Modification

 
             

Exercise price

  $6.37     $3.40  

Common stock price

  $3.19     $3.19  

Expected term (in years)

  4.3     4.3  

Average volatility

  90%     90%  

Risk-free interest rate

  0.33%     0.33%  

Dividend yield

  0%     0%  

 

On May 4, 2021, pursuant to the provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares at $2.817 per share of the Company’s common stock. As a result, the per share exercise price of our previously issued Series B, A-2 and B-2 common stock warrants was automatically reduced from $3.40 to $2.817 pursuant to the terms of the warrants. There was no change to the quantity of warrant shares. The Company determined the incremental fair value on Series B, A-2 and B-2 warrants due to the reduction of exercise price on the date of such modification to be approximately $86,000 using the Black-Scholes option pricing model. Assumptions used were as follows:

 

   

Immediately

   

Immediately

 

Series B, A-2 and B-2 Warrants

 

before Modification

   

After Modification

 
             

Exercise price

  $3.40     $2.82  

Common stock price

  $3.01     $3.01  

Expected term (in years)

  3.6     3.6  

Average volatility

  80%     80%  

Risk-free interest rate

  0.58%     0.58%  

Dividend yield

  0%     0%  

 

The incremental fair value of the Series B, A-2 and B-2 warrants is recorded as other expense and as additional paid-in capital.

 

In February 2021, a total of 40,000 shares of common stock were issued in connection with the exercise of Series B warrants for gross proceeds of approximately $136,000 and a total of 8,760 shares of common stock were issued in connection with the exercise of January 2021 warrants for gross proceeds of approximately $30,000.

 

In March 2021, a total of 4,000 shares of common stock were issued in connection with the exercise of January 2021 warrants for gross proceeds of approximately $13,000.

 

As of June 30, 2021, there were no Series A warrants remaining to purchase shares of common stock and Series B warrants to purchase a total of 285,632 shares of common stock still remaining and outstanding.

 

As of June 30, 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.

 

As of June 30, 2021, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock still remaining and outstanding.

 

No shares issuable pursuant to warrants have been cancelled during the three and six months ended June 30, 2021 and 2020.

 

A total of 6 shares issuable pursuant to warrants expired during the three and six months ended June 30, 2021. A total of 22 shares issuable pursuant to warrants expired during the three and six months ended June 30, 2020.