UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 1-11388

VIVEVE MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3153858
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

345 Inverness Drive South

Building B, Suite 250

Englewood, CO 80112

(Address of principal executive offices)

(Zip Code)

(720) 696-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	VIVE	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “accelerated filer,” and “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 11, ~~2021,~~2022, the issuer had ~~10,602,560~~10,640,537 shares of common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

Note About Forward-Looking Statements
		Page No.
PART I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31 27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4434

Item 4.	Controls and Procedures	4434

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	44 34

Item 1A.	Risk Factors	44 34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44 34

Item 3.	Defaults Upon Senior Securities	4535

Item 4.	Mine Safety Disclosures	4535

Item 5.	Other Information	4535

Item 6.	Exhibits	4535

SIGNATURES		4738

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A. "Risk Factors" in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should read this Quarterly Report ~~on Form 10-Q~~ and the documents that we have filed as exhibits to this Quarterly Report ~~on Form 10-Q~~ completely and with the understanding that our actual future results, performance or achievements may be materially different from what we expect. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms "Viveve Medical," the "Company," "we," "us," and "our" in this document refer to Viveve Medical, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries.

	September 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
ASSETS				*(1)*
Current assets:
Cash and cash equivalents	$	22,665		$	6,523		$	14,045		$	19,162
Accounts receivable, net of allowance for doubtful accounts of $49 and $124 as of September 30, 2021 and December 31, 2020, respectively		514			770
Accounts receivable, net of allowance for doubtful accounts of $37 and $66 as of March 31, 2022 and December 31, 2021, respectively								509			549
Inventory		2,150			3,254			1,552			1,472
Prepaid expenses and other current assets		2,083			2,296			1,393			1,055
Total current assets		27,412			12,843			17,499			22,238
Property and equipment, net		1,678			2,759			1,351			1,554
Investment in limited liability company		645			833
Investment in unconsolidated limited liability company								455			577
Other assets		649			195			1,379			1,544
Total assets	$	30,384		$	16,630		$	20,684		$	25,913
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,292		$	881		$	1,602		$	1,480
Accrued liabilities		2,557			2,416			3,376			3,053
Paycheck Protection Program loan, current portion		0			918
Note payable, current portion								5,285			0
Total current liabilities		3,849			4,215			10,263			4,533
Note payable, noncurrent portion		4,964			4,518			0			5,124
Paycheck Protection Program loan, noncurrent portion		0			425
Other noncurrent liabilities		1,206			498			265			1,190
Total liabilities		10,019			9,656			10,528			10,847
Commitments and contingences (Note 9)
Stockholders’ equity:
Convertible preferred stock; 10,000,000 shares authorized as of September 30, 2021 and December 31, 2020; Series B preferred stock, $0.0001 par value; 39,279 and 35,819 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		0			0
Series C preferred stock, $0.0001 par value; 0 shares issued and outstanding as of September 30, 2021 and outstanding as of September 30, 2021		0			0
Common stock, $0.0001 par value; 75,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 10,602,560 and 2,171,316 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		1			0
Convertible preferred stock; 10,000,000 shares authorized as of March 31, 2022 and December 31, 2021;
Series B preferred stock, $0.0001 par value; 41,767 and 40,504 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively								0			0
Series C preferred stock, $0.0001 par value; 0 shares issued and outstanding as of December 31, 2021								0			0
Common stock, $0.0001 par value; 75,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 10,640,537 and 10,619,846 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively								1			1
Additional paid-in capital		255,889			226,800			257,894			256,918
Accumulated deficit		(235,525	)		(219,826	)		(247,739	)		(241,853	)
Total stockholders’ equity		20,365			6,974			10,156			15,066
Total liabilities and stockholders’ equity	$	30,384		$	16,630		$	20,684		$	25,913

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Note: All share and per share data has been adjusted to reflect the 1-for-10 reverse stock split which became effective after market close on December 1, 2020, as discussed in Note 2.~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

Series A Convertible
Preferred Stock,
$0.0001 par value

Series B Convertible
Preferred Stock,
$0.0001 par value

Common Stock,
$0.0001 par value

Additional
Paid-In
Accumulated
Total Stockholders’

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balances as of January 1, 2020
185,218 $ 0 31,678 $ 0 707,571 $ 0 $ 214,431 $ (197,911 ) $ 16,521
Issuance costs in connection with November 2019 Offering
- 0 - 0 - 0 (30 ) 0 (30 )
Conversion of Series A convertible preferred stock into common stock
(185,218 ) 0 0 0 185,218 0 0 0 0
Issuance of common shares in connection with common warrant exercises
0 0 0 0 107,172 0 1,661 0 1,661
Series B convertible preferred stock dividends
- 0 - 0 - 0 (990 ) 0 (990 )
Series B convertible preferred stock dividends paid in PIK shares
0 0 989 0 0 0 989 0 989
Stock-based compensation expense
- 0 - 0 - 0 686 0 686
Issuance of common shares from employee stock purchase plan
- 0 - 0 32 0 0 0 0
Issuance of restricted common shares in connection with consulting agreement
0 0 0 0 2,832 0 24 0 24
Net loss
- 0 - 0 - 0 0 (6,310 ) (6,310 )
Balances as of March 31, 2020
0 0 32,667 0 1,002,825 0 216,771 (204,221 ) 12,551
Issuance costs in connection with November 2019 Offering
- 0 - 0 - 0 (3 ) 0 (3 )
Issuance of common shares in connection with Series A and B warrant exercises
0 0 0 0 514,578 0 3,139 0 3,139
Modification of exercise price of warrants in connection with 2020 Warrant Offering
- 0 - 0 - 0 1,838 0 1,838
Issuance of Series A-2 and B-2 warrants in connection with 2020 Warrant Offering
- 0 - 0 - 0 1,838 0 1,838
Issuance costs for Series A-2 and B-2 warrants in connection with 2020 Warrant Offering
- 0 - 0 - 0 (1,838 ) 0 (1,838 )
Transaction costs in connection with 2020 Warrant Offering
- 0 - 0 - 0 (326 ) 0 (326 )
Issuance of initial purchase common shares under the Purchase Agreement with LPC
0 0 0 0 52,500 0 341 0 341
Issuance costs in connection with Purchase Agreement with LPC
- 0 - 0 - 0 (452 ) 0 (452 )
Series B convertible preferred stock dividends
- 0 - 0 - 0 (1,021 ) 0 (1,021 )
Series B convertible preferred stock dividends paid in PIK shares
0 0 1,018 0 0 0 1,018 0 1,018
Stock-based compensation expense
- 0 - 0 - 0 632 0 632
Issuance of common shares from employee stock purchase plan
0 0 0 0 30 0 0 0 0
Issuance of common shares for vesting of restricted stock award granted to consultant
0 0 0 0 25 0 0 0 0
Issuance of restricted common shares in connection with consulting agreement
0 0 0 0 3,454 0 25 0 25
Net loss
- 0 - 0 - 0 0 (7,115 ) (7,115 )
Balances as of June 30, 2020
0 0 33,685 0 1,573,412 0 221,962 (211,336 ) 10,627
Issuance of common shares in connection with Series A and B warrant exercises
0 0 0 0 494,113 0 3,014 0 3,014
Issuance costs for Series A-2 and B-2 warrants in connection with 2020 Warrant Offering
0 0 0 0 93,129 0 593 0 593
Transaction costs in connection with 2020 Warrant Offering
- 0 - 0 - 0 (7 ) 0 (7 )
Transaction costs in connection with Purchase Agreement with LPC
- 0 - 0 - 0 (42 ) 0 (42 )
Dividend on Series B convertible preferred stock
- 0 - 0 - 0 (1,053 ) 0 (1,053 )
Dividend on Series B convertible preferred stock paid in PIK shares
0 0 1,050 0 0 0 1,050 0 1,050
Stock-based compensation expense
- 0 - 0 - 0 617 0 617
Issuance of common shares in connection with ESPP
0 0 0 0 22 0 0 0 0
Issuance of restricted common shares in connection with consulting agreement
0 0 0 0 4,709 0 25 0 25
Reverse stock split (December 2020) - rounding adjustment
0 0 0 0 5,931 0 0 0 0
Net loss
- 0 - 0 - 0 0 (3,735 ) (3,735 )
Balances as of September 30, 2020
0 $ 0 34,735 0 2,171,316 $ 0 $ 226,159 $ (215,071 ) $ 11,089

	Series B Convertible Preferred Stock				Series C Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Equity

Balances as of January 1, 2022		40,504	$	0		0	$	0		10,619,846	$	1	$	256,918		$	(241,853	)	$	15,066
Dividend on Series B convertible preferred stock		-		0		-		0		-		0		(1,266	)		0			(1,266	)
Dividend on Series B convertible preferred stock paid in PIK shares		1,263		0		0		0		0		0		1,263			0			1,263
Stock-based compensation expense		-		0		-		0		-		0		960			0			960
Issuance of common shares from employee stock purchase plan		0		0		0		0		20,691		0		19			0			19
Net loss		-		0		-		0		-		0		0			(5,886	)		(5,886	)
Balances as of March 31, 2022		41,767		0		0	$	0		10,640,537	$	1	$	257,894		$	(247,739	)	$	10,156

~~Note: All share and per share data has been adjusted to reflect the 1-for-10 reverse stock split which became effective after market close on December 1, 2020, as discussed in Note 2.~~

	Series B Convertible Preferred Stock				Series C Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Equity

Balances as of January 1, 2021		35,819	$	0		0	$	0		2,171,316	$	0	$	226,800		$	(219,826	)	$	6,974
January 2021 Offering, net issuance costs		0		0		0		0		5,666,760		1		25,121			0			25,122
Conversion of Series C convertible preferred stock into common stock		0		0		0		0		2,450,880		0		0			0			0
Issuance of common shares in connection with common warrant exercises		0		0		0		0		52,760		0		179			0			179
Modification of exercise price of warrants in connection with January 2021 Offering		-		0		-		0		-		0		287			0			287
Transaction costs in connection with Purchase Agreement with LPC		-		0		-		0		-		0		(40	)		0			(40	)
Dividend on Series B convertible preferred stock		-		0		-		0		-		0		(1,119	)		0			(1,119	)
Dividend on Series B convertible preferred stock paid in PIK shares		1,118		0		0		0		0		0		1,118			0			1,118
Stock-based compensation expense		-		0		-		0		-		0		810			0			810
Net loss		-		0		-		0		-		0		0			(5,791	)		(5,791	)
Balances as of March 31, 2021		36,937		0		0	$	0		10,341,716	$	1	$	253,156		$	(225,617	)	$	27,540

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2021			2020			2022			2021

Cash flows from operating activities:
Net loss	$	(15,699	)	$	(17,160	)	$	(5,886	)	$	(5,791	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		104			335			(1	)		65
Depreciation and amortization		884			965			204			328
Stock-based compensation		2,765			2,009			960			810
Non-cash interest expense		446			394			161			142
Amortization of operating lease right-of-use assets and accretion of operating lease liabilities		15			3
Loss from minority interest in limited liability company		188			323
Loss from investment in unconsolidated limited liability company								122			76
Loss on disposal of property and equipment		40			14			1			9
Modification of warrants		373			1,838			0			287
Forgiveness of Paycheck Protection Program loan		(1,358	)		0
Changes in assets and liabilities:
Accounts receivable		152			549			41			369
Inventory		1,423			233			(33	)		396
Prepaid expenses and other current assets		213			683			(338	)		253
Other noncurrent assets		(3	)		444
Other assets								112			150
Accounts payable		411			(913	)		122			276
Accrued and other liabilities		71			(2,918	)
Accrued liabilities								311			(727	)
Other noncurrent liabilities		324			265			(863	)		104
Net cash used in operating activities		(9,651	)		(12,936	)		(5,087	)		(3,253	)

Cash flows from investing activities:
Purchase of property and equipment		(162	)		(403	)		(49	)		(85	)
Net cash used in investing activities		(162	)		(403	)		(49	)		(85	)

Cash flows from financing activities:
Proceeds from January 2021 Offering, net of issuance costs		25,122			0			0			25,122
Proceeds from exercise of common warrants		179			8,407			0			179
Transaction costs in connection with 2020 Warrant Offering		0			(333	)
Proceeds from purchase of common shares under Purchase Agreement with LPC		704			341
Transaction costs in connection with Purchase Agreement with LPC		(71	)		(494	)		0			(40	)
Proceeds from Paycheck Protection Program loan		0			1,343
Transaction costs in connection with November 2019 Offering		0			(33	)
Proceeds from issuance of common shares from employee stock purchase plan		21			0			19			0
Net cash provided by financing activities		25,955			9,231			19			25,261
Net increase (decrease) in cash and cash equivalents		16,142			(4,108	)		(5,117	)		21,923

Cash and cash equivalents - beginning of period		6,523			13,308			19,162			6,523
Cash and cash equivalents - end of period	$	22,665		$	9,200		$	14,045		$	28,446

Supplemental disclosure:
Cash paid for interest	$	0		$	0		$	0		$	0
Cash paid for income taxes	$	0		$	0		$	0		$	0


Supplemental disclosure of cash flow information as of end of period:
Forgiveness of Paycheck Protection Program loan	$	1,358		$	0
Issuance of Series B convertible preferred stock in settlement of dividends	$	3,460		$	3,057		$	1,263		$	1,118
Issuance of note payable in settlement of accrued interest	$	443		$	392		$	160		$	141
Net transfer of equipment between inventory and property and equipment	$	(319	)	$	37		$	(47	)	$	(191	)
Supplemental cash flow information related to leases was as follows:
Operating cash outflows from operating leases	$	195		$	226		$	69		$	75

The accompanying notes are an integral part of these condensed consolidated financial statements.

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.~~ (“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.

On July 2, 2021, we filed a universal shelf registration statement with the ~~SEC~~Securities and Exchange Commission (the “SEC”) on Form S-3 for the proposed offering from time to time of up to $75,000,000 of our securities, including common stock, preferred stock, and/or warrants. This registration statement currently has a capacity of $75,000,000. However, as a result of the limitations of General Instruction I.B.6. of Form S-3, or the so-called “baby shelf ~~rules”,~~rules,” the amount of shares of our common stock available for sale under a registration statement on Form S-3 is limited to one-third of the aggregate market value of our common equity held by ~~non- affiliates~~non-affiliates of the Company over any rolling 12-month period. As of ~~September 30, 2021,~~March 31, 2022, we have not issued any shares or received any proceeds pursuant to the universal shelf registration statement.

~~Purchase Agreement with LPC~~ –Reduction of Common Warrant Exercise Price

On ~~May 4,~~January 19, 2021, ~~pursuant to~~ the ~~provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares~~Company closed a public offering at ~~$2.817~~an effective price of $3.40 per share of ~~the Company’s~~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 ~~from $3.40 to $2.817~~ 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. As a result of this reduction of warrant exercise price, the Company recognized a modification charge of ~~$86,000.~~$287,000.

In February and March 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 12,760 shares of common stock were issued in connection with the exercise of January 2021 warrants for gross proceeds of approximately $43,000.

As of March 31, 2022, there were Series B warrants to purchase a total of 285,632 shares of common stock, 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.

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.~~Viveve Medical.

The offering comprised of: ~~(1)~~(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~~1 share of common stock and ~~one~~1 warrant to purchase ~~one~~1 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 0 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 ~~September 30, 2021,~~March 31, 2022, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock still remaining and outstanding.

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~~1 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 0 remaining shares outstanding.

~~November 2019~~ ~~Offering~~ – ~~Reduction of Warrant Exercise Price~~

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. As a result of this reduction of warrant exercise price, the Company recognized a modification charge of $287,000.~~

On ~~December 16, 2020,~~March 14, 2022, the Company filed a Certificate of Elimination ~~(the “Certificate of Elimination”)~~ with the Delaware Secretary of State with respect to ~~547,345~~the authorized shares of Series AC 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.~~ stock. As of the date of the filing of the Certificate of Elimination, 0 shares of Series AC convertible preferred stock were outstanding. Upon filing the Certificate of Elimination, the ~~547,345~~2,450,880 authorized shares of Series AC 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.

The Company previously entered into a purchase agreement on June 8, 2020,as amended on March 31, 2021 (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~~(See Note ~~December 2020),~~ 11representing 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 ~~June 9, 2020,~~ ~~LPC purchased 52,500 shares of common stock at a price per share of $6.50 (the “Initial Purchase Shares”~~ – Common Stock.) ~~under the Purchase Agreement for gross proceeds of approximately $341,000.~~

On ~~March 31, 2021,~~ the Company and LPC entered into a First Amendment to the 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 LPC under the Purchase Agreement, as amended equals or exceeds $2.99 per share. On ~~May 4, 2021,~~ ~~LPC purchased 250,000 shares of common stock at price per share of $2.817 under the Purchase Agreement for gross proceeds of approximately $704,000.~~

As of ~~September 30, 2021,~~March 31, 2022, the equity facility with LPC has a remaining financing commitment of approximately $9,000,000.

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 $326,000. (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~~ ~~September 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.~~

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,~~2021, which was filed with the ~~Securities and Exchange Commission~~SEC on March ~~18, 2021.~~17, 2022. The results of operations for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results for the year ending December 31, ~~2021~~2022 or any future interim period.

~~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~~As of March 31, 2022, the Company had an accumulated deficit of ~~$235,525,000 as of~~ ~~September 30, 2021.~~ ~~Additionally, the Company used $9,651,000 in cash for operations in the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~ ~~However, the Company's financing activities provided cash of $25,955,000 during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~including $25,122,000 in net proceeds from the~~ ~~January 2021~~ Offering, $633,000 in net proceeds from purchase of common shares under the Purchase Agreement with LPC, $179,000 in proceeds from the exercise of common warrants and $21,000 in proceeds from issuance of common shares from employee stock purchase plan. As of ~~September 30, 2021,~~ ~~the Company had~~$247,739,000, cash and cash equivalents of ~~$22,665,000~~$14,045,000 and working capital of ~~$23,563,000. Accordingly, management expects that~~$7,236,000. The Company used cash of $5,087,000 in operations in the three months ended March 31, 2022. As of the date our ~~cash along with~~condensed consolidated financial statements for the ~~remaining equity financing commitment from LPC of approximately $9,000,000 will be~~three months ended March 31, 2022 were issued, the Company did not have sufficient cash to fund ~~our activities for at least~~its operations through May 31, 2023, without additional financing and, therefore, the ~~next~~Company concluded there was substantial doubt about its ability to continue as a going concern within ~~twelve~~one ~~months through~~ ~~November 2022;~~ ~~however, we~~ ~~may~~ ~~require additional funds from~~year after the ~~sale of equity or debt securities to fully implement our plan of operation.~~date the condensed consolidated financial statements were issued.

To fund further operations, the Company ~~may~~ 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.

The condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, Viveve, Inc. and Viveve BV. All significant intercompany accounts and transactions have been eliminated in consolidation.

~~The Company effected a~~ 1~~-for-10 reverse stock split of its common stock that became effective after market close on~~ ~~December 1, 2020.~~ ~~The reverse stock split uniformly affected all issued and outstanding shares of the Company’s common stock. The reverse stock split provided that every~~ ~~ten~~ ~~shares of the Company’s issued and outstanding common stock was automatically combined into~~ ~~one~~ ~~issued and outstanding share of common stock, without any change in par value per share. The number of authorized shares of common stock remained at 75,000,000 shares.~~

As a result of the reverse stock split, proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all then outstanding stock options, deferred restricted stock awards and warrants, which will result in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, deferred restricted stock awards and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants. In addition, the number of shares reserved for issuance under the Company’s equity compensation plans immediately prior to the effective date will be reduced proportionately. The Company issued 5,931 shares of common stock as a result of this adjustment.

NaN fractional shares were issued as a result of the reverse stock split. Stockholders of record who would otherwise have been entitled to receive a fractional share were rounded up to the nearest whole number.

~~All of the share numbers, share prices, and exercise prices have been adjusted, on a retroactive basis, to reflect this~~ 1~~-for-~~10 ~~reverse stock split.~~

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, ~~revenues,~~revenue, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results.

The Company considers all highly liquid investments purchased with an original maturity of three months or less, at the time of purchase, to be cash equivalents. The Company’s cash and cash equivalents are deposited in demand accounts primarily at ~~one~~1 financial institution. Deposits in this institution may, from time to time, exceed the federally insured amounts.

To achieve profitable operations, the Company must successfully develop, manufacture, and market its products. There can be no assurance that any such products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed. These factors could have a material adverse effect upon the Company’s financial results, financial position, and future cash flows.

Most of the Company’s products to date require clearance or approvals from the U.S. Food and Drug Administration ~~(“FDA”)~~ or other international regulatory agencies prior to commencing commercial sales. There can be no assurance that the Company’s products will receive any of these required clearances or approvals or for the indications requested. If the Company was denied such clearances or approvals or if such clearances or approvals were delayed, it would have a material adverse effect on the Company’s financial results, financial position and future cash flows.

The Company is subject to risks common to companies in the medical device industry including, but not limited to, new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, product liability, and the need to obtain additional financing. The Company’s ultimate success is dependent upon its ability to raise additional capital and to successfully develop and market its products.

The Company designs, develops, manufactures and markets a medical device that it refers to as the Viveve System, which is intended for the non-invasive treatment of vaginal introital laxity, for improved sexual function, for vaginal rejuvenation, for use in general surgical procedures for electrocoagulation and hemostasis, and stress urinary incontinence, depending on the relevant country-specific clearance or approval. The Viveve System consists of three main components: a radiofrequency generator housed in a table-top console, a reusable handpiece and a single-use treatment tip. Included with the system are single-use accessories (e.g. return pad, coupling fluid), as well as a cryogen canister that can be used for approximately four to five procedures, and a foot pedal. The Company outsources the manufacture and repair of the Viveve System to ~~a single~~ contract ~~manufacturer.~~manufacturing partners. Also, certain other components and materials that comprise the device are currently manufactured by a single supplier or a limited number of suppliers. A significant supply interruption or disruption in the operations of the contract manufacturer or these third-party suppliers would adversely impact the production of our products for a substantial period of time, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

In ~~North America,~~the United States, the Company sells its products primarily through a direct sales force to health care practitioners. Outside ~~North America,~~the United States, the Company sells through an extensive network of distribution partners. During the three ~~and~~ ~~nine~~months ended ~~September 30, 2021,~~March 31, 2022, ~~one~~1 distributor accounted for ~~36% and 29%~~41% of the Company’s ~~revenue, respectively.~~revenue. During the three ~~and~~ ~~nine~~months ended ~~September 30, 2020,~~March 31, 2021, ~~one~~1 distributor accounted for ~~40% and 45%~~17% of the Company’s ~~revenue, respectively.~~revenue.

As of ~~September 30, 2021,~~March 31, 2022, no customer accounted for more than 10% of the Company’s accounts receivable, net. As of December 31, ~~2020,~~2021, ~~one~~ ~~distributor~~1 direct customer accounted for ~~37%~~10% of total accounts receivable, net.

Accounts receivable are recorded at the invoiced amount and are not interest bearing. Our typical payment terms vary by region and type of customer (distributor or physician). Occasionally, payment terms of up to six months may be granted to customers with an established history of collections without concessions. Should we grant payment terms greater than six months or terms that are not in accordance with established history for similar arrangements, revenue would be recognized as payments become due and payable assuming all other criteria for revenue recognition have been met. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company makes ongoing assumptions relating to the collectability of its accounts receivable in its calculation of the allowance for doubtful accounts. In determining the amount of the allowance, the Company makes judgments about the creditworthiness of customers based on ongoing credit evaluations and assesses current economic trends affecting its customers that might impact the level of credit losses in the future and result in different rates of bad debts than previously seen. The Company also considers its historical level of credit losses. The allowance for doubtful accounts was ~~$49,000~~$37,000 as of ~~September 30, 2021~~March 31, 2022 and ~~$124,000~~$66,000 as of December 31, ~~2020.~~2021.

During the three ~~month and~~ ~~nine~~months ended ~~September 30,~~ March 31, 2022 and 2021,the Company wrote-off accounts receivable totaling approximately ~~$115,000~~$28,000 and ~~$179,000,~~$64,000, respectively, primarily related to U.S. customers. ~~There were 0 write-offs of customers’ accounts receivable during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020.~~ ~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ the Company wrote-off accounts receivable totaling approximately $173,000 primarily related to Latin America distributors in connection with the Company’s shift in its international business model and the withdrawal from certain countries in Latin America.

Revenue consists primarily of the sale of the Viveve System, single-use treatment tips and ancillary consumables. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders to be the contracts with a customer. ~~Revenues,~~Revenue, net of expected discounts, are recognized when the performance obligations of the contract with the customer are satisfied and when control of the promised goods are transferred to the customer, typically when products, which have been determined to be the only distinct performance obligations, are shipped to the customer. Expected costs of assurance warranties and claims are recognized as expense. Revenue is recognized net of any sales taxes from the sale of the products.

Rental revenue is generated through the lease of the Viveve System. The Company’s operating leases for the Viveve System generally have a rental period of ~~six~~6 to ~~twelve~~12 months and can be extended or terminated by the customer after that time or the Viveve System could be purchased by the customer. Rental revenue on those operating leases is recognized on a straight-line basis over the terms of the underlying leases. ~~The Company began this rental program in the quarter ended~~ ~~June 30, 2019.~~ For the three ~~and~~ ~~nine~~months ended ~~September 30,~~ March 31, 2022 and 2021,rental revenue recognized during the period was $261,000 and ~~$950,000, respectively. For the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~rental revenue recognized during the period was $471,000 and~~ ~~$829,000,~~$366,000, respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had deferred revenue in the amounts of ~~$436,000~~$506,000 and ~~$345,000,~~$452,000, respectively, related to its rental program, which is included in accrued liabilities on the condensed consolidated balance sheets. During the three ~~and~~months ended ~~nine~~March 31, 2022, the Company recognized revenue of $197,000 which was deferred as of December 31, 2021. During the three months ended ~~September 30,~~March 31, 2021, the Company recognized revenue of ~~$14,000 and $310,000~~$230,000 which was deferred ~~revenue~~ as of December 31, 2020.

~~Late in the~~ ~~first~~ ~~quarter of~~ ~~2020~~ ~~and through the~~ ~~third~~ ~~quarter of~~ ~~2021,~~ ~~the negative impact of the COVID-~~19 pandemic on medical facilities and practitioners was in full effect in the United States. Federal, regional, and local government and public health agencies issued directives halting performance of non-essential medical treatments and elective procedures in an effort to combat the spread of the coronavirus and protect public health and safety. As a result, a large percentage of Viveve’s U.S. customers either temporarily closed their medical practices or dramatically reduced services and staff. The consequence has been both a public health and economic crisis that is continuing for existing and prospective Viveve customers. In a supportive partnership response, in the ~~second~~ ~~quarter of~~ ~~2020~~ ~~Viveve contacted all of its subscription customers and provided them with a~~ ~~three~~~~-month deferral of the rental payment. Although clinics in various regions continue to re-open and gradually increase their limited services, we anticipate that until the COVID-~~19 pandemic abates, more practices re-open and elective patient’s safety concerns are reduced, that we will continue to experience reduced revenue from existing subscription customers, as well as a greatly reduced number of new and prospective customers.

In connection with the lease of the Viveve System, the Company offers single-use treatment tips and ancillary consumables that are considered non-lease components. In the contracts with lease and non-lease components, the Company follows the relevant guidance in ASC 606, Revenue from Contracts with Customers, to determine how to allocate contractual consideration between the lease and non-lease components.

Sales of our products are subject to regulatory requirements that vary from country to country. The Company has regulatory clearance for differing indications, or can sell its products without a clearance, in many countries throughout the world, including countries within the following regions: North America, Asia Pacific, Europe, the Middle East and Latin America. In ~~North America,~~the United States, we market and sell primarily through a direct sales force. Outside of ~~North America,~~the United States, we market and sell primarily through distribution partners.

From time to time, customers will pay for a portion of the products ordered in advance. Upon receipt of such payments, the Company records the customer advance payment as a component of accrued ~~liabilities.~~liabilities on the condensed consolidated balance sheets. The Company will remove the customer advance payment from accrued liabilities when revenue is recognized upon shipment of the products.

The Company continually evaluates whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. NaN such assets existed as of ~~September 30, 2021~~March 31, 2022, or December 31, ~~2020.~~2021. The Company had customer contract liabilities in the amount of ~~$25,000~~$4,000 and ~~$17,000~~$7,000 that performance had not yet been delivered to its customers as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Contract liabilities are recorded in accrued liabilities on the condensed consolidated balance sheet.

Separately, accounts receivable, net represents receivables from contracts with customers.

The Company applies the practical expedient to not make any adjustment for a significant financing component if, at contract inception, the Company does not expect the period between customer payment and transfer of control of the promised goods or services to the customer to exceed one year. During the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2022, ~~and~~ ~~2020,~~the Company did not have any contracts for the sale of its products with its customers with a significant financing component.

~~The Company began its rental program in the quarter ended~~ ~~June 30, 2019.~~ The Company expects that commissions paid to obtain subscriptions are recoverable and has therefore capitalized them as a contract cost in the amount of ~~$53,000~~$28,000 and ~~$32,000 at~~$84,000 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Capitalized commissions are amortized based on the subscription periods to which the assets relate and are included in selling, general and administrative expenses. For the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~2021, the amount of amortization of these costs was ~~$13,000~~$17,000 and ~~$58,000, respectively. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~the amount of amortization was $47,000 and $538,000,~~$14,000, respectively. There was no impairment loss in relation to the costs capitalized. The Company has elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is ~~one~~ ~~year or less.~~

Shipping costs billed to customers are recorded as revenue. Shipping and handling expense related to costs incurred to deliver product are recognized within cost of goods sold. The Company accounts for shipping and handling activities that occur after control has transferred as a fulfillment cost as opposed to a separate performance obligation, and the costs of shipping and handling are recognized concurrently with the related revenue.

Management has determined that the sales by geography is a key indicator for understanding the Company’s ~~financials~~financial performance because of the different sales and business models that are required in the various regions of the world (including regulatory, selling channels, pricing, customers and marketing efforts). The following table presents the revenue from unaffiliated customers disaggregated by geographic area for the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021 (in thousands):

The Company determines geographic location of its revenue based upon the destination of the shipments of its products.

The Company uses the equity method to account for its investments in entities that it does not control but have the ability to exercise significant influence over the investee. Equity method investments are recorded at original cost and adjusted periodically to recognize (1) the proportionate share of the investees’ net income or losses after the date of investment, (2) additional contributions made and dividends or distributions received, and (3) impairment losses resulting from adjustments to net realizable value. The Company eliminates all intercompany transactions in accounting for equity method investments. The Company records the proportionate share of the investees’ net income or losses in equity in earnings of unconsolidated affiliates on the condensed consolidated statements of ~~operations.~~operations and comprehensive loss. The Company utilizes a three-month lag in reporting equity income from its investments, adjusted for known amounts and events, when the investee’s financial information is not available timely or when the investee’s reporting period differs from our reporting period.

The Company assesses the potential impairment of the equity method investments when indicators such as a history of operating losses, a negative earnings and cash flow outlook, and the financial condition and prospects for the investee’s business segment might indicate a loss in value. The carrying value of the investments is reviewed annually for changes in circumstances or the occurrence of events that suggest the investment may not be recoverable. ~~NaN~~During the three months ended March 31, 2022 and 2021, 0 impairment charges have been recorded in the condensed consolidated statements of operations ~~during the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020.~~comprehensive loss.

The Company’s products sold to customers are generally subject to warranties between one and three years, which provides for the repair ~~rework~~ or replacement of products (at the Company’s option) that fail to perform within stated specifications. The Company has assessed the historical claims and, to date, product warranty claims have not been significant.

Share-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as expense over the employee’s service period. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award.

The Company determined that the Black-Scholes option pricing model is the most appropriate method for determining the estimated fair value for stock options and purchase rights under the employee stock purchase plan. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of share-based awards, including the option’s expected term and the price volatility of the underlying stock.

Equity instruments issued to nonemployees are recorded in the same manner as similar instruments issued to employees.

Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions. Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss. For the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~2021, the Company’s comprehensive loss is the same as its net loss.

The Company’s basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents outstanding during the period. For purposes of this calculation, stock options and warrants to purchase common stock and restricted common stock awards are considered common stock equivalents. For periods in which the Company has reported net losses, diluted net loss per share is the same as basic net loss per share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The following securities were excluded from the calculation of net loss per share because the inclusion would be anti-dilutive:

In ~~December 2019,~~June 2016, the FASB issued ASU ~~2019~~2016-~~12,~~13, ~~“Income Taxes~~Financial Instruments—Credit Losses (Topic ~~740~~326).: Measurement of Credit Losses on Financial Instruments, as amended, which revises the measurement of credit losses for most financial instruments measured at amortized cost, including trade receivables, from an incurred loss methodology to an expected loss methodology which results in earlier recognition of credit losses. Under the incurred loss model, a loss is not recognized until it is probable that the loss-causing event has already occurred. The ~~amendments~~new standard introduces a forward-looking expected credit loss model that requires an estimate of the expected credit losses over the life of the instrument by considering all relevant information including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. The guidance in this Update provide further simplification of accounting standards for the accounting for income taxes. Certain exceptions for are removed and requirements regarding the accounting for franchise taxes, tax basis of goodwill, and tax law rate changes are made. This guidanceASU 2016-13 is effective for ~~annual reporting periods~~the Company for financial statements issued for fiscal years beginning after December 15, ~~2020,~~2022 ~~including~~and interim periods within ~~that reporting period,~~those fiscal years, with early adoption permitted. ~~We adopted this guidance as~~The Company is still evaluating the impact of~~January 1, 2021,~~ ~~and~~ the adoption of ~~the guidance did~~ ~~not~~ ~~have a significant impact on the condensed consolidated financial statements.~~ this standard.

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

The Company recognizes and discloses the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). Each level of input has different levels of subjectivity and difficulty involved in determining fair value.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

There were no financial instruments that were measured at fair value on a recurring basis as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020~~2021 approximate fair value because of the short maturity of these instruments. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of the note payable approximates fair value.

On August 8, 2017, the Company entered into an exclusive Distributorship Agreement (the “Distributorship Agreement”) with InControl Medical, LLC (“ICM”), a Wisconsin limited liability company focused on women’s health, pursuant to which the Company will directly market, promote, distribute and sell ICM’s products to licensed medical professional offices and hospitals in North America.

~~Under the terms of the Distributorship Agreement, ICM agreed to~~ ~~not~~ ~~directly or indirectly appoint or authorize any~~ ~~third~~ ~~party to market, promote, distribute or sell any of the licensed products to any licensed medical professional offices and hospitals in the United States. In exchange, the Company agreed to~~ ~~not~~ market, promote, distribute or sell (or contract to do so) any product which substantially replicates all or almost all of the key features of the licensed products. The terms of the Distribution Agreement also included a minimum purchase requirement to purchase a certain quantity of ICM products per month. In addition, the parties agreed to certain mutual marketing obligations to promote sales of the licensed products. During the ~~three~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~the Company has purchased 40 and 185 units of ICM products for approximately $5,000 and $26,000, respectively. During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~the Company has purchased 140 and 425 units of ICM products for approximately $17,000 and $46,000, respectively. As of~~ ~~September 30, 2021,~~ ~~the Company has purchased approximately 5,425 units of ICM products. The Company paid ICM approximately $7,000 and $10,000 for product-related costs during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively. The Company paid ICM approximately $17,000 and $30,000 for product-related costs during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively. There were 0 amounts due to ICM for the accounts payable as of~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020.~~

In connection with the Distributorship Agreement, the Company also entered into a Membership Unit Subscription Agreement with ICM and the associated limited liability company operating agreement of ICM, pursuant to which the Company invested $2,500,000 in, and acquired membership units of, ICM. This investment has been recorded in investment in a limited liability company inon the condensed consolidated balance sheets. The Company used the equity method to account for the investment in ICM because the Company does not control it but has the ability to exercise significant influence over it. As of ~~September 30, 2021,~~March 31, 2022, the Company ~~owned~~owns approximately 7% ownership interest in ICM. The Company recognizes its allocated portion of ICM’s results of operations on a three-month lag due to the timing of financial information. For the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~2021, the allocated net loss from ICM’s operations was ~~$33,000~~$122,000 and ~~$55,000, respectively. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~the allocated net loss from ICM’s operations was $188,000 and $323,000,~~$76,000, respectively. The allocated net loss from ICM’s operations was recorded as loss from ~~minority interest~~investment in unconsolidated limited liability company in the condensed consolidated statements of ~~operations.~~operations and comprehensive loss.

In February 2019, the Company executed a mutual termination of the Distributorship Agreement with ICM. As a result, the Company no longer has a minimum purchase requirement to purchase a certain quantity of ICM products per month.

During the three months ended March 31, 2022 and 2021, the Company purchased 0 units of ICM products. Through March 31, 2022, the Company has purchased approximately 5,425 units of ICM products. The Company paid ICM $0 for product related costs during the three months ended March 31, 2022 and 2021. There were 0 amounts due to ICM for accounts payable as of March 31, 2022 and December 31, 2021.

Accrued liabilities consisted of the following as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):

On May 22, 2017, the Company entered into a Term Loan Agreement as amended on December 12, 2017 and November 29, 2018 (collectively the “2017 Loan Agreement”) with affiliates of ~~CRG LP (“CRG”).~~CRG. The credit facility consists of $20,000,000 drawn at closing and access to additional funding of up to an aggregate of $10,000,000 for a total of $30,000,000 available under the credit facility. On December 29, 2017, the Company accessed the remaining $10,000,000 available under the credit facility.

Under the 2017 Loan Agreement, as in effect prior to the November 12, 2019 amendment, the credit facility had a six-year term with four years of interest-only payments after which quarterly principal and interest payments were to be due through the maturity date. Amounts borrowed under the 2017 Loan Agreement accrued interest at an annual fixed rate of 12.5%, 4.0% of which may, at the election of the Company, be paid in-kind during the interest-only period by adding such accrued amount to the principal loan amount each quarter. The Company was also required to pay CRG a final payment fee upon repayment of the loans in full equal to 5.0% of the sum of the aggregate principal amount plus the deferred interest added to the principal loan amount during the interest-only period.

As collateral for its obligations under the 2017 Loan Agreement, the Company entered into security agreements with CRG whereby the Company granted CRG a lien on substantially all of the Company’s assets, including intellectual property.

The terms of the 2017 Loan Agreement also required the Company to meet certain financial and other covenants. The 2017 Loan Agreement also contained customary affirmative and negative covenants for a credit facility of this size and type.

On November 12, 2019, the Company and CRG amended the 2017 Loan Agreement (the “Amendment No. 3”). In connection with the amendment, the Company converted approximately $28,981,000 of the outstanding principal amount under the term loan plus accrued interest, the prepayment premium and the back-end facility fee for an aggregate amount of converted debt obligations of approximately $31,300,000. The debt obligations converted into 31,300 shares of the newly authorized Series B convertible preferred stock and warrants to purchase up to 989,379 shares of common stock were also issued. The warrants have a term of 5 years and an exercise price equal to 120% of the Series convertible B preferred stock conversion price of $15.30 or $18.36 per share. (See Note 11 – Common Stock.) CRG entered into a one year ~~lock up~~lock-up agreement on all securities that it holds.

The Amendment No. 3 to the 2017 Loan Agreement addressed, among other things:

Pursuant to the ~~Amendment~~ ~~No.~~3,amendment, the Company paid interest in-kind of ~~$154,000~~$160,000 and ~~$443,000~~$141,000 during the three ~~and~~ ~~nine~~months ended ~~September 30,~~ March 31, 2022 and 2021which was added to the total outstanding principal loan amount. ~~During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ the Company paid interest in-kind of $136,000 and $443,000, respectively, which was added to the total outstanding principal loan amount. Additionally, the back-end facility fee of $1,446,000 is due upon maturity, of which the Company had accrued $747,000 included in other noncurrent liabilities on the condensed consolidated balance sheet as of ~~September 30, 2021.~~

As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all covenants.

As of ~~September 30, 2021~~March 31, 2022, ~~and~~$5,285,000 was recorded on the condensed consolidated balance sheets, as note payable, current portion, which is net of the remaining unamortized debt discount. As December 31, ~~2020,~~2021, $~~4,964,000 and $4,518,000, respectively,~~5,124,000 was recorded on the condensed consolidated balance sheets, as note payable, noncurrent portion, which is net of the remaining unamortized debt discount. ~~The term loan has a maturity date of~~ ~~March 31, 2023.~~

As of ~~September 30, 2021,~~March 31, 2022, future minimum payments under the note payable were as follows (in thousands):

On May 25, 2021, the ~~updated Small Business guidance, the PPP Loan was modified so that, beginning~~ ~~ten~~ months from the date of the PPP Loan, Viveve is required to make monthly payments of principal and interest. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults or breaching the terms of the PPP Loan documents. The occurrence of an event of default ~~may~~ result in the repayment of all amounts outstanding, collection of all amounts owing from Viveve, or filing suit and obtaining judgment against Viveve. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. No ~~assurance is provided that Viveve will obtain forgiveness~~entire amount of the PPP Loan in ~~whole or in part.~~

In ~~October 2020,~~ the ~~Company was notified that the terms of its PPP Loan with WAB were modified. The~~aggregate amount of ~~time that~~$1,358,000, including the ~~Company had to spend the proceeds of the PPP Loan (the “covered period”) was extended from~~ 8 ~~weeks to~~ 24 ~~weeks. The date to begin repaying unforgiven portions of the PPP Loan was also extended from~~ ~~six~~ ~~months after the funding date to up to~~ 10 ~~months after the end of the covered period (approximately~~ 16 ~~months from the funding date) depending on when the Company applies for forgiveness. The SBA will also cover interest on the forgiveness portion of the loan during this period. There was~~ no ~~change to the maturity date of the loan. All PPP Loans must be repaid or forgiven within~~ ~~two~~ ~~years after the funding date. The Company submitted its PPP Loan forgiveness application to the SBA in~~ ~~October 2020.~~

In ~~May 2021,~~ ~~the Company was notified by WAB that its request for forgiveness of the PPP Loan had been approved in full. The~~ total principal amount and the accrued interest through the forgiveness payment date of May 21, 2021, was forgiven. ~~The Company has recognized a gain on the extinguishment of debt in the condensed consolidated statements of operations during the~~ ~~three~~ ~~months ended~~ ~~June 30, 2021~~ ~~in the amount of $1,358,000.~~

The following information pertains to those operating lease agreements where the Company is the lessee.

OnIn February 1, 2017, the Company entered into a sublease ~~agreement (the “Sublease”)~~ for approximately 12,400 square feet of building space for the relocation of the Company’s corporate headquarters to Englewood, ~~Colorado (the “Sublease Premises”), which was effective as of~~ ~~January 26, 2017.~~ Colorado. The lease term ~~commenced on~~ ~~June 1, 2017~~ was 36 months and ~~was to terminate in~~ ~~May 2021.~~ ~~The Company relocated its corporate headquarters from Sunnyvale, California to Englewood, Colorado in~~ ~~June 2017.~~

~~The~~the monthly base rent ~~under~~for the ~~Sublease~~first, second and third years was ~~equal to~~ $20.50, ~~per rentable square foot of the Sublease Premises during the~~ ~~first~~ ~~year. The monthly base rent was equal to~~ $21.12 and $21.75 per rentable square foot, ~~during the~~ ~~second~~ ~~and~~ ~~third~~ ~~years,~~ respectively. In connection with the execution of the ~~Sublease,~~sublease, the Company ~~also agreed to pay~~paid a security deposit of approximately $22,000. The Company was also ~~provided~~entitled to an allowance of approximately $88,000 for certain tenant improvements relating to the engineering, design and construction of the ~~Sublease Premises which has been reimbursed.~~

sublease premises. The lease term commenced in June 2017 and was to terminate in May 2021. In March 2021, the Company amended the ~~Sublease~~sublease for its office building space. The lease term was extended for a period of 34 months and will terminate on March 31, 2024. The monthly gross rent for the first, second and third years of the lease extension is ~~$21,028, $21,643~~$21,027.88, $21,643.03 and ~~$22,258~~$22,258.18 per month, respectively. The Company was also provided a rent abatement for the month of June 2021. Additionally, the sublandlord ~~has~~ agreed to perform certain construction, repair, maintenance or other tenant improvements to the ~~Subleased Premises~~subleased premises with estimated costs of approximately $19,000.

In ~~September 2018,~~October 2020, the Company entered into a 36-month noncancelable operating lease agreement for office equipment. The lease term commenced onin ~~September 20, 2018.~~December 2020 and will terminate in December 2023. The monthly lease payment is approximately ~~$3,000.~~$2,000.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. At lease inception, the Company determines the lease term by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The following table reflects the Company’s lease assets and lease liabilities atas of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (in thousands):

The operating lease right-of-use assets are included in other assets on the condensed consolidated balance sheets. The operating lease liabilities are included in accrued liabilities and other noncurrent liabilities on the condensed consolidated balance sheets.

The operating ~~leases~~lease expense for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021 was $69,000 and ~~$77,000, respectively. The operating leases expense for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ ~~was $211,000 and $226,000,~~$73,000, respectively.

As of ~~September 30, 2021,~~March 31, 2022, the maturity of operating lease liabilities was as follows (in thousands):

The weighted average remaining lease term was approximately 2924 months as of ~~September 30, 2021.~~March 31, 2022. The weighted average discount rate for the three months ended ~~September 30, 2021~~March 31, 2022 was 12.5%.

The following information pertains to those operating lease agreements where the Company is the lessor.

As of ~~September 30, 2021,~~March 31, 2022, minimum future rentals from customers on operating leases of Viveve Systems were as follows (in thousands):

As of ~~September 30, 2021,~~March 31, 2022, ~~$465,000 of property and~~the Company included rental program equipment is related to these operating lease ~~agreements.~~agreements with a net value of $459,000 in property and equipment, net on the condensed consolidated balance sheets. The depreciation expense for ~~that property and~~rental program equipment for the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2022 ~~is $68,000 and~~ ~~$273,000,~~ ~~respectively. The depreciation expense for that property and equipment for the~~ ~~three~~and ~~nine~~2021 ~~months ended~~ ~~September 30, 2020~~ is ~~$117,000~~$58,000 and ~~$345,000,~~$110,000, respectively.

The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with performance of services within the scope of the agreement, breach of the agreement by the Company, or noncompliance of regulations or laws by the Company, in all cases provided the indemnified party has not breached the agreement and/or the loss is not attributable to the indemnified party’s negligence or willful malfeasance. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amounts of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal.

The Company is or has been subject to proceedings, lawsuits and other claims arising in the ordinary course of business. The Company evaluates contingent liabilities, including threatened or pending litigation, for potential losses. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Because of uncertainties related to these matters, accruals are based upon the best information available. For potential losses for which there is a reasonable possibility (meaning the likelihood is more than remote but less than probable) that a loss exists, the Company will disclose an estimate of the potential loss or range of such potential loss or include a statement that an estimate of the potential loss cannot be made. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates, which could materially impact its condensed consolidated financial statements. Management does not believe that the outcome of any outstanding legal matters will have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.

On ~~December 16, 2020,~~ the Company filed a Certificate of Elimination with the Delaware Secretary of State with respect to the authorized shares of Series A convertible preferred stock. As of the date of the filing of the Certificate of Elimination, 0 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.

As previously reported (see Note 6 – Note Payable), the CRG debt obligations converted into 31,300 shares of the newly authorized Series B convertible preferred stock and warrants to purchase up to 989,379 shares of common stock were also issued.

In connection with the CRG debt conversion, on November 26, 2019, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series B Certificate of Designation provides for the issuance of the shares of Series B convertible preferred stock. The holders of Series B convertible preferred stock are entitled to receive compounding dividends at a rate of 12.5% per annum payable quarterly at the Company’s option through additional paid in-kind shares of Series B convertible preferred stock or in cash. During the three months ended ~~September 30,~~March 31, 2022, the Company paid a dividend in-kind of an additional 1,263 shares of Series B convertible preferred stock and a cash dividend of approximately $3,000 for the remaining fractional shares. During the three months ended March 31, 2021, the Company paid a dividend in-kind of an additional ~~1,189~~1,118 shares of Series B convertible preferred stock and a cash dividend of approximately $1,000 for the remaining fractional shares. ~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~the Company paid dividend in-kind of an additional 3,460 shares of Series B convertible preferred stock and a cash dividend of approximately $4,000 for the remaining fractional shares.~~ The Company has issued a total of ~~7,979~~10,467 shares of Series B convertible preferred stock and paid approximately ~~$14,000~~$19,000 in cash as preferred ~~dividend~~dividends to the holders of Series B convertible preferred stock through ~~September 30, 2021.~~March 31, 2022.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, there were ~~39,279~~41,767 and ~~35,819~~40,504 shares of Series B convertible preferred stock outstanding and convertible into ~~2,567,255~~2,729,869 and ~~2,341,111~~2,647,320 shares of common stock, respectively. Each share of Series B convertible preferred stock is convertible at the holder's option into shares of common stock at a conversion ratio of 1-for-65.36 per share determined by dividing the Series B liquidation amount of $1,000 per share by the Series B conversion price of $15.30 per share. However, under the terms of the Series B Preferred Stock and Warrant Purchase Agreement, as amended, CRG will not convert the Series B preferred stock or exercise the CRG warrants until the Company’s stockholders act to authorize additional number of shares of common stock sufficient to cover the conversion shares.

The shares of Series B convertible preferred stock have no voting rights and rank senior to all other classes and series of our equity in terms of repayment and certain other rights.

The Series B convertible preferred stock also provides that for so long as any shares are outstanding, the consent of the holders of the Series B convertible preferred stockholders would be required to amend the Company’s organizational documents, approve any merger, sale of assets, or other major corporate transaction, or incur additional indebtedness, among other items.

In connection with the closing of the public offering, on January 19, 2021, 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.

On March 14, 2022, the Company filed a Certificate of Elimination with the Delaware Secretary of State with respect to the authorized shares of Series C convertible preferred stock. As of the date of the filing of the Certificate of Elimination, 0 shares of Series C convertible preferred stock were outstanding. Upon filing the Certificate of Elimination, the 2,450,880 authorized shares of Series C 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.

On ~~June 8, 2020,~~ ~~the~~The Company previously 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~~term 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.~~share. 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. Transaction costs in connection with the Purchase Agreement with LPC totaled approximately $494,000.

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. Transaction costs in connection with the amendment to Purchase Agreement with LPC totaled approximately $70,000.

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.

On June 23, 2021, the Company’s stockholders approved the proposal for the potential issuance of 20% or more of the Company’s outstanding common stock to LPC pursuant to the provisions under the Purchase Agreement, as amended.

As of ~~September 30, 2021,~~March 31, 2022, the equity facility with LPC has a remaining financing commitment of approximately $9,000,000.

On January 19, 2021, the Company closed ~~an upsized underwritten public offering of units (the~~the “January 2021 ~~Offering”)~~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.~~Viveve Medical.

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~~1 share of common stock and ~~one~~1 warrant to purchase ~~one~~1 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~~1 share of Series C convertible preferred stock and ~~one~~1 warrant to purchase ~~one~~1 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.

There were 0 restricted common shares issued during the ~~nine~~three months ended ~~September 30,~~ March 31, 2022 and 2021.

~~The activity of restricted common shares during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~is described as follows:~~

As of ~~September 30, 2021,~~March 31, 2022, outstanding warrants to purchase shares of common stock were as follows:

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 inon 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~~ ~~nine~~months ended ~~September 30,~~ March 31, 2022 and 2021,the Company recorded $1,000 and ~~$3,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method. During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 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 ~~September 30, 2021,~~March 31, 2022, the unamortized debt discount was ~~$6,000.~~

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. $4,000.

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~~1 share of common stock have an exercise price of $3.40 per share and ~~expires~~expire on the fifth anniversary of the date of issuance.

OnAs a result of the closing of the January ~~19,~~ 2021 ~~the Company closed a public offering~~Offering at an effective price of $3.40 per share of its common ~~stock. As a result,~~stock, 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:

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:~~

The incremental fair value of the Series B, A-2 and B-2 warrants is ~~recorded as~~included in other ~~expense~~income (expense) on the condensed consolidated statement of operations and ascomprehensive loss, with a corresponding increase to additional paid-in ~~capital.~~capital on the condensed consolidated balance sheet.

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.

NaN shares issuable pursuant to warrants have been cancelled during the three months ended March 31, 2022 and 2021.

NaN shares issuable pursuant to warrants expired during the three months ended March 31, 2022 and 2021.

As of Marcher ~~September 30, 2021,~~ 31,2022,there were 0 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 ~~September 30, 2021,~~March 31, 2022, 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 ~~September 30, 2021,~~March 31, 2022, there were January 2021 warrants to purchase a total of 8,104,880 shares of common stock ~~still remaining and~~ outstanding.

~~NaN shares issuable pursuant to warrants have been cancelled during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~

~~NaN shares issuable pursuant to warrants expired during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2021.~~ ~~A total of~~ 6 ~~shares issuable pursuant to warrants expired during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~ ~~NaN shares issuable pursuant to warrants expired during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020.~~ ~~A total of~~ 22 ~~shares issuable pursuant to warrants expired during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020.~~

The Company has issued equity awards in the form of stock options (both incentive stock options and non-qualified stock options) and deferred restricted stock awards or units, 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 ~~September 30, 2021,~~March 31, 2022, there were outstanding stock option awards issued from the 2006 Plan covering a total of 12 shares of the Company’s common stock and 0 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 ~~1.3~~0.8 years.

InEffective January ~~2021,~~1, 2022, the total common stock reserved for issuance under the 2013 Plan was increased by ~~307,705~~1,076,833 shares from ~~1,451,246~~3,940,136 shares to a total of ~~1,758,951~~5,016,969 shares under the evergreen provision of the 2013 Plan.

In ~~June 2021,~~ ~~the Company’s stockholders approved an amendment to the~~ ~~2013~~ ~~Plan to increase the number of shares of common stock reserved for issuance thereunder from 1,758,951 to a total of 3,940,136 shares.~~

As of ~~September 30, 2021,~~March 31, 2022, there were outstanding stock option awards issued from the 2013 Plan covering a total of ~~3,195,730~~4,109,997 shares of the Company’s common stock and there remain reserved for future awards ~~66,753~~234,319 shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is ~~$7.48~~$6.05 per share and the remaining contractual term is ~~9.3~~9.0 years.

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 ~~September 30, 2021.~~March 31, 2022.

The options outstanding and exercisable as of ~~September 30, 2021~~March 31, 2022 were as follows:

As of ~~September 30, 2021,~~March 31, 2022, there are ~~679,000~~674,000 shares of unvested restricted stock outstanding that have been granted by the Company pursuant to deferred restricted stock units (“RSUs”) under the 2013 Plan.

In January 2021, the Company granted annual equity awards to employees and board members for 690,000 shares of common stock issuable upon vesting of RSUs under the 2013 Plan. The RSUs vest in full on the second anniversary of the grant date.

During the three ~~and~~ ~~nine~~months ended ~~September 30, 2021,~~March 31, 2022, ~~RSUs for 5,000 and 11,000 shares of common stock were cancelled, respectively.~~

~~There were~~ 0 RSUs for shares of common stock ~~granted by~~were cancelled. During the ~~Company during the~~ ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2021, RSUs for 3,000 shares of common stock were cancelled.

As of ~~September 30, 2021,~~March 31, 2022, there are 228 shares of unvested restricted stock outstanding that have been granted by the Company pursuant to deferred restricted stock awards (“RSAs”) under the 2013 Plan.

During the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~2021, 0 RSAs for shares of common stock were granted by the Company.

During the three months ended ~~September 30, 2021,~~March 31, 2022, 40 RSAs for shares of common stock were cancelled. During the ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~RSAs for~~ 6 ~~shares of common stock were cancelled.~~

~~During the~~ three months ended ~~September 30, 2020,~~ ~~15 RSAs for shares of common stock were cancelled. During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~March 31, 2021, RSAs for 432 shares of common stock were cancelled.

In September 2020, the board of directors approved the suspension of the Company’s 2017 Employee Stock Purchase Plan (the “2017 ESPP”) following the twelfth offering period and the ESPP purchase on September 30, 2020.

~~The activity of the Company’s~~ ~~2017~~ ~~ESPP for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~is described as follows:~~

In June 2021, the Company’s stockholders approved an amendment to the 2017 ESPP to increase the number of shares of common stock reserved for issuance thereunder from 400 to 500,378 shares and to increase the number of shares available in an offering period from 2 to 2,000 per participant (subject to adjustment in the event of certain changes to the Company’s capital structure and other similar events).

Following the Company’s annual stockholders’ meeting, the board of directors approved to reactivate the ESPP effective with the offering period beginning on July 1, 2021.

The activity of the Company’s 2017 ESPP for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is described as follows:

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 ~~September 30, 2021,~~March 31, 2022, the remaining shares available for issuance under the 2017 ESPP were ~~489,156~~451,179 shares.

During the three months ended ~~September 30,~~March 31, 2022, ~~2021,~~the Company granted stock options to employees and nonemployees to purchase ~~30,400~~941,000 shares of common stock with a weighted average grant date fair value of ~~$1.60~~$0.92 per share. During the three months ended ~~September 30, 2020,~~March 31, 2021, the Company granted stock options to employees and nonemployees to purchase ~~55,000~~7,000 shares of common stock with a weighted average grant date fair value of ~~$3.60 per share. During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~the Company granted stock options to employees and nonemployees to purchase 2,251,000 shares of common stock with a weighted average grant date fair value of $1.75 per share. During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~the Company granted stock options to employees and nonemployees to purchase 101,800 shares of common stock with a weighted average grant date fair value of $53.25~~$2.19 per share.

The Company estimated the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of stock options granted was estimated using the following weighted average assumptions:

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. NaN 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 for options, RSUs and ESPP shares included in the condensed consolidated statements of operations for the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021 (in thousands):

As of ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost in connection with unvested stock options was approximately ~~$6,618,000.~~$6,020,000. These costs are expected to be recognized over a period of approximately ~~2.95~~2.8 years.

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock. The fair value of the RSUs is recognized as expense ratably over the vesting period of two years. For the three ~~and~~ ~~nine~~months ended ~~September 30,~~ March 31, 2022 and 2021,the stock-based compensation expense for RSUs was ~~$272,000~~$274,000 and ~~$771,000,~~$222,000, respectively.

As of ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost in connection with unvested RSUs was approximately ~~$1,436,000.~~$877,000. These costs are expected to be recognized over a period of approximately ~~1.25~~0.8 years.

For the three ~~and~~ ~~nine~~months ended ~~September 30, 2021,~~March 31, 2022, the stock-based compensation expense for ESPP shares was not significant.

NaN provision for income taxes has been recorded due to the net operating losses incurred from inception to date, for which no0 benefit has been recorded.

For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company also computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

The Company’s effective tax rate is 0% for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. The Company expects that its effective tax rate for the full year ~~2021~~2022 will be 0%.

~~The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on~~ ~~March 27, 2020~~ in the United States. The CARES Act includes several significant provisions for corporations, including the usage of net operating losses and payroll benefits. The Company is evaluating the impact, if any, the CARES Act and other economic stimulus measures will have on the Company’s financials and disclosures.

In June 2006, the Company entered into a Development and Manufacturing Agreement (the “Agreement”) with Stellartech Research Corporation (“Stellartech”). The Agreement was amended on October 4, 2007. The Company’s first generation Viveve System which consists of a generator, handpiece and disposable treatment tip was designed and manufactured by Stellartech. Stellartech was the sole source supplier for this version of the Viveve System. Under the Agreement, the Company agreed to purchase 300 generators manufactured by Stellartech. ~~As of~~ ~~September 30, 2021,~~ ~~the Company has purchased~~ ~~855~~ ~~units.~~ The price per unit iswas variable and dependent on the volume and timing of units ordered. The Company purchased 855 units through September 2019. The Company no longer manufacture generators, handpieces or disposable treatment tips at Stellartech. However, the Company continues to have technology licenses with Stellartech. In conjunction with the Agreement, Stellartech purchased 38 shares of Viveve, Inc.’s common stock. Under the Agreement, the Company paid Stellartech ~~$50,000~~approximately $0 and ~~$199,000~~$77,000 for goods and services during the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020,~~ ~~respectively, and approximately $203,000 and $948,000 for the~~ ~~nine~~ ~~months ended~~ ~~September 30,~~ 2021,~~and~~ ~~2020,~~ respectively. The amounts due to Stellartech for accounts payable as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 ~~were approximately $1,000~~was $0 and ~~$9,000,~~$0, respectively.

In August 2017, the Company entered into a Distributorship Agreement with ICM. Under the terms of the Distributorship Agreement, the Company had a minimum purchase requirement to purchase a certain quantity of ICM products per month during the term of this agreement. In February 2019, the Company executed a mutual termination of the Distributorship Agreement with ICM. As a result, the Company no longer has a minimum purchase requirement to purchase a certain quantity of ICM products per month. (See Note 4 – Investment in Unconsolidated Limited Liability Company for transactions with ICM.)

You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the Securities and Exchange Commission on March ~~18, 2021.~~17, 2022. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, particularly in Part II, Item 1A. “Risk Factors.”

In the discussion below, when we use the terms “we”, “us” and “our”, we are referring to Viveve Medical, Inc. and our wholly-owned subsidiaries, Viveve, Inc. and Viveve BV.

We design, develop, manufacture and market a platform medical technology, which we refer to as Cryogen-cooled Monopolar Radiofrequency ~~or CMRF.~~(“CMRF”). Our proprietary CMRF technology is delivered through ~~a radiofrequency generator,~~RF, handpiece and treatment tip that, collectively, we refer to as the Viveve® System. The Viveve System is currently marketed and sold for a number of indications, depending on the relevant country-specific clearance or approval. Currently, the Viveve System is cleared for marketing in 50 countries throughout the world under the following indications for use:

In the U.S., the Viveve System is indicated for use in general surgical procedures for electrocoagulation and hemostasis and we market and sell primarily through a direct sales force. Outside the U.S., we primarily market and sell through distribution partners. As of ~~September 30, 2021,~~March 31, 2022, we have a global installed base of ~~870~~895 Viveve Systems and we have sold approximately ~~58,300~~63,600 single-use treatment tips worldwide.

Because the revenues we have earned to date have not been sufficient to support our operations, we have relied on sales of our securities, bank term loans and loans from related parties to fund our operations.

We are subject to risks, expenses and uncertainties frequently encountered by companies in the medical device industry. These risks include, but are not limited to, intense competition, whether we can be successful in obtaining ~~the~~ U.S. Food and Drug Administration (“FDA”) and other governmental clearance or approval for the sale of our product for all desired indications and whether there will be a demand for the Viveve System, given that the cost of the procedure will likely not be reimbursed by the government or private health insurers. In addition, we will continue to require substantial funds to support our clinical trials and fund our efforts to expand regulatory clearance or approval for our products, including in the U.S. We cannot be certain that any additional required financing will be available when needed or on terms which are favorable to us. ~~As noted above, our~~Our operations to date have been primarily funded through the sales of our securities, bank term loans and loans from related parties. Various factors, including our limited operating history with limited ~~revenues~~revenue to date and our limited ability to market and sell our products have resulted in limited working capital available to fund our operations. There are no assurances that we will be successful in securing additional financing in the future to fund our operations going forward. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending could have a material adverse effect on our ability to achieve our intended business objectives.

On December 1, 2020, the Company effected a 1-for-10 reverse stock split of all outstanding common stock of the Company. All share numbers, exercise prices for options and warrants, conversion price of preferred stock and other capitalization information in this Quarterly Report on Form 10-Q is represented on a post-split basis, unless as otherwise indicated.

On July 2, 2021, we filed a universal shelf registration statement with the SEC on Form S-3 for the proposed offering from time to time of up to $75,000,000 of our securities, including common stock, preferred stock, and/or warrants. This registration statement currently has a capacity of $75,000,000. However, as a result of the limitations of General Instruction I.B.6. of Form S-3, or the so-called “baby shelf rules”, the amount of shares of our common stock available for sale under a registration statement on Form S-3 is limited to one-third of the aggregate market value of our common equity held by non-affiliates of the Company over any rolling 12-month period. As of September 30, 2021, we have not issued any shares or received any proceeds pursuant to the universal shelf registration statement.

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 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.

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.

On May 4, 2021, pursuant to the provisions under the Purchase Agreement as amended, LPC purchased 250,000 shares of the Company’s common stock at $2.817 per share for gross proceeds of approximately $704,000.

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

~~Purchase Agreement with LPC~~ – ~~Reduction of Warrant Exercise Price~~

On May 4, 2021, 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. As a result of this reduction of warrant exercise price, the Company recognized a modification charge of $86,000.

The Paycheck Protection Program (“PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. On April 24, 2020, Viveve, Inc. (“Viveve”), a wholly-owned subsidiary of the Company, entered into a promissory note evidencing an unsecured loan in the aggregate amount of approximately $1,343,000 made to Viveve under the PPP (the “PPP Loan”). The PPP Loan to Viveve is being made through Western Alliance Bank. The interest rate on the PPP Loan is 1.00% and the term is two years. Beginning seven months from the date of the PPP Loan, Viveve is required to make monthly payments of principal and interest. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults or breaching the terms of the PPP Loan documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from Viveve, or filing suit and obtaining judgment against Viveve. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

On October 8, 2020, the Company was notified that the terms of its PPP Loan with Western Alliance Bank have been modified. The amount of time that the Company has to spend the proceeds of the PPP Loan (the “covered period”) has been extended from 8 weeks to 24 weeks. The date to begin repaying unforgiven portions of the PPP Loan has also been extended from six months after the funding date to up to 10 months after the end of the covered period (approximately 16 months) depending on when the Company applies for forgiveness. The SBA will also cover interest on the forgiveness portion of the loan during this period. There has been no change to the maturity date of the loan. All PPP Loans must be repaid or forgiven within two years after the funding date. We submitted our PPP Loan forgiveness application to the SBA in October 2020.

On May 25, 2021, the Company was notified by WAB that its request for forgiveness of the PPP Loan had been approved in full. The total principal amount and the accrued interest through the forgiveness payment date of May 21, 2021 was forgiven. The Company has recognized a gain on the extinguishment of debt in the amount of $1,358,000.

On November 18, 2020, we received clearance from the U.S. Food and Drug Administration, or FDA, under Section 510(k), to expand manufacturing capacity for consumable treatment tips used with our CMRF technology. The expansion of our manufacturing capabilities offers a significant reduction in tip manufacturing costs, strengthens our supply chain, reduces manufacturing risk, and positions us to support increases in treatment tip demand and utilization.

The Company received FDA approval of its investigational device exemption (IDE) application to conduct its U.S. pivotal, multicenter PURSUIT trial for improvement of Stress Urinary Incontinence (SUI) in women in July 2020, as well as FDA approval of requested amendments to the IDE protocol in December 2020. Initiation of the PURSUIT trial was announced by the Company on January 21, 2021 and completion of subject enrollment ~~is underway with an expected completion in~~was reported on December 14, 2021. Topline results are anticipated at the ~~fourth quarter~~end of ~~2021.~~2022.

PURSUIT is a randomized, double-blinded, sham-controlled trial with an ~~intended~~ enrollment of ~~approximately 390~~415 subjects with moderate SUI (≥ 10ml – 50ml urine leakage on the 1-hour Pad Weight Test) at ~~up to~~approximately 30 study sites in the U.S. Randomized in a 2:1 ratio for active and sham treatments, subjects in the active treatment arm ~~(260 subjects) will receive~~received a CMRF treatment (90J/cm2 RF and cryogen-cooling), while subjects in the control arm ~~(130 subjects) will receive~~received an inert sham treatment.

The primary efficacy endpoint of the PURSUIT trial is a comparison of the proportion of patients who experience greater than 50% reduction in urine leakage compared to baseline on the standardized 1-hour Pad Weight Test at 12 months post-treatment versus ~~the new~~an inert sham procedure. The study also includes several secondary endpoints, including: proportion of patients who experience greater than 50% reduction in urine leakage on the standardized 1-hour Pad Weight Test at three and six months post-treatment, percentage change from baseline in the 1-hour Pad Weight Test at three, six and 12 months, percent of subjects with no incontinence episodes at three, six and 12 months post treatment as assessed with the three-day bladder voiding diary, and change from baseline in the MESA Questionnaire (Medical, Epidemiologic and Social Aspects of Aging), Incontinence Quality of Life (I-QOL), Patient Global Impression of Improvement (PGI-1) Questionnaire, and International Consultation on Incontinence Modular Questionnaire-Urinary Incontinence Short Form (ICIQ-UI-SF). at three, six, nine and 12 months post-treatment. Subject safety will be monitored throughout the study.

In December 2019, the Company received approval of an Investigational Testing Application (ITA) from the Canadian Ministry of Health and in January 2020 initiated a three-arm, three-month feasibility study to compare Viveve’s CMRF treatment and a cryogen-only sham to an inert sham treatment for the improvement of SUI in women. Completion of subject enrollment in the study was reported in March 2020. Study subjects were randomized in a 1:1:1 ratio to the three arms and were assessed using the 1-hour Pad Weight Test, 3-day Voiding Diary, the 24-hour Pad Weight Test and I-QOL at five months post treatment. Due to patient, provider and medical facility health and safety concerns caused by the COVID-19 pandemic, the final subject follow-up visit was changed to 5 months versus 3 months.

Final results were reported in August 2020, indicating the primary efficacy endpoint (i.e., change from baseline in the standardized 1-hour Pad Weight Test at five months post treatment) was positively achieved. The median change from baseline in the active CMRF treatment group (N=13) and the cryogen-only sham treatment group (N=12) was -9.5 grams and -6.8 grams respectively, as compared to -4.4 grams in the inert sham treatment group (N=11). The study also assessed several secondary endpoints but showed no differentiation between groups. No device-related safety issues were reported. The meaningful separation demonstrated between the CMRF treatment arm and the inert sham arm in the feasibility study is believed to help provide confidence in the potential to achieve positive separation between the two treatment arms in the underway U.S. pivotal PURSUIT trial.

In response to the inconclusive results in which the treated arm showed no separation versus the sham control arm reported in July 2019 from the Company’s LIBERATE-International SUI trial conducted in Canada (aimed at supporting SUI indications in Canada, the European Union and several other international countries), Viveve conducted an in-vivo preclinical temperature and immunohistochemistry study to evaluate a new inert sham treatment tip. The Good Laboratory Practices study was initiated in June of this year following several months of engineering, validation, and development work. The study assessed both in-vivo tissue temperature changes during treatment, and histopathology at 30 days post-treatment compared to baseline, in three parous ewes using Viveve’s CMRF treatment tip (Active), cryogen-cooling only tip (“Old” sham treatment used in previous LIBERATE-International SUI study), and a new inert sham treatment tip. Histopathology of vaginal biopsies were performed and included use of α-smooth muscle actin, or α-SMA, staining for fibroblast activation and formation. All tissue samples were evaluated by an independent and blinded pathologist.

The positive preclinical findings demonstrated, as reported in August 2020, that both temperature and immunohistochemistry results support the validity of the new inert sham tip to provide a true inert or placebo treatment. Only minor tissue temperature change (less than 2 degrees centigrade) was generated by the new inert sham tip and no fibroblast activation was shown through elevated a-SMA staining. In contrast, both the Active and cryogen-cooling sham tips demonstrated meaningful tissue temperature changes during treatment and increased fibroblast activation 30 days post-treatment. We believe that the positive in-vivo preclinical study validates our new inert sham tip for use in the U.S. pivotal PURSUIT trial that is currently underway.

On September 23, 2021 the Company announced that the Australian Patent Office had issued Patent No. 2016324168 covering Viveve’s unique method of treatment to address stress urinary incontinence (SUI) in women. The issuance is the second SUI specific patent for Viveve.

~~On August 3, 2021, the Company announced that the Canadian Intellectual Property Office (CIPO) recently issued Canadian Patent No. 3028905 for Viveve’s dual-energy technology device and method.~~

The Company announced in April 2021 that the Taiwan Intellectual Property Office (TIPO) had issued Taiwan Patent No. 1720358 for Viveve’s dual-energy technology device and in February 2021 that the Korean Intellectual Property Office (KIPO) had issued Korean Patent No. 10-2197234 titled, Vaginal Remodeling Device and Method.

On October 28, 2021, the Company announced that the United States Patent and Trademark Office (USPTO) had issued U.S. Patent No. 11,154,349 for Viveve’s dual-energy device and method. The awarded patent strengthens the Company’s intellectual property portfolio and provides further coverage for Viveve’s innovative technology and treatment methods.of remodeling tissue.

In June 2021, the Company announced issuance of U.S. Patent No. 10,980,596 by the United States Patent and Trademark Office (USPTO). The awarded patent strengthens the Company’s intellectual property portfolio for its dual-energy technology device and expands its patent claims in the U.S.

In September 2020, the Company announced that the United States Patent and Trademark Office (USPTO) had issued U.S. Patent No. 10,779,874 covering Viveve’s unique method of treatment to address SUI in women. The granted patent is the first SUI specific patent for Viveve as it advances the pivotal U.S. PURSUIT clinical trial for improvement of SUI in women.

The above issued patents serve to further strengthen and expand Viveve’s already robust intellectual property estate. The Company continues to advance its global commercialization strategy for its dual-energy technology and treatment methods that includes securing the highest achievable levels of protection for its intellectual property portfolio.

In early July 2021, the Company announced that the American Medical Association ~~(AMA)~~(“AMA”) had issued a new Category III Current Procedural Terminology ~~(CPT®~~(“CPT”®) code for the Company’s dual-energy procedure effective January 1, 2022. The new code establishes a long-term pathway for potential reimbursement for Viveve’s noninvasive treatment under evaluation in the PURSUIT trial to improve SUI in women if approved by the ~~U.S. Food and Drug Administration~~FDA for this indication. The new Category III CPT code for Viveve’s SUI procedure is defined as: endovaginal cryogen-cooled, monopolar radiofrequency remodeling of the tissue surrounding the female bladder neck and proximal urethra for urinary incontinence.

In June 2019, U.S. sales of the Viveve System transitioned from a capital equipment sales model to a recurring revenue rental model. The new U.S. commercial sales model is intended to lower up-front costs for customers and thus lower hurdles to adoption, increase placement rates, and improve profitability by significantly reducing selling time per unit. The new commercial sales model successfully increased physician adoption rates in the months following its implementation and continued to gain traction in the U.S. market well into the first quarter of 2020. In December 2019, Viveve Systems placed with new customers represented higher monthly productivity rates and lower costs per system placed per sales representative. Sale of Viveve products outside of the U.S. continue to be supported by the Company’s current distributors without significant change to the international business model.

Late in the first quarter of 2020, the negative impact of the COVID-19 pandemic on medical facilities and practitioners was in full effect in the United States. Federal, regional, and local government and public health agencies issued directives halting performance of non-essential medical treatments and elective procedures in an effort to combat the spread of the coronavirus and protect public health and safety. As a result, a large percentage of Viveve’s U.S. customers either temporarily closed their medical practices or dramatically reduced services and staff. The consequence has been both a public health and economic crisis that is continuing for existing and prospective Viveve customers. In a supportive partnership response, Viveve contacted all of its subscription customers and provided them with a three-month deferral of the rental payment. Although clinics in various regions have re-opened and are providing limited services, we anticipate that until the COVID-19 pandemic abates, more practices re-open and elective patient’s safety concerns are reduced that we will continue to experience reduced revenue from existing subscription customers, as well as a greatly reduced number of new and prospective customers.

Under the recurring revenue rental model, customers may lease the Viveve System for a set initial term. After the initial term, the customer may purchase the Viveve System, continue to pay a monthly rental amount or terminate the contract.

The rental program is accounted for under the Financial Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) No. 2016-02, Leases (Topic 842) and meets the classification criteria for an operating lease. Revenue from the rental program is included in total revenue. For the three and nine months ended September 30, 2021, rental revenue recognized during the period was $261,000 and $950,000, respectively. For the three and nine months ended September 30 ,2020, rental revenue recognized during the period was $471,000 and $829,000, respectively. The Viveve Systems that are being leased are included in property and equipment, net and depreciated over their expected useful lives of five years. When other products (“non-lease components”), such as single-use treatment tips or ancillary consumables, are included in the offering, the Company follows the relevant guidance in ASC Topic 606, ~~Revenue from Contracts with Customers~~~~, to determine how to allocate contractual consideration between the lease and non-lease components.~~

As of the filing of this Quarterly Report, ~~on Form 10-Q,~~ the United States and many other countries continue to face outbreaks or resurgences of the highly transmissible pathogenic coronavirus and its variants, which has resulted in ~~an increasingly~~a widespread global health crisis, adversely affected general commercial activity and the economies and financial markets of many countries and ~~is likely to~~may continue to adversely affect our business, financial condition and results of operations. The extent to which the coronavirus impacts us will depend on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

We intend to increase our sales both internationally and in the U.S. market by seeking additional regulatory clearances or approvals for the sale and distribution of our products, identifying and training qualified distributors, and expanding the scope of physicians who offer the Viveve ~~System to include plastic surgeons, general surgeons, urologists and urogynecologists.~~System.

In June 2019, ~~we transitioned from~~in addition to a capital ~~equipment~~ sales model, towe began a new recurring revenue rental model infor the U.S. ~~market. The new U.S. commercial~~ sales ~~model is intended to lower up-front costs for customers and thus lower hurdles to adoption, increase placement rates, and improve profitability by significantly reducing selling time per unit.~~of the Viveve System. Sale of Viveve products outside of the U.S. will continue to be supported by our international distributors.

In addition, we intend to use the strategic relationships that we have developed with outside contractors and medical experts to improve our products by focusing our research and development efforts on various areas including, but not limited to:

The net proceeds received from sales of our securities and the term loans have been used to support commercialization of our product in existing and new markets, for our research and development efforts and for protection of our intellectual property, as well as for working capital and other general corporate purposes. We expect that our cash ~~along with the remaining equity financing commitment from LPC of approximately $9,000,000~~ will be sufficient to fund our ~~activities for at least the next 12 months~~current operations through ~~November~~December 2022; however, we ~~may~~will continue to require ~~additional capital from the sale of equity or debt securities~~funds to fully implement our plan of operation. Our operating costs include employee salaries and benefits, compensation paid to consultants, professional fees and expenses, costs associated with our clinical trials, capital costs for research and other equipment, costs associated with research and development activities including travel and administration, legal expenses, sales and marketing costs, general and administrative expenses, and other costs associated with an early stage public company subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We also expect to incur expenses related to obtaining regulatory clearance and approvals in the U.S. and internationally as well as legal and related expenses to protect our intellectual property. We expect capital expenditures, for the foreseeable future, to be less than ~~$1,000,000~~500,000 annually.

We intend to continue to meet our operating cash flow requirements through the sales of our products and by raising additional capital from the sale of equity or debt securities. If we sell our equity securities, or securities convertible into equity, to raise capital, our current stockholders will likely be substantially diluted. We may also consider the sale of certain assets, or entering into a strategic transaction, such as a merger, with a business complimentary to ours although we do not currently have plans for any such transaction. While we have been successful in raising capital to fund our operations since inception, other than as discussed in this Quarterly Report, ~~on Form 10-Q,~~ we do not have any committed sources of financing and there are no assurances that we will be able to secure additional funding, or if we do secure additional financing that it will be on terms that are favorable to us. If we cannot obtain financing, then we may be forced to curtail our operations or consider other strategic alternatives.

Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

We recorded revenue of ~~$1,616,000~~$1,641,000 for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to revenue of ~~$1,524,000~~$1,450,000 for the three months ended ~~September 30, 2020,~~March 31, 2021, an increase of ~~$92,000,~~$191,000, or approximately 6%13%. The increase in revenue was primarily due to higher ~~sales volume~~average selling prices of Viveve Systems and higher sales volume of treatment tips sold ~~during the period.~~globally, partially offset by a decrease in rental revenue from a lower rental installed base. Sales in the ~~third~~first quarter of ~~2021~~2022 included ~~sixteen~~eight Viveve Systems sold and approximately ~~2,300~~2,750 disposable treatment tips sold globally. Sales in the ~~third~~first quarter of ~~2020~~2021 included ~~twelve~~eight Viveve Systems sold and approximately ~~2,100~~2,450 disposable treatment tips sold globally.

Under the ~~subscription offering~~recurring revenue rental program, ~~which was launched in June 2019,~~ we placed ~~eight~~seven Viveve Systems in the U.S. market in the ~~third~~first quarter of ~~2021;~~2022; however, these new placements were offset by the non-renewal of subscriptions for four Viveve Systems during the period. In the first quarter of 2021, we placed four Viveve Systems under the subscription offering program in the U.S. market; but these new placements were offset by the negative impact of the COVID-19 crisis on our sales activity in the period which resulted in the ~~return~~non-renewal of nine Viveve Systems during the period. In the third quarter of 2020, we placed seven Viveve Systems under the subscription offering program in the U.S. market; however, these new placements were offset by the return of ninesubscriptions for six Viveve Systems during the period. Rental revenue on these leases is recognized on a straight-line basis over the term of the lease. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ rental revenue recognized during the period was $261,000 and ~~$471,000,~~$366,000, respectively.

Late in the first quarter of 2020 and through the third quarter of 2021, the COVID-19 pandemic has been in full effect adversely impacting commercial activity and the economies in the United States and most other countries and is likely to continue to adversely affect businesses and results of operations. Government and public health agencies issued directives halting performance of non-essential medical treatments and elective procedures in an effort to combat the spread of the coronavirus and protect public health and safety. As a result, Viveve’s customers either temporarily closed their medical practices or dramatically reduced services and staff. The consequence has been both a public health and economic crisis that continues for existing and prospective Viveve customers. In a supportive partnership response, in the second quarter of 2020 Viveve contacted all of its subscription customers and provided them with a three-month deferral of their rental payment. Although clinics in various regions continue to re-open and gradually increase their limited services, we anticipate that until the COVID-19 pandemic abates, more practices re-open and elective patient’s safety concerns are reduced that we will continue to experience reduced revenue from existing customers, as well as a greatly reduced number of new and prospective customers.

Gross profit was ~~$114,000~~$320,000 or 7%20% of revenue, for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to a gross profit of ~~$241,000,~~$382,000, or ~~16%~~26% of revenue, for the three months ended ~~September 30, 2020,~~March 31,2021, a decrease of ~~$127,000,~~$62,000, or approximately ~~53%~~16%. The decrease in gross profit was primarily due to ~~a decrease in subscription revenue from a lower rental installed base and~~ higher inventory related costs, inpartially offset by higher average selling prices of Viveve Systems during the ~~third quarter of 2021.~~period.

Research and development expenses totaled ~~$2,695,000~~$2,140,000 for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to research and development expense of ~~$884,000~~$1,930,000 for the three months ended ~~September 30, 2020,~~March 31,2021, an increase of ~~$1,811,000,~~$210,000, or approximately ~~205%~~11%. Spending on research and development increased primarily due to higher ~~clinical study~~personnel costs ~~due to the initiation of the pivotal U.S. PURSUIT clinical trial~~and additional stock-based compensation expense for the treatment of SUI in the first quarter of 2021 with subject enrollment rapidly advancing in the period. We expect completion of subject enrollment in the trial in the fourth quarter. Furthermore, spending on researchequity awards, and ~~development in the third quarter of 2021 also included~~ increased engineering and development work related to our products. ~~Spending on research~~Research and development expense in the ~~third~~first quarter of ~~2020 was lower as it~~2021 also included ~~reduced engineering~~spending on advertising and ~~development work~~marketing services related to ~~our products as a result~~the enrollment of ~~our overall strategic organizational realignment~~subjects for the PURSUIT trial; such spending was no longer needed in the first quarter of 2022 due to ~~focus efforts to advance our SUI clinical development program and operational measures to lower costs and reduce cash burn~~completion of subject enrollment in ~~response to~~ the ~~economic conditions caused by the COVID-19 crisis.~~fourth quarter of 2021.

Selling, general and administrative expenses totaled ~~$2,911,000~~$3,653,000 for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to ~~$2,761,000~~$3,581,000 for the three months ended ~~September 30, 2020,~~March 31, 2021, an increase of ~~$150,000,~~$72,000, or approximately 5%2%. The ~~slight~~ increase in selling, general and administrative expenses was primarily due to higher personnel costs ~~related to~~and additional stock-based compensation expense for equity awards, ~~granted to existing employees.~~

~~During the three months ended September 30, 2021, we had interest expense, net of $255,000 compared to interest expense, net of $235,000~~partially offset by reduced spending for the three months ended September 30, 2020, a change of $20,000, or approximately 9%. The increase resulted primarily from a higher term loan balance compared to the third quarter of 2020 due to the interest in-kind which was added to the total outstanding principal loan amount.

~~During the three months ended September 30, 2021, we had other expense, net of $78,000 compared to $41,000 for the three months ended September 30, 2020.~~

The Company uses the equity method to account for its investment in InControl Medical, LLC (“ICM”). For the three months ended September 30, 2021, the allocated net loss from ICM’s operations was $33,000 compared to $55,000 for the three months ended September 30, 2020.

We recorded revenue of $4,720,000 for the nine months ended September 30, 2021, compared to revenue of $3,532,000 for the nine months ended September 30, 2020, an increase of $1,188,000, or approximately 34%. The increase in revenue was primarily due higher sales volume of Viveve Systems and treatment tips soldmarketing efforts during the period. Sales in 2021 included sales of 31 Viveve Systems and approximately 8,200 disposable treatment tips sold globally. Sales in 2020 included sales of 16 Viveve Systems and approximately 5,900 disposable treatment tips sold globally.

Under the subscription offering program, we placed 18 Viveve Systems in the U.S. market in 2021; however, these new placements were offset by the negative impact of the COVID-19 crisis on our sales activity in the period which resulted in the return of 29 Viveve Systems during the period. In 2020, we placed 27 Viveve Systems under the subscription offering program in the U.S. market but these new placements were offset by the return of 18 Viveve Systems during the period. Rental revenue on these leases is recognized on a straight-line basis over the term of the lease. For the nine months ended September 30, 2021 and 2020, rental revenue recognized during the period was $950,000 and $829,000, respectively.

Late in the first quarter of 2020 and through the third quarter of 2021, the COVID-19 pandemic was in full effect adversely impacting commercial activity and the economies in the United States and most other countries and is likely to continue to adversely affect businesses and results of operations. Government and public health agencies issued directives halting performance of non-essential medical treatments and elective procedures in an effort to combat the spread of the coronavirus and protect public health and safety. As a result, Viveve’s customers either temporarily closed their medical practices or dramatically reduced services and staff. The consequence has been both a public health and economic crisis that continues for existing and prospective Viveve customers. In a supportive partnership response, in the second quarter of 2020 Viveve contacted all of its subscription customers and provided them with a three-month deferral of their rental payment. Although clinics in various regions continue tore-open and gradually increase their limited services, we anticipate that until the COVID-19 pandemic abates, more practices re-open and elective patient’s safety concerns are reduced that we will continue to experience reduced revenue from existing customers, as well as a greatly reduced number of new and prospective customers.

Gross profit was $661,000 or 14% of revenue for the nine months ended September 30, 2021, compared to gross profit of $49,000, or 1% of revenue, for the nine months ended September 30, 2020, an increase of $612,000. The increase in gross profit was primarily due to the higher sales volume of Viveve Systems and treatment tips sold during the period. Additionally, fixed manufacturing costs in 2020 were spread over a lower sales volume thereby lowering gross margins.

Research and development expenses totaled $6,804,000 for the nine months ended September 30, 2021 compared to research and development expense of $3,745,000 for the nine months ended September 30, 2020, an increase of $3,059,000, or approximately 82%. Spending on research and development increased primarily due to higher clinical study costs primarily due to the initiation of the pivotal U.S. PURSUIT clinical trial for the treatment of SUI in the first quarter of 2021 with subject enrollment advancing in the period. We expect completion of subject enrollment in the trial in the fourth quarter. Furthermore, spending on research and development in 2021 also included increased engineering and development work related to our products. Spending on research and development in 2020 was lower as it included reduced engineering and development work related to our products as a result of our overall strategic organizational realignment to focus efforts to advance our SUI clinical development program and operational measures to lower costs and reduce cash burn in response to the economic conditions caused by the COVID-19 crisis.

Selling, general and administrative expenses totaled $9,423,000 for the nine months ended September 30, 2021, compared to $10,476,000 for the nine months ended September 30, 2020, a decrease of $1,053,000, or approximately 10%. The decrease in selling, general and administrative expenses was primarily due to reduced spending as a result of the Company's organizational realignment to advance our SUI clinical development program and operational measures to lower costs and reduce cash burn in response to the continuing economic conditions caused by the COVID-19 crisis, partially offset by higher personnel costs for existing employees in 2021.

In May 2021, the Company’s request for forgiveness of the PPP Loan was approved in full. The total principal amount and the accrued interest through the forgiveness payment date was forgiven. The Company recognized a gain on the extinguishment of debt in the amount of $1,358,000.

In January 2021, the Company reduced the exercise price of the outstanding Series B, A-2 and B-2 warrants 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. The Series B, A-2 and B-2 warrant exercise price reduction resulted in the recognition of a modification expense of $287,000.

In May 2021, the Company reduced the exercise price of the outstanding Series B, A-2 and B-2 warrants from $3.40 per share to $2.817 per share pursuant to the terms of the warrants. The Series B, A-2 and B-2 warrant exercise price reduction resulted in the recognition of a modification expense of $86,000.

In April 2020, the Company reduced the exercise price of the outstanding Series A and B warrants from $15.50 per share to $6.10 per share. The Series A and B warrant exercise price adjustment resulted in the recognition of a modification expense of $1,838,000.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we had interest expense, net of ~~$734,000,~~$270,000 compared to interest expense, net of ~~$668,000~~$234,000 for the ~~nine~~three months ended ~~September 30, 2020,~~March 31 ,2021, a change of ~~$66,000,~~$36,000, or approximately ~~10%~~15%. The increase resulted primarily from a higher term loan balance compared to ~~2020~~the first quarter of 2021 due to the interest in-kind which was added to the total outstanding principal loan amount.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we had other expense, net of ~~$196,000,~~$21,000 compared to ~~$159,000~~$65,000 for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Loss from ~~minority interest~~investment in unconsolidated limited liability company

The Company uses the equity method to account for its investment in ~~ICM.~~InControl Medical, LLC (“ICM”). For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the allocated net loss from ICM’s operations was ~~$188,000,~~$122,000 compared to ~~$323,000~~$76,000 for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Comparison of the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

Since inception, the Company has sustained significant operating losses and such losses are expected to continue for the foreseeable future. ~~The Company~~As of March 31, 2022, we had an accumulated deficit of $235,525,000 as of September 30, 2021. Additionally, the Company used $9,651,000 in cash for operations in the nine months ended September 30, 2021. However, the Company's financing activities provided cash of $25,955,000 during the nine months ended September 30, 2021, including $25,122,000 in net proceeds from the January 2021 Offering, $633,000 in net proceeds from purchase of common shares under the Purchase Agreement with LPC, $179,000 proceeds from the exercise of common warrants and $21,000 from proceeds from issuance of common shares from employee purchase plan. As of September 30, 2021, the Company had$247,739,000, cash and cash equivalents of ~~$22,665,000~~$14,045,000 and working capital of ~~$23,563,000. Accordingly, management expects that~~$7,236,000. We used cash of $5,087,000 for operations during the three months ended March 31, 2022. As of the date our ~~cash along with~~condensed consolidated financial statements for the ~~remaining equity financing commitment from LPC of approximately $9,000,000 will be~~three months ended March 31, 2022 were issued, we did not have sufficient cash to fund our ~~activities for at least~~operations through May 31, 2023, without additional financing and, therefore, we concluded there was substantial doubt about our ability to continue as a going concern within one year after the ~~next twelve months through November 2022; however, we may require additional funds to fully implement our plan of operation.~~date the condensed consolidated financial statements were issued.

~~To fund further operations, the Company may need~~Management currently believes that it will be necessary for us to raise additional ~~capital. The Company~~funding. We may obtain additional ~~financing~~funding in the future through the issuance of ~~its~~our common stock, or through other equity or debt ~~financings.~~financing. The ~~Company’s ability to continue as a going concern or meet the minimum liquidity requirements in the future is dependent on its ability~~failure to raise ~~significant~~ additional ~~capital, of~~funding when needed could have a material adverse effect on our business and financial condition. We may not be able to obtain additional financing as needed on acceptable terms, or at all, which ~~there can be no assurance. If the necessary financing is not obtained or achieved, the Company will likely be required~~may require us to reduce ~~its planned~~our operating costs and other expenditures, ~~which could have an adverse impact on the results~~including reductions of ~~operations, financial condition~~personnel, salaries and capital expenditures. Alternatively, or in addition to such potential measures, we may elect to implement additional cost reduction actions as we may determine are necessary and in our best interests. Any such actions undertaken might limit 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.~~objectives.

The following table summarizes the primary sources and uses of cash for the periods presented below (in thousands):

We have incurred, and expect to continue to incur, significant expenses in the areas of research and development, regulatory and clinical study costs, associated with the Viveve System.

Operating activities used ~~$9,651,000~~$5,087,000 for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$12,936,000~~$3,253,000 used for the ~~nine~~three months ended ~~September 30, 2020.~~March 31,2021. The primary use of our cash was to fund selling, general and administrative expenses and research and development expenses associated with the Viveve System. Net cash used during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 consisted of a net loss of ~~$15,699,000~~$5,886,000 adjusted for non-cash expenses including ~~provision for doubtful accounts $104,000,~~bad debt recovery of $1,000, depreciation and amortization of ~~$884,000,~~$204,000, stock-based compensation of ~~$2,765,000,~~$960,000, non-cash interest expense of ~~$446,000, amortization of operating lease right-of-use assets and accretion of operating lease liabilities of $15,000,~~$161,000, a loss from ~~minority interest~~investment in unconsolidated limited liability company of ~~$188,000,~~$122,000, a loss on disposal of property and equipment of ~~$40,000, a noncash charge for the modification of warrants of $373,000, a gain on the extinguishment of debt of $1,358,000 related to forgiveness of the PPP Loan~~$1,000, and cash ~~inflows~~outflows from changes in operating assets and liabilities of ~~$2,589,000.~~$648,000. The change in operating assets and liabilities was primarily due to decrease in accounts receivable of ~~$152,000, a decrease~~$41,000, an increase in inventory of ~~$1,423,000, a decrease~~$33,000, an increase in prepaid expenses and other current assets of ~~$213,000, an increase~~$338,000, a decrease in other ~~noncurrent~~ assets of ~~$3,000,~~$112,000, an increase in accounts payable ~~$411,000,~~$122,000, an increase in accrued ~~and other~~ liabilities of ~~$71,000,~~$311,000, and ~~an increase~~a decrease of other noncurrent liabilities of ~~$324,000.~~$863,000.

Net cash used during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 consisted of a net loss of ~~$17,160,000~~$5,791,000 adjusted for non-cash expenses including provision for doubtful accounts ~~and write off of accounts receivable of $335,000,~~$65,000, depreciation and amortization of ~~$965,000,~~$328,000, stock-based compensation of ~~$2,009,000,~~$810,000, non-cash interest expense of ~~$394,000, amortization of operating lease right-of-use assets and accretion of operating lease liabilities of $3,000,~~$142,000, a loss from ~~minority interest~~investment in unconsolidated limited liability company of ~~$323,000,~~$76,000, a loss on disposal of property and equipment of ~~$14,000,~~$9,000, a noncash charge for the modification of ~~Series A and B~~ warrants of ~~$1,838,000,~~$287,000, and cash ~~outflows~~inflows from changes in operating assets and liabilities of ~~$1,657,000.~~$821,000. The change in operating assets and liabilities was primarily due to a decrease in accounts receivable of ~~$549,000,~~$369,000, a decrease in inventory of ~~$233,000,~~$396,000, a decrease in prepaid expenses and other current assets of ~~$683,000,~~$253,000, a decrease in other ~~noncurrent~~ assets of ~~$444,000, a decrease~~$150,000, an increase in accounts payable ~~$913,000,~~$276,000, a decrease in accrued ~~and other~~ liabilities of ~~$2,918,000,~~$727,000, and an increase of other noncurrent liabilities of ~~$265,000.~~$104,000.

Net cash used in investing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 was $49,000 and ~~2020 was $162,000 and $403,000,~~$85,000, respectively. Net cash used in investing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was used for the purchase of property and equipment. We expect to continue to purchase property and equipment in the normal course of our business. The amount and timing of these purchases and the related cash outflows in future periods is difficult to predict and is dependent on a number of factors including, but not limited to, any changes to the capital equipment requirements related to our recurring revenue rental model, development programs and clinical trials and increase in the number of our employees.

Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 was $19,000, which was the result of proceeds from issuance of common shares from the employee stock purchase plan.

Net cash provided by financing activities during the three months ended March 31, 2021 was ~~$25,955,000,~~$25,261,000, which was the result of net proceeds of $25,122,000 from the January 2021 Offering net of issuance costs ~~$704,000 from purchase of common shares in connection with the Purchase Agreement with LPC,~~and proceeds of $179,000 from exercises of common warrants, ~~and $21,000 of proceeds from issuance of common shares from employee stock purchase plan, partially~~ offset by transaction costs of ~~$71,000~~$40,000 in connection with the Purchase Agreement with LPC.

~~Net cash provided by financing activities during~~On July 2, 2021, we filed a universal shelf registration statement with the ~~nine months ended September 30, 2020 was $9,231,000, which was~~SEC on Form S-3 for the proposed offering from time to time of up to $75,000,000 of our securities, including common stock, preferred stock, and/or warrants. This registration statement currently has a capacity of $75,000,000. However, as a result of ~~net~~the limitations of General Instruction I.B.6. of Form S-3, or the so-called “baby shelf rules,” the amount of shares of our common stock available for sale under a registration statement on Form S-3 is limited to one-third of the aggregate market value of our common equity held by non-affiliates of the Company over any rolling 12-month period. As of December 31, 2021, we have not issued any shares or received any proceeds pursuant to the universal shelf registration statement.

The Company previously entered into a purchase agreement on June 8, 2020, as amended on March 31, 2021 (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 ~~$8,407,000~~our common stock, subject to certain limitations, from ~~exercises~~time to time over a 30-month period pursuant to the terms of ~~common warrants, proceeds of $1,343,000 from the PPP loan and proceeds of $341,000 from the initial purchase of common shares under~~ the Purchase ~~agreement from LPC, partially offset by transaction costs~~Agreement. As of ~~$333,000 in connection with~~March 31, 2022, the ~~2020 Warrant Offering, transaction costs of $494,000 in connection with the Purchase Agreement~~equity facility with LPC ~~and additional transaction costs~~has a remaining financing commitment of ~~$33,000 in connection with our November 2019 Offering.~~approximately $9,000,000.

~~We have obligations under a bank term loan and non-cancelable operating leases. As of September 30, 2021, our contractual obligations were as follows (in thousands):~~

In February 2017, we entered into a sublease for approximately 12,400 square feet of building space for the relocation of the Company’s corporate headquarters to Englewood, Colorado. The lease term was 36 months and the monthly base rent for the first, second and third years was $20.50, $21.12 and $21.75 per rentable square foot, respectively. In connection with the execution of the sublease, the Company paid a security deposit of approximately $22,000. The Company was also entitled to an allowance of approximately $88,000 for certain tenant improvements relating to the engineering, design and construction of the sublease premises. The lease term commenced in June 2017 and was to terminate in May 2021. In March 2021, the Company amended the sublease for its office building space. The lease term was extended for a period of 34 months and will terminate on March 31, 2024. The monthly gross rent for the first, second and third years of the lease extension is ~~$21,028, $21,643~~$21,027.88, $21,643.03 and ~~$22,258~~$22,258.18 per month, respectively. The Company was also provided a rent abatement for the month of June 2021. Additionally, the sublandlord ~~has~~ agreed to perform certain construction, repair, maintenance or other tenant improvements to the subleased premises with estimated costs of approximately $19,000.

In May 2017, the Company entered into the 2017 Loan Agreement with affiliates of CRG LP (“CRG”). The credit facility consists of $20,000,000 that was drawn at closing and the ability to access additional funding of up to an aggregate of $10,000,000 for a total of $30,000,000 under the credit facility. In December 2017, the Company accessed the remaining $10,000,000 available under the CRG credit facility. The term of the loan is six years with the first four years being interest only. In November 2019, the Company and CRG amended the 2017 Loan Agreement concurrent with the conversion of approximately $29,000,000 of the principal amount under the term loan with CRG (plus accrued interest, the prepayment premium and the back-end fee applicable thereto), for an aggregate amount of converted debt obligations of approximately $31,300,000. The amounts converted into 31,300 shares of the newly authorized Series B convertible preferred stock and warrants to purchase up to 989,379 shares of common stock were also issued. The outstanding principal balance under the 2017 Loan Agreement was ~~$4,964,000~~$5,285,000 as of ~~September 30, 2021.~~March 31, 2022.

In ~~September 2018,~~October 2020, the Company entered into a 36-month noncancelable operating lease agreement for office equipment. The lease commenced in December 2020 and will terminate in December 2023. The monthly payment is approximately ~~$3,000.~~$2,000.

The discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. ~~Please see Note 2~~During the three months ended March 31, 2022, there were no material changes to our ~~audited consolidated financial statements~~critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, that was filed with the SEC on March ~~18, 2021. There have been no material changes to the significant accounting policies during the nine months ended September 30, 2021.~~17, 2022.

In ~~December 2019,~~June 2016, the FASB issued ASU ~~2019-12, “Income Taxes~~2016-13, Financial Instruments—Credit Losses (Topic ~~740).~~326): Measurement of Credit Losses on Financial Instruments, as amended, which revises the measurement of credit losses for most financial instruments measured at amortized cost, including trade receivables, from an incurred loss methodology to an expected loss methodology which results in earlier recognition of credit losses. Under the incurred loss model, a loss is not recognized until it is probable that the loss-causing event has already occurred. The ~~amendments~~new standard introduces a forward-looking expected credit loss model that requires an estimate of the expected credit losses over the life of the instrument by considering all relevant information including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. The guidance in this Update provide further simplification of accounting standards for the accounting for income taxes. Certain exceptions for are removed and requirements regarding the accounting for franchise taxes, tax basis of goodwill, and tax law rate changes are made. This guidanceASU 2016-13 is effective for ~~annual reporting periods~~the Company for financial statements issued for fiscal years beginning after December 15, ~~2020, including~~2022 and interim periods within ~~that reporting period,~~those fiscal years, with early adoption permitted. ~~We adopted this guidance as~~The Company is still evaluating the impact of ~~January 1, 2021, and~~ the adoption of ~~the guidance did not have a significant impact on the condensed consolidated financial statements.~~this standard.

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

Research, development and commercialization of new technologies and products is, by its nature, unpredictable. Although we will undertake development efforts, including efforts with commercially reasonable diligence, there can be no assurance that we will have adequate capital to develop or commercialize our technology to the extent needed to create future sales to sustain our operations.

We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

Other than as discussed above and elsewhere in this Quarterly Report, ~~on Form 10-Q,~~ we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Inflation has increased during the periods covered by this Quarterly Report and is expected to continue to increase for the near future. Inflationary factors, such as increases in the cost of our products (and components thereof), interest rates, overhead costs and transportation costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to supply chain constraints, consequences associated with COVID-19 and increased product pricing due to semiconductor product shortages.

We are ~~exposed~~a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to market risk related to changes in interest rates. As of September 30, 2021, our cash and cash equivalents consisted of cash and interest-bearing accounts. Our primary exposure to market risk is interest income sensitivity, which is affected by changes inprovide the general level of U.S. interest rates. However, since a majority of our investments are in highly liquid interest-bearing accounts, we do not believe we are subject to any material market risk exposure. As of September 30, 2021, we did not have any material derivative financial instruments. The fair value of our cash and cash equivalents was $22.7 million as of September 30, 2021. information under this item.

We are also exposed to market risk related to changes in foreign currency exchange rates. From time to time, we contract with vendors or service providers that are located outside the U.S., which are denominated in foreign currencies. We are subject to fluctuations in foreign currency rates in connection with these agreements. We do not currently hedge our foreign currency exchange rate risk. As of September 30, 2021 and December 31, 2020, we had minimal liabilities denominated in foreign currencies.

~~We do not believe that inflation had a material effect on our business, financial condition or results of operations during the nine months ended September 30, 2021 and 2020.~~

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of management, including our principal executive officer and principal ~~financial~~accounting and ~~accounting~~financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2021,~~March 31, 2022, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon the evaluation of our disclosure controls and procedures as of ~~September 30, 2021,~~March 31, 2022, our Chief Executive Officer (principal executive officer) and Senior Vice President of Finance and Administration (principal accounting and financial officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. In addition, our ability to maintain an effective internal control environment has not been impacted by the COVID-19 pandemic.

No changes in the Company’s internal control over financial reporting have come to management’s attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

~~Except as disclosed below and in our Annual Report on Form 10-K for the year ended December 31, 2020, we~~We are not subject to any material pending legal proceedings. From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business.

We incorporate herein by reference the risk factors included in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission on March ~~18, 2021.~~17, 2022.

Pursuant to the Certificate of Designation of the Company’s Series B convertible preferred stock, we issued ~~1,189~~1,263 shares of Series B convertible preferred stock in lieu of ~~$1,189,000~~$1,263,000 in cash dividend to holders of Series B convertible preferred stock, exempt from registration pursuant to Section 4(a)(2) of the Securities Act, on ~~September 30, 2021.~~March 31, 2022.

The shares of Series B convertible preferred stock will only be convertible into common stock, following such time as we have filed an amendment to the certificate of incorporation that authorizes at least 125,000,000 shares of common stock. We may remove the requirement of authorized common stock increase for the conversion of Series B convertible preferred stock to enable CRG to convert its shares to common stock. The conversion or exercise of securities issued to affiliates of CRG are also further subject to certain beneficial ownership restrictions. If the Series B convertible preferred stock becomes convertible into common stock, it will be convertible into that number of shares of common stock determined by dividing $1,000 by the conversion price of $15.30.

+** This document is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2021			2020			2021			2020			2022			2021

Revenue	$	1,616		$	1,524		$	4,720		$	3,532		$	1,641		$	1,450
Cost of revenue		1,502			1,283			4,059			3,483			1,321			1,068
Gross profit		114			241			661			49			320			382

Operating expenses:
Research and development		2,695			884			6,804			3,745			2,140			1,930
Selling, general and administrative		2,911			2,761			9,423			10,476			3,653			3,581
Total operating expenses		5,606			3,645			16,227			14,221			5,793			5,511
Loss from operations		(5,492	)		(3,404	)		(15,566	)		(14,172	)		(5,473	)		(5,129	)
Gain on forgiveness of Paycheck Protection Program loan		0			0			1,358			0
Modification of warrants		0			0			(373	)		(1,838	)		0			(287	)
Interest expense, net		(255	)		(235	)		(734	)		(668	)		(270	)		(234	)
Other expense, net		(78	)		(41	)		(196	)		(159	)		(21	)		(65	)
Net loss from consolidated companies		(5,825	)		(3,680	)		(15,511	)		(16,837	)		(5,764	)		(5,715	)
Loss from minority interest in limited liability company		(33	)		(55	)		(188	)		(323	)
Loss from investment in unconsolidated limited liability company														(122	)		(76	)
Comprehensive and net loss		(5,858	)		(3,735	)		(15,699	)		(17,160	)		(5,886	)		(5,791	)
Series B convertible preferred stock dividends		(1,190	)		(1,053	)		(3,463	)		(3,064	)		(1,266	)		(1,119	)
Net loss attributable to common stockholders	$	(7,048	)	$	(4,788	)	$	(19,162	)	$	(20,224	)	$	(7,152	)	$	(6,910	)

Net loss per share of common stock:
Basic and diluted	$	(0.67	)	$	(2.65	)	$	(1.93	)	$	(14.71	)	$	(0.67	)	$	(0.80	)

Weighted average shares used in computing net loss per common share:
Basic and diluted		10,591,834			1,807,931			9,916,834			1,374,800			10,620,076			8,636,120

		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2021		2020			2022		2021

Convertible preferred stock:
Series A convertible preferred stock	(a)		0		0
Series B convertible preferred stock	(b)		2,567,255		2,270,261	(a)		2,729,869		2,414,183
Series C convertible preferred stock	(c)		0		0	(b)		0		0
Warrants to purchase common stock			9,793,599		1,771,088			9,793,599		9,793,605
Stock options to purchase common stock			3,195,742		975,605			4,110,009		981,551
Deferred restricted common stock units			679,000		0			674,000		687,000
Deferred restricted common stock awards			228		234			228		232

Year Ending December 31,
2021 (remaining 3 months)	$	0
2022		0
2022 (remaining nine months)				$	0
2023		5,992			5,992
Total Payments		5,992
Total payments					5,992
Less: Amount representing interest		(1,022	)		(703	)
Present value of obligations		4,970			5,289
Less: Unamortized debt discount		(6	)		(4	)
Note payable, noncurrent portion		4,964
Note payable, current portion				$	5,285

Year Ending December 31,
2021 (remaining 3 months)	$	69
2022		279
2022 (remaining nine months)				$	212
2023		285			287
2024		67			67
Total lease payments		700			566
Less: Amount representing interest		(102	)		(67	)
Present value of lease liabilities	$	598		$	499

	●	In ~~September 2020,~~ ~~the Company issued 47,090 restricted shares of its common stock at an aggregate value of approximately $25,000.~~

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

	Series A Convertible Preferred Stock, $0.0001 par value				Series B Convertible Preferred Stock, $0.0001 par value				Common Stock, $0.0001 par value				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Equity

Balances as of January 1, 2021		0	$	0		35,819	$	0		2,171,316	$	0	$	226,800		$	(219,826	)	$	6,974
January 2021 Offering, net issuance costs		0		0		0		0		5,666,760		1		25,121			0			25,122
Conversion of Series C convertible preferred stock into common stock		0		0		0		0		2,450,880		0		0			0			0
Issuance of common shares in connection with common warrant exercises		0		0		0		0		52,760		0		179			0			179
Modification of exercise price of warrants in connection with January 2021 Offering		-		0		-		0		-		0		287			0			287
Transaction costs in connection with Purchase Agreement with LPC		-		0		-		0		-		0		(40	)		0			(40	)
Dividend on Series B convertible preferred stock		-		0		-		0		-		0		(1,119	)		0			(1,119	)
Dividend on Series B convertible preferred stock paid in PIK shares		0		0		1,118		0		0		0		1,118			0			1,118
Stock-based compensation expense		-		0		-		0		-		0		810			0			810
Net loss		-		0		-		0		-		0		0			(5,791	)		(5,791	)
Balances as of March 31, 2021		0		0		36,937		0		10,341,716		1		253,156			(225,617	)		27,540
Issuance of purchased common shares under the Purchase Agreement with LPC		0		0		0		0		250,000		0		704			0			704
Transaction costs in connection with First Amendment to Purchase Agreement with LPC		-		0		-		0		-		0		(31	)		0			(31	)
Modification of exercise price of warrants in connection with First Amendment to Purchase Agreement with LPC
Purchase Agreement with LPC		-		0		-		0		-		0		86			0			86
Dividend on Series B convertible preferred stock		-		0		-		0		-		0		(1,154	)		0			(1,154	)
Dividend on Series B convertible preferred stock paid in PIK shares		0		0		1,153		0		0		0		1,153			0			1,153
Stock-based compensation expense		-		0		-		0		-		0		867			0			867
Net loss		-		0		-		0		-		0		0			(4,050	)		(4,050	)
Balances as of June 30, 2021		0		0		38,090		0		10,591,716		1		254,781			(229,667	)		25,115
Dividend on Series B convertible preferred stock		-		0		-		0		-		0		(1,190	)		0			(1,190	)
Dividend on Series B convertible preferred stock paid in PIK shares		0		0		1,189		0		0		0		1,189			0			1,189
Stock-based compensation expense		-		0		-		0		-		0		1,088			0			1,088
Issuance of common shares from employee stock purchase plan		0		0		0		0		10,844		0		21			0			21
Net loss		-		0		-		0		-		0		0			(5,858	)		(5,858	)
Balances as of September 30, 2021		0	$	0		39,279	$	0		10,602,560	$	1	$	255,889		$	(235,525	)	$	20,365


	~~(c)~~ (b)	Each share of Series C convertible preferred stock iswas convertible at any time at the ~~holder's~~holder’s option into ~~one~~1 share of common stock. ~~As of~~ ~~September 30, 2021,~~ ~~all~~All Series C convertible preferred stock had been converted into common stock and there ~~are~~ nowere 0 remaining shares outstanding. In March 2022, the Company filed a Certificate of Elimination with the Delaware Secretary of State with respect to the authorized shares of Series C convertible preferred ~~stock outstanding.~~stock.

Year Ending December 31,
2021 (remaining 3 months)	$	195
Thereafter		241
2022 (remaining nine months)			$	456
2023				50
Total	$	436	$	506

					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

	Immediately			Immediately			Immediately			Immediately
Series B Warrants	before Modification			After Modification			before Modification			After Modification

Exercise price	$	6.10		$	3.40		$	6.10		$	3.40
Common stock price	$	3.19		$	3.19		$	3.19		$	3.19
Expected term (in years)		3.9			3.9			3.9			3.9
Average volatility		90	%		90	%		90	%		90	%
Risk-free interest rate		0.33	%		0.33	%		0.33	%		0.33	%
Dividend yield		0	%		0	%		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	%

	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	%

	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, beginning of period		986,399		$	19.10		-	$	-
Options granted		2,251,000		$	2.73
Options exercised		0			0
Options canceled		(41,657	)	$	23.35
Options outstanding, end of period		3,195,742		$	7.52		9.3	$	0

Vested and exercisable and expected to vest, end of period		2,932,744		$	7.88		9.3	$	0

Vested and exercisable, end of period		581,757		$	23.17		8.5	$	0

	Three Months Ended March 31, 2022
						Weighted
				*Weighted*		*Average*
	*Number*			*Average*		*Remaining*		*Aggregate*
	of			*Exercise*		*Contractual*		*Intrinsic*
	*Shares*			*Price*		*Term (years)*		*Value*
Options outstanding, January 1, 2022		3,173,103		$	7.51		9.0	$	0
Options granted		941,000		$	1.26
Options exercised		0			0
Options canceled		(4,094	)	$	7.69
Options outstanding, March 31, 2022		4,110,009		$	6.08		9.0	$	0

Vested and exercisable and expected to vest, March 31, 2022		3,818,956		$	6.34		9.0	$	0

Vested and exercisable, March 31, 2022		995,692		$	15.65		8.4	$	0

Indication for Use:	No. of Countries:
General surgical procedures for electrocoagulation and hemostasis	4	(including the U.S.)
General surgical procedures for electrocoagulation and hemostasis of vaginal tissue and for the treatment of vaginal laxity	29
For treatment of vaginal laxity	5
For treatment of the vaginal introitus, after vaginal childbirth, to improve sexual function	9
General surgical procedures for electrocoagulation and hemostasis ~~as well as~~and for the treatment of vaginal laxity	1
For vaginal rejuvenation	1
For treatment of vaginal laxity, ~~and to improve mild~~ urinary incontinence and sexual function	1

	Three Months Ended
	Sepember 30,				Change
	2021		2020		$		%
	(in thousands, except percentages)

Revenue	$	1,616	$	1,524	$	92		6	%

	Nine Months Ended						Year Ended
	Sepember 30,						March 31,
	2021			2020			2022			2021

Net cash used in operating activities	$	(9,651	)	$	(12,936	)	$	(5,087	)	$	(3,253	)
Net cash used in investing activities		(162	)		(403	)		(49	)		(85	)
Net cash provided by financing activities		25,955			9,231			19			25,261
Net increase (decrease) in cash and cash equivalents	$	16,142		$	(4,108	)	$	(5,117	)	$	21,923

			Less than						More than
Contractual Obligations (including interest):	Total		1 Year		1 - 3 Years		3 -5 Years		5 Years
CRG note payable	$	5,992	$	-	$	5,992	$	-	$	-
Non-cancellable operating lease obligations		700		278		422		-		-
Total	$	6,692	$	278	$	6,414	$	-	$	-

Exhibit Number	Document

3.1.1(1)	Certificate of Conversion for Delaware.

3.1.2(2)	Amended and Restated Certificate of Incorporation.

3.1.3(3)	Articles of Amendment to the Articles of Continuance of Viveve Medical, Inc.

3.1.4(4)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed September 18, 2019.

~~3.1.5(6)~~3.1.5(5)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed November 30, 2020.

3.1.6(6)	Certificate of Elimination of Series A Preferred Stock.

3.1.7(7)	Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock.

3.1.8(8)	Form of Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock.

3.1.9(9)	Certificate of Elimination of Series C Preferred Stock.

3.2(2)	Amended and Restated Bylaws.

~~3.3(5)~~3.3(10)	Amendment to the Amended and Restated Bylaws.

10.1+*	Fifth Amended and Restated Viveve Medical, Inc. Independent Director Compensation Policy.

10.2+(11)	Form of Retention Bonus Agreement.

31.1*	Certification of the ~~Company~~’sCompany’s Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of the ~~Company~~’sCompany’s Principal Accounting and Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1+~~32.1**	Certification of the ~~Company~~’sCompany’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2+~~32.2**	Certification of the ~~Company~~’sCompany’s Principal Accounting and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	Inline XBRL Instance

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

	(5)	Incorporated by reference from the Form 8-K filed with the Securities and Exchange Commission on December 1, 2020.

	(6)	Incorporated by reference from the Form 8-K filed with the SEC on December 18, 2020.

	(7)	Incorporated by reference from the Form S-1/A filed with the SEC on November 21, 2019.

	(8)	Incorporated by reference from the Form 8-K filed with the SEC on January 19, 2021.

	(9)	Incorporated by reference from the Form 10-K filed with the Securities and Exchange Commission on March 17, 2022.

	(10)	Incorporated by reference from the Form 8-K filed with the Securities and Exchange Commission on June 16, 2021.

Dated: ~~November~~May 12, ~~2021~~2022	VIVEVE MEDICAL, INC.
	(Registrant)

	By:	/s/ Scott Durbin
		Scott Durbin
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Jim Robbins
		Jim Robbins
		Senior Vice President of Finance and Administration (Principal Accounting and Financial Officer)