. Stockholders’ Equity

Convertible Preferred Stock

As of

December 31, 2019,

the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to

5,000,000

shares of convertible preferred stock with

$0.001

par value per share, of which

48,503

shares were issued and outstanding.

Series A Convertible Preferred Stock

February

14,

2018,

the Company entered into a Series A Purchase Agreement with CRG, pursuant to which it agreed to convert

$38.0

million of the outstanding principal amount of its senior secured term loan (plus

$3.8

million in back-end fees, accrued interest, debt discount and prepayment premium applicable thereto), totaling

$41.8

million, into a newly authorized Series A convertible preferred stock (the “Series A preferred stock”). The Series A preferred stock was initially convertible into

2,090,000

shares of common stock subject to certain limitations contained in the Series A Purchase Agreement. Under the terms of the Series A Purchase Agreement, the holders of Series A preferred stock are entitled to receive annual accruing dividends at a rate of

8%,

payable in additional shares of Series A preferred stock or cash, at the Company’s option. The shares of Series A preferred stock have

voting rights and rank senior to all other classes and series of the Company’s equity in terms of repayment and certain other rights. In

January 2019

and

December 2019,

2,945

and

3,580

additional shares, respectively, were issued to CRG as payment of dividends accrued through

December 31, 2019.

As of

December 31, 2019,

48,325

shares of Series A preferred stock were outstanding. The Series A preferred stock accrued additional dividends of approximately

$3.6

million and

$2.9

million during the years ended

December 31, 2019

and

2018,

respectively.

Series B Convertible Preferred Stock

February

16,

2018,

the Company completed a public offering of

17,979

shares of Series B convertible preferred stock (the “Series B preferred stock”). As a result, the Company received net proceeds of approximately

$15.5

million after underwriting discounts, commissions, legal and accounting fees. The Series B preferred stock has a liquidation preference of

$0.001

per share, full ratchet price based anti-dilution protection, has

voting rights and is subject to certain ownership limitations. The Series B preferred stock is immediately convertible at the option of the holder, has

stated maturity, and does

not

pay regularly stated dividends or interest. During the year ended

December 31, 2019,

1,523

of these shares converted into

380,750

shares of common stock and

178

shares of Series B preferred stock remained outstanding.

The Company evaluated the Series B convertible preferred stock issuance in accordance with the provisions of ASC

815,

Derivatives and Hedging,

including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective conversion price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, to additional paid-in capital, resulting in a discount on the convertible preferred stock. As the Series B convertible preferred stock

may

be converted immediately, the Company recognized a BCF of

$5.2

million as a deemed dividend in the statements of operations as of

February

16,

2018.

Series C Convertible Preferred Stock

November 1, 2018,

the Company completed a public offering of

728,500

shares of common stock and

8,586

shares of Series C convertible preferred stock (the “Series C preferred stock”). As a result, we received net proceeds of approximately

$10.2

million after underwriting discounts, commissions, legal and accounting fees. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series C preferred stock will be entitled to receive distributions out of our assets, whether capital or surplus, of an amount equal to

$0.001

per share of Series C preferred stock before any distributions shall be made on the common stock but after distributions shall be made on any outstanding Series A preferred stock and any of our existing or future indebtedness. The Series C preferred stock has

voting rights. As of

December 31, 2018,

there were

2,170

shares of Series C preferred stock outstanding. During the year ended

December 31, 2019,

all

2,170

of these shares were converted into

542,500

shares of common stock and

shares remained outstanding.

ommon Stock

December

31,

2019,

the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to

100,000,000

shares of common stock with

$0.001

par value per share, of which

10,364,663

shares were issued and outstanding.

Common Stock Warrants

In connection with the issuance of the Company’s Series E convertible preferred stock in

September

2014

through

January

2015,

the Company issued warrants to purchase an aggregate of up to the number of shares of common stock equal to

50%

of the number of shares of the Company’s Series E Convertible preferred stock purchased by such investor, all of which expired on

September

2019.

February

16,

2018,

in connection with the Company’s completed public offering of Series B preferred stock, the Company issued

two

series of warrants that together provide for the purchase, by the investors in that offering, of an aggregate of

1,797,900

shares of common stock (the “Series B Warrants”). Each share of Series B preferred stock is accompanied by

one

warrant to purchase

one

share of common stock at

$4.00

per share that expires on the

seventh

anniversary of the date of issuance to purchase up to

shares of common stock and

one

warrant that expires on the earlier of (i) the

seventh

anniversary of the date of issuance or (ii) the

60th

calendar day following the receipt and announcement of FDA clearance of the Company’s Pantheris below-the-knee device (or the same or similar product with a different name) to purchase up to

shares of common stock; provided, however, if at any time during such

-day period the volume weighted average price for any trading day is less than the then effective exercise price, the termination date shall be extended to the

seven

year anniversary of the initial exercise date. FDA clearance of Pantheris SV was received in

April 2019,

triggering this

-day period. During the entire

-day period following clearance, the volume weighted average price was less than the then effective exercise price. As such, all Series

warrants are currently deemed to expire on the

seventh

anniversary of the date of issuance. The Company determined that the Series B Warrants should be classified as equity. As of

December 31, 2019,

Series B Warrants to purchase an aggregate of

1,768,850

shares of common stock remain outstanding.

July 13, 2018,

in connection with the Company’s completed public offering of

216,618

shares of common stock, the Company issued warrants that provide for the purchase of

108,309

shares of common stock at

$15.80

per share. Each share of common stock is accompanied by

one

half of

one

warrant that expires on the

third

anniversary of the date of issuance. The Company determined that these warrants should be classified as equity. As of

December 31, 2019,

all of these warrants remain outstanding.

November 1, 2018,

in connection with the Company’s completed public offering of

728,500

shares of common stock and

8,586

shares of Series C convertible preferred stock, the Company issued warrants to provide for the purchase of

2,875,000

shares of common stock. Each share of common stock is accompanied by

one

warrant to purchase

one

share of common stock at

$4.00

per share. These warrants expire on the

anniversary of the date of issuance. Each share of preferred stock is accompanied by

one

warrant to purchase

250

shares of common stock. The Company determined that the warrants should be classified as equity. As of

December 31, 2018,

all

2,875,000

of these warrants were outstanding at a conversion rate of

ten

warrants for each share of common stock. During the year ended

December 31, 2019,

warrants were exercised for an aggregate of

1,998,079

shares of common stock with proceeds to the Company of approximately

$8.0

million. As of

December 31, 2019,

warrants to purchase an aggregate of

876,840

shares of common stock remain outstanding.

The Company accounted for the common stock warrants issued during the year ended

December 31, 2018

as issuance costs relating to the respective equity financing, and used the Black-Scholes method to estimate their fair value. The fair value of the common stock warrants issued in

July 2018

and

November 2018

was

not

significant. The assumptions used to estimate the fair values of the common stock warrants issued in

February 2018

were as follows:

Expected term (years)	7
Expected volatility	55	%
Risk-free interest rate	2	%
Dividend rate	—

As of

December 31, 2019

and

2018,

warrants to purchase an aggregate of

2,753,999

and

4,757,539

shares of common stock were outstanding, respectively.

Stock Plans

January

2015,

the Board of Directors adopted and the Company’s stockholders approved the

2015

Equity Incentive Plan (

“2015

Plan”). The

2015

Plan replaced the

2009

Stock Plan (the

“2009

Plan”) which was terminated immediately prior to consummation of the Company’s IPO (collectively the “Plans.)” The

2015

Plan provides for the grant of incentive stock options (“ISOs”) to employees and for the grant of non-statutory stock options (“NSOs”), restricted stock, RSUs, stock appreciation rights, performance units and performance shares to employees, directors and consultants. Initially a total of

3,300

shares of common stock were reserved for issuance pursuant to the

2015

Plan. The shares reserved for issuance under the

2015

Plan included shares reserved but

not

issued under the

2009

Plan, plus any share awards granted under the

2009

Plan that expire or terminate without having been exercised in full or that are forfeited or repurchased. In addition, the number of shares available for issuance under the

2015

Plan includes an automatic annual increase on the

first

day of each fiscal year beginning in fiscal

2016,

equal to the lesser of

4,225

shares,

5.0%

of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year or an amount as determined by the Board of Directors. In addition, during fiscal

2018,

the Board of Directors approved an additional

300,000

shares of common stock for issuance under the

2015

Plan. The Company’s stockholders approved this increase on

June 8, 2018.

June 19, 2019,

the Company’s stockholders approved an additional

800,000

increase to the

2015

Plan. As of

December 31, 2019,

96,896

shares were available for grant under the

2015

Plan.

Pursuant to the Plans, ISOs and NSOs

may

be granted with exercise prices at

not

less than

100%

of the fair value of the common stock on the date of grant and the exercise price of ISOs granted to a stockholder, who, at the time of grant, owns stock representing more than

10%

of the voting power of all classes of the stock of the Company, shall be

not

less than

110%

of the fair market value per share of common stock on the date of grant. The Company’s Board of Directors determines the vesting schedule of the options. Options granted generally vest over

four

years and expire

ten

years from the date of grant.

Stock option activity under the Plans is set forth below:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Intri n sic Value
Balance at December 31, 2017		7,663		$	2,917.30			$	—
Options granted		3,100		$	16.70
Options expired		(2,550	)	$	2,725.80
Options forfeited		(259	)	$	3,493.70
Balance at December 31, 2018		7,954		$	1,707.30			$	—
Options expired		(448	)	$	3,061.09
Options forfeited		(105	)	$	1,929.52
Balance at December 31, 2019		7,401		$	1,309.47		6.81	$	—

Exercisable at December 31, 2019		7,224		$	1,310.25		6.80	$	—

Vested and expected to vest at December 31, 2019		7,401		$	1,309.47		6.81	$	—

Additional information related to the status of options as of

December

31,

2019

is summarized as follows:

Options Outstanding								Options Vested
				Weighted		Weighted				Weighted
				Average		Average				Average
Exercise		Options		Remaining		Exercise		Number		Exercise
Price		Outstanding		Contractual Life		Price		Exercisable		Price
$	16.70		3,100		8.44	$	16.70		3,100	$	16.70
$	204.00		5		7.56	$	204.00		3	$	204.00
$	820.00		1,001		7.21	$	820.00		856	$	820.00
$	1,052.00		46		7.18	$	1,052.00		36	$	1,052.00
$	1,420.00		70		6.84	$	1,420.00		70	$	1,420.00
$	1,472.00		10		6.83	$	1,472.00		8	$	1,472.00
$	1,800.00		2,440		5.00	$	1,800.00		2,440	$	1,800.00
$	1,980.00		28		0.32	$	1,980.00		28	$	1,980.00
$	4,364.00		10		5.18	$	1,980.00		10	$	1,980.00
$	4,404.00		25		6.43	$	4,404.00		25	$	4,404.00
$	4,952.00		18		6.33	$	4,952.00		18	$	4,952.00
$	5,040.00		24		1.47	$	5,040.00		24	$	5,040.00
$	5,184.00		151		6.19	$	5,184.00		141	$	5,184.00
$	5,196.00		241		6.18	$	5,196.00		233	$	5,196.00
$	5,940.00		14		2.02	$	5,940.00		14	$	5,940.00
$	6,084.00		11		5.58	$	6,084.00		11	$	6,084.00
$	7,290.00		3		4.04	$	7,290.00		3	$	7,290.00
$	7,844.00		110		5.91	$	7,844.00		110	$	7,844.00
$	8,100.00		94		3.73	$	8,100.00		94	$	8,100.00
			7,401		6.81	$	1,309.47		7,224	$	1,310.25

There were

options exercised during the year ended

December 31, 2019.

As of

December 31, 2019,

there was approximately

$72,000

of remaining unamortized stock-based compensation expense associated with unvested stock options, which will be expensed over a weighted average remaining service period of approximately

1.0

years. Because of the Company’s net operating losses, the Company did

not

realize any tax benefits from share-based payment arrangements for the years ended

December 31, 2019

and

2018.

The Company’s RSUs generally vest annually over

three

four

years in equal increments. The Company measures the fair value of RSUs using the closing stock price of a share of the Company’s common stock on the grant date and is recognized as expense on a straight-line basis over the vesting period of the award. A summary of all RSU activity is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
Awards outstanding at December 31, 2017		509		$	2,377.80		2.87
Awarded		297,753		$	15.00
Released		(128	)	$	2,739.70
Forfeited		(4,068	)	$	59.70
Awards outstanding at December 31, 2018		294,066		$	17.34		3.09
Awarded		764,151		$	1.24
Released		(101,575	)	$	17.95
Forfeited		(48,138	)	$	10.57
Awards outstanding at December 31, 2019		908,504		$	4.09		1.81

As of

December 31, 2019,

there was approximately

$3.0

million of remaining unamortized stock-based compensation expense associated with RSUs, which will be expensed over a weighted average remaining service period of approximately

1.8

years. The

908,504

outstanding non-vested and expected to vest RSUs have an aggregate fair value of approximately

$1.0

million. The Company used the closing market price of

$1.14

per share at

December 31, 2019,

to determine the aggregate fair value for the RSUs outstanding at that date. For the years ended

December 31, 2019

and

2018,

the fair value of RSUs vested was approximately

$116,000

and

$1,500,

respectively.

2018

Officer and Director Share Purchase Plan

August 22, 2018,

the Board of Directors of the Company approved the adoption of an Officer and Director Share Purchase Plan (“ODPP”), which allows executive officers and directors to purchase shares of our common stock at fair market value in lieu of salary or, in the case of directors, director fees. Eligible individuals

may

voluntarily participate in the ODPP by authorizing payroll deductions or, in the case of directors, deductions from director fees for the purpose of purchasing common stock. Elections to participate in the ODPP

may

only be made during open trading windows under our insider trading policy when the participant does

not

otherwise possess material non-public information concerning the Company. The Board of Directors authorized

20,000

shares to be made available for purchase by officers and directors under the ODPP. Effective on

August 28, 2019,

the Board of Directors approved an additional

40,000

shares to be made available under the ODPP. Common stock issued under the ODPP during the year ended

December 31, 2019

totaled

36,087

shares. As of

December 31, 2019,

there were

20,204

shares reserved for issuance under the ODPP.