9.	Summary of Stock Options

Stock Option Plans

The Company has issued equity awards in the form of stock options and restricted stock awards from

three

employee benefit plans. The plans include the Company’s

2005

Stock Incentive Plan (the

“2005

Plan”), 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”).

The

2005

Plan was adopted by the Company’s board of directors and approved by its stockholders. As of

December

31,

2016,

1,892

shares of common stock remain reserved for issuance under the

2005

Plan. The Company does not intend to grant further awards from the

2005

Plan, however, it will continue to administer the

2005

Plan until all outstanding awards are exercised, expire, terminate or are forfeited. There are currently outstanding stock option awards issued from the

2005

Plan covering a total of

1,892

shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is

$116.29

per share and the weighted average remaining contractual term is

0.73

years.

The

2006

Plan was adopted by the board of directors of Viveve, Inc. and was terminated in conjunction with the merger that took place on

September

23,

2014

between PLC Systems Inc., Viveve, Inc. and PLC Systems Acquisition Corp. (the “Merger”). Prior to the Merger, the board of directors voted to accelerate the vesting of all unvested options that were outstanding as of the date of the Merger such that all options would be immediately vested and exercisable by the holders. In conjunction with the Merger, the Company agreed to assume and administer the

2006

Plan and all outstanding options to purchase shares of Viveve, Inc. common stock issued from the

2006

Plan were converted into options to purchase shares of the Company’s common stock (rounded down to the nearest whole share). The number of shares of the Company’s common stock into which the

2006

Plan options were converted was determined by multiplying the number of shares covered by each

2006

Plan option by the exchange ratio of

0.0080497

(or

0.0010062

on a post- reverse stock split basis). The exercise price of each

2006

Plan option was determined by dividing the exercise price of each

2006

Plan option immediately prior to the Merger by the exchange ratio of

0.0080497

(or

0.0010062

on a post- reverse stock split basis) (rounded up to the nearest cent). There are currently outstanding stock option awards issued from the

2006

Plan covering a total of

38,378

shares of the Company’s common stock and no shares are available for future awards. The weighted average exercise price of the outstanding stock options is

$10.49

per share and the weighted average remaining contractual term is

5.88

years.

The

2013

Plan was also adopted by the Company’s board of directors and approved by its stockholders. The

2013

Plan is administered by the Compensation Committee of the Company’s board of directors (the “Administrator”). Under the

2013

Plan, the Company

may

grant equity awards to eligible participants which

may

take the form of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted, deferred or unrestricted stock awards, performance based awards or dividend equivalent rights. Awards

may

be granted to officers, employees, nonemployee directors (as defined in the

2013

Plan) and other key persons (including consultants and prospective employees). The term of any stock option award

may

not exceed

years and

may

be subject to vesting conditions, as determined by the Administrator. Options granted generally vest over

four

years. Incentive stock options

may

be granted only to employees of the Company or any subsidiary that is a “subsidiary corporation” within the meaning of Section

424(f)

of the Internal Revenue Code. The exercise price of any stock option award cannot be less than the fair market value of the Company’s common stock, provided, however, that an incentive stock option granted to an employee who owns more than

10%

of the Company’s outstanding voting power must have an exercise price of no less than

110%

of the fair market value of the Company’s common stock and a term that does not exceed

five

years.

August

22,

2016,

the Company’s stockholders approved an amendment to the

2013

Plan increasing the maximum number of shares of common stock reserved and available for awards under the

2013

Plan (the “Stock Issuable”) by

737,500

shares from

1,262,500

shares to a total of

2,000,000

shares and to add an “evergreen” provision to the

2013

Plan which will automatically increase annually, on the

first

day of each

January,

the Stock Issuable by an amount equal to the lesser of (i) the number of shares that will increase the Stock Issuable by

of the total number of shares of common stock outstanding (on a fully diluted basis) or (ii) an amount determined by the board of directors. On

December

23,

2016,

the board of directors approved the

2017

evergreen increase equal to

of the total number of fully diluted common shares or

523,209

shares, which is effective

January

2017.

As of

December

31,

2016,

there are outstanding stock option awards issued from the

2013

Plan covering a total of

1,869,494

shares of the Company’s common stock and there remain reserved for future awards

10,236

shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is

$5.99

per share, and the remaining contractual term is

9.19

years.

Activity under the

2005

Plan, the

2006

Plan and the

2013

Plan is as follows:

	Year Ended December 31, 2016
						Weighted
				Weighted		Average		Aggregate
	Number			Average		Remaining		Intrinsic
	of			Exercise		Contractual		Value
	Shares			Price		Term (years)		(in thousands)

Options outstanding, beginning of period		1,022,195		$	6.47		9.37	$	1,194,180
Options granted		978,966		$	6.00
Options exercised		(3,020	)	$	4.80
Options canceled		(88,377	)	$	7.41
Options outstanding, end of period		1,909,764		$	6.19		9.12	$	211,396

Vested and exercisable and expected to vest, end of period		1,761,430		$	6.22		9.09	$	204,619

Vested and exercisable, end of period		368,681		$	7.51		8.04	$	102,306

The aggregate intrinsic value reflects the difference between the exercise price of the underlying stock options and the Company’s closing share price as of

December

31,

2016.

The options outstanding and exercisable as of

December

31,

2016

are as follows:

			Options Outstanding						Options Exercisable
							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			December 31, 2016		Price		Term (Years)		December 31, 2016		Price

	$2.64			12,500	$	2.64		8.37		5,209	$	2.64
$3.68	-	$3.76		79,376	$	3.75		8.10		36,382	$	3.75
$4.80	-	$4.92		197,969	$	4.80		7.80		109,150	$	4.80
	$5.22			595,034	$	5.22		9.98		7,250	$	5.22
	$6.00			565,628	$	6.00		8.96		141,412	$	6.00
$6.24	-	$6.40		129,267	$	6.35		9.15		-	$	-
$7.00	-	$7.92		284,075	$	7.71		9.49		23,363	$	7.72
	$9.92			38,135	$	9.92		5.89		38,135	$	9.92
$56.00	-	$296.00		7,780	$	83.66		0.83		7,780	$	83.66
				1,909,764	$	6.19		9.12		368,681	$	7.51

Restricted Stock Awards

January

2016,

the Company granted restricted stock awards (“RSAs”) for

39,494

shares of common stock under the

2013

Plan to employees for

2015

accrued bonuses with a weighted average grant date fair value of

$6.24

per share, based on the market price of the Company’s common stock on the award date. The RSAs vest on the

one

-year anniversary of the award date.

As of

December

31,

2016,

none

of these RSAs were vested.

August

2016,

the Company granted RSAs for

5,998

shares of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$7.89

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant.

September

2016,

the Company granted

25,000

shares to a consultant with a weighted average grant date fair value of

$7.58

per share, based on the market price of the Company’s common stock on the award date. The RSA vests over

one

year at a rate of

1/4th

per quarter beginning as of the award date. As of

December

31,

2016,

6,250

shares were vested.

November

2016,

the Company granted RSAs for

6,544

shares of common stock under the

2013

Plan to board members as director compensation with a weighted average grant date fair value of

$5.91

per share, based on the market price of the Company’s common stock on the award date. The RSAs were fully vested on the date of grant.

A total of

shares pursuant to a RSA granted in

January

2016

were cancelled in

September

2016.

The total number of shares pursuant to outstanding RSAs as of

December

31,

2016

were

58,155

shares of common stock.

Stock-Based Compensation

During the years ended

December

31,

2016

and

2015,

the Company granted stock options to employees to purchase

919,841

and

753,880

shares of common stock with a weighted average grant date fair value of

$2.63

and

$3.13

per share, respectively. The aggregate intrinsic value of options exercised during the year ended

December

31,

2016

was

$5,000.

There were

options exercised during the year ended

December

31,

2015.

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

	Year Ended
	December 31,
	2016			2015

Expected term (in years)		5			5
Average volatility		49	%		63	%
Risk-free interest rate		1.78	%		1.70	%
Dividend yield		0	%		0	%

During the year ended

December

31,

2016,

the Company granted stock options to nonemployees to purchase

59,125

shares of common stock with a weighted average grant date fair value of

$4.60

per share. There were

options granted to nonemployees during the year ended

December

31,

2015.

There were

options exercised by nonemployees during the years ended

December

31,

2016

and

2015.

The fair value of nonemployee stock options granted was estimated using the following weighted average assumptions:

	Year Ended
	December 31,
	2016

Expected term (in years)		10
Average volatility		51	%
Risk-free interest rate		2.43	%
Dividend yield		0	%

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 Company specific events that affected volatility in a prior period. The expected term of employee 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.

dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

The following table shows stock-based compensation expense included in the consolidated statements of operations for the years ended

December

31,

2016

and

2015

(in thousands):

	Year Ended
	December 31,
	2016		2015

Research and development	$	114	$	18
Selling, general and administrative		867		202
Total	$	981	$	220

As of

December

31,

2016,

the total unrecognized compensation cost in connection with unvested stock options was approximately

$3,757,000.

These costs are expected to be recognized over a period of approximately

3.27

years.