10-Q

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 June 30, 2019

OR

☐ 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 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 August 7, 2019, the issuer had 46,613,204 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
SIGNATURES		38

2

NOTE ABOUT FORWARD-LOOKING STATEMENTS 

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.     

3

PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements (unaudited)  

VIVEVE MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	June 30,			December 31,
	2019			2018
	(unaudited)				(1)
ASSETS
Current assets:
Cash and cash equivalents	$	9,506		$	29,523
Accounts receivable, net of allowance for doubtful accounts of $469 and $284 as of June 30, 2019 and December 31, 2018, respectively		3,556			5,704
Inventory		4,714			4,119
Prepaid expenses and other current assets		2,768			2,558
Total current assets		20,544			41,904
Property and equipment, net		2,726			2,916
Investment in limited liability company		1,580			1,843
Other assets		646			171
Total assets	$	25,496		$	46,834
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	1,606		$	3,994
Accrued liabilities		5,278			6,766
Total current liabilities		6,884			10,760
Note payable, noncurrent portion		31,271			30,528
Other noncurrent liabilities		1,010			634
Total liabilities		39,165			41,922
Commitments and contingences (Note 8)
Stockholders’ equity (deficit):
Common stock, $0.0001 par value;
75,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 46,574,958 and 46,363,945 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		5			5
Additional paid-in capital		161,464			160,292
Accumulated deficit		(175,138	)		(155,385	)
Total stockholders’ equity (deficit)		(13,669	)		4,912
Total liabilities and stockholders’ equity (deficit)	$	25,496		$	46,834

(1) The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date. 

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

4

VIVEVE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Revenue	$	1,052		$	5,525		$	4,064		$	9,224
Cost of revenue		941			2,711			2,882			5,063
Gross profit		111			2,814			1,182			4,161
Operating expenses:
Research and development		2,902			3,672			5,382			7,428
Selling, general and administrative		5,530			9,437			12,156			18,368
Restructuring costs		-			-			742			-
Total operating expenses		8,432			13,109			18,280			25,796
Loss from operations		(8,321	)		(10,295	)		(17,098	)		(21,635	)
Interest expense, net		(1,194	)		(1,063	)		(2,310	)		(2,133	)
Other expense, net		(71	)		-			(82	)		(10	)
Net loss from consolidated companies		(9,586	)		(11,358	)		(19,490	)		(23,778	)
Loss from minority interest in limited liability company		(138	)		(158	)		(263	)		(407	)
Comprehensive and net loss	$	(9,724	)	$	(11,516	)	$	(19,753	)	$	(24,185	)
Net loss per share:
Basic and diluted	$	(0.21	)	$	(0.37	)	$	(0.43	)	$	(0.85	)
Weighted average shares used in computing net loss per common share:
Basic and diluted		46,494,274			31,305,386			46,433,421			28,591,134

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

5

VIVEVE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share and per share data)

(unaudited)

	Common Stock,				Additional					Total
	$0.0001 par value				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity (Deficit)
Balances as of December 31, 2018		46,363,945	$	5	$	160,292	$	(155,385	)	$	4,912
Stock-based compensation expense		-		-		470		-			470
Issuance of common shares from employee stock purchase plan		43,759		-		35		-			35
Issuance of restricted common shares in connection with consulting agreement		27,473		-		25		-			25
Issuance of common shares in connection with restricted stock award to employee		625		-		1		-			1
Net loss		-		-		-		(10,029	)		(10,029	)
Balances as of March 31, 2019		46,435,802	$	5	$	160,823	$	(165,414	)	$	(4,586	)
Stock-based compensation expense		-		-		562					562
Issuance of common shares from employee stock purchase plan		60,740		-		20					20
Restricted stock awards issued to directors for quarterly compensation		52,791		-		48					48
Issuance of restricted common shares in connection with consulting agreement		25,000		-		11					11
Issuance of common shares in connection with restricted stock award to employee		625		-		-					-
Net loss		0		-		-		(9,724	)		(9,724	)
Balances as of June 30, 2019		46,574,958		5		161,464		(175,138	)		(13,669	)

	Common Stock,				Additional						Total
	$0.0001 par value				Paid-In			Accumulated			Stockholders’
	Shares		Amount		Capital			Deficit			Equity (Deficit)
Balances as of December 31, 2017		19,503,558	$	2	$	102,979		$	(105,581	)	$	(2,600	)
February 2018 Offering, net of issuance costs		11,500,000		1		32,224			-			32,225
November 2017 ATM Facility, net of issuance cost		208,277		-		1,011			-			1,011
Stock-based compensation expense		-		-		645			-			645
Issuance of restricted stock awards to directors and consultant		22,137		-		108			-			108
Issuance of common shares from employee stock purchase plan		20,744		-		65			-			65
Cumulative effect adjustment from adoption of new accounting standard – ASC 606		-		-		-			177			177
Net loss		-		-		-			(12,669	)		(12,669	)
Balances as of March 31, 2018		31,254,716	$	3	$	137,032		$	(118,073	)	$	18,962
November 2017 ATM Facility, net of issuance cost		65,252		-		171			-			171
February 2018 Offering issuance costs		-		-		(11	)		-			(11	)
Stock-based compensation expense		-		-		709			-			709
Issuance of common shares from employee stock purchase plan		25,618		-		59			-			59
Issuance of restricted stock awards to directors and consultant		20,922		-		67			-			67
Issuance of restricted common shares		100,000		-		256			-			256
Net loss		-		-		-			(11,516	)		(11,516	)
Balances as of June 30, 2018		31,466,508	$	3	$	138,283		$	(129,589	)	$	8,697

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

6

 VIVEVE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	SIx Months Ended
	June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(19,753	)	$	(24,185	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts		185			32
Depreciation and amortization		547			334
Stock-based compensation		1,117			1,529
Fair value of common shares issued		-			256
Non-cash interest expense		843			776
Amortization of operating lease right-of-use assets and accretion of operating lease liabilities		5			-
Loss from minority interest in limited liability company		263			407
Loss on disposal of property and equipment		65			-
Changes in assets and liabilities:
Accounts receivable		1,963			(1,060	)
Inventory		(299	)		(1,930	)
Prepaid expenses and other current assets		(210	)		(283	)
Other noncurrent assets		40			14
Accounts payable		(2,388	)		68
Accrued and other liabilities		(1,736	)		635
Other noncurrent liabilities		104			173
Net cash used in operating activities		(19,254	)		(23,234	)
Cash flows from investing activities:
Purchase of property and equipment		(718	)		(803	)
Net cash used in investing activities		(718	)		(803	)
Cash flows from financing activities:
Proceeds from sale of common stock, net of issuance costs		-			33,396
Proceeds from issuance of common shares from employee stock purchase plan		55			124
Transaction costs in connection with note payable		(100	)		-
Net cash provided by (used in) financing activities		(45	)		33,520
Net increase (decrease) in cash and cash equivalents		(20,017	)		9,483
Cash and cash equivalents - beginning of period		29,523			20,730
Cash and cash equivalents - end of period	$	9,506		$	30,213
Supplemental disclosure:
Cash paid for interest	$	1,364		$	1,315
Cash paid for income taxes	$	-		$	2
Supplemental disclosure of cash flow information as of end of period:
Issuance of note payable in settlement of accrued interest	$	642		$	616
Net transfer of equipment between inventory and property and equipment	$	(296	)	$	159
Supplemental cash flow information related to leases was as follows:
Operating cash outflows from operating leases	$	73
Right-of-use assets obtained in exchange for operating lease liabilities (upon adoption of ASC 842)	$	629

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

7

VIVEVE MEDICAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and Basis of Presentation

Viveve Medical, Inc. (“Viveve Medical”, the “Company”, “we”, “our”, or “us”) designs, develops, manufactures and markets a platform medical technology, which we refer to as Cryogen-cooled Monopolar RadioFrequency, or CMRF. Our proprietary CMRF technology is delivered through a radiofrequency generator, handpiece and treatment tip, which collectively, we refer to as the Viveve® System. Viveve Medical competes in the women’s intimate health industry in some countries by marketing the Viveve System as a way to improve the overall well-being and quality of life of women suffering from vaginal introital laxity, for improved sexual function, or stress urinary incontinence, depending on the relevant country-specific clearance or approval.  In the United States, the Viveve System is currently indicated for use in general surgical procedures for electrocoagulation and hemostasis.

Public Offerings

 In December 2018, in connection with the closing of a public offering (the “December 2018 Offering”), the Company issued an aggregate of 14,728,504 shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of $1.50 per share for gross proceeds of approximately $22,093,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $20,385,000.  

In February 2018, in connection with the closing of a public offering (the “February 2018 Offering”), the Company issued an aggregate of 11,500,000 shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of $3.00 per share for gross proceeds of approximately $34,500,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $32,214,000.  

The Company established an “at-the-market” equity offering program through the filing of a prospectus supplement to its shelf registration statement on Form S-3, which was filed on November 8, 2017, under which the Company may offer and sell, from time-to-time, up to $25,000,000 aggregate offering price of shares of its common stock (the “November 2017 ATM Facility”). During the three and six months ended June 30, 2019, the Company sold zero shares of common stock under the November 2017 ATM Facility. During the three and six months ended June 30, 2018, the Company sold 65,252 and 273,529 shares of common stock under the November 2017 ATM Facility for net proceeds of approximately $172,000 and $1,183,000. As of June 30, 2019, the Company has sold 336,498 shares of common stock under the November 2017 ATM Facility for net proceeds of approximately $1,318,000.

8

Interim Unaudited Financial Information

The accompanying unaudited condensed consolidated financial statements of Viveve Medical have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated financial statements have been included.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission on March 15, 2019. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results for the year ending December 31, 2019 or any future interim period.

Liquidity and Management Plans

The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Codification (“ASC”) Topic 205-40, Presentation of Financial Statements – Going Concern, which requires that management evaluate whether there are relevant conditions and events that, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the financial statements are issued.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, since inception, the Company has sustained significant operating losses and such losses are expected to continue for the foreseeable future. As of June 30, 2019, the Company had an accumulated deficit of $175,138,000, cash and cash equivalents of $9,506,000 and working capital of $13,660,000. Additionally, the Company used $7,696,000 in cash for operations in the three months ended June 30, 2019 and $19,254,000 in cash for operations for the six months ended June 30, 2019. The Company will require additional cash funding to fund operations through August 2020. Accordingly, management has concluded that the Company does not have sufficient funds to support operations within one year after the date the financial statements are issued and, therefore, the Company concluded there was substantial doubt about the Company’s ability to continue as a going concern.

To fund further operations, the Company 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 financial statements contain no adjustments for the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern and have a material adverse effect on the Company’s future financial results, financial position and cash flows.

2. Summary of Significant Accounting Policies

Financial Statement Presentation

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.

Use of Estimates

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, 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. 

Changes in Accounting Policies

Except for the changes for the adoption of the new accounting standard for leases, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

9

Adoption of New Accounting Standard - Leases

The Company adopted FASB’s Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the renewal options for the facilities lease would be reasonably certain to be renewed and as such, included that renewal period in determining the expected lease term of that lease. Adoption of the new standard resulted in the recording of operating lease right-of-use assets of $629,000 and operating lease liabilities of $629,000, as of January 1, 2019. The standard did not have an impact on our consolidated results of operations, cash flows or stockholders’ equity previously reported. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of the new lease standard was as follows (in thousands): 

			Adjustments
			Due to
	December 31,		Adoption of			January 1,
	2018		ASC 842			2019
Other assets	$	171	$	629	(1)	$	800
Total assets	$	46,834	$	629	(1)	$	47,463
Accrued liabilities	$	6,766	$	230	(2)	$	6,996
Total current liabilities	$	10,760	$	230	(2)	$	10,990
Other noncurrent liabilities	$	634	$	399	(2)	$	1,033
Total liabilities	$	41,922	$	629	(2)	$	42,551
Total liabilities and stockholders' equity	$	46,834	$	629	(2)	$	47,463

(1)	Represents capitalization of operating lease right-of-use assets and reclassification of deferred rent.
(2)	Represents recognition of operating lease liabilities.

Cash and Cash Equivalents

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 financial institution. Deposits in this institution may, from time to time, exceed the federally insured amounts.

Concentration of Credit Risk and Other Risks and Uncertainties

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. 

10

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 RF, or radio frequency, 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. RF 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. 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 Company sells its products primarily through a direct sales force to health care practitioners. Outside North America, the Company sells through an extensive network of distribution partners. During the three months ended June 30, 2019, three distributors, collectively, accounted for 55% of the Company’s revenue. During the three months ended June 30, 2018, one distributor accounted for 13% of the Company’s revenue. During the six months ended June 30, 2019, two distributors, collectively, accounted for 32 % of the Company’s revenue. During the six months ended June 30, 2018, one distributor accounted for 23% of the Company’s revenue.

There were no direct sales customers that accounted for more than 10% of the Company’s revenue during the three and six months ended June 30, 2019 and 2018.

As of June 30, 2019, four distributors, collectively, accounted for 64% of total accounts receivable, net. As of December 31, 2018, three distributors, collectively, accounted for 54% of total accounts receivable, net.

Accounts Receivable and Allowance for Doubtful Accounts

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 $469,000 as of June 30, 2019 and $284,000 as of December 31, 2018.

Revenue Recognition

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, 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 have a rental period of six months and can be extended or terminated by the customer after that time or the Viveve System can 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 and the revenue associated with it has not been material to the periods presented.

In connection with the lease of the Viveve System, the Company offers single-use treatment tips and ancillary consumables that are considered nonlease components. In the contracts with lease and nonlease 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 nonlease components.

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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, Latin America, Europe, the Middle East and Asia Pacific. In North America, we market and sell primarily through a direct sales force. Outside of North America, we market and sell primarily through distribution partners.

The Company does not provide its customers with a right of return.

Customer Advance Payments

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.  The Company will remove the customer advance payment from accrued liabilities when revenue is recognized upon shipment of the products. 

Contract Assets and Liabilities

The Company continually evaluates whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. No such assets existed as of June 30, 2019 or December 31, 2018. The Company had customer contracts liabilities in the amount of $552,000, primarily related to marketing programs that performance had not yet been delivered to its customers as of June 30, 2019 and $686,000 as of December 31, 2018.

The following table reflects the changes in our customer contract liabilities for the six months ended June 30, 2019:

	June 30,		December 31,		Six Months
	2019		2018		Change
Customer contracts liabilities:
Marketing programs	$	552	$	639	$	(87	)
Other		-		47		(47	)
Total	$	552	$	686	$	(134	)

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

Significant Financing Component

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 six months ended June 30, 2019 and 2018, the Company did not have any contracts for the sale of its products with its customers with a significant financing component.

Contract Costs 

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. During the three and six months ended June 30, 2019 and 2018, the Company expensed the incremental costs of obtaining the contract as an expense when incurred as the amortization period was one year or less.

Shipping and Handling

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.

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Revenue by Geographic Area

Management has determined that the sales by geography is a key indicator for understanding the Company’s financials 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 six months ended June 30, 2019 and 2018 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
North America	$	663	$	4,552	$	2,455	$	7,158
Asia Pacific		343		630		1,310		1,521
Europe and Middle East		43		329		289		531
Latin America		3		14		10		14
Total	$	1,052	$	5,525	$	4,064	$	9,224

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

Investments in Unconsolidated Affiliates

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. 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. No impairment charges have been recorded in the condensed consolidated statements of operations during the three and six months ended June 30, 2019 and 2018.

Product Warranty

The Company’s products 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.

Accounting for Stock-Based Compensation

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 at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

Comprehensive Loss

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 months and six months ended June 30, 2019 and 2018, the Company’s comprehensive loss is the same as its net loss. 

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Net Loss per Share

The Company’s basic net loss per share is calculated by dividing the net loss 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. 

	Six Months Ended
	June 30,
	2019		2018
Stock options to purchase common stock		5,314,375		4,209,355
Warrants to purchase common stock		642,622		642,622
Restricted common stock awards		393,051		66,250

Other Recently Issued and Adopted Accounting Standards

In June 2018, the FASB issued ASU 2018-07, “Stock Compensation (Topic 718) – Improvements to Nonemployee Share- Based Payment Accounting”. The intent of this guidance is to simplify the accounting for nonemployee share-based payment accounting. The amendments in this guidance expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Equity- classified nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting for employee share-based payment awards, an entity considers the probability of satisfying performance conditions when nonemployee share-based payment awards contain such conditions. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within the reporting period. We adopted this guidance as of January 1, 2019 and the adoption of the guidance did not have a significant impact on the condensed consolidated financial statements.

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 consolidated financial statements as a result of future adoption.

3. Fair Value Measurements

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.

Level 1 Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult.

Level 2 Pricing is provided by third party sources of market information obtained through investment advisors. The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.

Level 3 Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity.

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 June 30, 2019 and December 31, 2018.

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 June 30, 2019, and December 31, 2018 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. 

There were no changes in valuation techniques from prior periods.

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4. Investment in Limited Liability Company

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 Company has a minimum purchase requirement to purchase a certain quantity of ICM products per month during the term of this Distributorship Agreement. In addition, the parties agreed to certain mutual marketing obligations to promote sales of the licensed products. As of June 30, 2019, the Company has purchased approximately 4,800 units of ICM products. The Company paid ICM approximately $27,000 for product related costs during the three and six months ended June 30, 2019.  There were no amounts due to ICM for the accounts payable as of June 30, 2019 and December 31, 2018.

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 in 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 June 30, 2019, the Company 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 and six ended June 30, 2019, the allocated net loss from ICM’s operations was $138,000 and $263,000, respectively, that was recorded as loss from minority interest in limited liability company in the condensed consolidated statements of operations.

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.

5. Accrued Liabilities

Accrued liabilities consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands): 

	June 30,		December 31,
	2019		2018
Accrued sales commission	$	723	$	1,743
Accrued interest		689		683
Accrued bonuses		607		837
Accrued professional fees		635		978
Accrued payroll and other related expenses		632		877
Customer contracts liabilities		552		686
Deferred revenue - systems rental program		398		-
Accrued clinical trial costs		346		84
Current operating lease liabilities		248		-
Travel and entertainment		123		280
Accrued sales & use tax		39		259
Other accruals		286		339
Total accrued liabilities	$	5,278	$	6,766

  6. Note Payable

On May 22, 2017, the Company entered into a Term Loan Agreement (the “2017 Loan Agreement”) with affiliates of CRG LP (“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.

A portion of the initial loan proceeds were used to repay all of the amounts owed by the Company under its 2016 Loan Agreement with Western Alliance Bank. The remainder of the loan proceeds (after deducting loan origination costs and other fees and expenses incurred in connection with the 2017 Loan Agreement), plus any additional amounts that may be borrowed in the future, will be used for general corporate purposes and working capital.

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The 2017 Loan Agreement has a six-year term with four years of interest-only payments after which quarterly principal and interest payments will be due through the maturity date. Amounts borrowed under the 2017 Loan Agreement accrue 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. During the three and six months ended June 30, 2019, the Company paid interest in-kind of $324,000 and $642,000, respectively, which was added to the total outstanding principal loan amount. During the three and six months ended June 30, 2018, the Company paid interest in-kind of $311,000 and $616,000, respectively, which was added to the total outstanding principal loan amount. The Company is 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. The Company accounts for the final payment fee by accruing the fee over the term of the loan using the effective interest rate method. As of June 30, 2019, interest accrued related to the final payment fee in the amount of $663,000 was included in other noncurrent liabilities in the condensed consolidated balance sheets.

The Company may prepay all or a portion of the outstanding principal and accrued unpaid interest under the 2017 Loan Agreement at any time upon prior notice to CRG, subject to a prepayment fee during the first five years of the term (which reduces each year) and no prepayment fee thereafter.

As security 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 require the Company to meet certain financial and other covenants. These covenants require the Company to maintain cash and cash equivalents of $2.0 million and, each year through the end of 2022, to meet a minimum total annual revenue threshold. In the event that the Company does not meet the minimum total annual revenue threshold for a particular year, then the Company can retroactively cure the shortfall by either issuing additional equity in exchange for cash or incurring certain additional permitted indebtedness, in each case, in an amount equal to 2.0 times the shortfall. Any such amounts shall be applied to prepay the loans. The 2017 Loan Agreement also contains customary affirmative and negative covenants for a credit facility of this size and type, including covenants that limit or restrict the Company’s ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, license intellectual property rights on an exclusive basis or repurchase stock, in each case subject to customary exceptions. As of June 30, 2019, the Company was in compliance with all covenants.

As of June 30, 2019 and December 31, 2018, $31,271,000 and $30,528,000, respectively, was recorded on the balance sheets under the 2017 Loan Agreement, respectively, which is net of the remaining unamortized debt discount.

In connection with the 2017 Loan Agreement, the Company issued two 10-year warrants to CRG to purchase a total of 222,049 shares of the Company’s common stock at an exercise price of $9.50 per share (See Note 9). 

As of June 30, 2019, future minimum payments under the note payable are as follows (in thousands): 

Year Ending December 31,
2019 (remaining six months)	$	1,414
2020		2,901
2021		16,673
2022		19,306
2023		6,220
Total payments		46,514
Less: Amount representing interest		(14,121	)
Present value of obligations		32,393
Less: Unamortized debt discount		(1,122	)
Note payable, noncurrent portion	$	31,271

 7. Leases

Lessee:

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

In January 2012, the Company entered into a lease agreement for office and laboratory facilities in Sunnyvale, California. The lease agreement, as amended, commenced in March 2012 and terminated in April 2018.

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On 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. The lease term commenced on June 1, 2017 and will terminate in May 2020. The Company relocated its corporate headquarters from Sunnyvale, California to Englewood, Colorado in June 2017.

The monthly base rent under the Sublease is equal to $20.50 per rentable square foot of the Sublease Premises during the first year. The monthly base rent is 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, the Company also agreed to pay a security deposit of approximately $22,000. The Company was also provided 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.

Rent expense for the three and six months ended June 30, 2018 was $90,000 and $228,000.

In September 2018, the Company entered into a 36-month noncancelable operating lease agreement for office equipment.  The lease commenced on September 20, 2018.  The monthly payment is approximately $3,000. 

After the adoption of ASU 842 – Leases on January 1, 2019, 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 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 at June 30, 2019 and January 1, 2019 (in thousands):

	June 30,		January 1,
	2019		2019
Assets:
Operating lease right-of-use assets	$	515	$	629
Liabilities:
Current operating lease liabilities	$	248	$	230
Noncurrent operating lease liabilities		272		399
	$	520	$	629

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

The operating leases expense for the three and six months ended June 30, 2019 was $75,000 and $150,000, respectively.

As of June 30, 2019, the maturity of operating lease liabilities was as follows (in thousands):

Year Ending December 31,
2019 (remaining six months)	$	149
2020		303
2021		137
Total lease payments		589
Less: Amount representing interest		(69	)
Present value of lease liabilities	$	520

The weighted average remaining lease term was approximately 23 months as of June 30, 2019. The weighted average discount rate for the three and six months ended June 30, 2019 was 12.5%.

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Lessor:

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

As of June 30, 2019, minimum future rentals from customers on non-cancellable operating leases of Viveve Systems are as follows (in thousands):

Year Ending December 31,
2019 (remaining six months)	$	339
2020		68
Thereafter		-
Total	$	407

As of June 30, 2019, $350,000 of property and equipment is related to these operating lease agreements. The depreciation expense for that property and equipment for the three and six months ended June 30, 2019 is $6,000, respectively.

8. Commitments and Contingencies

Indemnification Agreements

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 amount 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. 

Loss Contingencies

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.

9. Common Stock

 In March 2019, the Company issued 27,473 restricted shares of its common stock at a value of $0.91 per share, or an aggregate value of approximately $25,000.

In December 2018, in connection with the closing of the December 2018 Offering, the Company issued an aggregate of 14,728,504 shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of $1.50 per share for gross proceeds of approximately $22,093,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $20,385,000.  

In June 2018, the Company issued 100,000 restricted shares of its common stock at a value of $2.56 per share, or an aggregate value of approximately $256,000.

In February 2018, in connection with the closing of the February 2018 Offering, the Company issued an aggregate of 11,500,000 shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of $3.00 per share for gross proceeds of approximately $34,500,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $32,214,000.  

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Through the November 2017 ATM Facility, the Company may offer and sell, from time-to-time, up to $25,000,000 aggregate offering price of shares of its common stock. During the three and six months ended June 30, 2019, the Company sold zero shares of common stock under the November 2017 ATM Facility. During the three and six months ended June 30, 2018, the Company sold 65,252 and 273,529 shares of common stock under the November 2017 ATM Facility for net proceeds of approximately $172,000 and $1,183,000. As of June 30, 2019, the Company has sold 336,498 shares of common stock under the November 2017 ATM Facility for net proceeds of approximately $1,318,000.

Warrants for Common Stock

As of June 30, 2019, outstanding warrants to purchase shares of common stock were as follows: 

					Number of
					Shares
					Outstanding
	Exercisable	Expiration	Exercise		Under
Issuance Date	for	Date	Price		Warrants
September 2014	Common Shares	September 23, 2019	$	4.24		86,831
October 2014	Common Shares	October 13, 2019	$	4.24		29,000
November 2014	Common Shares	November 12, 2019	$	4.24		12,500
February 2015	Common Shares	February 17, 2025	$	4.00		75,697
March 2015	Common Shares	March 26, 2025	$	2.72		1,454
May 2015	Common Shares	May 12, 2025	$	4.24		36,229
May 2015	Common Shares	May 17, 2020	$	4.24		21,585
December 2015	Common Shares	December 16, 2025	$	5.60		26,875
April 2016	Common Shares	April 1, 2026	$	6.08		25,000
May 2016	Common Shares	May 11, 2021	$	7.74		5,000
June 2016	Common Shares	June 20, 2026	$	4.98		100,402
May 2017	Common Shares	May 25, 2027	$	9.50		222,049
						642,622

In connection with the 2017 Loan Agreement, the Company issued warrants to purchase a total of 222,049, shares of common stock at an exercise price of $9.50 per share. The warrants have a contractual life of ten years and are exercisable immediately in whole or in part. The Company determined the fair value of the warrants on the date of issuance to be $940,000 using the Black-Scholes option pricing model. Assumptions used were dividend yield of 0%, volatility of 55.1%, risk free interest rate of 2.25% and a contractual life of ten years. The fair value of the warrants along with financing and legal fees totaling $790,000, are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs are amortized to interest expense over the loan term. During the three and six months ended June 30, 2019, the Company recorded $119,000 and $202,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method. During the three and six months ended June 30, 2018, the Company recorded $83,000 and $160,000, respectively, of interest expense relating to the debt issuance costs using the effective interest method.

No shares issuable pursuant to warrants were issued in connection with the exercise of warrants during the three and six months ended June 30, 2019 and 2018.

No shares issuable pursuant to warrants have been cancelled during the three and six months ended June 30, 2019 and 2018.

10. Summary of Stock Options

Stock Option Plans

The Company has issued equity awards in the form of stock options and restricted stock awards (“RSAs”) 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 June 30, 2019, there are outstanding stock option awards issued from the 2006 Plan covering a total of 10,434 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 $10.05 per share and the weighted average remaining contractual term is 3.59 years.

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As of June 30, 2019, there are outstanding stock option awards issued from the 2013 Plan covering a total of 5,303,941 shares of the Company’s common stock and there remain reserved for future awards 904,651 shares of the Company’s common stock. The weighted average exercise price of the outstanding stock options is $3.00 per share, and the remaining contractual term is 8.64 years.

In January 2019, the board of directors approved the 2019 evergreen provision increasing the total stock reserved for issuance under the 2013 Plan by 2,043,142 shares from 4,914,016 shares to a total of 6,957,158 shares, which was effective January 1, 2019.

Activity under the 2006 Plan and the 2013 Plan is as follows:

	Six Months Ended June 30, 2019
						Weighted
				Weighted		Average
	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, beginning of period		4,014,475		$	4.56		7.4	$	-
Options granted		2,335,000		$	1.18
Options exercised		-
Options canceled		(1,035,100	)	$	4.94
Options outstanding, end of period		5,314,375		$	3.00		8.6	$	-
Vested and exercisable and expected to vest, end of period		5,054,030		$	3.04		8.6	$	-
Vested and exercisable, end of period		1,790,963		$	4.26		7.6	$	-

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 June 30, 2019.

The options outstanding and exercisable as of June 30, 2019 are as follows: 

							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			June 30, 2019		Price		Term (Years)		June 30, 2019		Price
$0.38	-	$0.58		190,000	$	0.53		9.93		-	$	-
$1.00	-	$1.97		2,643,195	$	1.38		9.42		485,265	$	1.52
$2.02	-	$2.83		85,000	$	2.48		8.62		20,520	$	2.65
$3.03	-	$3.82		474,376	$	3.55		8.55		175,002	$	3.65
$4.30	-	$4.97		920,023	$	4.52		8.11		409,403	$	4.55
$5.01	-	$5.67		510,696	$	5.37		7.11		317,831	$	5.37
$6.00	-	$6.61		242,627	$	6.03		6.29		209,608	$	6.01
$7.00	-	$7.92		238,024	$	7.70		7.04		162,900	$	7.71
$9.92	-	$9.92		10,424	$	9.92		3.60		10,424	$	9.92
$59.60	-	$149.04		10	$	149.04		2.31		10	$	149.04
Total:				5,314,375	$	3.00		8.64		1,790,963	$	4.26

Restricted Stock Awards (‘RSA”)

In June 2019, the Company issued 25,000 shares to a consultant in connection with the vesting of an RSA granted to the consultant in June 2018.

In April 2019, the Company issued 52,791 shares of common stock under the 2013 Plan to board members as director compensation with a weighted average grant date fair value of $0.91 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 and 52,791 shares of common stock were issued.

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In January 2019, the Company granted RSAs for 364,072 shares of common stock under the 2013 Plan to employees as part of their 2018 annual performance bonuses. The bonuses for 2018 performance were paid 50% in cash and 50% in the form of RSAs that will vest in full upon FDA approval of the Viveve System for improvement of sexual function or stress urinary incontinence in the United States. A total of 2,271shares pursuant to these RSAs were cancelled in the three and six months ended June 30, 2019. As of June 30, 2019, zero shares were vested and issued.

As of June 30, 2019, there are 393,051 shares of unvested restricted stock outstanding that have been granted pursuant to RSAs.

2017 Employee Stock Purchase Plan

The seventh offering period under the Company’s 2017 Employee Stock Purchase Plan (the “2017 ESPP”) began on April 1, 2019 and ended on June 30, 2019, and 60,740 shares were issued on June 28, 2019 at a purchase price of $0.32.

The sixth offering period under the Company’s 2017 Employee Stock Purchase Plan (the “2017 ESPP”) began on January 1, 2019 and ended on March 31, 2019, and 43,759 shares were issued on March 29, 2019 at a purchase price of $0.80.

As of June 30, 2019, the remaining shares available for issuance under the 2017 ESPP were 151,820 shares.

The Company estimates the fair value of purchase rights under the ESPP using a Black-Scholes valuation model. The fair value of each purchase right was estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following weighted-average assumptions:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		0.25			0.25			0.25			0.25
Average volatility		87	%		74	%		81	%		67	%
Risk-free interest rate		2.43	%		1.73	%		2.44	%		1.58	%
Dividend yield		0	%		0	%		0	%		0	%

The weighted average grant date fair value of the purchase rights issued under the 2017 ESPP during the three and six months ended June 30, 2019 was $0.95 and $0.68, respectively and during the three and six months ended June 30, 2018 was $0.95 and $1.11, respectively.

Stock-Based Compensation

During the three months ended June 30, 2019 and 2018, the Company granted stock options to employees to purchase 190,000 and 570,000 shares of common stock with a weighted average grant date fair value of $0.33 and $1.34 per share, respectively. During the six months ended June 30, 2019 and 2018, the Company granted stock options to employees to purchase 2,307,500 and 1,821,171 shares of common stock with a weighted average grant date fair value of $1.18 and $2.32 per share, respectively. There were no stock options exercised during the three and six months ended June 30, 2019 and 2018.

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:   

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		5			5			5			5
Average volatility		75	%		69	%		73	%		75	%
Risk-free interest rate		2.03	%		2.82	%		2.49	%		2.63	%
Dividend yield		0	%		0	%		0	%		0	%

During the three and six months ended June 30, 2019, the Company granted stock options to nonemployees to purchase 27,500 shares of common stock with a weighted average grant date fair value of $1.22. During the three and six months ended June 30, 2018, the Company granted stock options to nonemployees to purchase 200,000 and 202,388 shares of common stock with a weighted average grant date fair value of $1.59 and $1.61 respectively. There were no stock options exercised by nonemployees during the three and six months ended June 30, 2019 and 2018.

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Expected term (in years)		N/A		10			5			10
Average volatility		N/A		91	%		73	%		91	%
Risk-free interest rate		N/A		2.85	%		2.49	%		2.85	%
Dividend yield		N/A		0	%		0	%		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 the 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. No 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 condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	34	$	17	$	66	$	28
Research and development		53		65		93		187
Selling, general and administrative		534		693		958		1,314
Total	$	621	$	775	$	1,117	$	1,529

As of June 30, 2019, the total unrecognized compensation cost in connection with unvested stock options was approximately $4,143,620. These costs are expected to be recognized over a period of approximately 2.38 years.

11. Income Taxes

No provision for income taxes has been recorded due to the net operating losses incurred from inception to date, for which no 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 and six months ended June 30, 2019. The Company expects that its effective tax rate for the full year 2019 will be 0%.

12. Related Party Transactions

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. Under the Agreement, the Company agreed to purchase 300 generators manufactured by Stellartech. As of June 30, 2019, the Company has purchased 845 units. The price per unit is variable and dependent on the volume and timing of units ordered. In conjunction with the Agreement, Stellartech purchased 37,500 shares of Viveve, Inc.’s common stock. Under the Agreement, the Company paid Stellartech approximately $1,820,000 and $2,325,000 for goods and services during the three months ended June 30, 2019 and 2018, respectively, and approximately $3,132,000 and $5,598,000 for the six months ended June 30, 2019 and 2018, respectively. The amounts due to Stellartech for accounts payable as of June 30, 2019 and December 31, 2018 were approximately $465,000 and $960,000, respectively.

13. Restructuring Costs

In January 2019, the Company implemented a strategic organizational realignment plan to reduce operating expenses and prepare the Company for expanded indications for its CMRF technology platform for improved sexual function and stress urinary incontinence in women. The restructuring included a reduction in headcount of approximately 40 full-time employees. The total restructuring costs were approximately $742,000 and have been recorded in operating expenses in the condensed consolidated statements of operations. As of June 30, 2019, approximately $24,000 remains unpaid and is included in accrued liabilities. This amount is expected to be paid in the quarter ended September 30, 2019. The restructuring contributed to a reduction in total operating expenses in the first quarter of 2019 as planned and is expected to result in additional operating cost savings throughout the remainder of this year.

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

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, 2018, as filed with the Securities and Exchange Commission on March 15, 2019. 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."

Overview of Our Business

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 (“CMRF”). Our proprietary CMRF technology is delivered through a radiofrequency generator, 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 57 countries throughout the world under the following indications for use: 

Indication for Use:	No. of Countries:
General Surgical procedures for electrocoagulation and hemostasis		3 (including the U.S.)
General Surgical procedures for electrocoagulation and hemostasis of vaginal tissue and for the treatment of vaginal laxity		32
For treatment of vaginal laxity		5
For treatment of the vaginal introitus, after vaginal childbirth, to improve sexual function		14
General Surgical procedures for electrocoagulation and hemostasis and for the treatment of vaginal laxity		1
For vaginal rejuvenation		1
For treatment of vaginal laxity, urinary incontinence and sexual function		1

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 June 30, 2019, we have sold 774 Viveve Systems and approximately 37,850 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 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 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 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.

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Recent Events

Nasdaq Delisting Notice

On May 13, 2019 and May 21, 2019, the Company received written notices from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying it that the Company was not in compliance with the minimum bid price requirements as well as the market value of listed securities requirements. These notices do not impact the Company’s listing on The Nasdaq Capital Market at this time. Both notification letters state that the Company has 180 calendar days, or until November 11, 2019 and November 18, 2019, respectively, to regain compliance. There is the possibility for an additional 180-day compliance period for the minimum bid price compliance violation. However, no additional compliance period is applicable to the market value of listed securities or alternative standards noncompliance.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of its outstanding securities, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules. The Company will also consider available options to resolve the other listing deficiencies and regain compliance with all applicable Nasdaq rules.

Effective Shelf Registration Statements

In November 2017, 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 $50,000,000 of our securities, including common stock, preferred stock, and/or warrants (the “2017 Shelf Registration Statement”). The 2017 Shelf Registration Statement currently has a remaining capacity of $18.4 million.

December 2018 Offering

In connection with the closing of the December 2018 Offering, the Company issued an aggregate of 14,728,504 shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of $1.50 per share for gross proceeds of approximately $22,093,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $20,385,000.  

 “At-the-Market” Offering

The Company established an “at-the-market” equity offering program through the filing of a prospectus supplement to its shelf registration statement on Form S-3, which was filed on November 8, 2017, under which the Company may offer and sell, from time-to-time, up to $25,000,000 aggregate offering price of shares of its common stock (the “November 2017 ATM Facility”). As of June 30, 2019, the Company has sold 336,498 shares of common stock under the November 2017 ATM Facility for gross proceeds of approximately $1,631,000. The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately $1,318,000.   

CE Mark Clearance for Next Generation 2.0 Platform in Europe

In April 2019, the Company received CE Mark clearance for its next generation Viveve 2.0 CMRF system and tips in European Union and European Economic Area countries. As part of our ongoing regulatory strategy to expand the commercial launch of our Viveve 2.0 CMRF system globally, the Company’s next generation system and its consumable treatment tips are now available in over 30 countries in Europe. The Company’s Viveve 2.0 CMRF system significantly reduced manufacturing costs for both the next generation system and for the consumable tips since becoming available in the U.S. and it should have a positive impact on our overall gross margins going forward.

Enrollment Completed in VIVEVE II Clinical Study 

In March 2019, enrollment was completed for the VIVEVE II (VIveve treatment of the Vaginal Introitus to EValuate Effectiveness clinical study following IDE approval by the FDA. This is a prospective, randomized, double-blind, sham controlled study to evaluate the efficacy and safety of the Viveve System to improve symptoms of female sexual disfunction, associated with vaginal laxity. Nineteen (19) active clinical sites in the United States enrolled 250 female patients who were pre-menopausal, 18 years of age or older who experienced at least one full term vaginal delivery at least twelve months prior to enrollment date, randomized in a 2:1 ratio to either an active treatment group or sham-control group. Patients will be followed for twelve months post-treatment to assess the primary effectiveness and safety endpoints of the study with data being collected at one, three, six, nine and twelve months. Patients randomized to the sham arm will be offered the opportunity to receive a Viveve treatment once they have completed the twelve-month evaluation following the sham intervention.

The primary efficacy endpoint of the study is the mean change from baseline in the Female Sexual Function Index (FSFI) total score at twelve months post treatment. Secondary endpoints include evaluation of the mean change from baseline of the total FSFI score at six months, as well as evaluation of the mean change from baseline of the six different domains within the FSFI at six and twelve months. At months six and twelve, in addition to the FSFI, subjects will be asked to complete the Patient’s Global Impression of Improvement (PGI-I). Subjects will also be assessed for adverse events throughout the study. The Company intends to report final twelve-month clinical data from the study in the second quarter of 2020.

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Clinical Results Reported from LIBERATE-International SUI Trial 

In August 2019, clinical results for the LIBERATE-International study in stress urinary incontinence ("SUI") were reported by the Company. While the study did not meet its primary endpoint, review of the full clinical data demonstrates a consistency of benefit at six months post-treatment across all endpoints in the majority of patients within both groups. The Company’s analysis of the results is ongoing. However, the Company remains optimistic that there may be a path forward for our SUI clinical development program, with physicians around the world consistently reporting positive and durable SUI patient outcomes in their practices. The Company is further analyzing the data and evaluating potential options.

In July 2019, topline results for the LIBERATE-International study in SUI were reported by the Company. Statistical significance was not achieved on the primary endpoint of mean change from baseline on the 1-hour Pad Weight Test at six months post-treatment compared to the control group. The median change from baseline at six months post-treatment was -8.0g in the active group of 66 subjects (baseline median 12.8g) and -8.0g in the sham-control group of 33 subjects (baseline median 12.9g).

LIBERATE International was a randomized, double-blind, sham-controlled study conducted at 9 sites in Canada and included enrollment of 99 patients suffering from mild-to-moderate SUI. Patients were randomized in a 2:1 ratio to either an active treatment group or sham-control group. Patients were followed for six months post-treatment to assess the primary effectiveness and safety endpoints of the study with data being collected at one, three and six months.

The primary efficacy endpoint was the 6-month change from baseline in the one-hour pad weight test, and the study protocol includes 6 months of safety follow-up, as well as assessments of other secondary endpoints, including: 24-hour pad weight test, daily incontinence episodes, as well as composite scores from the validated UDI-6 (Urogenital Distress Inventory-Short Form), IIQ-7 (Incontinence Impact Questionnaire), and ICIQ-UI-SF (International Consultation on Incontinence Questionnaire-Urinary Incontinence-Short Form) outcome questionnaires.

Health Canada issued an authorization to conduct the investigational testing. The study was conducted in Canada to evaluate support for SUI indications in Canada, the European Union and several other international countries. .

Reported Positive Twelve-Month Data from SUI Feasibility Study

In December 2018, the Company reported positive twelve-month interim data from its SUI feasibility study.  At twelve months post-treatment, 72% of women experienced improvement in one-hour pad weight test and 60% of patients experienced significant benefit as they had ≤ 1 gram of urine leakage in the one-hour pad weight test at twelve months. A clinically meaningful benefit was achieved across all patient-reported SUI symptoms and quality of life outcome measures. No device-related safety issues were reported for any of the patients.

This single-arm feasibility study included 36 subjects with mild to moderate SUI (based on the one-hour pad weight test) who underwent treatment with Viveve’s CMRF technology under a proprietary treatment protocol. Clinical results included the objective one-hour pad weight test and seven-day bladder voiding diary, as well as composite scores from multiple validated patient-reported outcomes, including: UDI-6 (Urogenital Distress Inventory-Short Form), IIQ-7 (Incontinence Impact Questionnaire) and ICIQ-UI-SF (International Consultation on Incontinence Questionnaire-Urinary Incontinence-Short Form).

Submission of IDE to FDA for Approval to Conduct SUI Trial in the United States

In September 2018, the Company submitted an Investigational Device Exemption (IDE) to the U.S. Food and Drug Administration (FDA) for authorization to begin LIBERATE-U.S., a multicenter, randomized, double-blinded, sham-controlled trial to evaluate the safety and efficacy of the Company’s proprietary CMRF technology for the improvement of SUI in women. Intended enrollment for the LIBERATE-U.S. trial is approximately 240 subjects at up to 25 study sites in the United States. Subjects will be randomized in a 2:1 ratio for active and sham treatments.

In October 2018, the FDA sent a letter to the Company stating that the FDA did not approve the IDE submission for the LIBERATE-U.S. study and requesting the Company to submit additional safety testing as part of an IDE re-submission.  Viveve has had ongoing discussions with the FDA regarding such safety testing.  The decision and timing to conduct the safety testing and re-submit the IDE to the FDA upon testing  completion is under strategic assessment by the Company pending review of the complete data set from the LIBERATE-International SUI Trial.

U.S. Commercial Sales Transition to Recurring Revenue Rental Model

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 first month and is continuing to gain traction in the U.S. market. In June 2019, Viveve Systems placed with new customers represented a higher monthly productivity rate per sales representative than any prior month in the company’s history. Sale of Viveve products outside of the U.S. will continue to be supported by the Company’s current distributors without significant change to the international business model.

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 ASU Topic 842 and meets the classification criteria for an operating lease. Revenue from the rental program is included in rental revenue. The Viveve Systems that are being leased are included in property and equipment, net and depreciated over their expected useful lives of 5 years. When other products (“nonlease components”), such as single-use treatment tips or ancillary consumables, are included in the offering, 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 nonlease components.

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Strategic Organizational Realignment

In January 2019, the Company implemented a strategic and organizational realignment plan (the “Strategic Organizational Realignment”) to reduce operating expenses and prepare the Company for expanded indications for its CMRF technology platform for improved sexual function and stress urinary incontinence in women. The Strategic Organizational Realignment included a reduction in total headcount of approximately 40 full-time employees. It also included a nearly two-thirds reduction in the Company’s direct sales organization, which has been repositioned to provide targeted market development activities to further expand awareness and adoption of Viveve’s CMRF technology in the before mentioned medical specialties. The Company’s current and prospective aesthetic medicine customers in the U.S. will be supported by a network of distributor partners under Viveve’s direction. International commercial distribution will remain unchanged through Viveve’s global network of distributor partners. The total restructuring costs for employee severance and other related termination benefits were approximately $742,000 and it was recorded in the quarter ended March 31, 2019. As of June 30, 2019, approximately $24,000 remains unpaid and is included in accrued liabilities. This amount is expected to be paid in the quarter ending September 30, 2019. This restructuring contributed to a reduction in our total operating expenses in the first quarter of 2019 as planned and is expected to result in additional operating cost savings throughout the remainder of this year.

 Adoption of New Accounting Standard - Leases

The Company adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASU”) No. 2016-02, Leases (Topic 842), as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the renewal options for the facilities lease would be reasonably certain to be renewed and as such, included that renewal period in determining the expected lease term of that lease. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Plan of Operation

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. 

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:

● designing new treatment tips optimized for both ease-of-use and to reduce procedure times for patients and physicians; and

● developing new RF consoles.

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 will be sufficient to fund our activities for at least the next nine months; however, we may require additional capital from the sale of equity or debt securities 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 $500,000 annually.

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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.

Results of Operations 

Comparison of the Three Months Ended June 30, 2019 and 2018

Revenue

	Three Months Ended
	June 30,				Change
	2019		2018			$		%
	(in thousands, except percentages)
Revenue	$	1,052	$	5,525	$	(4,473	)		(81	)%

We recorded revenue of $1,052,000 for the three months ended June 30, 2019, compared to revenue of $5,525,000 for the three months ended June 30, 2018, a decrease of $4,473,000, or approximately 81%. The decrease in revenue was primarily due to lower sales volume of Viveve Systems sold as the Company transitioned its U.S. commercial sales model to a recurring revenue rental model versus selling systems under a capital equipment sales model. Sales in the second quarter of 2019 included 4 Viveve Systems and approximately 2,200 disposable treatment tips sold globally. Under the new subscription offering program, which was launched in June 2019, the Company placed 24 Viveve Systems in the U.S. market. Rental revenue on these leases will be recognized on a straight-line basis over the term of the lease (upon completion of system installation and training). No rental revenue was recognized in the second quarter of 2019. We will begin to recognize rental revenue in July 2019. Sales in the second quarter of 2018 included 85 Viveve Systems (which included 69 Viveve Systems sold in the U.S. market through direct sales) and approximately 2,700 disposable treatment tips sold globally.

Gross profit

	Three Months Ended
	June 30,				Change
	2019		2018			$		%
	(in thousands, except percentages)
Gross profit	$	111	$	2,814	$	(2,703	)		(96	)%

 Gross profit was $111,000, or 11% of revenue, for the three months ended June 30, 2019, compared to a gross profit of $2,814,000, or 51% of revenue, for the three months ended June 30, 2018, a decrease of $2,703,000, or approximately 96%. The decrease in gross profit was primarily due to the lower sales volume of Viveve Systems sold as the Company transitioned its U.S. business model to a recurring revenue rental model versus selling systems under a capital equipment sales model during the second quarter of 2019.

Research and development expenses

	Three Months Ended
	June 30,				Change
	2019		2018			$		%
	(in thousands, except percentages)
Research and development	$	2,902	$	3,672	$	(770	)		(21	)%

 Research and development expenses totaled $2,902,000, for the three months ended June 30, 2019, compared to research and development expense of $3,672,000 for the three months ended June 30, 2018, a decrease of $770,000, or approximately 21%. Spending on research and development decreased in the second quarter of 2019 primarily due to reduced engineering and development work related to our products in the period as well as certain cost savings in connection with the Company’s Strategic Organizational Realignment which occurred in the first quarter of 2019, partially offset by higher clinical study costs associated with our clinical development programs in female sexual function and SUI. Research and development spending in the second quarter of 2018 included higher costs associated with engineering and development work with our contract manufacturer related to product improvement efforts primarily for our next generation 2.0 platform in advance of the 2018 commercial product release.

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Selling, general and administrative expenses   

	Three Months Ended
	June 30,				Change
	2019		2018			$		%
	(in thousands, except percentages)
Selling, general and administrative	$	5,530	$	9,437	$	(3,907	)		(41	)%

Selling, general and administrative expenses totaled $5,530,000 for the three months ended June 30, 2019, compared to $9,437,000 for the three months ended June 30, 2018, a decrease of $3,907,000, or approximately 41%. The decrease in selling, general and administrative expenses in the second quarter of 2019 was primarily due to certain cost savings in connection with the Company’s Strategic Organizational Realignment which occurred in the first quarter of 2019 as well as lower professional and legal fees associated with our intellectual property. Selling, general and administrative expenses in the second quarter of 2018 included higher professional and legal fees associated with strategies to protect the Company’s intellectual property. In June 2018, we reached a favorable settlement in the Company’s patent infringement litigation with ThermiGen, LLC.

  Interest expense, net 

	Three Months Ended
	June 30,				Change
	2019		2018			$	%
	(in thousands, except percentages)
Interest expense, net	$	1,194	$	1,063	$	131		12	%

 During the three months ended June 30, 2019, we had interest expense, net of $1,194,000, compared to $1,063,000 for the three months ended June 30, 2018. The increase of $131,000, or approximately 12%, resulted primarily from the additional interest expense in 2019, which was computed on a higher term loan balance compared to 2018 due to the interest in-kind which has been added to the total outstanding principal loan amount each quarterly period.

Other expense, net

	Three Months Ended
	June 30,				Change
	2019		2018		$		%
	(in thousands, except percentages)
Other expense, net	$	71	$	-	$	71		100	%

  During the three months ended June 30, 2019, we had other expense, net, $ 71,000, compared to zero for the three months ended June 30, 2018.

Loss from minority interest in limited liability company

	Three Months Ended
	June 30,				Change
	2019		2018			$		%
	(in thousands, except percentages)
Loss from minority interest in limited liability company	$	138	$	158	$	(20	)		(13	)%

The Company uses the equity method to account for its investment in InControl Medical, LLC (“ICM”). For the three months ended June 30, 2019, the allocated net loss from ICM’s operations was $138,000, compared to $158,000 for the three months ended June 30, 2018       

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Comparison of the Six Months Ended June 30, 2019 and 2018

Revenue 

	Six Months Ended
	June 30,				Change
	2019		2018		$			%
	(in thousands, except percentages)
Revenue	$	4,064	$	9,224	$	(5,160	)		(56	)%

We recorded revenue of $4,064,000 for the six months ended June 30, 2019, compared to revenue of $9,224,000 for the six months ended June 30, 2018, a decrease of $5,160,000, or approximately 56%. The decrease in revenue was primarily due to lower sales volume of Viveve Systems sold as the Company transitioned its U.S. commercial sales model to a recurring revenue rental model versus selling systems under a capital equipment sales model. Sales in the first half of 2019 included sales of 47 Viveve Systems (which included 28 Viveve Systems sold in the U.S. market – 17 Viveve Systems through direct sales and 11 Viveve Systems through our U.S. distribution partner) and approximately 4,500 disposable treatment tips sold globally. Under the new subscription offering program, which was launched in June 2019, the Company placed 24 Viveve Systems in the U.S. market. Rental revenue on these leases will be recognized on a straight-line basis over the term of the lease (upon completion of system installation and training). No rental revenue was recognized in the first half of 2019. We will begin to recognize rental revenue in July 2019. Sales in the first half of 2018 included 138 Viveve Systems (which included 107 Viveve Systems sold in the U.S. market through direct sales) and approximately 3,300 disposable treatment tips sold globally.

Gross profit

	Six Months Ended
	June 30,				Change
	2019		2018		$			%
	(in thousands, except percentages)
Gross profit	$	1,182	$	4,161	$	(2,979	)		(72	)%

Gross profit was $1,182,000, or 29% of revenue, for the six months ended June 30, 2019, compared to a gross profit of $4,161,000, or 45% of revenue, for the six months ended June 30, 2018, a decrease of $2,979,000, or approximately 72%. The decrease in gross profit was primarily due to the lower sales volume of Viveve Systems sold as the Company transitioned its U.S. business model to a recurring revenue rental model versus selling systems under a capital equipment sales model in the second quarter of 2019.

Research and development expenses  

	Six Months Ended
	June 30,				Change
	2019		2018		$			%
	(in thousands, except percentages)
Research and development	$	5,382	$	7,428	$	(2,046	)		(28	)%

Research and development expenses totaled $5,382,000 for the six months ended June 30, 2019, compared to research and development expense of $7,428,000 for the six months ended June 30, 2018, a decrease of $2,046,000 or approximately 28%. Spending on research and development decreased in the first half of 2019 primarily due to reduced engineering and development work related to our products in the period as well as certain cost savings in connection with the Company’s Strategic Organizational Realignment, partially offset by higher clinical study costs associated with our clinical development programs in female sexual function and SUI. Research and development spending in the first half of 2018 included higher costs associated with engineering and development work with our contract manufacturer related to product improvement efforts primarily for our next generation 2.0 platform in advance of the 2018 commercial product release.

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Selling, general and administrative expenses  

	Six Months Ended
	June 30,				Change
	2019		2018		$			%
	(in thousands, except percentages)
Selling, general and administrative	$	12,156	$	18,368	$	(6,212	)		(34	)%

 Selling, general and administrative expenses totaled $12,156,000 for the six months ended June 30, 2019, compared to $18,368,000 for the six months ended June 30, 2018, a decrease of $6,212,000 or approximately 34 %. The decrease in selling, general and administrative expenses in the first half of 2019 was primarily due to certain cost savings in connection with the Company’s Strategic Organizational Realignment as well as lower professional and legal fees associated with our intellectual property. Selling, general and administrative expenses in the first half of 2018 included higher professional and legal fees associated with strategies to protect the Company’s intellectual property. In June 2018, we reached a favorable settlement in the Company’s patent infringement litigation with ThermiGen, LLC.

Restructuring costs

	Six Months Ended
	June 30,				Change
	2019		2018		$		%
	(in thousands, except percentages)
Restructuring costs	$	742	$	-	$	742		100	%

 In January 2019, the Company implemented the Strategic Organizational Realignment to reduce operating expenses and prepare the Company for expanded indications for its CMRF technology platform for improved sexual function and stress urinary incontinence in women. The restructuring included a reduction in headcount of approximately 40 full-time employees. The total restructuring costs recorded for the six months ended June 30, 2019 were approximately $742,000. This restructuring contributed to a reduction in total operating expenses in the second quarter of 2019 as planned and is expected to result in additional operating cost savings throughout the remainder of this year.

Interest expense, net  

	Six Months Ended
	June 30,				Change
	2019		2018		$		%
	(in thousands, except percentages)
Interest expense, net	$	2,310	$	2,133	$	177		8	%

 During the six months ended June 30, 2019, we had interest expense, net of $2,310,000, compared to $2,133,000 for the six months ended June 30, 2018. The increase of $177,000, or approximately 8%, resulted primarily from the additional interest expense in the first half of 2019, which was computed on a higher term loan balance compared to the first half of 2018 due to the interest in-kind which has been added to the total outstanding principal loan amount each quarterly period.

Other expense, net  

	Six Months Ended
	June 30,				Change
	2019		2018			$	%
	(in thousands, except percentages)
Other expense, net	$	82	$	10	$	72		720	%

 During the six months ended June 30, 2019, we had other expense, net, of $82,000, compared to $10,000 for the six months ended June 30, 2018.

 Loss from minority interest in limited liability company

	Six Months Ended
	June 30,				Change
	2019		2018		$			%
	(in thousands, except percentages)
Loss from minority interest in limited liability company	$	263	$	407	$	(144	)		(35	)%

 The Company uses the equity method to account for its investment in ICM. For the six months ended June 30, 2019, the allocated net loss from ICM’s operations was $263,000, compared to $407,0000 for the six months ended June 30, 2018.

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Liquidity and Capital Resources

Comparison of the Six Months Ended June 30, 2019 and 2018

Since inception, the Company has sustained significant operating losses and such losses are expected to continue for the foreseeable future. As of June 30, 2019, the Company had an accumulated deficit of $175,138,000, cash and cash equivalents of $9,506,000 and working capital of $13,660,000. Additionally, the Company used $7,696,000 in cash for operations in the three months ended June 30, 2019 and $19,254,000 in cash for operations for the six months ended June 30, 2019. At the date our financial statements for the three months ended June 30, 2019 are issued, we did not have sufficient cash to fund our operations through August 8, 2020, 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 date the financial statements are issued. The Company will require additional cash funding to fund operations through August 2020. Accordingly, management has concluded that the Company does not have sufficient funds to support operations within one year after the date the financial statements are issued and, therefore, the Company concluded there was substantial doubt about the Company’s ability to continue as a going concern.

To fund further operations, the Company 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 us to reduce our operating costs and other expenditures, including reductions of 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 objectives. There can be no assurance that financing will be available on acceptable terms, or at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern and have a material adverse effect on the Company’s future financial results, financial position and cash flows.

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

	Six Months Ended
	June 30,
	2019			2018
Net cash used in operating activities	$	(19,254	)	$	(23,234	)
Net cash used in investing activities		(718	)		(803	)
Net cash provided by (used in) financing activities		(45	)		33,520
Net increase in cash and cash equivalents	$	(20,017	)	$	9,483

Operating Activities

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 $19,254,000 for the six months ended June 30, 2019 compared to $23,234,000 used for the six months ended June 30, 2018. 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 six months ended June 30, 2019 consisted of a net loss of $19,753,000 adjusted for non-cash expenses including depreciation and amortization of $547,000, stock-based compensation of $1,117,000, non-cash interest expense of $843,000, and cash outflows from changes in operating assets and liabilities of $2,526,000. The change in operating assets and liabilities was primarily due to a decrease in accounts payable of $2,388,000, a decrease in accrued and other liabilities of $1,736,000, an increase in inventory of $299,000, an increase in prepaid expenses and other current assets of $210,000, partially offset by a decrease in accounts receivable of $1,963,000, an increase in other noncurrent liabilities of $104,000, and a decrease in other noncurrent assets of $40,000. Net cash used during the six months ended June 30, 2018 consisted of a net loss of $24,185,000 adjusted for non-cash expenses including provision for doubtful accounts of $32,000, depreciation and amortization of $334,000, stock-based compensation of $1,529,000, fair value of common stock issued of $256,000, non-cash interest expense of $776,000, loss from minority interest in limited liability company of $407,000, and cash outflows from changes in operating assets and liabilities of $2,383,000. The change in operating assets and liabilities was primarily due to an increase in accounts receivable of $1,060,000, increase in inventory of $1,930,000, an increase in prepaid expenses and other current assets of $283,000, an increase in accounts payable of $68,000, and an increase in accrued and other liabilities of $635,000, and an increase in other noncurrent liabilities of $173,000.

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Investing Activities

Net cash used in investing activities during the six months ended June 30, 2019 and 2018 was $718,000 and $803,000, respectively. Net cash used in investing activities during the six months ended June 30, 2019 and 2018 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 increase in the number of our employees and any changes to the capital equipment requirements related to our development programs and clinical trials.

Financing Activities

Net cash used in financing activities during the six months ended June 30, 2019 was $45,000, which was the result of transaction costs of $100,000 in connection with note payable, partially offset by the proceeds of $55,000 from purchases of common shares under the 2017 ESPP.

Net cash provided by financing activities during the six months ended June 30, 2018 was $33,520,000, which was the result of the gross proceeds of $34,500,000 from our February 2018 Offering (partially offset by transaction costs of $2,286,000) and gross proceeds of $1,316,000 from our November 2017 ATM Facility (partially offset by transaction costs of $133,000).

As of June 30, 2019, there is a balance of $25,000,000 available for future issuance under the 2017 Shelf Registration Statement, and approximately $23,369,000 available for future issuance under the November 2017 ATM Facility.

Contractual Payment Obligations

We have obligations under a bank term loan and non-cancelable operating leases. As of June 30, 2019, our contractual obligations are as follows (in thousands):

			Less than						More than
Contractual Obligations:	Total		1 Year		1 - 3 Year		3 -5 Years		5 Years
Debt obligations (including interest)	$	46,514	$	2,842	$	28,065	$	15,607	$	-
Non-cancellable operating lease obligations		313		276		37		-		-
Total	$	46,827	$	3,118	$	28,102	$	15,607	$	-

On February 1, 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 is 36 months and the monthly base rent for the first, second and third years is $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 is 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 will terminate in May 2020.

On May 22, 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. On December 29, 2017, the Company accessed the remaining $10,000,000 available under the credit facility. The term of the loan is six years with the first four years being interest only. The outstanding principal balance under the 2017 Loan Agreement is $32,068,000 as of June 30, 2019.

In September 2018, the Company entered into a 36-month noncancelable operating lease agreement for office equipment.  The lease commenced on September 20, 2018.  The monthly payment is approximately $3,000. 

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Critical Accounting Policies and Estimates

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 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, that was filed with the SEC on March 15, 2019, for a more complete description of our significant accounting policies. Except for the adoption of the new leases accounting standard on January 1, 2019, there have been no material changes to the significant accounting policies during the six months ended June 30, 2019.

Recent Accounting Pronouncements

The Company adopted FASB’s ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the renewal options for the facilities lease would be reasonably certain to be renewed and as such, included that renewal period in determining the expected lease term of that lease. Adoption of the new standard resulted in the recording of operating lease right-of-use assets of $629,000 and operating lease liabilities of $629,000, as of January 1, 2019. The standard did not have an impact on our consolidated results of operations, cash flows or stockholders’ equity previously reported. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

In June 2018, the FASB issued ASU 2018-07, “Stock Compensation (Topic 718) – Improvements to Nonemployee Share- Based Payment Accounting”. The intent of this guidance is to simplify the accounting for nonemployee share-based payment accounting. The amendments in this guidance expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Equity- classified nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting for employee share-based payment awards, an entity considers the probability of satisfying performance conditions when nonemployee share-based payment awards contain such conditions. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within the reporting period. We adopted this guidance as of January 1, 2019 and the adoption of the guidance did not have a significant impact on the condensed consolidated financial statements.

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 consolidated financial statements as a result of future adoption.

Nasdaq Delisting Notice

On May 13, 2019, we received written notice (the “First Notification Letter”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we are not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days. Based on the closing bid price of our common stock for the thirty (30) consecutive business days from March 28, 2019 to May 10, 2019, we no longer meet the minimum bid price requirement.

The First Notification Letter does not impact our listing on The Nasdaq Capital Market at this time. The First Notification Letter states that we have 180 calendar days, or until November 11, 2019, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of our common stock must have a closing bid price of at least $1.00 per share for a minimum of ten (10) consecutive business days. If we do not regain compliance with Nasdaq Listing Rule 5550(a)(2) by November 11, 2019, we may be eligible for an additional 180 calendar day compliance period. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the staff of Nasdaq (the “Staff”) that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq would notify us that our securities would be subject to delisting. In the event of such a notification, we may appeal the Staff’s determination to delist our securities, but there can be no assurance the Staff would grant our request for continued listing.

We intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of our outstanding securities, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.

Additionally, on May 21, 2019, we received written notice (the “Second Notification Letter”) from the Listing Qualifications Department of Nasdaq notifying us that we are not in compliance with the market value of listed securities requirements set forth in Nasdaq Listing Rule 5550(b)(2), or the alternative standards of Nasdaq Listing Rule 5550(b)(1), which requires a listed company to have minimum stockholders’ equity of $2.5 million, or Nasdaq Listing Rule 5550(b)(3), which requires a listed company to have had net income from continuing operations of at least $500,000 in the latest fiscal year or in two of the last three fiscal years. Nasdaq Listing Rule 5550(b)(2) requires listed securities to maintain a market value of at least $35 million for the previous thirty (30) consecutive business days for continued listing on The Nasdaq Capital Market. Based on our market value of listed securities for the thirty (30) consecutive business days from April 8, 2019 to May 20, 2019, we no longer meet the market value of listed securities requirement. In addition, we do not satisfy the alternative requirements of sufficient minimum stockholders’ equity or sufficient net income from continuing operations.

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The Second Notification Letter does not impact our listing on The Nasdaq Capital Market at this time. The Second Notification Letter states that we have 180 calendar days, or until November 18, 2019, to regain compliance with Nasdaq Listing Rule 5550(b)(2). Alternatively, we could gain compliance with Nasdaq Listing Rule 5550(b)(1) or Nasdaq Listing Rule 5550(b)(3). In order to regain compliance with Nasdaq Listing Rule 5550(b)(2), we must maintain a market value of listed securities of at least $35 million for a minimum of ten (10) consecutive business days. If we do not regain compliance with Nasdaq Listing Rule 5550(b)(2) or, alternatively, gain compliance with Nasdaq Listing Rule 5550(b)(1) or Nasdaq Listing Rule 5550(b)(3), prior to the expiration of the compliance period, Nasdaq would notify us that our securities would be subject to delisting. In the event of such a notification, we may appeal the Staff’s determination to delist our securities, but there can be no assurance the Staff would grant our request for continued listing. Unlike the minimum bid price noncompliance described in the First Notification Letter, no additional compliance period is applicable to the noncompliance described in the Second Notification Letter.

If our common stock is delisted by Nasdaq, it could lead to a number of negative implications, including an adverse effect on the price of our common stock, increased volatility in our common stock, reduced liquidity in our common stock, the loss of federal preemption of state securities laws and greater difficulty in obtaining financing. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, could result in a loss of current or future coverage by certain sell-side analysts and might deter certain institutions and persons from investing in our securities at all. Delisting could also cause a loss of confidence of our customers, collaborators, vendors, suppliers and employees, which could harm our business and future prospects. We will consider available options to resolve the deficiencies and regain compliance with all applicable Nasdaq Listing Rules.

Off-Balance Sheet Transactions

We do not have any off-balance sheet transactions.

Trends, Events and Uncertainties

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk related to changes in interest rates. As of June 30, 2019, 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 in 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 June 30, 2019, we did not have any material derivative financial instruments.  The fair value of our cash and cash equivalents was $9.5 million as of June 30, 2019.

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 June 30, 2019, and December 31, 2018, 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 six months ended June 30, 2019 and 2018.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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 and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2019, the end of the period covered by this Quarterly Report. Based upon the evaluation of our disclosure controls and procedures as of June 30, 2019, our Chief Executive Officer (principal executive officer) and Vice President of Finance and Administration (principal accounting officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

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.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

Except as disclosed below and in our Annual Report on Form 10-K for the year ended December 31, 2018, 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.

Item 1A. Risk Factors.

We incorporate herein by reference the risk factors included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2019. 

We recently received delisting notices from Nasdaq and if we do not regain compliance with Nasdaq listing standards, we will be delisted from Nasdaq.

On May 13, 2019, we received a letter from letter from the Listing Qualifications Department of The Nasdaq Stock Market stating that for the 30 consecutive business days prior to the date of the letter, we did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), Nasdaq has provided us with 180 calendar days, or until November 18, 2019, to regain compliance. In the event the Company does not regain compliance with the Nasdaq listing rules prior to the expiration of the compliance period, it will receive written notification that its securities are subject to delisting. Compliance can be achieved by meeting the minimum bid price

Additionally, on May 21, 2019, we received a second letter from the Listing Qualifications Department of The Nasdaq Stock Market stating that for the 30 consecutive business days prior to the date of the letter, we did not meet the minimum market value of listed securities of $35,000,000 required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq has provided us with 180 calendar days, or until November 18, 2019, to regain compliance. In the event the Company does not regain compliance with the Nasdaq listing rules prior to the expiration of the compliance period, it will receive written notification that its securities are subject to delisting. Compliance can be achieved by meeting the market value of listed securities standard for a minimum of 10 consecutive trading days during the 180-day compliance period ending November 11, 2019, of which there can be no assurance.

There is no assurance that the Company will meet the minimum bid price or the minimum market value of listed securities for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rules 5550(a)(2) and 5550(b)(2) in the future or that we will continue to comply with other Nasdaq listing requirements. If our common stock were to be delisted from the Nasdaq Capital Market, the liquidity of our common stock would be materially impacted, which would decrease the attractiveness of our common stock to investors and result in a decline in the market price of our common stock.

We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

Developing our products is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities. 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.

35

As of June 30, 2019, our cash and cash equivalents were $9.5 million and the 2017 Loan Agreement held an outstanding principal balance of $31.3 million. The 2017 Loan Agreement is collateralized by substantially all of our personal property, including our intellectual property. Under the 2017 Loan Agreement, we, as the borrower, are required to maintain cash and cash equivalents of $2.0 million and, each year through the end of 2022, to meet a minimum total annual revenue threshold, which as of June 30, 2019 and December 31, 2018 was $19.1 million and $21.0 million, respectively.

We expect that our cash and cash equivalents will be sufficient to fund our current operations through September 30, 2019. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. In any event, we will require additional capital to obtain regulatory approval for, and to commercialize, our product candidates. Raising funds in the current economic environment may present additional challenges. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidate or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

Our historical operating results indicate substantial doubt exists related to the Company's ability to continue as a going concern.

Our financial statements have been prepared assuming that our company will continue as a going concern. We have incurred net losses and used significant cash in operating activities since inception and have an accumulated deficit of approximately $175.1 million and working capital of $13.7 million as of June 30, 2019. These factors raise substantial doubt about our ability to continue as a going concern and satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.

If we continue to experience operating losses, and we are not able to generate additional liquidity through a capital raise or other cash infusion, while not expected, we may not be able to access additional funds under the 2017 Loan Agreement and we might need to secure additional sources of funds, which may or may not be available to us. Additionally, a failure to generate additional liquidity could negatively impact our ability to operate our business. Moreover, we currently believe that, without additional liquidity, we will not be in compliance with the covenants in the Company's credit agreement for the fourth quarter of 2019, which could result in an event of default and an acceleration of the indebtedness.

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

Unregistered Sales of Securities

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.      

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

36

Item 6. Exhibits.

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.
3.2(2)	Amended and Restated Bylaws
31.1*	Certification of the Company’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’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+	Certification of the Company’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+	Certification of the Company’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*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

+ 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.

(1) Incorporated by reference from the Form 10-Q filed with the Securities and Exchange Commission on May 13, 2016.

(2)	Incorporated by reference from the Form 8-K filed with the Securities and Exchange Commission on August 16, 2017.
(3)	Incorporated by reference from the Form 8-K filed with the Securities and Exchange Commission on April 14, 2016.

37

SIGNATURES

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.

Dated:  August 8, 2019	VIVEVE MEDICAL, INC.
	(Registrant)
	By:	/s/ Scott Durbin
		Scott Durbin
		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Jim Robbins
		Jim Robbins
		Vice President of Finance and Administration (Principal Accounting and Financial Officer)

38

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Scott Durbin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for Viveve Medical, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2019	/s/ Scott Durbin
	Scott Durbin
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Accounting and Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Jim Robbins, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for Viveve Medical, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2019	/s/ Jim Robbins
	Jim Robbins
	Vice President of Finance and Administration
	(Principal Accounting and Financial Officer)

EX-32.1

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (A) and (B) of Section 1350, Chapter 63 of Title 18,

United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Viveve Medical, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), that, to the best of their knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019	/s/ Scott Durbin
	Scott Durbin
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (A) and (B) of Section 1350, Chapter 63 of Title 18,

United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Viveve Medical, Inc. (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), that, to the best of their knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019	/s/ Jim Robbins
	Jim Robbins
	Vice President of Finance and Administration
	(Principal Accounting and Financial Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 07, 2019
Document Information [Line Items]
Entity Registrant Name	VIVEVE MEDICAL, INC.
Entity Central Index Key	0000879682
Trading Symbol	vive
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		46,613,204
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Title of 12(b) Security	Common Stock

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	[1]
Current assets:
Cash and cash equivalents	$ 9,506,000	$ 29,523,000
Accounts receivable, net of allowance for doubtful accounts of $469 and $284 as of June 30, 2019 and December 31, 2018, respectively	3,556,000	5,704,000
Inventory	4,714,000	4,119,000
Prepaid expenses and other current assets	2,768,000	2,558,000
Total current assets	20,544,000	41,904,000
Property and equipment, net	2,726,000	2,916,000
Investment in limited liability company	1,580,000	1,843,000
Other assets	646,000	171,000
Total assets	25,496,000	46,834,000
Current liabilities:
Accounts payable	1,606,000	3,994,000
Accrued liabilities	5,278,000	6,766,000
Total current liabilities	6,884,000	10,760,000
Note payable, noncurrent portion	31,271,000	30,528,000
Other noncurrent liabilities	1,010,000	634,000
Total liabilities	39,165,000	41,922,000
Commitments and contingences (Note 8)
Stockholders’ equity (deficit):
Common stock, $0.0001 par value; 75,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 46,574,958 and 46,363,945 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	5,000	5,000
Additional paid-in capital	161,464,000	160,292,000
Accumulated deficit	(175,138,000)	(155,385,000)
Total stockholders’ equity (deficit)	(13,669,000)	4,912,000
Total liabilities and stockholders’ equity (deficit)	$ 25,496,000	$ 46,834,000

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	[1]
Accounts receivable, allowance for doubtful accounts	$ 469	$ 284
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	46,574,958	46,363,945
Common stock, shares outstanding (in shares)	46,574,958	46,363,945

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue	$ 1,052,000	$ 5,525,000	$ 4,064,000	$ 9,224,000
Cost of revenue	941,000	2,711,000	2,882,000	5,063,000
Gross profit	111,000	2,814,000	1,182,000	4,161,000
Operating expenses:
Research and development	2,902,000	3,672,000	5,382,000	7,428,000
Selling, general and administrative	5,530,000	9,437,000	12,156,000	18,368,000
Restructuring costs			742,000
Total operating expenses	8,432,000	13,109,000	18,280,000	25,796,000
Loss from operations	(8,321,000)	(10,295,000)	(17,098,000)	(21,635,000)
Interest expense, net	(1,194,000)	(1,063,000)	(2,310,000)	(2,133,000)
Other expense, net	(71,000)		(82,000)	(10,000)
Net loss from consolidated companies	(9,586,000)	(11,358,000)	(19,490,000)	(23,778,000)
Loss from minority interest in limited liability company	(138,000)	(158,000)	(263,000)	(407,000)
Comprehensive and net loss	$ (9,724,000)	$ (11,516,000)	$ (19,753,000)	$ (24,185,000)
Net loss per share:
Basic and diluted (in dollars per share)	$ (0.21)	$ (0.37)	$ (0.43)	$ (0.85)
Weighted average shares used in computing net loss per common share:
Basic and diluted (in shares)	46,494,274	31,305,386	46,433,421	28,591,134

XML

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	February 2018 Offering [Member] Common Stock [Member]	February 2018 Offering [Member] Additional Paid-in Capital [Member]	February 2018 Offering [Member]	November 2017 ATM Facility [Member] Common Stock [Member]	November 2017 ATM Facility [Member] Additional Paid-in Capital [Member]	November 2017 ATM Facility [Member] Retained Earnings [Member]	November 2017 ATM Facility [Member]	Consultant [Member] Common Stock [Member]	Consultant [Member] Additional Paid-in Capital [Member]	Consultant [Member] Retained Earnings [Member]	Consultant [Member]	Director [Member] Common Stock [Member]	Director [Member] Additional Paid-in Capital [Member]	Director [Member] Retained Earnings [Member]	Director [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balances (in shares) at Dec. 31, 2017																19,503,558
Balances at Dec. 31, 2017																$ 2	$ 102,979	$ (105,581)	$ (2,600)
Stock-based compensation expense																	645		645
Issuance of common shares from employee stock purchase plan (in shares)																20,744
Issuance of common shares from employee stock purchase plan																	65		65
Issuance of restricted shares (in shares)																22,137
Issuance of restricted shares																	108		108
Net loss																		(12,669)	(12,669)
Stock offering, net of issuance costs (in shares)	11,500,000			208,277
Stock offering, net of issuance costs	$ 1	$ 32,224	$ 32,225		$ 1,011		$ 1,011
Cumulative effect adjustment from adoption of new accounting standard – ASC 606																		177	177
Balances (in shares) at Mar. 31, 2018																31,254,716
Balances at Mar. 31, 2018																$ 3	137,032	(118,073)	18,962
Balances (in shares) at Dec. 31, 2017																19,503,558
Balances at Dec. 31, 2017																$ 2	102,979	(105,581)	(2,600)
Net loss																			(24,185)
Stock offering, net of issuance costs (in shares)							273,529
Balances (in shares) at Jun. 30, 2018																31,466,508
Balances at Jun. 30, 2018																$ 3	138,283	(129,589)	8,697
Balances (in shares) at Mar. 31, 2018																31,254,716
Balances at Mar. 31, 2018																$ 3	137,032	(118,073)	18,962
Stock-based compensation expense																	709		709
Issuance of common shares from employee stock purchase plan (in shares)																25,618
Issuance of common shares from employee stock purchase plan																	59		59
Issuance of restricted shares (in shares)																20,922
Issuance of restricted shares																	67		67
Issuance of common shares in connection with restricted stock award to employee (in shares)																100,000
Issuance of common shares in connection with restricted stock award to employee																	256		256
Net loss																		(11,516)	(11,516)
Stock offering, net of issuance costs (in shares)				65,252			65,252
Stock offering, net of issuance costs					$ 171		$ 171
February 2018 Offering issuance costs																	(11)		(11)
Balances (in shares) at Jun. 30, 2018																31,466,508
Balances at Jun. 30, 2018																$ 3	138,283	(129,589)	8,697
Balances (in shares) at Dec. 31, 2018																46,363,945
Balances at Dec. 31, 2018																$ 5	160,292	(155,385)	4,912	[1]
Stock-based compensation expense																	470		470
Issuance of common shares from employee stock purchase plan (in shares)																43,759
Issuance of common shares from employee stock purchase plan																	35		35
Issuance of restricted shares (in shares)								27,473
Issuance of restricted shares									$ 25		$ 25
Issuance of common shares in connection with restricted stock award to employee (in shares)																625
Issuance of common shares in connection with restricted stock award to employee																	1		1
Net loss																		(10,029)	(10,029)
Balances (in shares) at Mar. 31, 2019																46,435,802
Balances at Mar. 31, 2019																$ 5	160,823	(165,414)	(4,586)
Balances (in shares) at Dec. 31, 2018																46,363,945
Balances at Dec. 31, 2018																$ 5	160,292	(155,385)	4,912	[1]
Net loss																			(19,753)
Stock offering, net of issuance costs (in shares)							0
Balances (in shares) at Jun. 30, 2019																46,574,958
Balances at Jun. 30, 2019																$ 5	161,464	(175,138)	(13,669)
Balances (in shares) at Mar. 31, 2019																46,435,802
Balances at Mar. 31, 2019																$ 5	160,823	(165,414)	(4,586)
Stock-based compensation expense																	562		562
Issuance of common shares from employee stock purchase plan (in shares)																60,740
Issuance of common shares from employee stock purchase plan																	20		20
Issuance of restricted shares (in shares)								25,000				52,791
Issuance of restricted shares									$ 11		$ 11		$ 48		$ 48
Issuance of common shares in connection with restricted stock award to employee (in shares)																625
Issuance of common shares in connection with restricted stock award to employee
Net loss																		(9,724)	(9,724)
Stock offering, net of issuance costs (in shares)							0
Balances (in shares) at Jun. 30, 2019																46,574,958
Balances at Jun. 30, 2019																$ 5	$ 161,464	$ (175,138)	$ (13,669)

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019		Jun. 30, 2018
Cash flows from operating activities:
Net loss	$ (19,753,000)		$ (24,185,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts	185,000		32,000
Depreciation and amortization	547,000		334,000
Stock-based compensation	1,117,000		1,529,000
Fair value of common shares issued			256,000
Non-cash interest expense	843,000		776,000
Amortization of operating lease right-of-use assets and accretion of operating lease liabilities	5,000
Loss from minority interest in limited liability company	263,000		407,000
Loss on disposal of property and equipment	65,000
Changes in assets and liabilities:
Accounts receivable	1,963,000		(1,060,000)
Inventory	(299,000)		(1,930,000)
Prepaid expenses and other current assets	(210,000)		(283,000)
Other noncurrent assets	40,000		14,000
Accounts payable	(2,388,000)		68,000
Accrued and other liabilities	(1,736,000)		635,000
Other noncurrent liabilities	104,000		173,000
Net cash used in operating activities	(19,254,000)		(23,234,000)
Cash flows from investing activities:
Purchase of property and equipment	(718,000)		(803,000)
Net cash used in investing activities	(718,000)		(803,000)
Cash flows from financing activities:
Proceeds from sale of common stock, net of issuance costs			33,396,000
Proceeds from issuance of common shares from employee stock purchase plan	55,000		124,000
Transaction costs in connection with note payable	(100,000)
Net cash provided by (used in) financing activities	(45,000)		33,520,000
Net increase (decrease) in cash and cash equivalents	(20,017,000)		9,483,000
Cash and cash equivalents - beginning of period	29,523,000	[1]	20,730,000
Cash and cash equivalents - end of period	9,506,000		30,213,000
Supplemental disclosure:
Cash paid for interest	1,364,000		1,315,000
Cash paid for income taxes			2,000
Supplemental disclosure of cash flow information as of end of period:
Issuance of note payable in settlement of accrued interest	642,000		616,000
Net transfer of equipment between inventory and property and equipment	(296,000)		159,000
Operating cash outflows from operating leases	73,000
Right-of-use assets obtained in exchange for operating lease liabilities (upon adoption of ASC 842)	$ 629,000

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

XML

Note 1 - The Company and Basis of Presentation

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. The Company and Basis of Presentation

Viveve Medical, Inc. (“Viveve Medical”, the “Company”, “we”, “our”, or “us”) designs, develops, manufactures and markets a platform medical technology, which we refer to as

Cryogen-cooled Monopolar RadioFrequency

, or CMRF. Our proprietary CMRF technology is delivered through a radiofrequency generator, handpiece and treatment tip, which collectively, we refer to as the Viveve® System. Viveve Medical competes in the women’s intimate health industry in some countries by marketing the Viveve System as a way to improve the overall well-being and quality of life of women suffering from vaginal introital laxity, for improved sexual function, or stress urinary incontinence, depending on the relevant country-specific clearance or approval.  In the United States, the Viveve System is currently indicated for use in general surgical procedures for electrocoagulation and hemostasis.

Public Offerings

 In

December 2018,

in connection with the closing of a public offering (the

“December 2018

Offering”), the Company issued an aggregate of

14,728,504

shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of

$1.50

per share for gross proceeds of approximately

$22,093,000.

The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately

$20,385,000.

 

In

February 2018,

in connection with the closing of a public offering (the

“February 2018

Offering”), the Company issued an aggregate of

11,500,000

shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of

$3.00

per share for gross proceeds of approximately

$34,500,000.

The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately

$32,214,000.

 

The Company established an “at-the-market” equity offering program through the filing of a prospectus supplement to its shelf registration statement on Form S-

3,

which was filed on

November 8, 2017,

under which the Company

may

offer and sell, from time-to-time, up to

$25,000,000

aggregate offering price of shares of its common stock (the

“November 2017

ATM Facility”). During the

three

and

six

months ended

June 30, 2019,

the Company sold

zero

shares of common stock under the

November 2017

ATM Facility. During the

three

and

six

months ended

June 30, 2018,

the Company sold

65,252

and

273,529

shares of common stock under the

November 2017

ATM Facility for net proceeds of approximately

$172,000

and

$1,183,000.

As of

June 30, 2019,

the Company has sold

336,498

shares of common stock under the

November 2017

ATM Facility for net proceeds of approximately

$1,318,000.

Interim Unaudited Financial Information

The accompanying unaudited condensed consolidated financial statements of Viveve Medical have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form

10

-Q and Article 

8

-

03

of Regulation S-

X.

Accordingly, they do

not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the condensed consolidated financial statements have been included.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form

10

-K for the year ended

December 31, 2018,

which was filed with the Securities and Exchange Commission on

March 15, 2019.

The results of operations for the

three

and

six

months ended

June 30, 2019

are

not

necessarily indicative of the results for the year ending

December 

31,

2019

or any future interim period.

Liquidity and Management Plans

The Company has adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Codification (“ASC”) Topic

205

-

40,

Presentation of Financial Statements – Going Concern, which requires that management evaluate whether there are relevant conditions and events that, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern and to meet its obligations as they become due within

one

year after the date that the financial statements are issued.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. However, since inception, the Company has sustained significant operating losses and such losses are expected to continue for the foreseeable future. As of

June 30, 2019,

the Company had an accumulated deficit of

$175,138,000,

cash and cash equivalents of

$9,506,000

and working capital of

$13,660,000.

Additionally, the Company used

$7,696,000

in cash for operations in the

three

months ended

June 30, 2019

and

$19,254,000

in cash for operations for the

six

months ended

June 30, 2019.

The Company will require additional cash funding to fund operations through

August 2020.

Accordingly, management has concluded that the Company does

not

have sufficient funds to support operations within

one

year after the date the financial statements are issued and, therefore, the Company concluded there was substantial doubt about the Company’s ability to continue as a going concern.

To fund further operations, the Company 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 financial statements contain

no

adjustments for the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern and have a material adverse effect on the Company’s future financial results, financial position and cash flows.

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Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Financial Statement Presentation

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.

Use of Estimates

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, 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. 

Changes in Accounting Policies

Except for the changes for the adoption of the new accounting standard for leases, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

Adoption of New Accounting Standard - Leases

The Company adopted FASB’s Accounting Standards Update (“ASU”)

No.

2016

-

02,

Leases (Topic

842

), as of

January 1, 2019,

using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the renewal options for the facilities lease would be reasonably certain to be renewed and as such, included that renewal period in determining the expected lease term of that lease. Adoption of the new standard resulted in the recording of operating lease right-of-use assets of

$629,000

and operating lease liabilities of

$629,000,

as of

January 1, 2019.

The standard did

not

have an impact on our consolidated results of operations, cash flows or stockholders’ equity previously reported. The comparative information has

not

been restated and continues to be reported under the accounting standards in effect for those periods.

The effect of the changes made to our consolidated

January 1, 2019

balance sheet for the adoption of the new lease standard was as follows (in thousands): 

			Adjustments
			Due to
	December 31,		Adoption of			January 1,
	2018		ASC 842			2019
Other assets	$	171	$	629	(1)	$	800
Total assets	$	46,834	$	629	(1)	$	47,463
Accrued liabilities	$	6,766	$	230	(2)	$	6,996
Total current liabilities	$	10,760	$	230	(2)	$	10,990
Other noncurrent liabilities	$	634	$	399	(2)	$	1,033
Total liabilities	$	41,922	$	629	(2)	$	42,551
Total liabilities and stockholders' equity	$	46,834	$	629	(2)	$	47,463

( 1 )	Represents capitalization of operating lease right-of-use assets and reclassification of deferred rent.
( 2 )	Represents recognition of operating lease liabilities.

Cash and Cash Equivalents

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

financial institution. Deposits in this institution

may,

from time to time, exceed the federally insured amounts.

Concentration of Credit Risk and Other Risks and Uncertainties

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 RF, or radio frequency, 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. RF 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. 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 Company sells its products primarily through a direct sales force to health care practitioners. Outside North America, the Company sells through an extensive network of distribution partners. During the

three

months ended

June 30, 2019,

three

distributors, collectively, accounted for

55%

of the Company’s revenue. During the

three

months ended

June 30, 2018,

one

distributor accounted for

13%

of the Company’s revenue. During the 

six

 months ended

June 30, 2019,

two

distributors, collectively, accounted for

32

% of the Company’s revenue. During the 

six

 months ended

June 30, 2018,

one

distributor accounted for

23%

of the Company’s revenue.

There were

no

direct sales customers that accounted for more than

10%

of the Company’s revenue during the

three

and

six

months ended

June 30, 2019

and

2018.

As of

June 30, 2019,

four

distributors, collectively, accounted for

64%

of total accounts receivable, net. As of

December 31, 2018,

three

distributors, collectively, accounted for

54%

of total accounts receivable, net.

Accounts Receivable and Allowance for Doubtful Accounts

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

$469,000

as of

June 30, 2019

and

$284,000

as of

December 31, 2018.

Revenue Recognition

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, 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 have a rental period of

six

months and can be extended or terminated by the customer after that time or the Viveve System can 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

and the revenue associated with it has

not

been material to the periods presented.

In connection with the lease of the Viveve System, the Company offers single-use treatment tips and ancillary consumables that are considered nonlease components. In the contracts with lease and nonlease 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 nonlease 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, Latin America, Europe, the Middle East and Asia Pacific. In North America, we market and sell primarily through a direct sales force. Outside of North America, we market and sell primarily through distribution partners.

The Company does 

not

 provide its customers with a right of return.

Customer Advance Payments

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.  The Company will remove the customer advance payment from accrued liabilities when revenue is recognized upon shipment of the products. 

Contract Assets and Liabilities

The Company continually evaluates whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities.

No

such assets existed as of 

June 30, 2019

or 

December 

31,

2018.

The Company had customer contracts liabilities in the amount of

$552,000,

primarily related to marketing programs that performance had

not

yet been delivered to its customers as of

June 30, 2019

and

$686,000

as of

December 31, 2018.

The following table reflects the changes in our customer contract liabilities for the

six

months ended

June 30, 2019:

	June 30,		December 31,		Six Months
	2019		2018		Change
Customer contracts liabilities:
Marketing programs	$	552	$	639	$	(87	)
Other		-		47		(47	)
Total	$	552	$	686	$	(134	)

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

Significant Financing Component

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

six

months ended

June 30, 2019

and

2018,

the Company did

not

have any contracts for the sale of its products with its customers with a significant financing component.

Contract Costs

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. During the

three

and

six

months ended

June 30, 2019

and

2018,

the Company expensed the incremental costs of obtaining the contract as an expense when incurred as the amortization period was

one

 year or less.

Shipping and Handling

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.

Revenue by Geographic Area

Management has determined that the sales by geography is a key indicator for understanding the Company’s financials 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

six

months ended

June 30, 2019

and

2018

(in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
North America	$	663	$	4,552	$	2,455	$	7,158
Asia Pacific		343		630		1,310		1,521
Europe and Middle East		43		329		289		531
Latin America		3		14		10		14
Total	$	1,052	$	5,525	$	4,064	$	9,224

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

Investments in Unconsolidated Affiliates

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. 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.

No

impairment charges have been recorded in the condensed consolidated statements of operations during the

three

and

six

months ended

June 30, 2019

and

2018.

Product Warranty

The Company’s products 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.

Accounting for Stock-Based Compensation

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 at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

Comprehensive Loss

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

months and

six

months ended

June 30, 2019

and

2018,

the Company’s comprehensive loss is the same as its net loss. 

Net Loss per Share

The Company’s basic net loss per share is calculated by dividing the net loss 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. 

	Six Months Ended
	June 30,
	2019		2018
Stock options to purchase common stock		5,314,375		4,209,355
Warrants to purchase common stock		642,622		642,622
Restricted common stock awards		393,051		66,250

Other Recently Issued and Adopted Accounting Standards

In

June 2018,

the FASB issued ASU

2018

-

07,

“Stock Compensation (Topic

718

) – Improvements to Nonemployee Share- Based Payment Accounting”. The intent of this guidance is to simplify the accounting for nonemployee share-based payment accounting. The amendments in this guidance expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic

718

are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Equity- classified nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting for employee share-based payment awards, an entity considers the probability of satisfying performance conditions when nonemployee share-based payment awards contain such conditions. This guidance is effective for annual reporting periods beginning after

December 15, 2018,

including interim periods within the reporting period. We adopted this guidance as of

January 1, 2019

and the adoption of the guidance did

not

have a significant impact on the condensed consolidated financial statements.

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 consolidated financial statements as a result of future adoption.

XML

Note 3 - Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3. Fair Value Measurements

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.

Level 1 Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Therefore, determining fair value for Level  1 investments generally does not require significant judgment, and the estimation is not difficult.

Level 2 Pricing is provided by third party sources of market information obtained through investment advisors. The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.

Level 3 Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level  3 instruments involves the most management judgment and subjectivity.

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

June 30, 2019

and

December 31, 2018.

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

June 30, 2019,

and

December 31, 2018

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. 

There were

no

changes in valuation techniques from prior periods.

XML

Note 4 - Investment in Limited Liability Company

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

4. Investment in Limited Liability Company

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 Company has a minimum purchase requirement to purchase a certain quantity of ICM products per month during the term of this Distributorship Agreement. In addition, the parties agreed to certain mutual marketing obligations to promote sales of the licensed products. As of

June 30, 2019,

the Company has purchased approximately

4,800

units of ICM products. The Company paid ICM approximately 

$27,000

for product related costs during the

three

and

six

months ended

June 30, 2019.  

There were

no

amounts due to ICM for the accounts payable as of

June 30, 2019

and

December 31, 2018.

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 in 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

June 30, 2019,

the Company 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 and

six

ended

June 30, 2019,

the allocated net loss from ICM’s operations was

$138,000

and

$263,000,

respectively, that was recorded as loss from minority interest in limited liability company in the condensed consolidated statements of operations.

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.

XML

Note 5 - Accrued Liabilities

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

5. Accrued Liabilities

Accrued liabilities consisted of the following as of

June 30, 2019

and

December 31, 2018 (

in thousands): 

	June 30,		December 31,
	2019		2018
Accrued sales commission	$	723	$	1,743
Accrued interest		689		683
Accrued bonuses		607		837
Accrued professional fees		635		978
Accrued payroll and other related expenses		632		877
Customer contracts liabilities		552		686
Deferred revenue - systems rental program		398		-
Accrued clinical trial costs		346		84
Current operating lease liabilities		248		-
Travel and entertainment		123		280
Accrued sales & use tax		39		259
Other accruals		286		339
Total accrued liabilities	$	5,278	$	6,766

XML

Note 6 - Note Payable

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

   6. Note Payable

On

May 22, 2017,

the Company entered into a Term Loan Agreement (the

“2017

Loan Agreement”) with affiliates of CRG LP (“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.

A portion of the initial loan proceeds were used to repay all of the amounts owed by the Company under its

2016

Loan Agreement with Western Alliance Bank. The remainder of the loan proceeds (after deducting loan origination costs and other fees and expenses incurred in connection with the

2017

Loan Agreement), plus any additional amounts that

may

be borrowed in the future, will be used for general corporate purposes and working capital.

The

2017

Loan Agreement has a

six

-year term with

four

years of interest-only payments after which quarterly principal and interest payments will be due through the maturity date. Amounts borrowed under the

2017

Loan Agreement accrue 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. During the

three

and

six

months ended

June 30, 2019,

the Company paid interest in-kind of

$324,000

and

$642,000,

respectively, which was added to the total outstanding principal loan amount. During the

three

and

six

months ended

June 30, 2018,

the Company paid interest in-kind of

$311,000

and

$616,000,

respectively, which was added to the total outstanding principal loan amount. The Company is 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. The Company accounts for the final payment fee by accruing the fee over the term of the loan using the effective interest rate method. As of

June 30, 2019,

interest accrued related to the final payment fee in the amount of

$663,000

was included in other noncurrent liabilities in the condensed consolidated balance sheets.

The Company

may

prepay all or a portion of the outstanding principal and accrued unpaid interest under the

2017

Loan Agreement at any time upon prior notice to CRG, subject to a prepayment fee during the

first

five

years of the term (which reduces each year) and

no

prepayment fee thereafter.

As security 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 require the Company to meet certain financial and other covenants. These covenants require the Company to maintain cash and cash equivalents of

$2.0

million and, each year through the end of

2022,

to meet a minimum total annual revenue threshold. In the event that the Company does

not

meet the minimum total annual revenue threshold for a particular year, then the Company can retroactively cure the shortfall by either issuing additional equity in exchange for cash or incurring certain additional permitted indebtedness, in each case, in an amount equal to

2.0

times the shortfall. Any such amounts shall be applied to prepay the loans. The

2017

Loan Agreement also contains customary affirmative and negative covenants for a credit facility of this size and type, including covenants that limit or restrict the Company’s ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends or make distributions, license intellectual property rights on an exclusive basis or repurchase stock, in each case subject to customary exceptions. As of

June 30, 2019,

the Company was in compliance with all covenants.

As of

June 30, 2019

and

December 31, 2018,

$31,271,000

and

$30,528,000,

respectively, was recorded on the balance sheets under the

2017

Loan Agreement, respectively, which is net of the remaining unamortized debt discount.

In connection with the

2017

Loan Agreement, the Company issued

two

10

-year warrants to CRG to purchase a total of

222,049

shares of the Company’s common stock at an exercise price of

$9.50

per share (See Note

9

). 

As of

June 30, 2019,

future minimum payments under the note payable are as follows (in thousands): 

Year Ending December 31,
2019 (remaining six months)	$	1,414
2020		2,901
2021		16,673
2022		19,306
2023		6,220
Total payments		46,514
Less: Amount representing interest		(14,121	)
Present value of obligations		32,393
Less: Unamortized debt discount		(1,122	)
Note payable, noncurrent portion	$	31,271

XML

Note 7 - Leases

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

  7. Leases

Lessee:

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

In

January 2012,

the Company entered into a lease agreement for office and laboratory facilities in Sunnyvale, California. The lease agreement, as amended, commenced in

March 2012

and terminated in

April 2018.

On

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.

The lease term commenced on

June 1, 2017

and will terminate in

May 2020.

The Company relocated its corporate headquarters from Sunnyvale, California to Englewood, Colorado in

June 2017.

The monthly base rent under the Sublease is equal to

$20.50

per rentable square foot of the Sublease Premises during the

first

year. The monthly base rent is 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, the Company also agreed to pay a security deposit of approximately

$22,000.

The Company was also provided 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.

Rent expense for the

three

and

six

months ended

June 30, 2018

was

$90,000

and

$228,000.

In

September 2018,

the Company entered into a

36

-month noncancelable operating lease agreement for office equipment.  The lease commenced on

September 20, 2018.  

The monthly payment is approximately

$3,000.

 

After the adoption of ASU

842

– Leases on

January 1, 2019,

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 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 at

June 30, 2019

and

January 1, 2019 (

in thousands):

	June 30,		January 1,
	2019		2019
Assets:
Operating lease right-of-use assets	$	515	$	629
Liabilities:
Current operating lease liabilities	$	248	$	230
Noncurrent operating lease liabilities		272		399
	$	520	$	629

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

The operating leases expense for the

three

and

six

months ended

June 30, 2019

was

$75,000

and

$150,000,

respectively.

As of

June 30, 2019,

the maturity of operating lease liabilities was as follows (in thousands):

Year Ending December 31,
2019 (remaining six months)	$	149
2020		303
2021		137
Total lease payments		589
Less: Amount representing interest		(69	)
Present value of lease liabilities	$	520

The weighted average remaining lease term was approximately

23

months as of

June 30, 2019.

The weighted average discount rate for the

three

and

six

months ended

June 30, 2019

was

12.5%.

Lessor:

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

As of

June 30, 2019,

minimum future rentals from customers on non-cancellable operating leases of Viveve Systems are as follows (in thousands):

Year Ending December 31,
2019 (remaining six months)	$	339
2020		68
Thereafter		-
Total	$	407

As of

June 30, 2019,

$350,000

of property and equipment is related to these operating lease agreements. The depreciation expense for that property and equipment for the

three

and

six

months ended

June 30, 2019

is

$

6,000,

respectively.

XML

Note 8 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8. Commitments and Contingencies

Indemnification Agreements

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 amount 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. 

Loss Contingencies

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.

XML

Note 9 - Common Stock

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

9. Common Stock

In

March 2019,

the Company issued

27,473

restricted shares of its common stock at a value of

$0.91

per share, or an aggregate value of approximately

$25,000.

In

December 2018,

in connection with the closing of the

December 2018

Offering, the Company issued an aggregate of

14,728,504

shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of

$1.50

per share for gross proceeds of approximately

$22,093,000.

The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately

$20,385,000.

 

In

June 2018,

the Company issued

100,000

restricted shares of its common stock at a value of

$2.56

per share, or an aggregate value of approximately

$256,000.

In

February 2018,

in connection with the closing of the

February 2018

Offering, the Company issued an aggregate of

11,500,000

shares of common stock, including the shares issued in connection with the exercise of the underwriters’ overallotment option, at a public offering price of

$3.00

per share for gross proceeds of approximately

$34,500,000.

The net proceeds to the Company, after deducting underwriting discounts and commissions and other offering expenses, were approximately

$32,214,000.

 

Through the

November 2017

ATM Facility, the Company

may

offer and sell, from time-to-time, up to

$25,000,000

aggregate offering price of shares of its common stock. During the

three

and

six

months ended

June 30, 2019,

the Company sold

zero

shares of common stock under the

November 2017

ATM Facility. During the

three

and

six

months ended

June 30, 2018,

the Company sold

65,252

and

273,529

shares of common stock under the

November 2017

ATM Facility for net proceeds of approximately

$172,000

and

$1,183,000.

As of

June 30, 2019,

the Company has sold

336,498

shares of common stock under the

November 2017

ATM Facility for net proceeds of approximately

$1,318,000.

Warrants for Common Stock

As of

June 30, 2019,

outstanding warrants to purchase shares of common stock were as follows: 

					Number of
					Shares
					Outstanding
	Exercisable	Expiration	Exercise		Under
Issuance Date	for	Date	Price		Warrants
September 2014	Common Shares	September 23, 2019	$	4.24		86,831
October 2014	Common Shares	October 13, 2019	$	4.24		29,000
November 2014	Common Shares	November 12, 2019	$	4.24		12,500
February 2015	Common Shares	February 17, 2025	$	4.00		75,697
March 2015	Common Shares	March 26, 2025	$	2.72		1,454
May 2015	Common Shares	May 12, 2025	$	4.24		36,229
May 2015	Common Shares	May 17, 2020	$	4.24		21,585
December 2015	Common Shares	December 16, 2025	$	5.60		26,875
April 2016	Common Shares	April 1, 2026	$	6.08		25,000
May 2016	Common Shares	May 11, 2021	$	7.74		5,000
June 2016	Common Shares	June 20, 2026	$	4.98		100,402
May 2017	Common Shares	May 25, 2027	$	9.50		222,049
						642,622

In connection with the

2017

Loan Agreement, the Company issued warrants to purchase a total of

222,049,

shares of common stock at an exercise price of

$9.50

per share. The warrants have a contractual life of

ten

years and are exercisable immediately in whole or in part. The Company determined the fair value of the warrants on the date of issuance to be

$940,000

using the Black-Scholes option pricing model. Assumptions used were dividend yield of

0%,

volatility of

55.1%,

risk free interest rate of

2.25%

and a contractual life of

ten

years. The fair value of the warrants along with financing and legal fees totaling

$790,000,

are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs are amortized to interest expense over the loan term. During the

three

and

six

months ended

June 30, 2019,

the Company recorded

$119,000

and

$202,000,

respectively, of interest expense relating to the debt issuance costs using the effective interest method. During the

three

and

six

months ended

June 30, 2018,

the Company recorded

$83,000

and

$160,000,

respectively, of interest expense relating to the debt issuance costs using the effective interest method.

No

shares issuable pursuant to warrants were issued in connection with the exercise of warrants during the

three

and

six

months ended

June 30, 2019

and

2018.

No

shares issuable pursuant to warrants have been cancelled during the

three

and

six

months ended

June 30, 2019

and

2018.

XML

Note 10 - Summary of Stock Options

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

10. Summary of Stock Options

Stock Option Plans

The Company has issued equity awards in the form of stock options and restricted stock awards (“RSAs”) 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

June 30, 2019,

there are outstanding stock option awards issued from the

2006

Plan covering a total of

10,434

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

$10.05

per share and the weighted average remaining contractual term is

3.59

years.

As of

June 30, 2019,

there are outstanding stock option awards issued from the

2013

Plan covering a total of

5,303,941

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

904,651

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

$3.00

per share, and the remaining contractual term is

8.64

years.

In

January 2019,

the board of directors approved the

2019

evergreen provision increasing the total stock reserved for issuance under the

2013

Plan by

2,043,142

shares from 

4,914,016

shares to a total of

6,957,158

shares, which was effective

January 1, 2019.

Activity under the

2006

Plan and the

2013

Plan is as follows:

	Six Months Ended June 30, 2019
						Weighted
				Weighted		Average
	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, beginning of period		4,014,475		$	4.56		7.4	$	-
Options granted		2,335,000		$	1.18
Options exercised		-
Options canceled		(1,035,100	)	$	4.94
Options outstanding, end of period		5,314,375		$	3.00		8.6	$	-
Vested and exercisable and expected to vest, end of period		5,054,030		$	3.04		8.6	$	-
Vested and exercisable, end of period		1,790,963		$	4.26		7.6	$	-

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

June 30, 2019.

The options outstanding and exercisable as of

June 30, 2019

are as follows: 

							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			June 30, 2019		Price		Term (Years)		June 30, 2019		Price
$0.38	-	$0.58		190,000	$	0.53		9.93		-	$	-
$1.00	-	$1.97		2,643,195	$	1.38		9.42		485,265	$	1.52
$2.02	-	$2.83		85,000	$	2.48		8.62		20,520	$	2.65
$3.03	-	$3.82		474,376	$	3.55		8.55		175,002	$	3.65
$4.30	-	$4.97		920,023	$	4.52		8.11		409,403	$	4.55
$5.01	-	$5.67		510,696	$	5.37		7.11		317,831	$	5.37
$6.00	-	$6.61		242,627	$	6.03		6.29		209,608	$	6.01
$7.00	-	$7.92		238,024	$	7.70		7.04		162,900	$	7.71
$9.92	-	$9.92		10,424	$	9.92		3.60		10,424	$	9.92
$59.60	-	$149.04		10	$	149.04		2.31		10	$	149.04
Total:				5,314,375	$	3.00		8.64		1,790,963	$	4.26

Restricted Stock Awards (‘RSA”)

In

June 2019,

the Company issued

25,000

shares to a consultant in connection with the vesting of an RSA granted to the consultant in

June 2018.

In

April 2019,

the Company issued

52,791

shares of common stock under the

2013

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

$0.91

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 and

52,791

shares of common stock were issued.

In

January 2019,

the Company granted RSAs for

364,072

shares of common stock under the

2013

Plan to employees as part of their

2018

annual performance bonuses. The bonuses for

2018

performance were paid

50%

in cash and

50%

in the form of RSAs that will vest in full upon FDA approval of the Viveve System for improvement of sexual function or stress urinary incontinence in the United States. A total of

2,271

shares

pursuant to these RSAs were cancelled in the

three

and

six

months ended

June 30, 2019.

As of

June 30, 2019,

zero

shares were vested and issued.

As of

June 30, 2019,

there are

393,051

shares of unvested restricted stock outstanding that have been granted pursuant to RSAs.

2017

Employee Stock Purchase Plan

The

seventh

offering period under the Company’s

2017

Employee Stock Purchase Plan (the

“2017

ESPP”) began on

April 1, 2019

and ended on

June 30, 2019,

and

60,740

shares were issued on

June 28, 2019

at a purchase price of

$0.32.

The

sixth

offering period under the Company’s

2017

Employee Stock Purchase Plan (the

“2017

ESPP”) began on

January 1, 2019

and ended on

March 31, 2019,

and

43,759

shares were issued on

March 29, 2019

at a purchase price of

$0.80.

As of

June 30, 2019,

the remaining shares available for issuance under the

2017

ESPP were

151,820

shares.

The Company estimates the fair value of purchase rights under the ESPP using a Black-Scholes valuation model. The fair value of each purchase right was estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following weighted-average assumptions:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		0.25			0.25			0.25			0.25
Average volatility		87	%		74	%		81	%		67	%
Risk-free interest rate		2.43	%		1.73	%		2.44	%		1.58	%
Dividend yield		0	%		0	%		0	%		0	%

The weighted average grant date fair value of the purchase rights issued under the

2017

ESPP during the

three

and

six

months ended

June 30, 2019

was

$0.95

and

$0.68,

respectively and during the

three

and

six

months ended

June 30, 2018

was

$0.95

and

$1.11,

respectively.

Stock-Based Compensation

During the

three

months ended

June 30, 2019

and

2018,

the Company granted stock options to employees to purchase

190,000

and

570,000

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

$0.33

and

$1.34

per share, respectively. During the

six

months ended

June 30, 2019

and

2018,

the Company granted stock options to employees to purchase

2,307,500

and

1,821,171

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

$1.18

and

$2.32

per share, respectively. There were

no

stock options exercised during the

three

and

six

months ended

June 30, 2019

and

2018.

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:   

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		5			5			5			5
Average volatility		75	%		69	%		73	%		75	%
Risk-free interest rate		2.03	%		2.82	%		2.49	%		2.63	%
Dividend yield		0	%		0	%		0	%		0	%

During the

three

and

six

months ended

June 30, 2019,

the Company granted stock options to nonemployees to purchase

27,500

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

$1.22

.

During the

three

and

six

months ended

June 30, 2018,

the Company granted stock options to nonemployees to purchase

200,000

and

202,388

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

$1.59

and

$1.61

respectively. There were

no

stock options exercised by nonemployees during the

three

and

six

months ended

June 30, 2019

and

2018.

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Expected term (in years)		N/A		10			5			10
Average volatility		N/A		91	%		73	%		91	%
Risk-free interest rate		N/A		2.85	%		2.49	%		2.85	%
Dividend yield		N/A		0	%		0	%		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 the 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.

No

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 condensed consolidated statements of operations for the

three

and

six

months ended

June 30, 2019

and

2018

(in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	34	$	17	$	66	$	28
Research and development		53		65		93		187
Selling, general and administrative		534		693		958		1,314
Total	$	621	$	775	$	1,117	$	1,529

As of

June 30, 2019,

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

$4,143,620.

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

2.38

years.

XML

Note 11 - Income Taxes

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. Income Taxes

No

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

no

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

and

six

months ended

June 30, 2019.

The Company expects that its effective tax rate for the full year

2019

will be

0%.

XML

Note 12 - Related Party Transactions

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

12. Related Party Transactions

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.

Under the Agreement, the Company agreed to purchase

300

generators manufactured by Stellartech. As of

June 30, 2019,

the Company has purchased

845

units. The price per unit is variable and dependent on the volume and timing of units ordered. In conjunction with the Agreement, Stellartech purchased

37,500

shares of Viveve, Inc.’s common stock. Under the Agreement, the Company paid Stellartech approximately

$1,820,000

and

$2,325,000

for goods and services during the

three

months ended

June 30, 2019

and

2018,

respectively, and approximately

$3,132,000

and

$5,598,000

for the

six

months ended

June 30, 2019

and

2018,

respectively. The amounts due to Stellartech for accounts payable as of

June 30, 2019

and

December 31, 2018

were approximately

$465,000

and

$960,000,

respectively.

XML

Note 13 - Restructuring Costs

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

13. Restructuring Costs

In

January 2019,

the Company implemented a strategic organizational realignment plan to reduce operating expenses and prepare the Company for expanded indications for its CMRF technology platform for improved sexual function and stress urinary incontinence in women. The restructuring included a reduction in headcount of approximately

40

full-time employees. The total restructuring costs were approximately

$742,000

and have been recorded in operating expenses in the condensed consolidated statements of operations. As of

June 30, 2019,

approximately

$24,000

remains unpaid and is included in accrued liabilities. This amount is expected to be paid in the quarter ended

September 30, 2019.

The restructuring contributed to a reduction in total operating expenses in the

first

quarter of

2019

as planned and is expected to result in additional operating cost savings throughout the remainder of this year.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Financial Statement Presentation

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.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

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, 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. 

Changes in Accounting Policies, Policy [Policy Text Block]

Changes in Accounting Policies

Except for the changes for the adoption of the new accounting standard for leases, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

Adoption of New Accounting Standard - Leases

The Company adopted FASB’s Accounting Standards Update (“ASU”)

No.

2016

-

02,

Leases (Topic

842

), as of

January 1, 2019,

using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the renewal options for the facilities lease would be reasonably certain to be renewed and as such, included that renewal period in determining the expected lease term of that lease. Adoption of the new standard resulted in the recording of operating lease right-of-use assets of

$629,000

and operating lease liabilities of

$629,000,

as of

January 1, 2019.

The standard did

not

have an impact on our consolidated results of operations, cash flows or stockholders’ equity previously reported. The comparative information has

not

been restated and continues to be reported under the accounting standards in effect for those periods.

The effect of the changes made to our consolidated

January 1, 2019

balance sheet for the adoption of the new lease standard was as follows (in thousands): 

			Adjustments
			Due to
	December 31,		Adoption of			January 1,
	2018		ASC 842			2019
Other assets	$	171	$	629	(1)	$	800
Total assets	$	46,834	$	629	(1)	$	47,463
Accrued liabilities	$	6,766	$	230	(2)	$	6,996
Total current liabilities	$	10,760	$	230	(2)	$	10,990
Other noncurrent liabilities	$	634	$	399	(2)	$	1,033
Total liabilities	$	41,922	$	629	(2)	$	42,551
Total liabilities and stockholders' equity	$	46,834	$	629	(2)	$	47,463

( 1 )	Represents capitalization of operating lease right-of-use assets and reclassification of deferred rent.
( 2 )	Represents recognition of operating lease liabilities.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

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

financial institution. Deposits in this institution

may,

from time to time, exceed the federally insured amounts.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk and Other Risks and Uncertainties

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 RF, or radio frequency, 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. RF 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. 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 Company sells its products primarily through a direct sales force to health care practitioners. Outside North America, the Company sells through an extensive network of distribution partners. During the

three

months ended

June 30, 2019,

three

distributors, collectively, accounted for

55%

of the Company’s revenue. During the

three

months ended

June 30, 2018,

one

distributor accounted for

13%

of the Company’s revenue. During the 

six

 months ended

June 30, 2019,

two

distributors, collectively, accounted for

32

% of the Company’s revenue. During the 

six

 months ended

June 30, 2018,

one

distributor accounted for

23%

of the Company’s revenue.

There were

no

direct sales customers that accounted for more than

10%

of the Company’s revenue during the

three

and

six

months ended

June 30, 2019

and

2018.

As of

June 30, 2019,

four

distributors, collectively, accounted for

64%

of total accounts receivable, net. As of

December 31, 2018,

three

distributors, collectively, accounted for

54%

of total accounts receivable, net.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable and Allowance for Doubtful Accounts

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

$469,000

as of

June 30, 2019

and

$284,000

as of

December 31, 2018.

Revenue [Policy Text Block]

Revenue Recognition

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, 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 have a rental period of

six

months and can be extended or terminated by the customer after that time or the Viveve System can 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

and the revenue associated with it has

not

been material to the periods presented.

In connection with the lease of the Viveve System, the Company offers single-use treatment tips and ancillary consumables that are considered nonlease components. In the contracts with lease and nonlease 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 nonlease 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, Latin America, Europe, the Middle East and Asia Pacific. In North America, we market and sell primarily through a direct sales force. Outside of North America, we market and sell primarily through distribution partners.

The Company does 

not

 provide its customers with a right of return.

Customer Advance Payments

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.  The Company will remove the customer advance payment from accrued liabilities when revenue is recognized upon shipment of the products. 

Contract Assets and Liabilities

The Company continually evaluates whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities.

No

such assets existed as of 

June 30, 2019

or 

December 

31,

2018.

The Company had customer contracts liabilities in the amount of

$552,000,

primarily related to marketing programs that performance had

not

yet been delivered to its customers as of

June 30, 2019

and

$686,000

as of

December 31, 2018.

The following table reflects the changes in our customer contract liabilities for the

six

months ended

June 30, 2019:

	June 30,		December 31,		Six Months
	2019		2018		Change
Customer contracts liabilities:
Marketing programs	$	552	$	639	$	(87	)
Other		-		47		(47	)
Total	$	552	$	686	$	(134	)

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

Significant Financing Component

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

six

months ended

June 30, 2019

and

2018,

the Company did

not

have any contracts for the sale of its products with its customers with a significant financing component.

Contract Costs

 

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. During the

three

and

six

months ended

June 30, 2019

and

2018,

the Company expensed the incremental costs of obtaining the contract as an expense when incurred as the amortization period was

one

 year or less.

Shipping and Handling

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.

Revenue by Geographic Area

Management has determined that the sales by geography is a key indicator for understanding the Company’s financials 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

six

months ended

June 30, 2019

and

2018

(in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
North America	$	663	$	4,552	$	2,455	$	7,158
Asia Pacific		343		630		1,310		1,521
Europe and Middle East		43		329		289		531
Latin America		3		14		10		14
Total	$	1,052	$	5,525	$	4,064	$	9,224

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

Equity Method Investments [Policy Text Block]

Investments in Unconsolidated Affiliates

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. 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.

No

impairment charges have been recorded in the condensed consolidated statements of operations during the

three

and

six

months ended

June 30, 2019

and

2018.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranty

The Company’s products 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 Payment Arrangement [Policy Text Block]

Accounting for Stock-Based Compensation

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 at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Loss

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

months and

six

months ended

June 30, 2019

and

2018,

the Company’s comprehensive loss is the same as its net loss. 

Earnings Per Share, Policy [Policy Text Block]

Net Loss per Share

The Company’s basic net loss per share is calculated by dividing the net loss 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. 

	Six Months Ended
	June 30,
	2019		2018
Stock options to purchase common stock		5,314,375		4,209,355
Warrants to purchase common stock		642,622		642,622
Restricted common stock awards		393,051		66,250

New Accounting Pronouncements, Policy [Policy Text Block]

Other Recently Issued and Adopted Accounting Standards

In

June 2018,

the FASB issued ASU

2018

-

07,

“Stock Compensation (Topic

718

) – Improvements to Nonemployee Share- Based Payment Accounting”. The intent of this guidance is to simplify the accounting for nonemployee share-based payment accounting. The amendments in this guidance expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic

718

are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. Equity- classified nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting for employee share-based payment awards, an entity considers the probability of satisfying performance conditions when nonemployee share-based payment awards contain such conditions. This guidance is effective for annual reporting periods beginning after

December 15, 2018,

including interim periods within the reporting period. We adopted this guidance as of

January 1, 2019

and the adoption of the guidance did

not

have a significant impact on the condensed consolidated financial statements.

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 consolidated financial statements as a result of future adoption.

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Cumulative Effect of Adjustments for New Accounting Pronouncements on Balance Sheet [Table Text Block]

			Adjustments
			Due to
	December 31,		Adoption of			January 1,
	2018		ASC 842			2019
Other assets	$	171	$	629	(1)	$	800
Total assets	$	46,834	$	629	(1)	$	47,463
Accrued liabilities	$	6,766	$	230	(2)	$	6,996
Total current liabilities	$	10,760	$	230	(2)	$	10,990
Other noncurrent liabilities	$	634	$	399	(2)	$	1,033
Total liabilities	$	41,922	$	629	(2)	$	42,551
Total liabilities and stockholders' equity	$	46,834	$	629	(2)	$	47,463

Contract with Customer, Asset and Liability [Table Text Block]

	June 30,		December 31,		Six Months
	2019		2018		Change
Customer contracts liabilities:
Marketing programs	$	552	$	639	$	(87	)
Other		-		47		(47	)
Total	$	552	$	686	$	(134	)

Revenue from External Customers by Geographic Areas [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
North America	$	663	$	4,552	$	2,455	$	7,158
Asia Pacific		343		630		1,310		1,521
Europe and Middle East		43		329		289		531
Latin America		3		14		10		14
Total	$	1,052	$	5,525	$	4,064	$	9,224

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Six Months Ended
	June 30,
	2019		2018
Stock options to purchase common stock		5,314,375		4,209,355
Warrants to purchase common stock		642,622		642,622
Restricted common stock awards		393,051		66,250

XML

Note 5 - Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	June 30,		December 31,
	2019		2018
Accrued sales commission	$	723	$	1,743
Accrued interest		689		683
Accrued bonuses		607		837
Accrued professional fees		635		978
Accrued payroll and other related expenses		632		877
Customer contracts liabilities		552		686
Deferred revenue - systems rental program		398		-
Accrued clinical trial costs		346		84
Current operating lease liabilities		248		-
Travel and entertainment		123		280
Accrued sales & use tax		39		259
Other accruals		286		339
Total accrued liabilities	$	5,278	$	6,766

XML

Note 6 - Note Payable (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Debt [Table Text Block]

Year Ending December 31,
2019 (remaining six months)	$	1,414
2020		2,901
2021		16,673
2022		19,306
2023		6,220
Total payments		46,514
Less: Amount representing interest		(14,121	)
Present value of obligations		32,393
Less: Unamortized debt discount		(1,122	)
Note payable, noncurrent portion	$	31,271

XML

Note 7 - Leases (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Lessee, Lease Assets and Liabilities [Table Text Block]

	June 30,		January 1,
	2019		2019
Assets:
Operating lease right-of-use assets	$	515	$	629
Liabilities:
Current operating lease liabilities	$	248	$	230
Noncurrent operating lease liabilities		272		399
	$	520	$	629

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year Ending December 31,
2019 (remaining six months)	$	149
2020		303
2021		137
Total lease payments		589
Less: Amount representing interest		(69	)
Present value of lease liabilities	$	520

Lessor, Operating Lease, Payments to be Received, Maturity [Table Text Block]

Year Ending December 31,
2019 (remaining six months)	$	339
2020		68
Thereafter		-
Total	$	407

XML

Note 9 - Common Stock (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

					Number of
					Shares
					Outstanding
	Exercisable	Expiration	Exercise		Under
Issuance Date	for	Date	Price		Warrants
September 2014	Common Shares	September 23, 2019	$	4.24		86,831
October 2014	Common Shares	October 13, 2019	$	4.24		29,000
November 2014	Common Shares	November 12, 2019	$	4.24		12,500
February 2015	Common Shares	February 17, 2025	$	4.00		75,697
March 2015	Common Shares	March 26, 2025	$	2.72		1,454
May 2015	Common Shares	May 12, 2025	$	4.24		36,229
May 2015	Common Shares	May 17, 2020	$	4.24		21,585
December 2015	Common Shares	December 16, 2025	$	5.60		26,875
April 2016	Common Shares	April 1, 2026	$	6.08		25,000
May 2016	Common Shares	May 11, 2021	$	7.74		5,000
June 2016	Common Shares	June 20, 2026	$	4.98		100,402
May 2017	Common Shares	May 25, 2027	$	9.50		222,049
						642,622

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Note 10 - Summary of Stock Options (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Six Months Ended June 30, 2019
						Weighted
				Weighted		Average
	Number			Average		Remaining		Aggregate
	of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
Options outstanding, beginning of period		4,014,475		$	4.56		7.4	$	-
Options granted		2,335,000		$	1.18
Options exercised		-
Options canceled		(1,035,100	)	$	4.94
Options outstanding, end of period		5,314,375		$	3.00		8.6	$	-
Vested and exercisable and expected to vest, end of period		5,054,030		$	3.04		8.6	$	-
Vested and exercisable, end of period		1,790,963		$	4.26		7.6	$	-

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

							Weighted
			Number		Weighted		Average		Number		Weighted
			Outstanding		Average		Remaining		Exercisable		Average
Range of			as of		Exercise		Contractual		as of		Exercise
Exercise Prices			June 30, 2019		Price		Term (Years)		June 30, 2019		Price
$0.38	-	$0.58		190,000	$	0.53		9.93		-	$	-
$1.00	-	$1.97		2,643,195	$	1.38		9.42		485,265	$	1.52
$2.02	-	$2.83		85,000	$	2.48		8.62		20,520	$	2.65
$3.03	-	$3.82		474,376	$	3.55		8.55		175,002	$	3.65
$4.30	-	$4.97		920,023	$	4.52		8.11		409,403	$	4.55
$5.01	-	$5.67		510,696	$	5.37		7.11		317,831	$	5.37
$6.00	-	$6.61		242,627	$	6.03		6.29		209,608	$	6.01
$7.00	-	$7.92		238,024	$	7.70		7.04		162,900	$	7.71
$9.92	-	$9.92		10,424	$	9.92		3.60		10,424	$	9.92
$59.60	-	$149.04		10	$	149.04		2.31		10	$	149.04
Total:				5,314,375	$	3.00		8.64		1,790,963	$	4.26

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		5			5			5			5
Average volatility		75	%		69	%		73	%		75	%
Risk-free interest rate		2.03	%		2.82	%		2.49	%		2.63	%
Dividend yield		0	%		0	%		0	%		0	%

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Expected term (in years)		N/A		10			5			10
Average volatility		N/A		91	%		73	%		91	%
Risk-free interest rate		N/A		2.85	%		2.49	%		2.85	%
Dividend yield		N/A		0	%		0	%		0	%

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	34	$	17	$	66	$	28
Research and development		53		65		93		187
Selling, general and administrative		534		693		958		1,314
Total	$	621	$	775	$	1,117	$	1,529

2017 Employee Stock Purchase Plan [Member]

Notes Tables

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Expected term (in years)		0.25			0.25			0.25			0.25
Average volatility		87	%		74	%		81	%		67	%
Risk-free interest rate		2.43	%		1.73	%		2.44	%		1.58	%
Dividend yield		0	%		0	%		0	%		0	%

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Note 1 - The Company and Basis of Presentation (Details Textual) - USD ($)			1 Months Ended			3 Months Ended		6 Months Ended		20 Months Ended
	Feb. 12, 2018	Nov. 08, 2017	Dec. 31, 2018		Feb. 28, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Mar. 31, 2019	Jun. 08, 2018	Dec. 31, 2017
Shares Issued, Price Per Share											$ 0.91	$ 2.56
Proceeds from Issuance of Common Stock									$ 33,396,000
Retained Earnings (Accumulated Deficit), Ending Balance			$ (155,385,000)	[1]		$ (175,138,000)		(175,138,000)		$ (175,138,000)
Cash and Cash Equivalents, at Carrying Value, Ending Balance			$ 29,523,000	[1]		9,506,000	$ 30,213,000	9,506,000	30,213,000	9,506,000			$ 20,730,000
Working Capital						13,660,000		13,660,000		$ 13,660,000
Net Cash Provided by (Used in) Operating Activities, Total						$ (7,696,000)		$ (19,254,000)	$ (23,234,000)
December 2018 Offering [Member]
Stock Issued During Period, Shares, New Issues			14,728,504
Shares Issued, Price Per Share			$ 1.50
Proceeds from Issuance of Common Stock			$ 22,093,000
Proceeds From Issuance of Common Stock, Net			$ 20,385,000
February 2018 Offering [Member]
Stock Issued During Period, Shares, New Issues	11,500,000				11,500,000
Shares Issued, Price Per Share	$ 3				$ 3
Proceeds from Issuance of Common Stock	$ 34,500,000				$ 34,500,000
Proceeds From Issuance of Common Stock, Net	$ 32,214,000				$ 32,214,000
November 2017 ATM Facility [Member]
Stock Issued During Period, Shares, New Issues						0	65,252	0	273,529	336,498
Proceeds From Issuance of Common Stock, Net							$ 172,000		$ 1,183,000	$ 1,318,000
Aggregate Offering Price		$ 25,000,000

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Jan. 01, 2019 USD ($)
Operating Lease, Right-of-Use Asset	$ 515,000		$ 515,000			$ 629,000
Operating Lease, Liability, Total	$ 520,000		$ 520,000			$ 629,000
Number of Financial Institutions	1		1
Accounts Receivable, Allowance for Credit Loss, Ending Balance	$ 469,000		$ 469,000		$ 284,000
Contract with Customer, Asset, after Allowance for Credit Loss, Total	0		0		0
Contract with Customer, Liability, Total	552,000		552,000		$ 686,000
Equity Method Investment, Other than Temporary Impairment	$ 0	$ 0	$ 0	$ 0
Minimum [Member]
Warranty Period			1 year
Maximum [Member]
Warranty Period			3 years
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Concentration Risk, Number of Customers	3	1	2	1
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Three Customers [Member]
Concentration Risk, Percentage	55.00%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | One Customer [Member]
Concentration Risk, Percentage		13.00%		23.00%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Two Customers [Member]
Concentration Risk, Percentage			32.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Number of Customers			4		3
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Three Customers [Member]
Concentration Risk, Percentage					54.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Four Customers [Member]
Concentration Risk, Percentage			64.00%

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Note 2 - Summary of Significant Accounting Policies - Cumulative Effect of Adjustments for New Accounting Pronouncements on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018	[1]
Other assets		$ 646	$ 800	$ 171
Total assets		25,496	47,463	46,834
Accrued liabilities		5,278	6,996	6,766
Total current liabilities		6,884	10,990	10,760
Other noncurrent liabilities		1,010	1,033	634
Total liabilities		39,165	42,551	41,922
Total liabilities and stockholders' equity		$ 25,496	47,463	$ 46,834
Accounting Standards Update 2016-02 [Member]
Other assets	[2]		629
Total assets	[2]		629
Accrued liabilities	[3]		230
Total current liabilities	[3]		230
Other noncurrent liabilities	[3]		399
Total liabilities	[3]		629
Total liabilities and stockholders' equity	[3]		$ 629

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

[2] Represents capitalization of operating lease right-of-use assets and reclassification of deferred rent.

[3] Represents recognition of operating lease liabilities.

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Note 2 - Summary of Significant Accounting Policies - Customer Contract Liabilities (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Customer contract liabilities	$ 552,000	$ 686,000
Change in customer contract liabilities	(134,000)
Marketing Programs [Member]
Customer contract liabilities	552,000	639,000
Change in customer contract liabilities	(87,000)
Product and Service, Other [Member]
Customer contract liabilities		$ 47,000
Change in customer contract liabilities	$ (47,000)

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Note 2 - Summary of Significant Accounting Policies - Revenue From Unaffiliated Customers by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue	$ 1,052	$ 5,525	$ 4,064	$ 9,224
North America [Member]
Revenue	663	4,552	2,455	7,158
Asia Pacific [Member]
Revenue	343	630	1,310	1,521
Europe And Middle East [Member]
Revenue	43	329	289	531
Latin America [Member]
Revenue	$ 3	$ 14	$ 10	$ 14

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Note 2 - Summary of Significant Accounting Policies - Antidilutive Securities (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	5,314,375	4,209,355
Common Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	642,622	642,622
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share (in shares)	393,051	66,250

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Note 4 - Investment in Limited Liability Company (Details Textual)		3 Months Ended		6 Months Ended
	Aug. 08, 2017 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Income (Loss) from Equity Method Investments, Total		$ (138,000)	$ (158,000)	$ (263,000)	$ (407,000)
Membership Unit Subscription Agreement [Member] | InControl Medical [Member]
Accounts Payable, Related Parties, Current		$ 0		$ 0		$ 0
InControl Medical [Member]
Equity Method Investment, Ownership Percentage		7.00%		7.00%
Income (Loss) from Equity Method Investments, Total		$ (138,000)		$ (263,000)
InControl Medical [Member] | Membership Unit Subscription Agreement [Member]
Unrecorded Unconditional Purchase Obligation, Period Quantity Purchased				4,800
Payments for Purchase of Products		$ 27,000		$ 27,000
Payments to Acquire Equity Method Investments	$ 2,500,000

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Note 5 - Accrued Liabilities - Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Accrued sales commission	$ 723		$ 1,743
Accrued interest	689		683
Accrued bonuses	607		837
Accrued professional fees	635		978
Accrued payroll and other related expenses	632		877
Customer contracts liabilities	552		686
Deferred revenue - systems rental program	398
Accrued clinical trial costs	346		84
Current operating lease liabilities	248	$ 230
Travel and entertainment	123		280
Accrued sales & use tax	39		259
Other accruals	286		339
Total accrued liabilities	$ 5,278	$ 6,996	$ 6,766	[1]

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

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Note 6 - Note Payable (Details Textual) - USD ($)			3 Months Ended		6 Months Ended
	Dec. 29, 2017	May 22, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Interest Payable			$ 14,121,000		$ 14,121,000
Notes Payable, Noncurrent, Total			$ 31,271,000		$ 31,271,000		$ 30,528,000	[1]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			642,622		642,622
May 2017 Issuance Related to 2017 Loan Agreement [Member]
Warrants and Rights Outstanding, Term		10 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		222,049	222,049		222,049
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 9.50	$ 9.50		$ 9.50
The 2017 Loan Agreement [Member] | CRG LP [Member]
Debt Instrument, Face Amount		$ 20,000,000
Debt Agreement, Covenant, Additional Funding		10,000,000
Debt Agreement, Maximum Borrowing Capacity		$ 30,000,000
Proceeds from Lines of Credit, Total	$ 10,000,000
Debt Instrument, Term		6 years
Debt instrument, Interest Only Payment, Period		4 years
Debt Instrument, Interest Rate, Stated Percentage		12.50%
Debt Instrument, Interest Rate, Stated Percentage Deferred During Interest-only Period		4.00%
Paid-in-Kind Interest			$ 324,000	$ 311,000	$ 642,000	$ 616,000
Debt Instrument, Prepayment Fee, Percentage		5.00%
Debt Instrument, Prepayment Fee, Period of Term		5 years
Debt Instrument, Covenant, Cash and Cash Equivalents		$ 2,000,000
Notes Payable, Noncurrent, Total			31,271,000		31,271,000		$ 30,528,000
The 2017 Loan Agreement [Member] | CRG LP [Member] | Other Noncurrent Liabilities [Member]
Interest Payable			$ 663,000		$ 663,000

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

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Note 6 - Note Payable - Summary of Note Payable (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	[1]
2019 (remaining six months)	$ 1,414
2020	2,901
2021	16,673
2022	19,306
2023	6,220
Total payments	46,514
Less: Amount representing interest	(14,121)
Present value of obligations	32,393
Less: Unamortized debt discount	(1,122)
Note payable, noncurrent portion	$ 31,271	$ 30,528

[1] The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date.

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Note 7 - Leases (Details Textual)	1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Feb. 01, 2017 USD ($) ft²
Operating Leases, Rent Expense, Total			$ 90,000		$ 228,000
Operating Lease, Cost		$ 75,000		$ 150,000
Operating Lease, Weighted Average Remaining Lease Term		1 year 330 days		1 year 330 days
Operating Lease, Weighted Average Discount Rate, Percent		12.50%		12.50%
Sublease Agreement for Relocation of Headquarters [Member]
Area of Real Estate Property | ft²						12,400
Operating Leases, Monthly Rent Per Rentable Square Foot During First Year						20.5
Operating Leases, Monthly Rent Per Rentable Square Foot During Second Year						21.12
Operating Leases, Monthly Rent Per Rentable Square Foot During Third Year						21.75
Security Deposit						$ 22,000
Operating Leases, Allowance for Certain Improvements						$ 88,000
Noncancelable Operating Lease Agreement for Office Equipment [Member]
Lessee, Operating Lease, Term of Contract	3 years
Operating Leases, Monthly Payment	$ 3,000
Leases of Viveve Systems [Member]
Operating Lease, Property Plant and Equipment, Amount		$ 350,000		$ 350,000
Lessor, Operating Lease, Depreciation on Leased Assets		$ 6,000		$ 6,000

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Note 7 - Leases - Lease Assets and Liabilities (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset	$ 515,000	$ 629,000
Current operating lease liabilities	248,000	230,000
Noncurrent operating lease liabilities	272,000	399,000
	$ 520,000	$ 629,000

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Note 7 - Leases - Maturity of Operating Lease Liabilities (Details) - USD ($)	Jun. 30, 2019	Jan. 01, 2019
2019 (remaining six months)	$ 149,000
2020	303,000
2021	137,000
Total lease payments	589,000
Less: Amount representing interest	(69,000)
Present value of lease liabilities	$ 520,000	$ 629,000

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Note 7 - Leases - Minimum Future Rentals (Details) $ in Thousands	Jun. 30, 2019 USD ($)
2019 (remaining six months)	$ 339
2020	68
Thereafter
Total	$ 407

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Note 9 - Common Stock (Details Textual)				1 Months Ended			3 Months Ended			6 Months Ended		20 Months Ended
	Jun. 08, 2018 USD ($) $ / shares shares	Feb. 12, 2018 USD ($) $ / shares shares	Nov. 08, 2017 USD ($)	Mar. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Feb. 28, 2018 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) shares	Mar. 31, 2018 USD ($)	Jun. 30, 2019 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) shares	Jun. 30, 2019 USD ($) $ / shares shares	May 22, 2017 USD ($) yr $ / shares shares
Stock Issued During Period, Shares, Restricted Stock Award, Gross | shares	100,000			27,473
Shares Issued, Price Per Share | $ / shares	$ 2.56			$ 0.91
Stock Issued During Period, Value, Restricted Stock Award, Gross	$ 256,000			$ 25,000				$ 67,000	$ 108,000
Proceeds from Issuance of Common Stock											$ 33,396,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares							642,622			642,622		642,622
Class of Warrants or Rights, Exercises in Period | shares							0	0		0	0
Class of Warrant or Right Number of Securities Called by Warrants or Rights Cancelled In Period | shares							0	0		0	0
The 2017 Loan Agreement [Member]
Debt Issuance Costs, Net, Total							$ 790,000			$ 790,000		$ 790,000
Amortization of Debt Discount (Premium)							$ 119,000	$ 83,000		$ 202,000	$ 160,000
May 2017 Issuance Related to 2017 Loan Agreement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares							222,049			222,049		222,049	222,049
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares							$ 9.50			$ 9.50		$ 9.50	$ 9.50
Warrants and Rights Outstanding, Term													10 years
Warrants and Rights Outstanding													$ 940,000
May 2017 Issuance Related to 2017 Loan Agreement [Member] | Measurement Input, Expected Dividend Rate [Member]
Warrants and Rights Outstanding, Measurement Input													0
May 2017 Issuance Related to 2017 Loan Agreement [Member] | Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input													0.551
May 2017 Issuance Related to 2017 Loan Agreement [Member] | Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input													0.0225
May 2017 Issuance Related to 2017 Loan Agreement [Member] | Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input | yr													10
December 2018 Offering [Member]
Shares Issued, Price Per Share | $ / shares					$ 1.50
Stock Issued During Period, Shares, New Issues | shares					14,728,504
Proceeds from Issuance of Common Stock					$ 22,093,000
Proceeds From Issuance of Common Stock, Net					$ 20,385,000
February 2018 Offering [Member]
Shares Issued, Price Per Share | $ / shares		$ 3				$ 3
Stock Issued During Period, Shares, New Issues | shares		11,500,000				11,500,000
Proceeds from Issuance of Common Stock		$ 34,500,000				$ 34,500,000
Proceeds From Issuance of Common Stock, Net		$ 32,214,000				$ 32,214,000
November 2017 ATM Facility [Member]
Stock Issued During Period, Shares, New Issues | shares							0	65,252		0	273,529	336,498
Proceeds From Issuance of Common Stock, Net								$ 172,000			$ 1,183,000	$ 1,318,000
Aggregate Offering Price			$ 25,000,000

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Note 9 - Common Stock - Summary of Outstanding Warrants (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	May 22, 2017
Shares Outstanding Under Warrants (in shares)	642,622
September 2014 Issuance Through Private Offering [Member]
Expiration Date	Sep. 23, 2019
Exercise Price (in dollars per share)	$ 4.24
Shares Outstanding Under Warrants (in shares)	86,831
Vendors and Contractor Warrants, October 2014 Issuance [Member]
Expiration Date	Oct. 13, 2019
Exercise Price (in dollars per share)	$ 4.24
Shares Outstanding Under Warrants (in shares)	29,000
Vendors and Contractor Warrants, November 2014 Issuance [Member]
Expiration Date	Nov. 12, 2019
Exercise Price (in dollars per share)	$ 4.24
Shares Outstanding Under Warrants (in shares)	12,500
Employee Performance Bonus Warrants, February 2015 Issuance [Member]
Expiration Date	Feb. 17, 2025
Exercise Price (in dollars per share)	$ 4
Shares Outstanding Under Warrants (in shares)	75,697
Contractor Warrants, March 2015 Issuance [Member]
Expiration Date	Mar. 26, 2025
Exercise Price (in dollars per share)	$ 2.72
Shares Outstanding Under Warrants (in shares)	1,454
Contractor Warrants, May 2015 Issuance [Member]
Expiration Date	May 12, 2025
Exercise Price (in dollars per share)	$ 4.24
Shares Outstanding Under Warrants (in shares)	36,229
May 2015 Issuance Second Contractor [Member]
Expiration Date	May 17, 2020
Exercise Price (in dollars per share)	$ 4.24
Shares Outstanding Under Warrants (in shares)	21,585
Performance Bonus Warrants, December 2015 Issuance [Member]
Expiration Date	Dec. 16, 2025
Exercise Price (in dollars per share)	$ 5.60
Shares Outstanding Under Warrants (in shares)	26,875
Distributor Warrants, April 2016 Issuance [Member]
Expiration Date	Apr. 01, 2026
Exercise Price (in dollars per share)	$ 6.08
Shares Outstanding Under Warrants (in shares)	25,000
Contractor Warrants, May 2016 Issuance [Member]
Expiration Date	May 11, 2021
Exercise Price (in dollars per share)	$ 7.74
Shares Outstanding Under Warrants (in shares)	5,000
June 2016 Issuance Related to 2016 Loan Agreement [Member]
Expiration Date	Jun. 20, 2026
Exercise Price (in dollars per share)	$ 4.98
Shares Outstanding Under Warrants (in shares)	100,402
May 2017 Issuance Related to 2017 Loan Agreement [Member]
Expiration Date	May 25, 2027
Exercise Price (in dollars per share)	$ 9.50	$ 9.50
Shares Outstanding Under Warrants (in shares)	222,049	222,049

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Note 10 - Summary of Stock Options (Details Textual) - USD ($)					1 Months Ended				3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 28, 2019	Mar. 29, 2019	Jan. 01, 2019	Jun. 08, 2018	Jun. 30, 2019	Apr. 30, 2019	Mar. 31, 2019	Jan. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					5,314,375				5,314,375		5,314,375		4,014,475
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance					$ 3				$ 3		$ 3		$ 4.56
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term											8 years 219 days		7 years 146 days
Stock Issued During Period, Shares, Restricted Stock Award, Gross				100,000			27,473
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance					393,051				393,051		393,051
Shares Issued, Price Per Share				$ 2.56			$ 0.91
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross											2,335,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate									0.00%	0.00%	0.00%	0.00%
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate											0.00%
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount					$ 4,143,620				$ 4,143,620		$ 4,143,620
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition											2 years 138 days
Consultant [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Gross					25,000
Director [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Gross						52,791
Director [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value						$ 0.91
Nonemployees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate										0.00%	0.00%	0.00%
The 2006 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					10,434				10,434		10,434
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					0				0		0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance					$ 10.05				$ 10.05		$ 10.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term											3 years 215 days
The 2013 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					5,303,941				5,303,941		5,303,941
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance					$ 3				$ 3		$ 3
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term											8 years 233 days
Common Stock, Capital Shares Reserved for Future Issuance					904,651				904,651		904,651
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized			2,043,142
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			6,957,158										4,914,016
The 2013 Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period								364,072
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period									2,271		2,271
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period											0
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total											0
The 2013 Plan [Member] | Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross									190,000	570,000	2,307,500	1,821,171
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value									$ 0.33	$ 1.34	$ 1.18	$ 2.32
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period									0	0	0	0
The 2013 Plan [Member] | Nonemployees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross									27,500	200,000	27,500	202,388
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value									$ 1.22	$ 1.59	$ 1.22	$ 1.61
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period									0	0	0	0
2017 Employee Stock Purchase Plan [Member]
Stock Issued During Period, Shares, Employee Stock Purchase Plans	60,740	43,759
Shares Issued, Price Per Share	$ 0.32	$ 0.80
Employee Stock Ownership Plan (ESOP), Number of Suspense Shares					151,820				151,820		151,820
Employee Stock Ownership Plan (ESOP), Weighted Average Purchase Price of Shares Purchased									$ 0.95	$ 0.95	$ 0.68	$ 1.11
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate									0.00%	0.00%	0.00%	0.00%

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Note 10 - Summary of Stock Options - Summary of Option Activity Under All Plans (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2018 $ / shares shares
Options outstanding (in shares) | shares	4,014,475
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 4.56
Options outstanding, weighted average remaining contractual term (Year)	8 years 219 days	7 years 146 days
Options granted (in shares) | shares	2,335,000
Options granted, weighted average exercise price (in dollars per share) | $ / shares	$ 1.18
Options exercised (in shares) | shares
Options exercised, weighted average exercise price (in dollars per share) | $ / shares
Options canceled (in shares) | shares	(1,035,100)
Options canceled, weighted average exercise price (in dollars per share) | $ / shares	$ 4.94
Options outstanding (in shares) | shares	5,314,375	4,014,475
Options outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 3	$ 4.56
Options outstanding, aggregate intrinsic value | $
Vested and exercisable and expected to vest, end of period (in shares) | shares	5,054,030
Vested and exercisable and expected to vest, end of period, weighted average exercise price (in dollars per share) | $ / shares	$ 3.04
Vested and exercisable and expected to vest, end of period, weighted average remaining contractual term (Year)	8 years 219 days
Vested and exercisable and expected to vest, end of period, aggregate intrinsic value | $
Vested and exercisable, end of period (in shares) | shares	1,790,963
Vested and exercisable, end of period, weighted average exercise price (in dollars per share) | $ / shares	$ 4.26
Vested and exercisable, end of period, weighted average remaining contractual term (Year)	7 years 219 days
Vested and exercisable, end of period, aggregate intrinsic value | $

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Note 10 - Summary of Stock Options - Summary of Options Outstanding and Exercisable (Details)	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Options outstanding, number (in shares) | shares	5,314,375
Options outstanding, weighted average exercise price (in dollars per share)	$ 3
Options outstanding, weighted average remaining contractual term (Year)	8 years 233 days
Options exercisable, number exercisable (in shares) | shares	1,790,963
Options exercisable, weighted average exercise price (in dollars per share)	$ 4.26
Range One [Member]
Exercise price range, lower limit (in dollars per share)	0.38
Exercise price range, upper limit (in dollars per share)	$ 0.58
Options outstanding, number (in shares) | shares	190,000
Options outstanding, weighted average exercise price (in dollars per share)	$ 0.53
Options outstanding, weighted average remaining contractual term (Year)	9 years 339 days
Options exercisable, number exercisable (in shares) | shares
Options exercisable, weighted average exercise price (in dollars per share)
Range Two [Member]
Exercise price range, lower limit (in dollars per share)	1
Exercise price range, upper limit (in dollars per share)	$ 1.97
Options outstanding, number (in shares) | shares	2,643,195
Options outstanding, weighted average exercise price (in dollars per share)	$ 1.38
Options outstanding, weighted average remaining contractual term (Year)	9 years 153 days
Options exercisable, number exercisable (in shares) | shares	485,265
Options exercisable, weighted average exercise price (in dollars per share)	$ 1.52
Range Three [Member]
Exercise price range, lower limit (in dollars per share)	2.02
Exercise price range, upper limit (in dollars per share)	$ 2.83
Options outstanding, number (in shares) | shares	85,000
Options outstanding, weighted average exercise price (in dollars per share)	$ 2.48
Options outstanding, weighted average remaining contractual term (Year)	8 years 226 days
Options exercisable, number exercisable (in shares) | shares	20,520
Options exercisable, weighted average exercise price (in dollars per share)	$ 2.65
Range Four [Member]
Exercise price range, lower limit (in dollars per share)	3.03
Exercise price range, upper limit (in dollars per share)	$ 3.82
Options outstanding, number (in shares) | shares	474,376
Options outstanding, weighted average exercise price (in dollars per share)	$ 3.55
Options outstanding, weighted average remaining contractual term (Year)	8 years 200 days
Options exercisable, number exercisable (in shares) | shares	175,002
Options exercisable, weighted average exercise price (in dollars per share)	$ 3.65
Range Five [Member]
Exercise price range, lower limit (in dollars per share)	4.30
Exercise price range, upper limit (in dollars per share)	$ 4.97
Options outstanding, number (in shares) | shares	920,023
Options outstanding, weighted average exercise price (in dollars per share)	$ 4.52
Options outstanding, weighted average remaining contractual term (Year)	8 years 40 days
Options exercisable, number exercisable (in shares) | shares	409,403
Options exercisable, weighted average exercise price (in dollars per share)	$ 4.55
Range Six [Member]
Exercise price range, lower limit (in dollars per share)	5.01
Exercise price range, upper limit (in dollars per share)	$ 5.67
Options outstanding, number (in shares) | shares	510,696
Options outstanding, weighted average exercise price (in dollars per share)	$ 5.37
Options outstanding, weighted average remaining contractual term (Year)	7 years 40 days
Options exercisable, number exercisable (in shares) | shares	317,831
Options exercisable, weighted average exercise price (in dollars per share)	$ 5.37
Range Seven [Member]
Exercise price range, lower limit (in dollars per share)	6
Exercise price range, upper limit (in dollars per share)	$ 6.61
Options outstanding, number (in shares) | shares	242,627
Options outstanding, weighted average exercise price (in dollars per share)	$ 6.03
Options outstanding, weighted average remaining contractual term (Year)	6 years 105 days
Options exercisable, number exercisable (in shares) | shares	209,608
Options exercisable, weighted average exercise price (in dollars per share)	$ 6.01
Range Eight [Member]
Exercise price range, lower limit (in dollars per share)	7
Exercise price range, upper limit (in dollars per share)	$ 7.92
Options outstanding, number (in shares) | shares	238,024
Options outstanding, weighted average exercise price (in dollars per share)	$ 7.70
Options outstanding, weighted average remaining contractual term (Year)	7 years 14 days
Options exercisable, number exercisable (in shares) | shares	162,900
Options exercisable, weighted average exercise price (in dollars per share)	$ 7.71
Range Nine [Member]
Exercise price range, lower limit (in dollars per share)	9.92
Exercise price range, upper limit (in dollars per share)	$ 9.92
Options outstanding, number (in shares) | shares	10,424
Options outstanding, weighted average exercise price (in dollars per share)	$ 9.92
Options outstanding, weighted average remaining contractual term (Year)	3 years 219 days
Options exercisable, number exercisable (in shares) | shares	10,424
Options exercisable, weighted average exercise price (in dollars per share)	$ 9.92
Range Ten [Member]
Exercise price range, lower limit (in dollars per share)	59.60
Exercise price range, upper limit (in dollars per share)	$ 149.04
Options outstanding, number (in shares) | shares	10
Options outstanding, weighted average exercise price (in dollars per share)	$ 149.04
Options outstanding, weighted average remaining contractual term (Year)	2 years 113 days
Options exercisable, number exercisable (in shares) | shares	10
Options exercisable, weighted average exercise price (in dollars per share)	$ 149.04

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Note 10 - Summary of Stock Options - Valuation Assumption for Employee Stock Purchase Plan (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Expected term (Year)	5 years	5 years	5 years	5 years
Average volatility	75.00%	69.00%	73.00%	75.00%
Risk-free interest rate	2.03%	2.82%	2.49%	2.63%
Dividend yield	0.00%	0.00%	0.00%	0.00%
2017 Employee Stock Purchase Plan [Member]
Expected term (Year)	91 days	91 days	91 days	91 days
Average volatility	87.00%	74.00%	81.00%	67.00%
Risk-free interest rate	2.43%	1.73%	2.44%	1.58%
Dividend yield	0.00%	0.00%	0.00%	0.00%

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Note 10 - Summary of Stock Options - Valuation Assumptions for Stock Options (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Expected term (Year)	5 years	5 years	5 years	5 years
Average volatility	75.00%	69.00%	73.00%	75.00%
Risk-free interest rate	2.03%	2.82%	2.49%	2.63%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Nonemployees [Member]
Expected term (Year)		10 years	5 years	10 years
Average volatility		91.00%	73.00%	91.00%
Risk-free interest rate		2.85%	2.49%	2.85%
Dividend yield		0.00%	0.00%	0.00%

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Note 10 - Summary of Stock Options - Stock-based Compensation Expense Included in the Statement of Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Stock-based compensation expense	$ 621	$ 775	$ 1,117	$ 1,529
Cost of Sales [Member]
Stock-based compensation expense	34	17	66	28
Research and Development Expense [Member]
Stock-based compensation expense	53	65	93	187
Selling, General and Administrative Expenses [Member]
Stock-based compensation expense	$ 534	$ 693	$ 958	$ 1,314

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Note 11 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2019
Income Tax Expense (Benefit), Total		$ 0
Effective Income Tax Rate Reconciliation, Percent, Total	0.00%	0.00%
Forecast [Member]
Effective Income Tax Rate Reconciliation, Percent, Total			0.00%

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Note 12 - Related Party Transactions (Details Textual) - Stellartech Research Corporation [Member] - USD ($)	3 Months Ended		6 Months Ended		135 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Stock Issued During Period, Shares, New Issues					37,500
Related Party Transaction, Amounts of Transaction	$ 1,820,000	$ 2,325,000	$ 3,132,000	$ 5,598,000
Accounts Payable, Related Parties, Current	$ 465,000		$ 465,000		$ 960,000

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Note 13 - Restructuring Costs (Details Textual)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)
Restructuring and Related Cost, Number of Positions Eliminated	40
Restructuring Charges, Total	$ 742,000			$ 742,000
Restructuring Reserve, Ending Balance						$ 24,000