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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

 


 

FORM 10-Q

 


 

(Mark One)

 

 

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

 

For the quarterly period ended September 30, 2024

or

 

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

 

Commission File Number: 001-36817

 


 

AVINGER, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware

 

20-8873453

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

400 Chesapeake Drive

Redwood City, California 94063

(Address of principal executive offices and zip code)

 

(650) 241-7900

(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, par value $0.001 per share

 

AVGR

 

The 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 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, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 Act). Yes No ☒

 

As of November 4, 2024, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 3,196,791.

 

 

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

 

our ability to continue as a going concern;

 

 

our ability to regain and remain in compliance with the listing requirements of the Nasdaq Capital Market;

 

 

the outcome of and expectations regarding our current clinical studies and any additional clinical studies we initiate;

 

 

our plans to modify our current products, or develop new products, to address additional indications;

 

 

our ability to obtain additional financing through future equity or debt financings;

 

 

the expected timing of 510(k) clearances by the U.S. Food and Drug Administration (“FDA”) which may include but are not limited to additional versions of Pantheris, Ocelot, Tigereye and Lightbox;

 

 

the expected timing of 510(k) submission to the FDA, and associated marketing clearances by the FDA, which may include but are not limited to additional versions of Pantheris, Ocelot, Tigereye and Lightbox;

 

 

our ability to realize benefits from our license and collaboration agreements with Zylox-Tonbridge;

 

 

the expected growth in our business and our organization;

 

 

our expectations regarding government and third-party payor coverage and reimbursement, including the ability of Pantheris to qualify for reimbursement codes used by other atherectomy products;

 

 

our ability to retain and recruit key personnel, including the continued development of our sales and marketing infrastructure;

 

 

our ability to obtain and maintain intellectual property protection for our products;

 

 

our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for, or ability to obtain, additional financing;

 

 

our expectations regarding revenue, cost of revenue, gross margins, and expenses, including research and development and selling, general and administrative expenses;

 

 

our ability to identify and develop new and planned products and acquire new products, including those for the coronary market;

 

 

our financial performance;

 

 

our ability to remain in compliance with laws and regulations that currently apply or become applicable to our business, both in the United States and internationally; and

 

 

developments and projections relating to our competitors or our industry.

 

 

 

 

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2024. We urge you to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

 

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

 

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the United States Securities and Exchange Commission (“SEC”) as exhibits to the Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 

 

 

 

AVINGER, INC.

AS OF AND FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

 

TABLE OF CONTENTS

 

   

Page

Part I

Financial Information

 

Item 1.

Unaudited Financial Statements

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations and Comprehensive Loss

2

 

Condensed Statements of Stockholders’ Equity

3

 

Condensed Statements of Cash Flows

5

 

Notes to Condensed Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

     

Part II

Other Information

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 3.

Defaults Upon Senior Securities

43

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

43

Item 6.

Exhibits

44

     

Signatures

45

 

“Avinger,” “Pantheris,” “Lumivascular,” and “Tigereye” are trademarks of our company. Our logo and our other trade names, trademarks and service marks appearing in this Quarterly Report on Form 10-Q are our property. Other trade names, trademarks and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, our trademarks and trade names referred to in this Quarterly Report on Form 10-Q appear without the ™ symbol, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and trade names.

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1.    UNAUDITED FINANCIAL STATEMENTS

 

AVINGER, INC.

CONDENSED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)

 

   

September 30,

   

December 31,

 
   

2024

   

2023

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 5,901     $ 5,275  

Accounts receivable, net of allowance for doubtful accounts of $56 and $41 at September 30, 2024 and December 31, 2023, respectively

    877       1,014  

Inventories, net

    3,759       5,298  

Prepaid expenses and other current assets

    947       575  

Total current assets

    11,484       12,162  
                 

Right of use asset

    1,427       1,102  

Property and equipment, net

    466       487  

Other assets

    224       19  

Total assets

  $ 13,601     $ 13,770  
                 

Liabilities and stockholders equity (deficit)

               

Current liabilities:

               

Accounts payable

  $ 921     $ 777  

Accrued compensation

    1,962       2,311  

Preferred stock dividends payable

    653        

Accrued expenses and other current liabilities

    589       817  

Leasehold liability, current portion

    1,210       1,102  

Borrowings

    4,168       14,293  

Total current liabilities

    9,503       19,300  
                 

Leasehold liability, long-term portion

    217        

Other long-term liabilities

    6       672  

Total liabilities

    9,726       19,972  
                 

Commitments and contingencies (Note 6)

           
                 

Stockholders equity (deficit):

               

Preferred stock issuable in series, par value of $0.001;

               

Shares authorized: 5,000,000 at September 30, 2024 and December 31, 2023;

               

Shares issued and outstanding: 30,229 and 62,881 at September 30, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $18,338 and $62,796 at September 30, 2024 and December 31, 2023, respectively

           

Common stock, par value of $0.001;

               

Shares authorized: 100,000,000 at September 30, 2024 and December 31, 2023;

               

Shares issued and outstanding: 2,783,891 and 1,279,928 at September 30, 2024 and December 31, 2023, respectively

    3       1  

Additional paid-in capital

    438,153       414,493  

Accumulated deficit

    (434,281

)

    (420,696

)

Total stockholders’ equity (deficit)

    3,875       (6,202 )

Total liabilities and stockholders’ equity (deficit)

  $ 13,601     $ 13,770  
 

 

1

 

 

 

AVINGER, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except per share data)

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Revenues

  $ 1,650     $ 1,817     $ 5,356     $ 5,746  

Cost of revenues

    1,224       1,429       4,209       4,117  

Gross profit

    426       388       1,147       1,629  
                                 

Operating expenses:

                               

Research and development

    1,086       1,044       3,052       3,388  

Selling, general and administrative

    3,009       3,377       10,980       10,261  

Total operating expenses

    4,095       4,421       14,032       13,649  

Loss from operations

    (3,669

)

    (4,033

)

    (12,885 )     (12,020 )
                                 

Interest expense, net

    (48

)

    (455

)

    (698 )     (1,292 )

Other income (expense), net

    11       12       (2 )     16  

Net loss and comprehensive loss

    (3,706

)

    (4,476

)

    (13,585 )     (13,296 )

Accretion of preferred stock dividends

    (349 )     2,436       (652 )      

Gain on exchange of Series A for Series A-1 convertible preferred stock

                1,908        

Net loss applicable to common stockholders

  $ (4,055

)

  $ (2,040

)

  $ (12,329 )   $ (13,296 )
                                 

Net loss per share attributable to common stockholders, basic and diluted

  $ (1.82

)

  $ (2.92

)

  $ (6.93 )   $ (21.48 )

Weighted average common shares used to compute net loss per share, basic and diluted

    2,224       698       1,780       619  

 

2

 

 

 

AVINGER, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

(unaudited)

(In thousands, except share data)

 

   

Convertible

Preferred Stock

   

Common Stock

   

Additional Paid-in

   

Accumulated

   

Total Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

 

Balance at June 30, 2023

    60,961     $       622,578     $ 9     $ 404,597     $ (411,196

)

  $ (6,590 )

Issuance of common stock in public offerings, net of commissions and issuance costs

                600,454       1       5,136             5,137  

Conversion of CRG loan principal into Series E convertible preferred stock

    1,920                         1,920             1,920  

Employee stock-based compensation

                            219             219  

Reclassifications and adjustments due to rounding impact from reverse stock split for fractional shares

                56,896       (9 )     9              

Waiver of Series A preferred stock dividends

                            2,436             2,436  

Net and comprehensive loss

                                  (4,476

)

    (4,476

)

Balance at September 30, 2023

    62,881     $       1,279,928     $ 1     $ 414,317     $ (415,672

)

  $ (1,354 )

 

 

   

Convertible

Preferred Stock

   

Common Stock

   

Additional Paid-in

   

Accumulated

   

Total Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

 

Balance at June 30, 2024

    30,229     $       1,916,434     $ 2     $ 438,326     $ (430,575

)

  $ 7,753  

Issuance of common stock in public offerings, net of commissions and issuance costs

                            (45 )           (45 )

Conversion of CRG loan principal into Series H convertible preferred stock

                                         

Exercises of pre-funded warrants for common stock

                867,457       1                   1  

Employee stock-based compensation

                            222             222  

Accretion of preferred stock dividends

                            (349 )           (349 )

Net and comprehensive loss

                                  (3,706 )     (3,706 )

Balance at September 30, 2024

    30,229     $       2,783,891     $ 3     $ 438,153     $ (434,281 )   $ 3,875  

 

3

 

 

AVINGER, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (CONTINUED)

(unaudited)

(In thousands, except share data)

 

   

Convertible

Preferred Stock

   

Common Stock

   

Additional Paid-in

   

Accumulated

   

Total Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity (Deficit)

 

Balance at December 31, 2022

    60,961     $       522,177     $ 8     $ 406,514     $ (402,376

)

  $ 4,146  

Issuance of common stock in public offerings, net of commissions and issuance costs

                607,236       1       5,173             5,174  

Conversion of CRG loan principal into Series E convertible preferred stock

    1,920                         1,920             1,920  

Exercise of pre-funded warrants for common stock

                91,325       1       (2 )           (1 )

Issuance of common stock upon vesting of restricted stock units

                2,294                          

Employee stock-based compensation

                            703             703  

Reclassifications and adjustments due to rounding impact from reverse stock split for fractional shares

                56,896       (9 )     9              
Net and comprehensive loss                                   (13,296 )     (13,296 )

Balance at September 30, 2023

    62,881     $       1,279,928     $ 1     $ 414,317     $ (415,672

)

  $ (1,354 )

 

   

Convertible

Preferred Stock

   

Common Stock

   

Additional Paid-in

   

Accumulated

   

Total Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Equity (Deficit)

 

Balance at December 31, 2023

    62,881     $       1,279,928     $ 1     $ 414,493     $ (420,696 )   $ (6,202 )

Issuance of common stock and Series F preferred stock in a Private Placement, net of commissions and issuance costs

    7,224             75,327             6,880             6,880  

Issuance of common stock warrants in connection with the Private Placement

                            127             127  
Exercises of pre-funded warrants for common stock                 867,457       1                   1  

Issuance of common stock in public offerings, net of commissions and issuance costs

                330,000             5,155             5,155  

Conversion of CRG loan principal into Series H convertible preferred stock

    11,000                         11,000             11,000  

Cancellation of Series A preferred stock

    (60,876 )                                    

Issuance of Series A-1 preferred stock, net of commissions and issuance costs

    10,000                                      

Issuance of common stock upon vesting of restricted stock awards

                368,503       1                   1  

Net share settlement of restricted stock awards in satisfaction of tax obligations

                (137,324 )           (374 )           (374 )

Employee stock-based compensation

                            1,525             1,525  

Accretion of preferred stock dividends

                            (652 )           (652 )

Net and comprehensive loss

                                  (13,585 )     (13,585 )

Balance at September 30, 2024

    30,229     $       2,783,891     $ 3     $ 438,153     $ (434,281 )   $ 3,875  

 

 

4

 

 

 

AVINGER, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

 

   

Nine Months Ended September 30,

 
   

2024

   

2023

 

Cash flows from operating activities

               

Net loss

  $ (13,585 )   $ (13,296 )

Adjustments to reconcile net loss to net cash used in operating activities:

           

Depreciation and amortization

    245       214  

Amortization of debt issuance costs and debt discount

    32       62  

Stock-based compensation

    1,525       703  

Noncash interest expense and other charges

    844       1,488  

Change in right of use asset

    16       42  

Provision for excess and obsolete inventories

    111       350  

Other non-cash charges

    14       (51 )

Changes in operating assets and liabilities:

           

Accounts receivable

    122       278  

Inventories

    1,205       (996 )

Prepaid expenses and other current assets

    (372 )     (188 )

Other assets

    (221 )     21  

Accounts payable

    144       (82 )

Accrued compensation

    (349 )     (250 )

Accrued expenses and other current liabilities

    (228 )     240  

Other long-term liabilities

    (666 )     422  

Net cash used in operating activities

    (11,163 )     (11,043 )
                 
Cash flows from investing activities                
Purchase of property and equipment           (8 )
Net cash used in investing activities           (8 )
                 

Cash flows from financing activities

               

Proceeds from the issuance of common stock and convertible preferred stock in a private placement, net of commissions and issuance costs

    7,007        

Proceeds from issuance of common stock upon warrant exercises

    1        

Proceeds from the issuance of common stock in public offerings, net of commissions and issuance costs

    5,155       5,173  

Net share settlement on restricted stock awards in satisfaction of tax obligations

    (374 )      

Net cash provided by financing activities

    11,789       5,173  
                 

Net change in cash and cash equivalents

    626       (5,878 )

Cash and cash equivalents, beginning of period

    5,275       14,603  

Cash and cash equivalents, end of period

  $ 5,901     $ 8,725  
                 

Supplemental disclosure of cash flow information

               

Noncash investing and financing activities:

               

Increase to right of use asset and leasehold liability arising from lease amendment

  $ 1,177     $  

Conversion of CRG loan principal and accrued interest into Series H convertible preferred stock

  $ 11,000     $ 1,920  

Accretion of preferred stock dividends

  $ 652     $  

Reclassification of other long-term liabilities to accrued compensation

  $     $ 796  

Transfers between inventory and property and equipment

  $ 223     $ 32  

 

See accompanying notes.

 

5

 

 

AVINGER, INC.

 

Notes to Condensed Financial Statements

 

 

1. Organization

 

Organization, Nature of Business

 

Avinger, Inc. (the “Company”), a Delaware corporation, was incorporated in March 2007. The Company designs, manufactures and sells image-guided, catheter-based systems that are used by physicians to treat patients with peripheral artery disease (“PAD”). Patients with PAD have a build-up of plaque in the arteries that supply blood to areas away from the heart, particularly the pelvis and legs. The Company manufactures and sells a suite of products in the United States (“U.S.”) and in select international markets. The Company has developed its Lumivascular platform, which integrates optical coherence tomography (“OCT”) visualization with interventional catheters and is the industry’s only system that provides real-time intravascular imaging during the treatment portion of PAD procedures. The Company’s Lumivascular platform consists of a capital component, Lightbox consoles, as well as a variety of disposable catheter products. The Company’s current catheter products include Ocelot, Tigereye and Tigereye ST, which are designed to allow physicians to penetrate a total blockage in an artery, known as a chronic total occlusion (“CTO”). The Company also has image-guided atherectomy products, Pantheris, Pantheris SV and Pantheris LV, which are designed to allow physicians to precisely remove arterial plaque in PAD patients. The Company is in the process of developing next-generation CTO crossing devices to target coronary CTO markets. The Company is located in Redwood City, California.

 

Liquidity Matters

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) requires the Company to make certain disclosures if it concludes that there is substantial doubt about the entity’s ability to continue as a going concern within one year from the date of the issuance of these financial statements.

 

In the course of its activities, the Company has incurred losses and negative cash flows from operations since its inception. As of September 30, 2024, the Company had an accumulated deficit of $434.3 million. The Company expects to incur losses for the foreseeable future. The Company believes that its cash and cash equivalents of $5.9 million at September 30, 2024, together with debt and other financing activities and expected revenues from operations will be sufficient to allow the Company to fund its current operations through the end of the fourth quarter of 2024. On March 5, 2024, the Company entered into a financing as part of a broader strategic collaboration with Zylox-Tonbridge Medical Technology Co., Ltd. (“Zylox-Tonbridge”) in which the Company received an aggregate of $7.5 million before any commissions, legal and accounting fees, and other ancillary expenses as described more fully below. On June 17, 2024, the Company completed a public offering in which it received an aggregate of $6.0 million before any commissions, legal and accounting fees, and other ancillary expenses. The Company had also received net proceeds of approximately $6.5 million from the sale of its common stock under an At The Market Offering Agreement from the time of activation through the quarter ended September 30, 2024. On October 17, 2024, the Company reactivated the ATM Agreement. During October and part of November 2024, the Company sold 107,080 shares of common stock pursuant to the ATM Agreement at an average price of  $0.82 per share for aggregate proceeds of approximately $88,000, of which approximately $2,600 was paid in the form of commissions to the Agent. The Company may seek to raise additional funds in future equity offerings to meet its operational needs and capital requirements for product development, clinical trials and commercialization or other strategic objectives.

 

The Company can provide no assurance that it will be successful in raising funds pursuant to additional equity or debt financings or that such funds will be raised at prices that do not create substantial dilution for its existing stockholders. Given the volatility in the Company’s stock price, any financing that the Company may undertake in the next twelve months could cause substantial dilution to its existing stockholders, and there can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its various endeavors. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the macroeconomic environment has in the past resulted in and could continue to result in reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits and reduced business and consumer spending, which could increase the cost of capital and/or limit the availability of capital to the Company.

 

If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable to it, the Company may have to significantly reduce its operations or delay, scale back or discontinue the development and sale of one or more of its products. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s ultimate success will largely depend on its continued development of innovative medical technologies, its ability to successfully commercialize its products and its ability to raise significant additional funding.

 

6

 

Additionally, due to the substantial doubt about the Company’s ability to continue operating as a going concern and the “Material Adverse Change” clause in the Loan Agreement with CRG Partners III L.P. and certain of its affiliated funds (collectively “CRG”), the entire amount of outstanding borrowings at September 30, 2024 and December 31, 2023 has been classified as current in these financial statements. CRG has not purported that an Event of Default (as defined in the Loan Agreement) has occurred due to a Material Adverse Change.

 

Currently substantially all of the Company’s cash and cash equivalents are held at a single financial institution. The Company’s previous banking partner was acquired by another financial institution in 2023 following closure by state regulators. The Company has regained access to its accounts with the new institution and is currently reviewing its banking relationships. Potential future disruptions to financial institutions where the Company holds accounts or has credit arrangements, or more widespread disruptions in the financial services industry, could negatively impact the Company’s access to cash and cash equivalents.

 

If the Company is unable to access its cash and cash equivalents as needed, its financial position and ability to operate its business will be adversely affected.

 

Public Offerings

 

June 2024 Offering

 

On June 13, 2024, the Company entered into a securities purchase agreement with two institutional investors for the issuance and sale of 3,614,457 shares of its common stock in a best efforts public offering (“the Offering”) at a purchase price of $1.66 per share, or pre-funded warrants in lieu thereof. The Company received aggregate net proceeds of approximately $5.2 million after underwriting discounts, commissions, legal and accounting fees, and other ancillary expenses.

 

As a result, the Company issued (i) 330,000 shares of common stock, (ii) and pre-funded warrants in lieu of common stock to purchase up to an aggregate of 3,284,457 shares of common stock (the “Pre-Funded Warrants”). During the third quarter of 2024, a total of 867,457 shares of the Pre-Funded Warrants were exercised resulting in the issuance of an aggregate of 867,457 shares of common stock. After giving effect to these aforementioned exercises, as of September 30, 2024, 2,417,000 Pre-Funded Warrants remain outstanding.

 

In addition, the Company issued to the investors in the Offering (i) Series A-1 warrants (the “Series A-1 Warrants”) to purchase up to an aggregate of 3,614,457 shares of common stock, (ii) Series A-2 warrants (the “Series A-2 Warrants”) to purchase up to an aggregate of 3,614,457 shares of common stock, and (iii) Series A-3 warrants (the “Series A-3 Warrants,” and together with the Series A-1 Warrants and Series A-2 Warrants, the “Warrants”) to purchase up to an aggregate of 3,614,457 shares of common stock. Each share of common stock or Pre-Funded Warrant was sold together with one Series A-1 Warrant to purchase one share of common stock, one Series A-2 Warrant to purchase one share of common stock, and one Series A-3 Warrant to purchase one share of common stock. Each Warrant has an exercise price of $1.66 per.

 

The Series A-1 Warrants expire on the earlier of August 12, 2029 and 60 days following the public announcement by the Company of the Company receiving FDA clearance of second image-guided coronary device with a therapeutic indication other than diagnostic imaging or coronary CTO crossing. The Series A-2 Warrants expire on the earlier of August 12, 2026 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving 510(k) clearance of image-guided Coronary CTO crossing device. The Series A-3 Warrants expire on the earlier of May 12, 2025 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving FDA approval of image-guided Coronary CTO investigational device exemption (“IDE”) application.

 

Pursuant to an engagement letter (the “Engagement Letter”) with H.C. Wainwright & Co., LLC (the “Placement Agent”), the Company, in connection with the Offering, issued warrants to designees of the Placement Agent (the “Placement Agent Warrants”) to purchase up to an aggregate of 216,867 shares of common stock (the “Placement Agent Warrant Shares”). The Placement Agent Warrants have substantially the same terms as the Warrants issued and sold in the Offering, except that the Placement Agent Warrants have an exercise price of $2.075 per share and expire on June 13, 2029.

 

7

 

At The Market Offering Agreement

 

On May 20, 2022, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Agent”), as sales agent, pursuant to which the Company may offer and sell shares of common stock, par value $0.001 per share (the “Shares”) up to an aggregate offering price of $7,000,000 from time to time, in an at the market public offering. Sales of the Shares are to be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent. The Agent will receive a commission from the Company of 3.0% of the gross proceeds of any Shares sold under the ATM Agreement. The Shares sold under the ATM Agreement are offered and sold pursuant to the Company’s shelf registration statement on Form S-3, which was initially filed with the SEC on March 29, 2022 and declared effective on April 7, 2022, and a prospectus supplement and the accompanying prospectus relating to the At The Market Offering filed with the SEC on May 20, 2022. On August 3, 2022, the Company suspended sales under the ATM Agreement. On March 17, 2023, the Company reactivated the ATM Agreement. During the year ended December 31, 2023, the Company sold 607,241 shares of common stock at an average price of $9.01 per share for aggregate proceeds of approximately $5.5 million, of which approximately $164,000 was paid in the form of commissions to the Agent. There were no sales under the ATM Agreement during the three or nine months ended September 30, 2024. On October 17, 2024, the Company reactivated the ATM Agreement. During October and part of November 2024, the Company sold 107,080 shares of common stock pursuant to the ATM Agreement at an average price of  $0.82 per share for aggregate proceeds of approximately $88,000, of which approximately $2,600 was paid in the form of commissions to the Agent. While the Company may attempt additional sales in the future, there can be no assurance that the Company will be successful in acquiring additional funding through these means.

 

Other than the ATM Agreement, the Company currently does not have any commitments to obtain additional funds.

 

Strategic Partnership and Private Placement

 

On March 4, 2024, the Company entered into a License and Distribution Agreement (the “License Agreement”) with Zylox-Tonbridge effective as of the Initial Closing (defined below), pursuant to which the Company will license and distribute certain of the Company’s products (including consumables) in the Greater China region, including mainland China, Hong Kong, Macao, and Taiwan (the “Territory”). Zylox-Tonbridge will lead all regulatory activities for the registration of the Avinger products in the Territory. Avinger will also license its intellectual property and know-how related to Avinger products to Zylox-Tonbridge so that Zylox-Tonbridge can manufacture the localized products in the Territory. Avinger will supply Avinger products to Zylox-Tonbridge until Zylox-Tonbridge’s manufacturing capability has been established and Zylox-Tonbridge has obtained the regulatory approval of the localized products manufactured by Zylox-Tonbridge. All sales of Avinger products locally manufactured by Zylox-Tonbridge with regulatory approval by the regulatory authorities in the Territory and commercialized in the Territory will be royalty bearing to Avinger at a rate from a mid-single to high-single digit percentage depending on the amount of gross revenue as defined in the License Agreement, with certain increases depending on the amount of product gross margin. The License Agreement has an initial term of 20 years, which shall be further automatically extended for additional 20-year terms, subject to certain conditions. The License Agreement may not be terminated by either party, other than for certain uncured material breaches or the other party’s insolvency. During the three and nine months ended September 30, 2024, the Company received approximately $0.2 million and $0.4 million respectively from Zylox-Tonbridge related to inventory consumed for regulatory approval which is recorded as a reduction to research and development expenses in the Condensed Statement of Operations and Comprehensive Loss for the three months ended September 30, 2024 which substantially offset the related expenditures associated with the inventory consumption.

 

In connection with the License Agreement, on March 4, 2024, the Company and Zylox-Tonbridge also entered into a Strategic Cooperation and Framework Agreement in conjunction with the Initial Closing (the “Collaboration Agreement” and, together with the License Agreement, the “Strategic Collaboration”), which provides the opportunity for the Company to access certain Zylox-Tonbridge peripheral vascular products for distribution in the U.S. and Germany. The agreement also provides the option for Avinger to source finished goods inventory from Zylox-Tonbridge following registration of Zylox-Tonbridge’s manufacturing facility with the FDA.

 

Private Placement

 

On March 4, 2024, in connection with the Strategic Collaboration, the Company and Zylox-Tonbridge Medical Limited, a wholly-owned subsidiary of Zylox-Tonbridge (the “Purchaser”), entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Purchaser agreed to purchase, in two tranches, up to an aggregate of $15 million in shares of the Company’s common stock, and shares of two new series of the Company’s preferred stock (the “Private Placement”). On March 5, 2024, (the “Initial Closing”), the Company issued to the Purchaser 75,327 shares of the common stock at a purchase price per share of $3.664 (the “Purchase Price”), and 7,224 shares of a newly authorized Series F convertible preferred stock, par value $0.001 per share (the “Series F Preferred Stock”), at a purchase price per share of $1,000, for an aggregate purchase price of $7.5 million.

 

8

 

Each share of Series F Preferred Stock has a stated value of $1,000 and is initially convertible into approximately 273 shares of common stock at a conversion price equal to the Purchase Price, subject to the terms of the Certificate of Designation of Preferences, Rights, and Limitations of the Series F Preferred Stock (the “Series F Certificate of Designation”).

 

Upon completion of the following as mutually agreed upon by the Company and the Purchaser: (i) the successful registration and listing under 21 CFR part 807 with the FDA of the Purchaser and one of its designated affiliates to manufacture Avinger’s products, and (ii) the Company achieving an aggregate of $10 million in gross revenue within any four consecutive fiscal quarters after the Initial Closing, excluding any gross revenue achieved by Avinger under the License Agreement discussed above (together, the “Milestones”), the Purchaser will invest an additional $7.5 million (the “Milestone Closing”) to purchase shares of the Company’s new Series G convertible preferred stock, par value $0.001 per share (the “Series G Preferred Stock”). Each share of Series G Preferred Stock will have a stated value of $1,000 and will be convertible into shares of common stock at a conversion price of equal to the lowest of (x) the Purchase Price, (y) the closing price of the common stock on the date immediately preceding the Milestone Closing, and (z) the average closing price for the last five trading days preceding the Milestone Closing, provided that the conversion price will be no less than $0.20. The Milestone Closing was determined to be a separate freestanding equity-classified instrument issued together with the common stock and Series F preferred stock, all of which are classified within equity.

 

On May 22, 2024, the Company held a special meeting of stockholders to vote on the following proposals resulting from the Private Placement (i) accept conversion of the shares of Series F Preferred Stock in excess of 19.9% of the Company’s outstanding common stock, which may be deemed a “change of control” under Nasdaq Listing Rule 5635(b) and (ii) issue and sell shares of Series G Preferred Stock upon completion of the Milestones. Both proposals were approved by the Company’s stockholders. There were no conversions of Series F Preferred Stock during the three months ended September 30, 2024.

 

The Company engaged two financial advisors in connection with the Private Placement and agreed to pay them an aggregate cash fee equal to 7% of the gross proceeds to the Company. Additionally, the Company agreed to issue to one financial advisor warrants to purchase an aggregate number of shares of common Stock equal to 2% of the gross proceeds. In connection with the Private Placement, the Company issued the financial advisor warrants (the “Advisor Warrants”) to purchase 40,938 shares of common stock. The cash fee of approximately $0.5 million and warrants with a fair value of approximately $0.1 million are considered financing costs and are recognized as a reduction of the proceeds from the Private Placement.

 

Series A Preferred Stock Exchange

 

On March 5, 2024, the Company entered into a Securities Purchase Agreement (the “A-1 Securities Purchase Agreement”) with CRG to exchange all outstanding shares of Series A preferred stock for 10,000 shares of Series A-1 preferred stock (the “Exchange”). Among other things, the shares of Series A-1 preferred stock: (i) are convertible into an aggregate of approximately 2,729,257 shares of common stock at a conversion price equal to the Purchase Price, (ii) do not accrue or pay dividends payable solely on the Series A-1 preferred stock, (iii) will have no liquidation preference and (iv) will be junior in rank to shares of the Company’s Series E preferred stock, Series F preferred stock and Series G preferred stock. The Exchange resulted in approximately $1.9 million gain included in the net loss applicable to common holders for the nine months ended September 30, 2024.

 

CRG Loan Amendment

 

Also on March 5, 2024, the Company entered into Amendment No. 9 to Loan Agreement effective as of the Initial Closing (the “Amendment”) with CRG, which amends the Loan Agreement to, among other things:

 

  -

extend the interest-only period through December 31, 2026;

  -

provide that interest payable through December 31, 2026 may be payable in kind rather than in cash; and

  -

permit the payment of dividends on the preferred stock issued or issuable to the Purchaser.

 

9

 

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying unaudited condensed interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial information. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, or for any other interim period or for any future year. The December 31, 2023 condensed balance sheet data has been derived from audited financial statements. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules and regulations relating to interim financial statements. These unaudited condensed financial statements and notes should be read in conjunction with the financial statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 20, 2024. The Company’s significant accounting policies are more fully described in Note 2 of the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to its stock-based compensation, accruals related to compensation, the valuation of the common stock warrants, provisions for doubtful accounts receivable and excess and obsolete inventories, clinical trial accruals, and its reserves for sales returns and warranty costs. Management bases its estimates on historical experience and on various other assumptions that are believed 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. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

 

Concentration of Credit Risk, and Other Risks and Uncertainties

 

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable to the extent of the amounts recorded on the balance sheets.

 

The Company’s policy is to invest in cash and cash equivalents, consisting of money market funds. These financial instruments are held in Company accounts at one financial institution, First Citizens Bank, which acquired the Company’s prior banking partner, Silicon Valley Bank, in March 2023. The counterparties to the agreements relating to the Company’s investments consist of financial institutions of high credit standing. The Company provides for uncollectible amounts when specific credit problems arise. Management’s estimates for uncollectible amounts have been adequate, and management believes that all significant credit risks have been identified at September 30, 2024 and December 31, 2023. The Company’s previous banking partner was acquired by another financial institution in 2023 following closure by state regulators. Although the Company has regained access to its accounts with this institution, now a division of the acquiring bank, and is currently reviewing its banking relationships, potential future disruptions to financial institutions where the Company holds accounts or has credit arrangements, or more widespread disruptions in the financial services industry, could negatively impact the Company’s access to cash and cash equivalents.

 

The Company’s accounts receivable are due from a variety of healthcare organizations in the United States and select international markets. The Company provides for uncollectible amounts when specific credit problems arise. Management’s estimates for uncollectible amounts have been adequate, and management believes that all significant credit risks have been identified at September 30, 2024 and December 31, 2023. At September 30, 2024, there was one customer that represented 38% of the Company’s accounts receivable. At December 31, 2023, there was one customer that represented 24% of the Company’s accounts receivable. For the nine months ended September 30, 2024 there was one customer that represented 17% of revenues. For the three months ended September 30, 2024, there were two customers that represented 20% and 11% of revenues, respectively. For the three and nine months ended September 30, 2023, there was one customer that represented 22% and 17% of revenues, respectively. Disruption of the Company’s sales orders or a deterioration of financial condition of its customers would have a negative impact on the Company’s financial position and results of operations.

 

10

 

Product Warranty Costs

 

The Company typically offers a one-year warranty on its products commencing upon the transfer of title and risk of loss to the customer. The Company accrues for the estimated cost of product warranties upon invoicing its customers, based on historical results. Warranty costs are reflected in the statement of operations and comprehensive loss as a cost of revenues. The warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from these estimates, revisions to the estimated warranty liability would be required. Periodically the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts, as necessary. Warranty provisions and claims are summarized as follows (in thousands):

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Beginning balance

  $ 150     $ 128     $ 193     $ 109  

Warranty provision

    3       18       35       52  

Usage/Release

    (25

)

    (7

)

    (100 )     (22 )

Ending balance

  $ 128     $ 139     $ 128     $ 139  

 

Net Loss per Share Attributable to Common Stockholders

 

Basic net loss per share attributable to common stockholders is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Any common stock shares subject to repurchase are excluded from the calculations as the continued vesting of such shares is contingent upon the holders’ continued service to the Company. As of September 30, 2024 and 2023, there were no shares subject to repurchase. Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as diluted net loss per share attributable to common stockholders as the inclusion of all potentially dilutive common shares would have been anti-dilutive.

 

Net loss per share applicable to common stockholders was determined as follows (in thousands, except per share data):

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Net loss applicable to common stockholders

  $ (4,055

)

  $ (2,040

)

  $ (12,329 )   $ (13,296 )

Weighted average common stock outstanding, basic and diluted

    2,224       698       1,780       619  

Net loss per share attributable to common stockholders, basic and diluted

  $ (1.82

)

  $ (2.92

)

  $ (6.93 )   $ (21.48 )

 

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities have an anti-dilutive impact due to losses reported:

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Common stock warrants equivalents

    14,425,040       459,019       5,844,318       483,947  

Common stock options

    15       20       15       20  

Convertible preferred stock

    30,229       62,151       35,121       61,362  

Unvested restricted stock units

    112,459       91,630       114,730       88,585  
      14,567,743       612,820       5,944,184       633,914  

 

11

 

Segment and Geographical Information

 

The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Primarily all of the Company’s long-lived assets, which are comprised of property and equipment, are based in the United States. For the three months ended September 30, 2024 and 2023, 94% and 91% respectively, of the Company’s revenues were in the United States. For the nine months ended September 30, 2024 and 2023, 93% and 92%, respectively, of the Company’s revenues were derived from the United States based on the shipping location of the external customer. The remaining revenues for the three and nine months ended September 30, 2024 and 2023, were primarily derived from Germany.

 

Fair Value Measurements

 

As of September 30, 2024 and December 31, 2023, cash equivalents were all categorized as Level 1 and consisted of money market funds. As of September 30, 2024 and December 31, 2023, there were no financial assets and liabilities categorized as Level 2 or 3. There were no transfers between fair value hierarchy levels during the three or nine months ended September 30, 2024 and September 30, 2023.

 

Recent Accounting Pronouncements

 

Recent accounting standards not yet adopted

 

In August 2020, the FASB issued ASU No. 2020-06, DebtDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys Own Equity, which among other things, simplifies the accounting models for the allocation of proceeds attributable to the issuance of a convertible debt instrument.  As a result, after adopting the ASU’s guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (i) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification (“ASC”) 815 or (ii) a convertible debt instrument was issued at a substantial premium. The ASU becomes effective for the Company, as a smaller reporting company as defined by the SEC, in the first quarter of 2024. The Company has not yet adopted this standard. This new standard is not expected to have a material impact on the Company’s financial statements.

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures. This ASU requires that a public entity provide additional segment disclosures on an interim and annual basis. The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements unless impracticable. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company has not yet adopted this standard. This new standard is not expected to have a material impact on the Company’s financial statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU No. 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, if any, with further disaggregation required for significant individual jurisdictions. The ASU is effective for the Company for fiscal years beginning after December 15. ASU No. 2023-09 allows for adoption using either a prospective or retrospective transition method. This new standard is not expected to have a material impact on the Company’s financial statements.

 

 

3. Inventories

 

Inventories consisted of the following (in thousands):

 

   

September 30,

   

December 31,

 
   

2024

   

2023

 

Raw materials

  $ 1,863     $ 3,203  

Work-in-process

    154       25  

Finished products

    1,742       2,070  

Total inventories

  $ 3,759     $ 5,298  

 

12

 

 

4. Borrowings

 

CRG

 

On September 22, 2015, the Company entered into a Term Loan Agreement, as amended (the “Loan Agreement”) with CRG under which, subject to certain conditions, the Company had the right to borrow up to $50 million in principal amount from CRG on or before the end of the twenty-fourth (24th) month period commencing on the first Borrowing Date (as defined in the Loan Agreement). The Company borrowed $30 million on September 22, 2015. The Company borrowed an additional $10 million on June 15, 2016 under the Loan Agreement.

 

On February 14, 2018, the Company and CRG further amended the Loan Agreement concurrent with the conversion of $38 million of the principal amount of the senior secured term loan (plus $3.8 million in back-end fees and prepayment premium applicable thereto) into a newly authorized Series A convertible preferred stock.

 

On August 2, 2023, the Company and CRG entered into a Securities Purchase Agreement (“Series E Purchase Agreement”) pursuant to which the Company issued 1,920 shares of a newly authorized Series E convertible preferred stock (“Series E Preferred Stock”) in exchange for CRG surrendering for cancellation $1.92 million of outstanding principal and accrued interest of the senior secured term loan under the Loan Agreement. Each share of Series E preferred stock has a stated value of $1,000 per share and is convertible into 93 shares of the Company’s common stock at a conversion price of $10.725 per share.

 

On May 16, 2024, the Company and CRG entered into another Securities Purchase Agreement (“Series H Purchase Agreement”) pursuant to which the Company issued 11,000 shares of a newly authorized Series H convertible preferred stock (“Series H Preferred Stock”) in exchange for CRG surrendering for cancellation $11.0 million of outstanding principal and accrued interest of the senior secured term loan under the Loan Agreement. Each share of Series H preferred stock has a stated value of $1,000 per share and is convertible into 259 shares of the Company’s common stock at a conversion price of $3.86 per share. Both the shares of Series E preferred stock and Series H preferred stock cannot be converted into common stock to the extent the applicable holder would beneficially own in excess 9.99% of the Company’s outstanding voting power and in no case will the beneficial ownership limitation exceed 19.99% of the Company’s outstanding voting power on a combined basis (as CRG collectively holds all of the issued and outstanding shares of the Company’s Series A-1 Convertible Preferred Stock, Series E Convertible Preferred Stock and Series H Convertible Preferred Stock), unless approved by the Company's stockholders in accordance with Nasdaq Listing Rule 5635(b).

 

The Company has entered into several amendments to the Loan Agreement (the “Amendments”) with CRG since September 2015. The Amendments, among other things: (1) extended the interest-only period through December 31, 2026; (2) extended the period during which the Company may elect to pay a portion of interest in payment-in-kind (“PIK”), interest payments through December 31, 2026 so long as no Default (as defined in the Loan Agreement) has occurred and is continuing; (3) permitted the Company to make the entire interest payments in PIK interest payments through December 31, 2026 so long as no Default has occurred and is continuing; (4) extended the Stated Maturity Date (as defined in the Loan Agreement) to December 31, 2028; (5) reduced the minimum liquidity covenant to $3.5 million at all times; (6) eliminated the minimum revenue covenants for all years (7) changed the date under the on-going stand-alone representation regarding no “Material Adverse Change” to December 31, 2020; (8) amended the on-going stand-alone representation and stand-alone Event of Default (as defined in the Loan Agreement) regarding Material Adverse Change such that any adverse change in or effect upon the revenue of the Company and its subsidiaries due to the outbreak of COVID-19 will not constitute a Material Adverse Change; (9) provided CRG with board observer rights and (10) provide that the board observer may be appointed or removed by written notice from the Majority Lenders (as defined in the Loan Agreement).

 

On January 26, 2024, the Company entered into Amendment No. 8 to the Loan Agreement with CRG, which reduced the minimum liquidity requirement of the Loan Agreement from $3.5 million to $1.0 million until April 1, 2024. Thereafter, the Company was subject to the minimum liquidity requirement of $3.5 million.

 

On March 5, 2024, the Company entered into Amendment No. 9 to the Loan Agreement with CRG, which (1) extended the interest-only period through December 31, 2026; (2) extended the period during which the Company may elect to pay a portion of interest in PIK interest payments through December 31, 2026 so long as no Default (as defined in the Loan Agreement) has occurred and is continuing; (3) permitted the Company to make the entire interest payments in PIK interest payments through December 31, 2026 so long as no Default has occurred and is continuing; and (4) permit the payment of dividends on the preferred stock issued or issuable to the Purchaser. The Company assessed Amendment No. 9 to the Loan Agreement and determined that this represented a loan modification. As such, the unamortized portion of previous issuance costs incurred will be amortized over the modified term, and costs incurred with third parties was expensed as incurred.

 

13

 

On June 5, 2024, the Company entered into Amendment No. 10 to the Loan Agreement with CRG, which reduced the minimum liquidity requirement of the Loan Agreement from $3.5 million to $1.5 million for the period commencing June 1, 2024 and ending July 31, 2024. Thereafter, the Company will be subject to the minimum liquidity requirement of $3.5 million.

 

Under the amended Loan Agreement, no cash payments for either principal or interest are required until the first quarter of 2027. The interest will be accrued and included in the debt balance based (to the extent not paid) on principal amounts outstanding at the beginning of the quarter at an interest rate of 12.5%. Beginning in the first quarter of 2027, the Company will be required to make quarterly principal payments (in addition to the interest) of $0.5 million with total principal payments of $1.8 million in 2027 and $1.8 million in 2028. Total cash interest payments required to be made are $0.4 million and $0.1 million for 2027 and 2028 respectively. The maturity date of the Loan (as defined in the Loan Agreement) is December 31, 2028.

 

The Company may voluntarily prepay the borrowings in full, with a prepayment premium beginning at 5.0% and declining by 1.0% annually thereafter, with no premium being payable if prepayment occurs after seven and half years of the loan. There is currently no prepayment premium payable. Each tranche of borrowing required the payment, on the borrowing date, of a financing fee equal to 1.5% of the borrowed loan principal, which is recorded as a discount to the debt. In addition, a facility fee equal to 15.0% of the amounts borrowed plus any PIK is to be payable at the end of the term or when the borrowings are repaid in full. A short-term liability is being accreted using the effective interest method for the facility fee over the term of the Loan Agreement with a corresponding discount to the debt. The borrowings are collateralized by a security interest in substantially all of the Company’s assets.

 

The Loan Agreement requires that the Company adheres to certain affirmative and negative covenants, including financial reporting requirements, certain minimum financial covenants for a pre-specified liquidity requirement and a prohibition against the incurrence of indebtedness, or creation of additional liens, other than as specifically permitted by the terms of the Loan Agreement. In particular, the covenants of the amended Loan Agreement included a covenant that the Company maintain a minimum of $3.5 million of cash and certain cash equivalents. The minimum liquidity requirement was temporarily reduced to $1.5 million until July 31, 2024. The Loan Agreement also prohibits the payment of cash dividends on the Company’s capital stock and also places restrictions on mergers, sales of assets, investments, incurrence of liens, incurrence of indebtedness and transactions with affiliates. CRG may accelerate the payment terms of the Loan Agreement upon the occurrence of certain “Events of Default” set forth therein, which include the failure of the Company to make timely payments of amounts due under the Loan Agreement, the failure of the Company to adhere to the covenants set forth in the Loan Agreement, the insolvency of the Company or upon the occurrence of a “Material Adverse Change” thereunder.

 

As of September 30, 2024, the Company was in compliance with all applicable covenants under the Loan Agreement.

 

As of September 30, 2024, principal, final facility fee and PIK payments under the Loan Agreement, as amended, were as follows (in thousands):

 

Year Ending December 31,

       

2024 (remaining three months of the year)

  $  

2025

     

2026

     

2027

    2,176  

2028

    4,060  

Total

    6,236  

Less: Amount of PIK additions and final facility fee to be incurred subsequent to September 30, 2024

    (1,934 )

Less: Amount representing debt issuance costs

    (134 )

Borrowings, current portion, as of September 30, 2024

  $ 4,168  

 

In connection with drawdowns under the Loan Agreement, the Company recorded aggregate debt discounts of $1.3 million as contra-debt. The debt discounts are being amortized as non-cash interest expense using the effective interest method over the term of the Loan Agreement. As of September 30, 2024 and December 31, 2023, the balance of the aggregate debt discount was approximately $134,000 and $166,000, respectively. The Company’s interest expense associated with the amortization of debt discount was approximately $8,000 and $21,000 during the three months ended September 30, 2024 and 2023, respectively. The Company’s interest expense associated with the amortization of debt discount was approximately $32,000 and $62,000 during the nine months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024 and 2023, the Company incurred interest expense of approximately $116,000 and $512,000, respectively. For the nine months ended September 30, 2024 and 2023, the Company incurred interest expense of approximately $0.8 million and $1.6 million, respectively.

 

14

 

While, as of the date hereof, CRG has not purported that an Event of Default has resulted due to a Material Adverse Change (as those terms defined in the Loan Agreement), due to the substantial doubt about the Company’s ability to continue operating as a going concern, the entire outstanding amount of borrowings under the Loan Agreement and associated aggregate debt discount at September 30, 2024 and December 31, 2023 were classified as current in these financial statements.

 

 

5. Leases

 

The Company’s operating lease obligations primarily consist of leased office, laboratory, and manufacturing space under a non-cancelable operating lease. In addition to the minimum future lease commitments presented below, the lease requires the Company to pay property taxes, insurance, maintenance, and repair costs. The most recent amendment also provides an optional one-year extension of the lease following the end of the current term on November 30, 2025, which was not included in the assessment of the lease term as it is not reasonably certain the Company will elect to exercise this option. Rent expense is recognized using the straight-line method over the term of the lease.

 

The current lease was to expire on November 30, 2024. On March 6, 2024, the Company entered into an amendment to the lease which extended the lease term for a period of one year, subsequent to the original expiration. As amended, the lease will expire on November 30, 2025. Under the terms of the amendment, the Company will be obligated to pay an additional $1.3 million in base rent payments through November 2025, beginning on December 1, 2024. In total, the Company is obligated to pay approximately $7.1 million in base rent payments through November 2025, which began on December 1, 2019. The weighted average remaining lease term as of September 30, 2024 is 1.2 years.

 

In connection with the amendment the Company adjusted its right-of-use asset and lease liability to $2.2 million. As of the date of the amendment, the operating lease was included on the balance sheet at the present value of the future base payments discounted at a 6.5% discount rate using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment as the lease does not provide an implicit rate.

 

The Company’s operating lease expense, excluding variable maintenance fees and other expenses on a monthly basis, was approximately $105,000. Rent expense for the three months ended September 30, 2024 and 2023 was approximately $316,000 and $314,000, respectively. Rent expense for the nine months ended September 30, 2024 and 2023 was approximately $947,000 and $942,000, respectively. The Company’s variable expenses for the three months ended September 30, 2024 and 2023 were approximately $90,000 and $65,000, respectively. The Company’s variable expenses for the nine months ended September 30, 2024 and 2023 were approximately $263,000 and $233,000, respectively. Operating right-of-use asset amortization for the three months ended September 30, 2024 and 2023 was approximately $290,000 and $288,000, respectively. Operating right-of-use asset amortization for the nine months ended September 30, 2024 and 2023 was approximately $867,000 and $852,000, respectively.

 

The following table presents the future operating lease payments and leasehold liability included on the balance sheet related to the Company’s operating lease as of September 30, 2024 (in thousands):

 

Year Ending December 31,

       

2024 (remaining three months of the year)

  $ 313  

2025

    1,166  

Total

    1,479  

Less: Imputed interest

    (52

)

Leasehold liability as of September 30, 2024

  $ 1,427  

 

15

 

The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of September 30, 2024 and December 31, 2023 (in thousands):

 

Lease-Related Assets and Liabilities  

Financial Statement Line

Items

 

 

 

 

 

September 30,

2024

    December 31,

2023

 

Right of use assets:

                   

Operating lease

 

Right of use asset

  $ 1,427     $ 1,102  

Total right of use assets

  $ 1,427     $ 1,102  

Lease liabilities:

                   

Operating lease

 

Leasehold liability, current portion

  $ 1,210     $ 1,102  
   

Leasehold liability, long-term portion

    217        

Total lease liabilities

  $ 1,427     $ 1,102  

 

 

6. Commitments and Contingencies

 

Purchase Obligations

 

Purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. The Company had non-cancelable commitments to suppliers for purchases totaling approximately $0.7 million as of September 30, 2024. The majority of this amount is related to commitments to purchase inventory components and services related to the manufacturing of inventory.

 

Legal Proceedings

 

The Company is not currently involved in any pending legal proceedings that it believes could have a material adverse effect on our financial condition, results of operations or cash flows. From time to time, the Company may be involved in legal proceedings or investigations, which could harm our reputation, business and financial condition and divert the attention of our management from the operation of our business.

 

 

7. Stockholders Equity

 

Convertible Preferred Stock

 

As of September 30, 2024 and December 31, 2023, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 5,000,000 shares of convertible preferred stock with $0.001 par value per share. As of September 30, 2024 and December 31, 2023, 30,229 and 62,881 shares, respectively, were issued and outstanding.

 

Series A Preferred Stock Exchange

 

On March 5, 2024, the Company entered into the A-1 Securities Purchase Agreement with CRG to exchange all 60,876 outstanding shares of Series A preferred stock for 10,000 shares of Series A-1 preferred stock. Consequently, there are no shares of Series A preferred stock outstanding as of September 30, 2024.

 

The exchange was accounted for as a capital transaction constituting an extinguishment of the Series A preferred stock through the issuance of Series A-1 preferred stock with no net impact to stockholders’ deficit. At the time of the exchange, the Series A preferred stock had approximately $1.9 million excess fair value in comparison to the Series A-1 preferred stock. The difference in fair value is treated as an adjustment to net loss applicable to common stockholders for the purpose of calculating earnings per share, see Note 2 for details.

 

16

 

Series A-1 Convertible Preferred Stock

 

Each share of Series A-1 preferred stock has a stated value of $1,000 per share and is convertible into 273 shares of the Company’s common stock at $3.664 per share. The Series A-1 preferred stock is convertible into a total of 2,729,257 shares of common stock subject to certain limitations contained in the A-1 Securities Purchase Agreement. Shares of Series A-1 preferred stock cannot be converted into common stock to the extent the applicable holder would beneficially own in excess of 9.99% of the Company’s outstanding voting power and in no case will the beneficial ownership limitation exceed 19.99% of the Company’s outstanding voting power, unless approved by the Company's stockholders in accordance with Nasdaq Listing Rule 5635(b).The Series A-1 preferred stock has no liquidation preference, no voting rights and ranks junior to shares of the Company’s Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock in terms of repayment and certain other rights. The Series A-1 preferred stock is immediately convertible at the option of the holder, has no stated maturity, and does not pay regularly stated dividends or interest. As of September 30, 2024, 10,000 shares of Series A-1 preferred stock were outstanding.

 

Series B Convertible Preferred Stock

 

The Series B preferred stock has a liquidation preference of $0.001 per share, full ratchet price based anti-dilution protection, has no voting rights and is subject to certain ownership limitations. The Series B preferred stock is immediately convertible at the option of the holder, has no stated maturity, and does not pay regularly stated dividends or interest. As of September 30, 2024 and December 31, 2023, 85 shares of Series B preferred stock remained outstanding, which are currently convertible into shares of the Company’s common stock at $1.66 per share.

 

Series E Convertible Preferred Stock

 

Each share of Series E preferred stock has a stated value of $1,000 per share and is convertible into 93 shares of the Company’s common stock at a conversion price of $10.725 per share. The Series E preferred stock is convertible into a total of 178,560 shares of common stock subject to certain limitations contained in the Series E Purchase Agreement. Shares of Series E preferred stock cannot be converted into common stock to the extent the applicable holder would beneficially own in excess of 9.99% of the Company’s outstanding voting power and in no case will the beneficial ownership limitation exceed 19.99% of the Company’s outstanding voting power, unless approved by the Company's stockholders in accordance with Nasdaq Listing Rule 5635(b). The holders of Series E preferred stock are entitled to receive annual accruing dividends at a rate of 8%, payable in additional shares of Series E preferred stock or cash, at the Company’s option. The shares of Series E preferred stock have full voting rights, on an as-converted basis, subject to certain limitations. The Series E preferred stock rank junior to Series H preferred stock and are senior to all other classes and series of the Company’s equity in terms of repayment and certain other rights. The Series E preferred stock accrued additional dividends of less than $0.1 million and $0.1 million during the three and nine months ended September 30, 2024, respectively, which were recognized as a reduction to additional paid-in capital in the statement of stockholders’ equity (deficit). As of September 30, 2024 and December 31, 2023, 1,920 shares of Series E preferred stock were outstanding.

 

Series F Convertible Preferred Stock

 

On March 4, 2024, in connection with the Purchase Agreement (see Note 1), the Company issued 7,224 shares of Series F Preferred Stock, at a purchase price per share of $1,000. Each share of Series F preferred stock is convertible into 273 shares of the Company’s common stock at a conversion price of $3.664 per share. The Series F preferred stock is convertible into a total of 1,972,152 shares of common stock subject to certain limitations contained in the Purchase Agreement. Shares of Series F preferred stock cannot be converted into common stock to the extent the applicable holder would beneficially own in excess of 49.9% of the Company’s outstanding voting power. The holders of Series F preferred stock are entitled to receive annual accruing dividends at a rate of 5% until the third anniversary of their issuance and 8% thereafter. The dividends are payable in additional shares of Series F preferred stock or cash, at the Company’s option through the third anniversary of their issuance, and at the holder’s option thereafter. The shares of Series F preferred stock have full voting rights, on an as-converted basis, subject to certain limitations. The Series F preferred stock ranks junior to Series H preferred stock, pari passu with Series E preferred stock and are senior to all other classes and series of the Company’s equity in terms of repayment and certain other rights. The Series F preferred stock accrued additional dividends of $0.1 million and $0.2 million during the three and nine months ended September 30, 2024, respectively, which were recognized as a reduction to additional paid-in capital in the statement of stockholders’ deficit. As of September 30, 2024, 7,224 shares of Series F preferred stock were outstanding.

 

17

 

Series H Convertible Preferred Stock

 

On May 16, 2024, in connection with the Series H Purchase Agreement (see Note 4), the Company issued 11,000 shares of Series H Preferred Stock, at a purchase price per share of $1,000. Each share of Series H preferred stock is convertible into 259 shares of the Company’s common stock at a conversion price of $3.86 per share. The Series H preferred stock is convertible into a total of 2,849,000 shares of common stock subject to certain limitations contained in the Purchase Agreement. Shares of Series H preferred stock cannot be converted into common stock to the extent the applicable holder would beneficially own in excess of 9.99% of the Company’s outstanding voting power and in no case will such beneficial ownership limitation exceed 19.99%, unless approved by the Company's stockholders in accordance with Nasdaq Listing Rule 5635(b). The holders of Series H preferred stock are entitled to receive annual accruing dividends at a rate of 8%, payable in additional shares of Series E preferred stock or cash, at the Company’s option. The shares of Series H preferred stock have full voting rights, on an as-converted basis, subject to certain limitations. The Series H preferred stock rank senior to all other classes and series of the Company’s equity in terms of repayment and certain other rights. The Series H preferred stock accrued additional dividends of $0.2 million and $0.3 million during the three and nine months ended September 30, 2024, which were recognized as a reduction to additional paid-in capital in the statement of stockholders’ deficit. As of September 30, 2024, 11,000 shares of Series H preferred stock were outstanding.

 

Common Stock

 

As of September 30, 2024, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 100,000,000 shares of common stock with $0.001 par value per share, of which 2,783,891 shares were issued and outstanding.

 

March 2024 Offering

 

On March 5, 2024, in connection with the Purchase Agreement (see Note 1), the Company issued 75,327 shares of common stock at a purchase price per share of $3.664.

 

June 2024 Offering

 

On June 17, 2024, in connection with the June 2024 Offering (see Note 1), the Company issued 330,000 shares of common stock at a purchase price per share of $1.66.

 

18

 

Common Stock Warrants

 

As of September 30, 2024, the Company had outstanding warrants to purchase common stock as follows:

 

   

Total

Outstanding

and

Exercisable

   

Underlying

Shares of

Common

Stock

   

Exercise

Price per

Share

   

Expiration Date

 

Series 1 Warrants issued in the February 2018 Series B financing

    8,979,000       2,993     $ 6,000.00    

February 2025

 

Series 2 Warrants issued in the February 2018 Series B financing

    8,709,500       2,903     $ 6,000.00    

February 2025

 

Placement agent warrants issued in the January 2022 financing

    1,330,000       4,433     $ 150.00    

January 2027

 

Warrants issued in the January 2022 financing

    16,150,000       53,833     $ 144.00    

July 2027

 

Series A Preferred Investment Options issued in August 2022 financing

    2,853,883       190,259     $ 22.53    

February 2028

 

Placement agent Preferred Investment Options issued in the August 2022 financing

    171,233       11,416     $ 32.85    

August 2027

 

Advisor Warrants issued in the March 2024 financing

    40,938       40,938     $ 3.664    

March 2029

 

Pre-Funded Warrants issued in the June 2024 financing

    2,417,000       2,417,000     $ 0.001       n/a  

Series A-1 Warrants issued in the June 2024 financing

    3,614,457       3,614,457     $ 1.66    

See note (1)

 

Series A-2 Warrants issued in the June 2024 financing

    3,614,457       3,614,457     $ 1.66    

See note (2)

 

Series A-3 Warrants issued in the June 2024 financing

    3,614,457       3,614,457     $ 1.66    

See note (3)

 

Placement Agent Warrants issued in the June 2024 financing

    216,867       216,867     $ 2.075    

June 2029

 

Total as of September 30, 2024

    51,711,792       13,784,013                  

 


(1)

The Series A-1 Warrants expire on the earlier of August 12, 2029 and 60 days following the public announcement by the Company of the Company receiving FDA clearance of second image-guided coronary device with a therapeutic indication other than diagnostic imaging or coronary CTO crossing.

(2)

Series A-2 Warrants expire on the earlier of August 12, 2026 and 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving 510(k) clearance of image-guided Coronary CTO crossing device.

(3)

The Series A-3 Warrants expire on the earlier of May 12, 2025 and 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving FDA approval of image-guided Coronary CTO IDE application.

 

During the three months ended September 30, 2024, a total of 867,457 Pre-Funded Warrants were exercised resulting in the issuance of an aggregate of 867,457 shares of common stock. After giving effect to these aforementioned exercises, 2,417,000 Pre-Funded Warrants remained outstanding. On October 3, 2024, holders of Pre-Funded Warrants opted to exercise a total of 306,000 shares of their warrants into common stock leaving 2,111,000 remaining.

 

In accordance with their terms, the 2,853,833 Series B Preferred Investment Options, exercisable for 190,259 shares of common stock at an exercise price of $22.53 per share, expired on August 8, 2024.

 

19

 

As of December 31, 2023, the Company had outstanding warrants to purchase common stock as follows:

 

   

Total

Outstanding

and

Exercisable

   

 

Underlying

Shares of

Common

Stock

   

 

Exercise

Price per

Share

 

Expiration Date

Series 1 Warrants issued in the February 2018 Series B financing

    8,979,000       2,993     $ 6,000.00  

February 2025

Series 2 Warrants issued in the February 2018 Series B financing

    8,709,500       2,903     $ 6,000.00  

February 2025

Placement agent warrants issued in the January 2022 financing

    1,330,000       4,433     $ 150.00  

January 2027

Warrants issued in the January 2022 financing

    16,150,000       53,833     $ 144.00  

July 2027

Series A Preferred Investment Options issued in August 2022 financing

    2,853,883       190,259     $ 22.53  

February 2028

Series B Preferred Investment Options issued in August 2022 financing

    2,853,883       190,259     $ 22.53  

August 2024

Placement agent Preferred Investment Options issued in the August 2022 financing

    171,233       11,416     $ 32.85  

August 2027

Total as of December 31, 2023

    41,047,499       456,096            

 

March 2024 Private Placement

 

On March 7, 2024, in connection with the closing of the Strategic Partnership and Private Placement, the Company issued Advisor Warrants at an exercise price of $3.664 per share which were immediately exercisable. The Advisor Warrants will expire five years following the time they become exercisable, or March 5, 2029.

 

The exercise price and the number of shares of common stock issuable upon exercise of each Advisor Warrant are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of Advisor Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Advisor Warrants prior to the fundamental transaction.

 

The Advisor Warrants can be exercised at the option of the holders at any time after they become exercisable provided that shares cannot be exercised into common stock if the applicable holder would beneficially own in excess of 4.99% of the Company’s outstanding common stock immediately after giving effect to the exercise. A holder of the Advisor Warrants may, upon notice to the Company, increase or decrease such beneficial ownership limitation, but not in excess of 9.99%.

 

June 2024 Offering

 

On June 13, 2024, the Company entered into a securities purchase agreement with two institutional investors resulting in the issuance of among other things, Pre-Funded Warrants in lieu of common stock to purchase up to an aggregate of 3,284,457 shares of common stock of which 2,417,000 remain outstanding as of September 2024. The Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable, and have no expiration date. On October 3, 2024, holders of Pre-Funded Warrants opted to exercise a total of 306,000 of their warrants into common stock leaving 2,111,000 remaining.

 

In addition, the Company issued to the investors in the Offering (i) Series A-1 Warrants to purchase up to an aggregate of 3,614,457 shares of common stock, (ii) Series A-2 Warrants to purchase up to an aggregate of 3,614,457 shares of common stock, and (iii) Series A-3 Warrants to purchase up to an aggregate of 3,614,457 shares of common stock. Each share of common stock or Pre-Funded Warrant was sold together with one Series A-1 Warrant to purchase one share of common stock, one Series A-2 Warrant to purchase one share of common stock, and one Series A-3 Warrant to purchase one share of common stock. Each Warrant has an exercise price of $1.66 per share.

 

20

 

The Series A-1 Warrants expire on the earlier of August 12, 2029 and 60 days following the public announcement by the Company of the Company receiving FDA clearance of second image-guided coronary device with a therapeutic indication other than diagnostic imaging or coronary CTO crossing. The Series A-2 Warrants expire on the earlier of August 12, 2026 and 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving 510(k) clearance of image-guided Coronary CTO crossing device. The Series A-3 Warrants expire on May 12, 2025 and 60 days following the date of the public announcement by the Company of the occurrence of the Company receiving FDA approval of image-guided Coronary CTO IDE application.

 

In connection with the Offering, the Company also issued to the placement agent Placement Agent or its designees Placement Agent Warrants to purchase up to an aggregate of 216,867 shares of common stock. The Placement Agent Warrants have substantially the same terms as the warrants issued and sold in the Offering, except that the Placement Agent Warrants have an exercise price of $2.075 per share and expire on June 13, 2029.

 

The exercise price and the number of shares of common stock issuable upon exercise of each Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants immediately prior to the fundamental transaction.

 

The Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants can be exercised at the option of the holders at any time after they become exercisable provided that shares of the Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants cannot be exercised into common stock if the applicable holder would beneficially own in excess of 4.99% (or, upon election by such holder prior to the issuance of any shares of Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants, 9.99%) of the Company’s outstanding common stock immediately after giving effect to the exercise. A holder of the Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants may, upon notice to the Company, increase or decrease such beneficial ownership limitation, but not in excess of 9.99%.

 

In the event of a fundamental transaction in which the holders of our voting securities immediately prior to such fundamental transaction will not, following such fundamental transaction, directly or indirectly own more than 50% of the voting securities of the surviving entity or successor entity, and in which the Company is not the successor entity or does not continue as a reporting issuer under the Exchange Act, then, at the request of the holder, the Company or the successor entity shall purchase the unexercised portion of the Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants from the holder by paying to the holder an amount, in cash, equal to the fair value of the remaining unexercised portion of the Pre-Funded Warrants, Series A-1 Warrants, Series A-2 Warrants, Series A-3 Warrants, and Placement Agent Warrants on the date of such fundamental transaction, subject to certain limitations in the event of a fundamental transaction not within our control.

 

 

8. Stock-Based Compensation

 

Stock Plans

 

In January 2015, the Board of Directors adopted and the Company’s stockholders approved the 2015 Equity Incentive Plan (“2015 Plan”). On December 22, 2023, the Company’s stockholders approved an additional