avgr20220930

avgr20220930_10q.htm

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, 2022

☐

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, 2022, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 7,435,644.

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:

●

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 FDA for 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, for additional versions of Pantheris, Ocelot, Tigereye and Lightbox;

●

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 remain in compliance with the listing requirements of the Nasdaq Capital Market;

●

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 expectations of qualitative and quantitative effects of COVID-19 to the extent discussed, as well as any expectations of recovery from or forward looking short-term or long-term implications thereof;

	●	the effects of the COVID-19 pandemic on our business and results of operations;
	●	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 22, 2022. 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, 2022

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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

Part II	Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

Signatures		36

“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,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	17,342		$	19,497
Accounts receivable, net of allowance for doubtful accounts of $43 at September 30, 2022 and $6 at December 31, 2021		1,554			1,393
Inventories		5,047			4,601
Prepaid expenses and other current assets		652			300
Total current assets		24,595			25,791

Right of use asset		2,449			3,179
Property and equipment, net		574			95
Other assets		333			420
Total assets	$	27,951		$	29,485

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	612		$	1,394
Accrued compensation		1,344			1,609
Series A preferred stock dividends payable		3,382			—
Accrued expenses and other current liabilities		669			718
Leasehold liability, current portion		1,065			985
Total current liabilities		7,072			4,706

Borrowings, long-term portion		13,668			12,287
Leasehold liability, long-term portion		1,384			2,194
Other long-term liabilities		881			575
Total liabilities		23,005			19,762

Commitments and contingencies (Note 6)

Stockholders’ equity:
Convertible preferred stock issuable in series, par value of $0.001;
Shares authorized: 5,000,000 at September 30, 2022 and December 31, 2021;
Shares issued and outstanding: 56,451 at September 30, 2022 and December 31, 2021; aggregate liquidation preference of $56,366 at September 30, 2022 and December 31, 2021		—			—
Common stock, par value of $0.001;
Shares authorized: 100,000,000 at September 30, 2022 and December 31, 2021;
Shares issued and outstanding: 7,435,644 and 4,778,263 at September 30, 2022 and December 31, 2021, respectively		7			96
Additional paid-in capital		403,133			394,380
Accumulated deficit		(398,194	)		(384,753	)
Total stockholders’ equity		4,946			9,723
Total liabilities and stockholders’ equity	$	27,951		$	29,485

All share and per share data reflect the impact of the reverse stock split effective March 14, 2022. See accompanying notes.

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,
	2022			2021			2022			2021
Revenues	$	2,252		$	2,366		$	6,272		$	7,727
Cost of revenues		1,462			1,566			4,301			5,015
Gross profit		790			800			1,971			2,712

Operating expenses:
Research and development		1,086			1,397			3,244			4,502
Selling, general and administrative		3,384			3,892			10,862			11,755
Total operating expenses		4,470			5,289			14,106			16,257
Loss from operations		(3,680	)		(4,489	)		(12,135	)		(13,545	)

Interest expense, net		(407	)		(419	)		(1,286	)		(1,214	)
Other (expenses) income, net		—			(4	)		(20	)		2,343
Net loss and comprehensive loss		(4,087	)		(4,912	)		(13,441	)		(12,416	)
Accretion of preferred stock dividends		(1,127	)		(1,044	)		(3,381	)		(3,132	)
Deemed dividend arising from beneficial conversion feature of convertible preferred stock		—			—			(5,111	)		—
Net loss applicable to common stockholders	$	(5,214	)	$	(5,956	)	$	(21,933	)	$	(15,548	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.77	)	$	(1.25	)	$	(3.78	)	$	(3.31	)
Weighted average common shares used to compute net loss per share, basic and diluted		6,798			4,769			5,804			4,704

All share and per share data reflect the impact of the reverse stock split effective March 14, 2022. See accompanying notes.

AVINGER, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(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, 2021		52,276	$	—		4,767,650	$	95	$	392,032		$	(374,845	)	$	17,282
Issuance of common stock under officers and directors purchase plan and vesting of restricted stock units		—		—		10,498		1		—			—			1
Employee stock-based compensation		—		—		—		—		239			—			239
Accretion of Series A preferred stock dividends		—		—		—		—		(1,044	)		—			(1,044	)
Net and comprehensive loss		—		—		—		—		—			(4,912	)		(4,912	)
Balance at September 30, 2021		52,276	$	—		4,778,148	$	96	$	391,227		$	(379,757	)	$	11,566

	Convertible Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance at June 30, 2022		56,451	$	—		6,081,333	$	6	$	399,422		$	(394,107	)	$	5,321
Issuance of common stock in public offerings, net of commissions and issuance costs		—		—		959,137		1		4,799			—			4,800
Exercise of pre-funded warrants for common stock		—		—		387,019		—		—			—			—
Issuance of common stock upon vesting of restricted stock units		—		—		8,155		—		—			—			—
Employee stock-based compensation		—		—		—		—		39			—			39
Accretion of Series A preferred stock dividends		—		—		—		—		(1,127	)		—			(1,127	)
Net and comprehensive loss		—		—		—		—		—			(4,087	)		(4,087	)
Balance at September 30, 2022		56,451	$	—		7,435,644	$	7	$	403,133		$	(398,194	)	$	4,946

All share and per share data reflect the impact of the reverse stock split effective March 14, 2022. See accompanying notes.

AVINGER, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (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
Balance at December 31, 2020		52,369		$	—		4,246,306	$	85	$	380,332		$	(367,341	)	$	13,076
Issuance of common stock in public offerings, net of commissions and issuance costs		—			—		500,000		10		13,067			—			13,077
Conversion of Series B preferred stock into common stock		(93	)		—		18,600		—		—			—			—
Issuance of common stock under officers and directors purchase plan and vesting of restricted stock units		—			—		13,242		1		—			—			1
Employee stock-based compensation		—			—		—		—		960			—			960
Accretion of Series A preferred stock dividends		—			—		—		—		(3,132	)		—			(3,132	)
Net and comprehensive loss		—			—		—		—		—			(12,416	)		(12,416	)
Balance at September 30, 2021		52,276		$	—		4,778,148	$	96	$	391,227		$	(379,757	)	$	11,566

	Convertible Preferred Stock					Common Stock					Additional Paid-in			Accumulated			Total Stockholders’
	Shares			Amount		Shares		Amount			Capital			Deficit			Equity
Balance at December 31, 2021		56,451		$	—		4,778,263	$	96		$	394,380		$	(384,753	)	$	9,723
Issuance of common stock in public offerings, net of commissions and issuance costs		—			—		1,285,603		2			5,194			—			5,196
Issuance of Series D preferred stock, net of commissions and issuance costs		7,600			—		—		—			6,721			—			6,721
Conversion of Series D preferred stock into common stock		(7,600	)		—		950,000		1			—			—			1
Exercise of pre-funded warrants for common stock		—			—		387,019		—			—			—			—
Reclassifications and adjustments due to rounding impact from reverse stock split for fractional shares		—			—		26,169		(92	)		92			—			—
Issuance of common stock upon vesting of restricted stock units		—			—		8,590		—			—			—			—
Employee stock-based compensation		—			—		—		—			127			—			127
Accretion of Series A preferred stock dividends		—			—		—		—			(3,381	)		—			(3,381	)
Net and comprehensive loss		—			—		—		—			—			(13,441	)		(13,441	)
Balance at September 30, 2022		56,451		$	—		7,435,644	$	7		$	403,133		$	(398,194	)	$	4,946

All share and per share data reflect the impact of the reverse stock split effective March 14, 2022. See accompanying notes.

AVINGER, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(13,441	)	$	(12,416	)

SEC Form 10-Q filed by Avinger Inc.