| Stockholders' Equity and Common Stock Purchase Warrants | Note 14 — Stockholders’
Equity and Common Stock Purchase Warrants Common Stock As of March 31, 2019
the Company is authorized to issue up to 75.0 million shares of common stock, par value of $0.001 per share. There were 27,142,979
and 27,142,979 shares of common stock issued and outstanding, as of March 31, 2019 and December 31, 2018, respectively, summarized
as follows:
Shares of Common Stock Issued and Outstanding
Issued and outstanding as of December 31, 2018 27,142,979
Senior Secured Convertible Note conversion 50,044
Issued and outstanding as of March 31, 2019 27,193,023
Issued and outstanding as of December 31, 2017 14,551,234
Equity Subscription Rights Offering 9,000,000
Underwritten public offering 2,649,818
Repayment of debt - Senior Secured Note 600,000
Series W Warrant exercises 34,345
Series S Warrant exercises 274,257
Series B Convertible Preferred Stock conversion 33,325
Issued and outstanding as of December 31, 2018 27,142,979
● During the three months ended March 31, 2019, 50,044 shares of common stock of the Company were issued upon (partial) conversion of the Senior Secured Convertible Note. See Note 12, Debt,
● On December 27, 2018, 600,000 shares of common stock of the Company were issued in connection with the repayment of the Senior Secured Note debt. See Note 12, Debt,
● The Company completed an equity subscription rights offering on the June 7, 2018 expiration date of the equity subscription period, with such transaction having a June 12, 2018 close date - referred to herein as the “June 12, 2018 Equity Subscription Rights Offering” - and was completed under a registration statement on Form S-1 - File No. 333-222581 - declared effective by the SEC on May 23, 2018.
The June 12, 2018 Equity Subscription Rights Offering - “ESRO” - involved the Company distributing one non-transferable equity subscription for each of the 17,509,654 issued and outstanding shares of common stock of the Company, as of the record date of May 21, 2018, subject-to the acceptance by the Company of a maximum of 9,000,000 fully-paid equity subscriptions tendered as of the June 7, 2018 expiration date of the equity subscription period. The equity subscription provided for the purchase of a common stock unit at a $1.15 per unit, with each such unit comprised of one share of common stock of the Company and one Series Z Warrant, and immediately separated upon issue into its underlying components.
The June 12, 2018 ESRO resulted in approximately $10.4 million of gross cash proceeds, before approximately $1.0 million of commissions and fees to the dealer-managers, and approximately $0.2 million of offering costs incurred by the Company, upon the issue on June 12, 2018 of 9.0 million common stock units, comprised of one share of common stock of the Company and one Series Z Warrant, as noted above. The June 12, 2018 ESRO proceeds after the dealer-manager commissions and fees and the offering costs incurred by the Company, were allocated based on relative fair value of approximately $7.1 to the shares of common stock par value and additional paid-in capital and approximately $2.1 million to additional paid-in capital with respect to the Series Z Warrants.
● In January 2018, the Company conducted an underwritten public offering resulting in the issue of a total of 2,649,818 shares of common stock of the Company pursuant to its previously filed and effective shelf registration statement on SEC Form S-3 - File No. 333-220549 - declared effective October 6, 2017, along with a corresponding prospectus supplement dated January 19, 2018. On January 19, 2018, the Company entered into an underwriting agreement with Dawson James Securities, Inc., as sole underwriter, under which the Company agreed to issue to the underwriter at $1.80 per share, 2,415,278 shares of common stock on a firm commitment basis and up to an additional 362,292 shares solely to cover underwriter over-allotments, if any, at the option of the underwriter, exercisable within 45 calendar days from January 19, 2018. On January 23, 2018, 2,415,278 shares of common stock of the Company were issued, and on January 25, 2018, an additional 234,540 shares of common stock of the Company were issued under the underwriter’s over-allotment, resulting in cash proceeds, net of the underwriter’s discount of $4,388,099, before $113,438 of offering costs incurred by the Company.
● On February 8, 2018, the Company issued at total 34,345 shares of common stock from the exercise of a corresponding number of Series W Warrants, at temporary exercise price of $2.00 per share, resulting in $68,690 of cash proceeds, before offering costs of $50,520. See herein below for a discussion of the “Series W Warrants Offer-to-Exercise”.
● In March 2018, 274,257 shares of common stock of the Company were issued, resulting from a corresponding number of Series S Warrants exercised for $2,743 of cash proceeds.
● In July 2018, 33,325 shares of common stock of the Company were issued upon the conversion of a corresponding number of shares of Series B Convertible Preferred Stock. Subsequently, in April
2019, the Company issued 1,680,000 shares of common stock of the Company pursuant to its previously filed and effective shelf registration
statement on SEC Form S-3 - File No. 333-220549 - declared effective October 6, 2017, along with a corresponding prospectus supplement
dated April 12, 2019 - resulting in cash proceeds of approximately $1.7 million before placement agent and estimated legal fees
of approximately $82,000. Subsequently, in May
2019, the Company issued 2,000,000 shares of common stock of the Company pursuant to its previously filed and effective shelf registration
statement on SEC Form S-3 - File No. 333-220549 - declared effective October 6, 2017, along with a corresponding prospectus supplement
dated May 8, 2019 - resulting in cash proceeds of approximately $2.0 million before estimated legal fees of approximately $15,000. Subsequently, in connection
with the Senior Secured Convertible Note conversion price voluntary adjustment effective April 23, 2019, through May 14, 2019,
a total of an additional 503,604 shares of common stock of the Company were issued upon (partial) conversions of the Senior Secured
Convertible Note. See Note 12, Debt, Common Stock Purchase Warrants The following table
summarizes outstanding warrants to purchase common stock of the Company at the dates indicated:
Common Stock Purchase Warrants Issued and Outstanding at
Weighted Weighted
Average Average
March 31, Exercise December 31, Exercise Expiration
2019 Price /Share 2018 Price Date
Equity classified warrants
Series Z Warrants 16,815,039 $ 1.60 16,815,039 $ 1.60 April 2024
UPO - Series Z Warrants 53,000 $ 1.60 53,000 $ 1.60 January 2022
Series W Warrants 381,818 $ 5.00 381,818 $ 5.00 January 2022
Series S Warrants 1,199,383 $ 0.01 1,199,383 $ 0.01 June 2032
Total 18,449,240 $ 1.57 18,449,240 $ 1.57 Series Z Warrants There were 16,815,039
Series Z Warrants issued and outstanding as of March 31, 2019 and December 31, 2018, including: the initial issue of 2,739,190
Series Z Warrants on the March 15, 2018 Exchange Date of the Series A and Series A-1 Exchange Offer, as such exchange offer is
discussed above; the issue of 5,075,849 Series Z Warrants on the April 5, 2018 Exchange Date of the “Series W Warrants Exchange
Offer”, as such exchange offer is discussed below; and the issue of 9,000,000 Series Z Warrants on the June 12, 2018 close
date of the Equity Subscription Rights Offering, as such offering is discussed above. Upon issue, a Series
Z Warrant is exercisable to purchase one share of common stock of the Company at an exercise price of $1.60 per share, effective
June 1, 2018. The Series Z Warrant exercise price was initially $3.00 per share through May 31, 2018. On May 15, 2018, the Company’s
board of directors approved a reduction to the Series Z Warrant exercise price to $1.60 per share, effective June 1, 2018, upon
completion of the period-of-notice to the holders of Series Z Warrants then issued and outstanding. See herein below for further
information with respect to the modification expense recognized in connection with the Series Z Warrant exercise price adjustment.
The Series Z Warrant $1.60 exercise price is not subject-to further adjustment, unless by action of the PAVmed Inc board of directors,
or the effect of stock dividends, stock splits or similar events affecting the common stock of the Company. Under no circumstances
will the Company be required to net cash settle the Series Z Warrants, nor to pay any liquidated damages in lieu of delivery of
shares of common stock of the Company resulting from a failure to satisfy any obligations under the Series Z Warrant, and, the
Series Z Warrants expire after the close of business on April 30, 2024, if not earlier redeemed by the Company, as discussed below. Commencing on May
1, 2019, the Company may redeem the outstanding Series Z Warrants, at the Company’s option, in whole or in part, at a price
of $0.01 per Series Z Warrant at any time while the Series Z Warrants are exercisable, upon a minimum of 30 days’ prior written
notice of redemption, if, and only if, the volume weighted average closing price of the common stock of the Company equals or exceeds
$9.00 (subject to adjustment) for any 20 out of 30 consecutive trading days ending three business days before the Company issues
its notice of redemption, and provided the average daily trading volume in the common stock of the Company during such 30-day period
is at least 20,000 shares per day; and if, and only if, there is a current registration statement in effect with respect to the
shares of Common Stock underlying such Series Z Warrants. As noted above, on
April 5, 2018, a total of 5,075,849 Series Z Warrants were issued-upon-exchange of 10,151,682 Series W Warrants, referred to as
the “Series W Warrants Exchange Offer” and the “April 5, 2018 Exchange Date”. In this regard, pursuant
to an offer-to-exchange letter dated February 20, 2018, as included in a Tender Offer Statement on Schedule TO filed with the SEC
on February 20, 2018, the Company offered to issue one Series Z Warrant in exchange for two Series W Warrants. Such Series W Warrants
Exchange Offer commenced on February 20, 2018 and had April 2, 2018 expiration date. The Series W Warrants Offer-to-Exchange was
completed after expiration of the guaranteed delivery period on April 5, 2018. The Series Z Warrant
exercise price adjustment to $1.60 per share from $3.00 per share, as discussed above, resulted in the recognition of a modification
expense on the June 1, 2018 effective date of the Series Z Warrant exercise price adjustment, under the analogous guidance with
respect to stock option modification under FASB ASC Topic 718, Stock-Based Compensation Additionally, the
Series Z Warrants issued in both the Series A and Series A-1 Exchange Offer on March 15, 2018 and the Series W Warrants Exchange
Offer on April 5, 2018, as each exchange offer is discussed above, were issued under the (original) “Series Z Warrant Agreement”.
The Company’s board of directors approved Amendment No. 1 to the original Series Z Warrant Agreement, resulting in the “Amended
and Restated Series Z Warrant Agreement”, dated June 8, 2018, referred to as the Amended Series Z Warrant Agreement. The
principal provisions of the Series Z Warrant Agreement Amendment No. 1, include among other items: to provide for a “late
delivery fee” for shares issued outside of the “standard delivery period”, including delivery of shares upon
Series Z Warrant exercise for open market or other purchase transactions - i.e. “buy-in fee”, with each such payment,
if any, in addition to and not in lieu of delivery of shares, and, to provide for a standard provision (“plain vanilla”)
in the event the Company engages in a “Fundamental Transaction”, as defined, wherein the Series Z Warrant may participate
pari passu with common stockholders in the consideration paid by an acquiror for the Company’s shares, with such payment,
if any, made by the acquiring entity and not paid by the Company as issuer. The Series Z Warrant Agreement Amendment No. 1, was
evaluated under the analogous guidance with respect to stock option modification under FASB ASC 718, as discussed above, but did
not result in the recognition of a modification expense as there was no incremental increase in the estimated fair value as described
above. Series W Warrants There were 381,818
Series W Warrants issued and outstanding as of March 31, 2019 and December 31, 2018. The Series W Warrants have an exercise price
of $5.00 per share, with such exercise price not subject to further adjustment, except in the event of stock dividends, stock splits
or similar events affecting the common stock of the Company, and became exercisable on October 28, 2016 and expire on January 29,
2022, or earlier upon redemption by the Company, as discussed below. Under no circumstances will the Company be required to net
cash settle the Series W Warrants, nor to pay any liquidated damages resulting from a failure to satisfy any obligations under
the Series W Warrant. The Series W Warrant
Exchange Offer, as discussed above, resulted in the recognition of a modification expense on the April 5, 2018 Exchange Date, under
the analogous guidance with respect to stock option modification under FASB ASC 718, as described above with respect to the “Series
Z Warrant June 1, 2018 exercise price adjustment”. In this regard, the Series W Warrants exchanged-upon-issue of the Series
Z Warrants resulted in the recognition on the April 5, 2018 Exchange Date of a modification expense of $766,456 included in other
income (expense) with a corresponding increase to additional paid-in capital, resulting from the incremental estimated fair value
of the consideration given of $3,304,377 of the 5,075,849 Series Z Warrants issued-upon-exchange as compared of the $2,537,921
estimated fair value of the 10,151,682 Series W Warrants extinguished-upon-exchange. The April 5, 2018 Exchange Date estimated
fair values of each of the Series Z Warrants and Series W Warrants noted above, were each computed using the Black-Scholes option
pricing model, using the Company’s common stock price, the Company’s dividend yield, the risk-free rates based on U.S.
Treasury security yields, estimated volatility in the value of the Company’s common stock, and the respective warrants’
exercise price. On January 11, 2018,
the Company filed with the SEC a Tender Offer Statement on Schedule TO offering Series W Warrants holders a temporary exercise
price of $2.00 per share, with such offer having an expiry of February 8, 2018, referred to as the “Series W Warrants Offer-to-Exercise”.
As of the February 8, 2018 expiry date, a total of 34,345 Series W Warrants were exercised at the temporary exercise of $2.00 per
share, resulting in $68,690 of cash proceeds, before offering costs of $50,520. Commencing April 28,
2017, the Company may redeem the outstanding Series W Warrants (other than those outstanding prior to the IPO held by the Company’s
management, founders, and members thereof, but including the warrants held by the initial investors), at the Company’s option,
in whole or in part, at a price of $0.01 per warrant: at any time while the warrants are exercisable; upon a minimum of 30 days’
prior written notice of redemption; if, and only if, the volume weighted average price of the Company’s common stock equals
or exceeds $10.00 (subject-to adjustment) for any 20 consecutive trading days ending three business days before the Company issues
its notice of redemption, and provided the average daily trading volume in the stock is at least 20,000 shares per day; and, if,
and only if, there is a current registration statement in effect with respect to the shares of common stock of the Company underlying
such warrants. The right to exercise will be forfeited unless the Series W Warrants are exercised prior to the date specified in
the notice of redemption. On and after the redemption date, a record holder of an Series W Warrant will have no further rights
except to receive the redemption price for such holder’s Series W Warrant upon its surrender. Series S Warrants There were 1,199,383
Series S Warrants issued and outstanding as of March 31, 2019 and December 31, 2018. Previously, under the Note and Security Purchase
Agreement with Scopia, the Company issued a total of 2,660,000 Series S Warrants to Scopia and its designees, which were immediately
exercisable upon issuance and each may be exercised for one share of common stock of the Company at an exercise price of $0.01
per share, with such exercise price not subject to further adjustment, except for the effect of stock dividends, stock splits or
similar events affecting the common stock of the Company. The Series S Warrants may be exercised for cash or on a cashless basis.
Any Series S Warrants outstanding on the June 30, 2032 expiration date will be automatically exercised on a cashless basis. In March 2018, a total
of 274,257 Series S Warrants exercised for $2,743 of cash proceeds, resulting in the issue of a corresponding number of a shares
of common stock of the Company. In each of October 2017 and November 2017, 532,000 (or a total of 1,064,000) Series S Warrants
were exercised for total cash proceeds of $10,640, resulting in the issuance of a corresponding number of shares of common stock
of the Company, and in November 2017, a total of 122,360 Series S Warrants were exercised on a cashless basis, resulting in the
issuance of a total of 122,080 shares of common stock of the Company. The Senior Secured
Note and the Series S Warrants are freestanding financial instruments, as the Series S Warrants were immediately legally detachable
from the Senior Secured Note and were immediately exercisable. Under no circumstances will the Company be required to net cash
settle the Series S Warrants, nor to pay any liquidated damages resulting from a failure to satisfy any obligations under the Series
S Warrant. The Series-S Warrants are classified as equity in the consolidated balance sheet. The Senior Secured Note net cash proceeds
were allocated to the Senior Secured Note and the Series S Warrants based on their respective relative fair value, resulting in
an allocation of $1,408,125 to the Senior Secured Note and $3,434,452 to the Series S-Warrants. See Note 12, Debt Unit Purchase Options Previously, on the
April 28, 2016 closing date of the Company’s IPO, a total of 53,000 unit purchase options were issued to the IPO selling
agents, with each such unit purchase option issued on April 28, 2016 referred to as an “UPO-W”. The UPO-W, with an
exercise price of $5.50 per unit, could have been exercised to purchase the same unit issued in the Company’s IPO, with such
unit comprised of one share of common stock of the Company and one Series W Warrant to purchase one share of common stock of the
Company at an exercise price of $5.00 per share, along with the other provisions of the Series W Warrant as discussed above. The
UPO-W had a January 29, 2021 expiration date. The issue of the UPO-W to the IPO selling agents was recognized as an offering cost
of the Company’s IPO, with an estimated fair value of $105,100, determined using a Black-Scholes option pricing model with
the following assumptions: fair value of the underlying unit of $5.00, expected volatility of 50%, risk free rate of 1.28%, remaining
contractual term of 4.6 years, and a dividend yield of 0%. On August 22, 2018,
the “UPO Exchange Offer” was completed, wherein, 53,000 “UPO-Z” were issued-upon-exchange of all the previously
issued and outstanding 53,000 UPO-W. The UPO-Z, with an exercise price of $5.50 per unit, may be exercised to purchase a unit comprised
of one share of common stock of the Company and one Series Z Warrant to purchase one share of common stock of the Company at an
exercise price of $1.60 per share, along with the other provisions of the Series Z Warrant as discussed above. The UPO-Z has a
January 29, 2021 expiration date. The UPO Exchange Offer
resulted in the recognition of a modification expense under the analogous guidance with respect to stock option modification under
FASB ASC 718, as described above with respect to the “June 1, 2018 Series Z Warrant exercise price adjustment”. In
this regard, the UPO-Z issued-upon-exchange of the UPO-W resulted in the recognition on the August 22, 2018 exchange date of a
modification expense of $2,120, with a corresponding increase to additional paid-in capital. resulting from the incremental estimated
fair value of the consideration given of $3,180 of the 53,000 UPO-Z issued-upon-exchange as compared to the estimated fair value
of $1,060 of the 53,000 UPO-W extinguished-upon-exchange. The August 22, 2018 estimated fair values of each of the UPO-Z and UPO-W
were each computed using the Black-Scholes option pricing model, using the Company’s common stock price, the Company’s
dividend yield, the risk-free rates based on U.S. Treasury security yields, estimated volatility in the value of the Company’s
common stock, and the respective exercise prices of each of the unit purchase options before and after the August 22, 2018 exercise
price adjustment. Registration
Statement - Form S-3 - File No. 333-227718 The Company has filed
with the SEC an effective registration statement on Form S-3 - File No. 333-227718 - declared effective on October 17, 2018, which
registers for resale (i) the 257,776 shares of common stock of the Company underlying the Series W Warrants privately issued prior
to the Company’s IPO, (ii) the 4,638,818 shares of common stock of the Company underlying the Series Z Warrants privately
issued prior to the Company’s IPO, (iii) the 53,000 shares of common stock of the Company underlying the UPOs issued to the
selling agent and its designees in connection with the Company’s IPO, the 53,000 Series Z Warrants underlying the UPOs and
the 53,000 shares of common stock of the Company issuable upon exercise of the Series Z Warrants underlying the UPOs, (iv) the
2,739,190 shares of common stock of the Company underlying the Series Z Warrants privately issued-upon-exchange of each of the
Series A Warrants and Series A-1 Warrants, and (v) the 2,659,720 shares of common stock of the Company issued or issuable upon
exercise of the Series S Warrants. The registration statement also registers the initial issuance by the Company of 124,042 shares
of common stock of the Company upon exercise of publicly held Series W Warrants and 437,031 shares of common stock of the Company
upon exercise of publicly held Series Z Warrants, as well as all of the shares of common stock of the Company underlying the Series
W Warrants and Series Z Warrants listed in clauses (i) to (iv) of the preceding sentence to the extent such Series W Warrants and
Series Z Warrants are publicly transferred prior to their exercise. Registration Statement - Form S-3
- File No 333-229372 In connection with
the Senior Convertible Note private placement, the Company filed with the Securities and Exchange Commission (’SEC”)
an effective registration statement on Form S-3 - File No. 333- 229372 - referred to as the “Senior Convertible Note Registration
Statement” - registering for resale the maximum number of shares of common stock of the Company issuable upon conversion
of the Senior Convertible Note and the shares issued in connection with the repayment of the Senior Secured Note. If the Senior
Convertible Note Registration Statement effectiveness is not maintained, then, the Company is required to make payments of 1% of
the Senior Convertible Note face value principal payable on the date of such event, and every thirty days thereafter until the
effectiveness failure is cured. Noncontrolling Interest The noncontrolling
interest (“NCI”) included as a component of consolidated total stockholders’ equity for the periods indicated
is as follows:
Three Months
Ended Year Ended
March 31, December 31,
2019 2018
NCI - equity (deficit) - beginning of period $ (161,512 ) $ —
Investment in majority-owned subsidiary — 1,812
Net loss attributable to NCI (168,751 ) (204,072 )
Lucid Diagnostics Inc. 2018 Equity Plan - stock-based compensation 104,503 40,748
NCI - equity (deficit) - end of period $ (225,760 ) $ (161,512 ) The noncontrolling
interest presented above is with respect to Lucid Diagnostics Inc., a majority-owned subsidiary of PAVmed Inc. Lucid Diagnostics
Inc. was incorporated in the State of Delaware on May 8, 2018, and on May 12, 2018, under separate share Subscription Agreements
between Lucid Diagnostics Inc. and each of the respective common stock purchasers. Lucid Diagnostics Inc. issued a total of 10.0
million shares of its common stock for a purchase price of $0.001 per share, including - the issue of 8,187,499 shares to PAVmed
Inc., 943,464 shares to Case Western Reserve University (“CWRU”), and 289,679 shares to each of the three individual
physician inventors of the of the intellectual property and proprietary technologies underlying the CWRU License Agreement. See
Note 7, Agreements Related to Acquired Intellectual Property Rights As of March 31, 2019
and December 31, 2018, there were 10.0 million shares of common stock of Lucid Diagnostics Inc. issued and outstanding, of which
PAVmed Inc. holds a 81.875% majority-interest ownership and has a controlling financial interest, with the remaining 18.125% minority-interest
ownership held by CWRU and each of the three physician inventors noted above. Accordingly, Lucid Diagnostics Inc. is a consolidated
majority-owned subsidiary of the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component
of consolidated stockholders’ equity, along with the recognition of a net loss attributable to the NCI. The stock-based compensation
expense recognized includes: $4,104 and $12,485 during the three months ended March 31, 2019 and the year ended December 31, 2018,
respectively, recognized by Lucid Diagnostics Inc. with respect to stock options granted under the PAVmed Inc. 2014 Equity Plan
to non-employees providing services to Lucid Diagnostics Inc., and $104,503 and $40,748 during the three months ended March 31,
2019 and the year ended December 31, 2018, respectively, recognized by Lucid Diagnostics Inc. with respect to stock options granted
under the Lucid Diagnostics Inc. 2018 Equity Plan to a PAVmed Inc employee and to non-employees providing services to Lucid Diagnostics
Inc. - with each such stock based compensation expense classified in research and development expense. There was no such Lucid
Diagnostics Inc. stock-based compensation expense recognized for the corresponding prior year period. See Note 10, Stock-Based
Compensation |
