| Stockholders' Equity and Common Stock Purchase Warrants | Note 14 — Stockholders’ Equity
and Common Stock Purchase Warrants Common Stock As of December 31, 2019,
the Company is authorized to issue up to 100,000,000 million shares of common stock, par value of $0.001 per share. There were
40,478,861 and 27,142,979 shares of common stock issued and outstanding, as of December 31, 2019 and 2018, respectively, summarized
as follows:
Shares of Common Stock Issued and Outstanding
Issued and outstanding as of December 31, 2018 27,142,979
Registered offerings 5,480,000
Conversion of Senior Secured Convertible Note issued December 27, 2018 7,773,110
Employee stock purchase plan 82,772
Issued and outstanding as of December 31, 2019 40,478,861
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 Year Ended December 31,
2019
● During April, May, and June 2019, a total of 5,480,000 shares of common stock of the Company were issued in registered offerings, including 4,950,000 shares issued under common stock share subscription agreements entered into with individual investors and 530,000 shares issued under a placement agency agreement, resulting in total proceeds of $5,480,000, before placement agent fees and legal fees of $101,098.
● In 2019, a total of 7,773,110 shares of common stock of the Company were issued upon conversions of the December 2018 Senior Secured Convertible Note. See Note 12, Debt, for further information with respect to the Senior Secured Convertible Note issued December 27, 2018, including the issue of shares of common stock of the Company.
● In October 2019, 82,772 shares of common stock were purchase by employees in participation of the Employee Stock Purchase Plan. See Note 10, Stock-Based Compensation, for further information with respect to the ESPP Year Ended December 31,
2018
● 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, for further information with respect to the Senior Secured Note repayment.
● 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” (“ESRO”) 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 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 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 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 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. Common Stock Purchase Warrants The following table summarizes
outstanding warrants to purchase common stock of the Company at the dates indicated:
December 31, Weighted Average Exercise December 31, 2018 Weighted Average Exercise Expiration 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
UPO - Series W Warrants - - - - January 2022
Series S Warrants 1,199,383 $ 0.01 1,199,383 $ 0.01 January 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 December 31, 2019 and 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; the issue of 5,075,849 Series Z Warrants on
the April 5, 2018 Exchange Date of the Series W Warrants Exchange Offer; and the issue of 9,000,000 Series Z Warrants on the June
12, 2018 close date of the Equity Subscription Rights Offering. 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
Fair Value Assumptions - June 1, 2018 Immediately after Modification Immediately before Modification
Calculated aggregate estimated fair value $ 3,477,692 $ 2,336,697
Series Z Warrants - issued and outstanding - June 1, 2018 7,815,039 7,815,039
Value of common stock per share $ 1.00 $ 1.00
Exercise price per share - Series Z Warrant $ 1.60 $ 3.00
Expected term - years 5.9 5.9
Volatility 58 % 58 %
Risk free interest rate 2.8 % 2.8 %
Dividend yield 0 % 0 % Series Z Warrants - continued 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 December 31, 2019 and 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 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 of a current period modification expense of $766,456 included in other income (expense) in the consolidated
statement of operations, 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 following assumptions:
Series Z Warrants Series W Warrants
Calculated aggregate estimated fair value $ 3,304,377 $ 2,537,921
Series Z Warrants issued-upon-exchange 5,075,849 -
Series W Warrants extinguished-upon-exchange - 10,151,682
Value of common stock $ 1.66 $ 1.66
Exercise price per share $ 3.00 $ 5.00
Expected term (years) 2.7 3.8
Volatility 55 % 55 %
Risk free rate 2.7 % 2.5 %
Dividend yield 0 % 0 % 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. 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 December 31, 2019 and 2018, respectively. 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.
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. Subsequent to December 31,
2019, in January 2020, the remaining 1,199,383 Series S Warrants were exercised for $11,994 of cash proceeds and the issue of a
corresponding number of shares of common stock of the Company. Previously, 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. 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 of a modification expense of $2,120 included in
other income (expense) in the consolidated statement of operations, with a corresponding increase to additional paid-in capital
in the consolidated balance sheet, 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 following assumptions:
Fair Value Assumptions UPO-Z UPO-W
Calculated aggregate estimated fair value $ 3,180 $ 1,060
UPO-Z issued-upon-exchange /UPO-W extinguished-upon-exchange 53,000 53,000
Value of common stock $ 1.38 $ 1.38
Value of Series Z Warrant /Series W Warrants $ 0.53 $ 0.05
Exercise price per unit - UPO-Z /UPO-W $ 5.50 $ 5.50
Expected term (years) 2.4 2.4
Volatility 42 % 42 %
Risk free rate 2.6 % 2.6 %
Dividend yield 0 % 0 % Noncontrolling Interest The noncontrolling interest
(“NCI”) included as a component of consolidated total stockholders’ equity for the periods indicated is as follows:
Year Ended
December 31, 2019 December 31, 2018
NCI - equity (deficit) - beginning of period (161,512 ) -
Investment in majority-owned subsidiary- Lucid Diagnostics Inc. - 1,812
Investment in majority-owned subsidiary- Solys Diagnostics Inc. 889 -
Share Subscription Receivable - Solys Diagnostics Inc. (889 ) -
Net loss attributable to NCI- Lucid Diagnostics Inc. (801,224 ) (204,072 )
Net loss attributable to NCI- Solys Diagnostics Inc. (9,666 ) -
Stock-based compensation expense - Lucid Diagnostics Inc 2018 Equity Plan 158,123 40,748
NCI - equity (deficit) - end of period (814,279 ) (161,512 ) The consolidated noncontrolling
interest presented above is with respect to the Company’s majority-owned subsidiaries Lucid Diagnostics Inc. (inception date
of May 8, 2018) and Solys Diagnostics Inc. (inception date of October 7, 2019). As of December 31, 2019,
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 of the “EsoGuard Technology”. 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 in the consolidated balance sheet as of December 31, 2019 and
December 31, 2018, along with the recognition of a net loss attributable to the NCI in the consolidated statement of operations
in the year ended December 31, 2019 and December 31, 2018. As of December 31, 2019,
there were 9,189,190 shares of common stock of Solys Diagnostics Inc. issued and outstanding, of which PAVmed Inc. holds a 90.3235%
majority-interest ownership and has a controlling financial interest, with the remaining 9.6765% minority-interest ownership held
by unrelated third parties. Accordingly, Solys 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
in the consolidated balance sheet as of December 31, 2019, along with the recognition of a net loss attributable to the NCI in
the consolidated statement of operations in the year ended December 31, 2019. See Note 10, Stock-Based
Compensation |
