PROXY
STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 31, 2023
INTRODUCTION
The
Company is providing this proxy statement in connection with the solicitation by the Board of proxies to be voted at the Special Meeting
to be held on March 31, 2023, at 10:00 a.m., Eastern time, and any adjournment or postponement thereof. The Special Meeting will
be a virtual meeting. You will be able to attend and participate in the Special Meeting online by visiting https://www.cstproxy.com/pavmed/sm2023.
Please see the “Questions and Answers” below for more details.
This
proxy statement and the accompanying proxy card are being mailed or made available to stockholders beginning on or around February
21, 2023 in connection with the solicitation of proxies by the Board.
When
and where will the meeting take place?
The
Special Meeting will be held on March 31, 2023, at 10:00 a.m., Eastern time, solely over the Internet by means of a live audio
webcast. The Company will not conduct the meeting in-person.
Stockholders
participating in the Special Meeting will be able to listen only and will not be able to speak during the webcast. However, in order
to maintain the interactive nature of the Special Meeting, virtual attendees will be able to:
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vote
via the Special Meeting webcast; and |
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submit
questions or comments to the Company’s officers during the Special Meeting via the Special Meeting webcast. |
Shareholders
may submit questions or comments during the meeting through the Special Meeting webcast by typing in the “Submit a question”
box.
What
proposals are being presented for a stockholder vote at the Special Meeting?
There
are two proposals being presented for stockholder vote at the Special Meeting:
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to
approve an amendment to the Company’s Certificate of Incorporation, to effect, at any time prior to the one-year anniversary
date of the Special Meeting, (i) a reverse split of the Company’s outstanding shares of common stock (which is sometimes called
the “Reverse Split” herein) at a specific ratio, ranging from 1-for-5 to 1-for-15, to be determined by the Board
in its sole discretion, and (ii) an associated reduction in the number of shares of common stock the Company is authorized to issue
(which is sometimes call the “Authorized Capital Reduction” herein), from 250,000,000 shares to 50,000,000 shares
(which is sometimes called the “Reverse Split Proposal” herein); and |
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to
approve the adjournment of the Special Meeting to the extent there are insufficient proxies at the Special Meeting to approve the
foregoing proposal (which is sometimes called the “Adjournment Proposal” herein). |
Stockholders
will also consider any other business as may properly come before the Special Meeting or any adjournment or postponement thereof.
Why
is the Special Meeting being held?
The
Board believes that it is in the best interest of the Company’s stockholders to effect the Reverse Split in order to increase the
per share trading price of the common stock, for two reasons:
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On
December 29, 2022, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”)
stating that, for the prior 30 consecutive business days (through December 28, 2022), the closing bid price of the common stock had
been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
In order to regain compliance, the closing bid price of the common stock must be at least $1 for a minimum of ten consecutive business
days. |
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The
Board believes that the Reverse Split will make the common stock more attractive to a broader range of institutional and other investors,
as the Company has been advised that the current per share trading price of the common stock may affect its acceptability to certain
institutional investors, professional investors and other members of the investing public. |
To
obtain stockholder approval of the amendment effecting the Reverse Split, as required under the Delaware General Corporation Law (the
“DGCL”), the Company called the Special Meeting. For more information on the reasons for the Reverse Split, see the
discussion under “The Reverse Split Proposal—Reasons for the Reverse Split Proposal” below.
What
are the recommendations of the Board?
The
Board recommends that you vote:
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“FOR”
the Reverse Split Proposal; and |
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“FOR”
the Adjournment Proposal. |
Who
is entitled to vote?
The
holders of the Company’s common stock at the close of business on the record date, February 1, 2023, are entitled to vote at the
Special Meeting. As of the record date, 97,721,415 shares of common stock were outstanding (inclusive of shares underlying unvested restricted
stock awards). Holders of the Company’s common stock have one vote for each share that they own on such date.
What
is the difference between a record holder and a beneficial owner?
If
your shares are registered in your name with the Company’s transfer agent, Continental Stock Transfer and Trust Company, then you
are considered the “record holder” for those shares. If you are the record holder of your shares, you have the right to vote
your shares by proxy or to attend the meeting and vote via the Special Meeting webcast.
If
your shares are held through a bank, broker or other nominee, then you are considered to hold your shares in “street name.”
While you are the “beneficial owner” of those shares, you are not considered the record holder. As the beneficial owner of
shares of the Company’s common stock, you have the right to instruct your bank, broker or other nominee how to vote your shares.
However, since you are not the record holder of your shares, you may not vote these shares at the Special Meeting unless you obtain a
“legal proxy” from the stockholder of record.
How
do I submit my vote?
Record
Owners. Record holders can vote by the following methods:
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By
Attending the Special Meeting. You may attend the Special Meeting and vote via the Special Meeting webcast. |
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By
Proxy via the Internet. You may vote by proxy via the Internet. The proxy card enclosed with this proxy
statement provides instructions for submitting a proxy electronically by Internet. |
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By
Proxy via the Mail. You may vote by proxy by completing the enclosed proxy card and returning it in the postage-paid return envelope. |
Beneficial
Owners. Beneficial owners of shares held in street name may instruct their bank, broker or other nominee how to vote their shares.
Beneficial owners should refer to the materials provided to them by their nominee for information on communicating these “voting
instructions.” Beneficial owners may not vote their shares at the Special Meeting unless they obtain a legal proxy from the stockholder
of record and follow the instructions set forth below for attending the Special Meeting.
What
does it mean to vote by proxy?
When
you vote “by proxy,” you grant another person the power to vote stock that you own. If you vote by proxy in accordance with
this proxy statement, you will have designated the following individuals as your proxy holders for the Special Meeting: Lishan Aklog,
M.D., the Company’s Chief Executive Officer and Chairman of the Board; and Dennis McGrath, the Company’s President and Chief
Financial Officer.
Any
proxy given pursuant to this solicitation and received in time for the Special Meeting will be voted in accordance with your specific
instructions. If you provide a proxy, but you do not provide specific instructions on how to vote on each proposal, the proxy holder
will vote your shares “FOR” the Reverse Split Proposal and “FOR” the Adjournment Proposal. With respect to any
other proposal that properly comes before the Special Meeting, the proxy holders will vote in their own discretion according to their
best judgment, to the extent permitted by applicable laws and regulations.
How
do I attend the Special Meeting?
The
Special Meeting will be a virtual meeting. Any stockholder wishing to attend the Special Meeting must register in advance. To register
for and attend the Special Meeting, please follow these instructions as applicable to the nature of your ownership of the Company’s
common stock:
Record
Owners. If you are a record holder, and you wish to attend the Special Meeting, go to https://www.cstproxy.com/pavmed/sm2023, enter
the control number you received on your proxy card or notice of the meeting, and click on the “Click here to preregister for the
online meeting” link at the top of the page. Immediately prior to the start of the Special Meeting, you will need to log back into
the meeting site using your control number. You must register before the meeting starts.
Beneficial
Owners. Beneficial owners who wish to attend the Special Meeting must obtain a legal proxy from the stockholder of record and e-mail
a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial owners should contact their
bank, broker or other nominee for instructions regarding obtaining a legal proxy. Beneficial owners who e-mail a valid legal proxy will
be issued a meeting control number that will allow them to register to attend and participate in the Special Meeting. You will receive
an e-mail prior to the meeting with a link and instructions for entering the Special Meeting. Beneficial owners should contact Continental
Stock Transfer on or before March 23, 2023.
Shareholders
will also have the option to listen to the Special Meeting by telephone by calling:
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Within
the U.S. and Canada: (800) 450-7155 (toll-free) |
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Outside
of the U.S. and Canada: (857) 999-9155 (standard rates apply) |
The
passcode for telephone access is 2648546#. You will not be able to vote or submit questions unless you register for and log in to the
Special Meeting webcast as described above.
What
happens if I do not provide voting instructions to my bank, broker or other nominee?
If
you are a beneficial owner and do not provide your bank, broker or other nominee with voting instructions and do not obtain a legal proxy,
under the rules of various national and regional securities exchanges, the bank, broker or other nominee may generally vote on routine
matters but cannot vote on non-routine matters. If the bank, broker or other nominee that holds your shares does not receive instructions
from you on how to vote your shares on a non-routine matter, the bank, broker or other nominee will inform the inspector of election
that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker
non-vote.”
The
Company expects that the Reverse Split Proposal and the Adjournment Proposal will be considered routine proposals. If they are treated
as routine matters as expected, broker non-votes should not occur with respect to these matters in connection with the Special Meeting.
How
do I revoke my proxy or voting instructions?
Record
Owners. A record holder may revoke his, her or its proxy by (i) submitting a subsequent written notice of revocation that is received
by the Company’s Secretary at any time prior to the voting at the Special Meeting, (ii) submitting a subsequent proxy prior to
the voting at the Special Meeting or (iii) attending the Special Meeting and voting via the Special Meeting webcast. Attendance by a
stockholder at the Special Meeting does not alone serve to revoke his or her proxy. Stockholders may send written notice of revocation
to the Secretary, PAVmed Inc., 360 Madison Avenue, 25th Floor, New York, New York 10017.
Beneficial
Owners. Beneficial owners should refer to the materials provided to them by their bank, broker or other nominee for information on
changing their voting instructions.
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of a majority of the common stock outstanding and entitled to vote at
the meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business. Abstentions are voted
neither “FOR” nor “AGAINST” a matter, but are counted in the determination of a quorum. Similarly, a “broker
non-vote” may occur with respect to shares held in street name, when the bank, broker or other nominee is not permitted to vote
such stock on a particular matter as described above. The shares subject to a proxy which are not being voted on a particular “non-routine”
matter because of a broker non-vote will not be considered shares present and entitled to vote on the matter. These shares, however,
may be considered present and entitled to vote on other “routine” matters and will count for purposes of determining the
presence of a quorum, unless the proxy indicates that the shares are not being voted on any matter at the Special Meeting, in which case
the shares will not be counted for purposes of determining the presence of a quorum.
How
many votes are required to approve each proposal?
Reverse
Split Proposal. Approval of the Reverse Split Proposal requires the affirmative vote of a majority of the outstanding shares of the
Company’s common stock entitled to vote on such proposal. Abstentions and broker non-votes, if any, will have the same effect as
a vote “AGAINST” this proposal.
Adjournment
Proposal. The Adjournment Proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common
stock, represented in person or by proxy at the meeting and entitled to vote on such proposal. Abstentions, which are considered present
and entitled to vote on this matter, will have the same effect as a vote “AGAINST” this proposal. Broker non-votes on this
matter, if any, which are not considered present and entitled to vote on this matter, will not have any effect on the vote with respect
to this proposal.
Who
is paying for this proxy statement and the solicitation of my proxy, and how are proxies solicited?
Proxies
are being solicited by the Board for use at the Special Meeting. The Company’s officers and other employees, without additional
remuneration, also may assist in the solicitation of proxies in the ordinary course of their employment. The Company also has engaged
Morrow Sodali LLC (“Morrow Sodali”) as the Company’s proxy solicitor to assist in the solicitation of proxies
for the Special Meeting. The Company has agreed to pay Morrow Sodali its customary fee. The Company also will reimburse Morrow Sodali
for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses,
damages and expenses.
In
addition to the use of the mail and the Internet, solicitations may be made personally or by email or telephone, as well as by public
announcement. The Company will bear the cost of this proxy solicitation. The Company may also request brokers, dealers, banks and their
nominees to solicit proxies from their clients where appropriate, and may reimburse them for reasonable expenses related thereto.
Who
can help answer my questions?
If
you have questions about how to vote or direct a vote in respect of your shares or about the proposals, or if you need additional copies
of the proxy statement or proxy card, you may contact Morrow Sodali at:
Morrow
Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford, Connecticut 06902
Tel: (800) 662-5200
Banks and brokers call: (203) 658-9400
Email: PAVM.info@investor.morrowsodali.com
You
may also contact the Company at:
PAVmed
Inc.
360 Madison Avenue, 25th Floor
New York, New York 10017
Attention: Secretary
THE
REVERSE SPLIT PROPOSAL
On
January 30, 2023, the Board unanimously adopted and declared the advisability of an amendment to the Company’s Certificate of Incorporation
to effect, at any time prior to the one-year anniversary of the stockholder meeting at which the amendment is approved, (i) a reverse
split of the Company’s common stock (which is sometimes called the “Reverse Split” herein) at a specific ratio,
ranging from 1-for-5 to 1-for-15, to be determined by the Board in its sole discretion, and (ii) an associated reduction in the number
of shares of common stock the Company is authorized to issue (which is sometimes called the “Authorized Capital Reduction”
herein), from 250,000,000 shares to 50,000,000 shares. To obtain stockholder approval of the amendment, as required under the DGCL, the
Board further directed that the amendment be considered for approval at a special meeting of the Company’s stockholders. Accordingly,
at the Special Meeting, stockholders will vote on a proposal to approve the amendment effecting the Reverse Split and the Authorized
Capital Reduction.
By
approving this proposal, the Company’s stockholders will be deemed to have approved an amendment to the Company’s Certificate
of Incorporation effecting the Reverse Split at each of the whole number ratios between 1-for-5 and 1-for-15, inclusive. The Board will
determine the ratio of the Reverse Split by choosing which amendment to file with the Delaware Secretary of State. Upon such filing,
the amendments effecting the Reverse Split at the other ratios will be deemed abandoned, such that the Board may effect only one Reverse
Split. The Board also may elect to effect no Reverse Split. The amendments will be deemed abandoned in their entirety if the Reverse
Split and Authorized Capital Reduction are not effectuated within one year from the date of the Special Meeting. In addition, the Board
reserves the right to abandon the amendments in their entirety at any time, if the Board determines, in its sole discretion, that
the Reverse Split and the Authorized Capital Reduction are no longer in the best interests of the Company and its stockholders.
A
consolidated form of certificate of amendment effecting the Reverse Split and the Authorized Capital Reduction is attached as Annex
A to this proxy statement.
General
Description of the Reverse Split Proposal
Approval
of the Reverse Split Proposal will authorize the Company to effect a Reverse Split of its common stock at each of the whole number ratios
between 1-for-5 and 1-for-15, inclusive, with the specific ratio to be determined by the Board in its sole discretion.
The
Company believes that the availability to the Board of a range of approved ratios will provide the Company with the flexibility to implement
the Reverse Split in a manner designed to maximize the anticipated benefits for the Company and its stockholders. In determining which
ratio to implement, if any, following the receipt of stockholder approval, the Board may consider, among other things:
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historical trading price and trading volume of the common stock; |
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the
then-prevailing trading price and trading volume of the common stock and the anticipated impact of the Reverse Split on the trading
market for the common stock; and |
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prevailing
general market and economic conditions. |
The
Reverse Stock Split will affect all holders of the common stock uniformly and will not affect any stockholder’s percentage ownership
interest in the Company, except to the extent that the Reverse Split would result in any holder of the common stock receiving fractional
shares. Stockholders will not receive fractional shares of common stock in connection with the Reverse Split. Instead, stockholders who
otherwise would have been entitled to a fraction of a share as a result of the Reverse Split will receive in lieu thereof one additional
whole share.
The
table set forth below under “—Effect on Shares of Common Stock” presents, for illustrative purposes only, the
approximate number of shares of common stock the Company expects to be outstanding after giving effect to the Reverse Split, at three
different Reverse Split ratios within the range set forth above, in each case assuming 97,721,415 shares of common stock outstanding
immediately prior to the Reverse Split (which is the amount outstanding, inclusive of shares underlying unvested restricted stock awards,
as of February 1, 2023) and without giving effect to the issuance of shares of common stock in lieu of fractional shares.
The
Reverse Split itself will not impact the market value of the Company as a whole, although the market value of the common stock may move
up or down once the Reverse Split is effective. The Company does not expect the Reverse Split itself to have any economic effect on the
Company’s common stockholders, preferred stockholders, debt holders or option holders, except to the extent the Reverse Split will
result in issuance of additional shares of common stock in lieu of fractional shares.
The
determination of the specific ratio for the Reverse Split will not affect the number of shares of common stock the Company is authorized
to issue after the Reverse Split. Regardless of the ratio, as a result of the Authorized Capital Reduction, the Company will be authorized
to issue 50,000,000 shares of common stock after the Reverse Split.
The
Board does not intend for the Reverse Split to be the first step in a series of plans or proposals to effect a “going private transaction”
within the meaning of Rule 13e-3 of the Exchange Act.
Reasons
for the Reverse Split Proposal
Reverse
Split
The
Board believes that it is in the best interest of the Company’s stockholders to effect the Reverse Split in order to increase the
per share trading price of the common stock, for the following reasons.
Regain
Nasdaq Compliance. The common stock is publicly traded and listed on Nasdaq under the symbol PAVM. On December 29, 2022, the Company
received a notice from the Nasdaq Listing Qualifications Department stating that, for the prior 30 consecutive business days (through
December 28, 2022), the closing bid price of the common stock had been below the minimum of $1 per share required for continued listing
on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). The notification letter stated that the Company would be afforded
180 calendar days (until June 27, 2023) to regain compliance. In order to regain compliance, the closing bid price of the common stock
must be at least $1 for a minimum of ten consecutive business days. The notification letter also stated that, in the event the Company
does not regain compliance within the initial 180-day period, the Company may be eligible for an additional 180-day period. If the Company
is not able to regain compliance, the Company’s securities will be subject to delisting from Nasdaq.
Facilitate
Investment. The Company believes that the Reverse Split will make the common stock more attractive to a broader range of institutional
and other investors, as the Company has been advised that the current per share trading price of the common stock may affect its acceptability
to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional
investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual
brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make
the processing of trades in low-priced stocks economically unattractive to brokers.
Reducing
the number of outstanding shares of the common stock through the Reverse Split is intended, absent other factors, to increase the per
share trading price of the common stock. However, other factors, such as the Company’s financial results, market conditions and
market perception of the Company’s business may adversely affect the per share trading price of the common stock. As a result,
there can be no assurance that the Reverse Split, if implemented, will result in the intended benefits described above, that the per
share trading price of the common stock will increase as expected following the Reverse Split or that the per share trading price of
the common stock will not decrease in the future.
Authorized
Capital Reduction
As
a matter of Delaware law, the implementation of the Reverse Split does not require a reduction in the total number of authorized shares
of common stock. However, the amendment to the Company’s Certificate of Incorporation effecting the Reverse Stock Split also will
effect the Authorized Capital Reduction. The Authorized Capital Reduction will not be proportional to the ratio of the Reverse Split.
Accordingly, while the Authorized Capital Reduction will reduce the number of shares authorized for issuance on an absolute basis, it
will have the effect of increasing the number of shares of common stock authorized for issuance relative to the number of shares outstanding.
The Board believes the relative increase in the number of shares of common stock authorized for issuance is in the best interests of
the Company and its stockholders.
The
relative increase will enable the Company to meet its obligations under its outstanding options, warrants and convertible securities,
and its equity compensation plans, while retaining flexibility to respond to future business needs and opportunities. For example, the
shares may be used for additional equity awards to the Company’s employees, for financing the Company’s business, for acquiring
other businesses, or for forming strategic partnerships and alliances. While the Company from time to time explores opportunities for
strategic transactions that could result in the issuance of common stock, including equity capital raises, as they arise or as the Company’s
needs require, the Company has no current agreement or commitment to issue additional shares of its common stock, except for issuances
of common stock upon the exercise of its outstanding options and warrants and the conversion of its outstanding convertible preferred
stock and notes.
Risks
of the Reverse Split Proposal
Risks
Related to the Reverse Split
We
cannot assure you that the Reverse Split will increase the per share trading price of the common stock as expected or that it will have
the desired effects. If the Reverse Split is implemented, the Board expects that the Reverse Split will increase the per share trading
price of the common stock. However, the effect of the Reverse Split upon the market price of the common stock cannot be predicted with
any certainty.
The
history of similar reverse stock splits for companies in similar circumstances is varied. It is possible that the per share trading price
of the common stock may decline from the proportionately adjusted price promptly after the Reverse Split. In addition, after the Reverse
Split, the per share trading price of the common stock may decrease due to factors unrelated to the Reverse Split. The trading price
of the common stock after the Reverse Split will be based on numerous factors unrelated to the number of shares outstanding, such as
the Company’s financial results, market conditions and market perception of the Company’s business.
As
a result, it is possible that (i) the per share bid price of the common stock after the Reverse Split will not remain in excess of the
$1 minimum under the Nasdaq Listing Rules, (ii) the Reverse Split will not result in a per share trading price that would attract institutional
investors, professional investors and other members of the investing public or improve the economics of processing trades in the common
stock, (iii) if the trading price declines from the proportionately adjusted price promptly after the Reverse Split, the total market
capitalization of the Company shortly after the Reverse Split will be lower than it would have been absent the Reverse Split, and (iv)
it will be more difficult for the Company to achieve the market capitalization it attained in the recent past, because the absolute per
share trading price will need to be proportionately larger.
Even
if we regain compliance with Nasdaq’s minimum bid price requirement, we cannot assure you that we will remain in compliance with
this requirement or Nasdaq’s other continued listing requirements. Even if the bid price per share of the common stock exceeds
$1 per share for the period of time required to regain compliance with Nasdaq’s minimum bid price requirement, the Company may
be delisted due to a failure to meet this requirement in the future or due to a failure to meet the other continued listing requirements,
including Nasdaq requirements related to the minimum stockholders’ equity, minimum number of shares that must be in the public
float and the minimum market value of the public float. A decrease in the outstanding shares and total market capitalization of the Company
as a result of the Reverse Split, as described above, may exacerbate this risk.
The
Reverse Split may decrease the liquidity of the common stock. The liquidity of the common stock may be negatively impacted by the
Reverse Split, given the reduced number of shares that would be outstanding after the Reverse Split, particularly if the increased per
share trading price resulting from the Reverse Split is not maintained. In addition, the Reverse Split will increase the number of stockholders
who own “odd lots” of fewer than 100 shares of the common stock. Brokerage commission and other costs of transactions in
odd lots are generally higher than the costs of transactions of more than 100 shares of common stock. Accordingly, the Reverse Split
may not achieve the desired results of increasing marketability of the common stock as described above.
Risks
Related to the Authorized Capital Reduction
Future
issuances of common stock by the Company may have an adverse effect on the market price of the common stock. While the Authorized
Capital Reduction will reduce the number of shares authorized for issuance on an absolute basis, it will have the effect of increasing
the number of shares of common stock authorized for issuance relative to the number of shares outstanding. The Company may issue a substantial
number of these shares of the common stock under its outstanding options, warrants, preferred stock and convertible notes, as well as
under its existing equity compensation plan and employee stock purchase plan. In addition, the Company may issue additional shares of
common stock in future financings. Any of the foregoing issuances will dilute the Company’s existing stockholders. Furthermore,
the trading price of the common stock could decline as a result of sales of such shares of common stock, or the perception that such
sales could occur.
Mechanics
of the Reverse Split
Effective
Time
The
effective time of the Reverse Split, if approved by stockholders and implemented by the Company, will be the date and time set forth
in the certificate of amendment that is filed with the Delaware Secretary of State. It is expected that such filing will take place promptly
following the Special Meeting, assuming the stockholders approve the amendment. The effective time could occur as soon as the business
day immediately following the Special Meeting. However, the Company will have up to one year from the date of the Special Meeting to
effect the Reverse Split. Within this limit, the exact timing of the filing of the amendment will be determined by the Board based on
its evaluation as to when such action will be the most advantageous to the Company and its stockholders.
Fractional
Shares
Stockholders
will not receive fractional shares of common stock in connection with the Reverse Split. Instead, stockholders who otherwise would have
been entitled to a fraction of a share as a result of the Reverse Split will receive in lieu thereof one additional whole share.
Record
and Beneficial Stockholders
Stockholders
of record who hold their shares electronically in book entry form do not need to take any action to receive their post-Reverse Split
shares of common stock. Stockholders of record who hold their shares of common stock electronically in book-entry form will receive a
transaction statement at their address of record as soon as practicable after the effective date of the Reverse Split, indicating the
number of post-Reverse Split shares of common stock they own.
Stockholders
of record who hold their shares in certificate form will receive a letter of transmittal as soon as practicable after the effective date
of the Reverse Split. The Company’s transfer agent will act as “exchange agent” for the purpose of implementing the
exchange of such old stock certificates. Holders of old stock certificates will be asked to surrender their stock certificates to the
exchange agent in accordance with the procedures set forth in the letter of transmittal. Upon delivery of the old stock certificates,
together with the other required documentation properly completed and executed in accordance with the procedures set forth in the letter
of transmittal, the Company’s transfer agent will issue the applicable post-Reverse Split shares in book-entry form, as evidenced
by a transaction statement that will be sent to the stockholder’s address of record. From the effective time of the Reverse Split
until the surrender of the old stock certificates as described herein, the old stock certificates will be deemed to represent the number
of whole shares resulting from the Reverse Split.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO SO.
Beneficial
stockholders who hold their shares of common stock in “street name” through a bank, broker or other nominee should note that,
although the Company intends to treat beneficial stockholders in the same manner as stockholders of record, such banks, brokers or other
nominees may have different procedures for processing the Reverse Split than those put in place by the Company for stockholders of record.
If you hold your shares in “street name” and if you have questions in this regard, you are encouraged to contact your bank,
broker or other nominee.
Principal
Effects of the Reverse Split Proposal
Effect
on the Common Stock
If
the Reverse Split is approved by the stockholders and implemented by the Company, each stockholder will own a reduced number of shares
of the common stock. Except for adjustments that may result from the treatment of fractional shares as described above, the proposed
reverse split will affect all stockholders uniformly. The proportionate voting rights and other rights and preferences of the holders
of the common stock will not be affected by the Reverse Split (other than as a result of the treatment of fractional shares). For example,
a holder of 2% of the voting power of the outstanding shares of the common stock immediately prior to the Reverse Split would continue
to hold 2% of the voting power of the outstanding shares of the common stock immediately after such Reverse Split. The number of stockholders
of record also will not be affected by the Reverse Split.
The
determination of the specific ratio for the Reverse Split will not affect the number of shares of common stock the Company is authorized
to issue after the Reverse Split. Regardless of the ratio, as a result of the Authorized Capital Reduction, the Company will be authorized
to issue 50,000,000 shares of common stock after the Reverse Split.
The
following table presents, for illustrative purposes only, the approximate number of shares of common stock the Company expects to be
outstanding after giving effect to the Reverse Split, at three different Reverse Split ratios within the range set forth above, in each
case assuming 97,721,415 shares of common stock outstanding immediately prior to the Reverse Split (which is the amount outstanding,
inclusive of shares underlying unvested restricted stock awards, as of February 1, 2023) and without giving effect to the issuance of
shares of common stock in lieu of fractional shares.
| |
As of
February 1, 2023 | | |
After 1-for-5 Reverse Split | | |
After 1-for-10 Reverse Split | | |
After 1-for-15 Reverse Split | |
Common Stock Authorized(1) | |
| 250,000,000 | | |
| 50,000,000 | | |
| 50,000,000 | | |
| 50,000,000 | |
Common Stock Issued and Outstanding | |
| 97,721,415 | | |
| 19,544,283 | | |
| 9,772,141 | | |
| 6,514,761 | |
Number of Shares of Common Stock Issuable Pursuant to Existing Arrangements(2) | |
| 39,879,344 | | |
| 7,975,869 | | |
| 3,987,934 | | |
| 2,658,623 | |
Remaining Number of Shares of Common Stock Authorized | |
| 112,399,241 | | |
| 22,479,848 | | |
| 36,239,925 | | |
| 40,826,616 | |
Price Per share(3) | |
$ | 0.5120 | | |
$ | 2.5600 | | |
$ | 5.1200 | | |
$ | 7.6800 | |
| (1) | The
determination of the specific ratio for the Reverse Split will not affect the number of shares
of common stock the Company is authorized to issue after the Reverse Split. Regardless of
the ratio, as a result of the Authorized Capital Reduction, the Company will be authorized
to issue 50,000,000 shares of common stock after the Reverse Split. |
| (2) | The
number of shares of stock issuable pursuant to existing arrangements as of February 1, 2023
(without giving effect to the Reverse Split) includes the following: |
| (i) | 11,9737,450
shares issuable upon exercise of the Company’s Series Z Warrants at an exercise price
of $1.60 per share; |
| (ii) | 6,697,668
shares issuable upon conversion of the Company’s Convertible Notes (as defined in “Description
of Common Stock” below), assuming for the purposes hereof that the principal and
interest thereon is converted into shares of our common stock at the fixed conversion price
of $5.00 per share. The number of shares of common stock to be issued under the Convertible
Notes may be substantially greater than this amount, because the principal and interest thereon
may be settled in shares of common stock, at a price per share based on the then current
market price, but in any event at a price per share not less than floor price specified in
the Convertible Notes; |
| (iii) | 1,229,887
shares issuable upon conversion of the Series B Preferred Stock (as defined in “Description
of Common Stock” below), assuming for the purposes hereof that all outstanding
shares are converted in full at the conversion price of $3.00 per share; |
| (iv) | 18,638,655
shares issuable upon exercise of stock options at a weighted average exercise price of $1.86
per share; |
| (v) | 193,843
shares of our common stock reserved for issuance, but not subject to outstanding awards,
under the 2014 Plan (as defined in “Description of Common Stock” below);
and |
| (vi) | 1,181,841
shares of our common stock reserved for issuance under the ESPP (as defined in “Description
of Common Stock” below). |
The
number of shares of stock issuable pursuant to existing arrangements, as set forth above, does not reflect future increases in the size
of the 2014 Plan and the ESPP that may occur on an annual basis pursuant to the terms of such plans. The number of shares of stock issuable
pursuant to existing arrangements, as set forth above, also does not include shares issuable pursuant the sales agreement between the
Company and Cantor (as defined in “Description of Common Stock” below), pursuant to which the Company may offer and
sell, from time to time, up to $50,000,000 in shares of our common stock to or through Cantor in an “at the market” offering.
See the information under “Description of Common Stock” below.
| (3) | The
price per share indicated reflects solely the application of the applicable Reverse Split
ratio to the closing price of the common stock on February 1, 2023. |
The
common stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to the periodic reporting and other
requirements of the Exchange Act. The Reverse Split will not affect the registration of the common stock under the Exchange Act.
Immediately
after the Reverse Split, the common stock will continue to be listed on Nasdaq under the symbol PAVM, although it is likely that Nasdaq
would add the letter “D” to the end of the trading symbol for a period of twenty trading days after the effective date of
the Reverse Split to indicate that the Reverse Split had occurred. There can be no assurance that the Company will regain compliance
with Nasdaq’s continued listing requirements, including the minimum bid price requirement, or that the common stock will continue
to be listed on the Nasdaq Capital Market.
After
the effective date of the Reverse Split, the common stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”)
number, which is the number used to identify the common stock.
Effect
on Outstanding Derivative Securities and Equity Compensation Plans
The
Reverse Split will require that proportionate adjustments be made to the conversion rate, the per share exercise price and the number
of shares issuable upon the exercise or conversion of the Company’s outstanding derivative securities, based on the Reverse Split
ratio determined by the Board. The adjustments to the Company’s outstanding derivative securities will result in approximately
the same aggregate price being required to be paid upon exercise of such exercisable securities, and approximately the same value of
shares of common stock being delivered upon such conversion of such convertible securities, immediately following the Reverse Split as
was the case immediately preceding the Reverse Split.
Under
the terms of the 2014 Plan, upon the implementation of a reverse stock split, the compensation committee of the Board may, in its sole
discretion, equitably adjust the awards under the 2014 Plan in order to prevent dilution or enlargement of the benefits available under
the 2014 Plan (including as to the number of shares subject to the award and the exercise price), equitably adjust the aggregate number
of shares reserved for issuance under the 2014 Plan, and equitably adjust the aggregate number of shares that may be issued pursuant
to incentive stock options under the 2014 Plan. In accordance with this provision, upon implementation of the Reverse Split, the compensation
committee of the Board has determined to proportionately adjust the per share exercise price and the number of shares issuable upon the
exercise of employee stock options under the 2014 Plan as described above, and to proportionately adjust the aggregate number of shares
reserved for issuance and the aggregate number of shares that may be issued pursuant to incentive stock options, based on the Reverse
Split ratio determined by the Board. Restricted stock awards under the 2014 Plan will be treated like all other shares of outstanding
common stock.
Under
the terms of the ESPP, upon the implementation of a reverse stock split, the compensation committee of the Board must equitably and proportionately
adjust the number of shares of common stock that thereafter may be made the subject of options under the ESPP (including the specific
limits, maximums and other numbers of shares set forth in the ESPP), to the extent necessary to preserve (but not increase) the level
of incentives intended by the ESPP and the then-outstanding options. In accordance with this provision, upon implementation of the Reverse
Split, the compensation committee of the Board has determined to proportionately adjust the maximum aggregate number of shares that may
be delivered pursuant to options under the ESPP, as well as all limits and other share amounts specifically set forth in the ESPP.
The
table below presents, for illustrative purposes only, the anticipated effect of the Reverse Split on the Company’s outstanding
derivative securities and equity compensation plans, at three different Reverse Split ratios within the range set forth above:
| |
As of
February 1, 2023 | | |
After 1-for-5 Reverse Split | | |
After 1-for-10 Reverse Split | | |
After 1-for-15 Reverse Split | |
Series Z Warrants: | |
| | | |
| | | |
| | | |
| | |
Shares Issuable Upon Exercise in Full | |
| 11,937,450 | | |
| 2,387,490 | | |
| 1,193,745 | | |
| 795,830 | |
Exercise Price Per Share | |
$ | 1.60 | | |
$ | 8.00 | | |
$ | 16.00 | | |
$ | 24.00 | |
Convertible Notes: | |
| | | |
| | | |
| | | |
| | |
Shares Issuable Upon Conversion of Outstanding Principal and Interest(1) | |
| 6,697,668 | | |
| 1,339,534 | | |
| 669,767 | | |
| 446,511 | |
Fixed Conversion Price Per Share | |
$ | 5.00 | | |
$ | 25.00 | | |
$ | 50.00 | | |
$ | 75.00 | |
Series B Preferred Stock: | |
| | | |
| | | |
| | | |
| | |
Shares Issuable Upon Conversion in Full | |
| 1,229,887 | | |
| 245,977 | | |
| 122,989 | | |
| 81,992 | |
Conversion Price Per Share | |
$ | 3.00 | | |
$ | 15.00 | | |
$ | 30.00 | | |
$ | 45.00 | |
Employee Stock Options: | |
| | | |
| | | |
| | | |
| | |
Shares Issuable Upon Exercise | |
| 18,638,655 | | |
| 3,727,731 | | |
| 1,863,866 | | |
| 1,242,577 | |
Weighted Average Exercise Price Per Share | |
$ | 1.86 | | |
$ | 9.30 | | |
$ | 18.60 | | |
$ | 27.90 | |
2014 Plan: | |
| | | |
| | | |
| | | |
| | |
Aggregate Remaining Shares Reserved for Issuance(2) | |
| 193,843 | | |
| 38,769 | | |
| 19,384 | | |
| 12,923 | |
ESPP: | |
| | | |
| | | |
| | | |
| | |
Aggregate Remaining Shares Reserved for Issuance(2) | |
| 1,181,841 | | |
| 236,368 | | |
| 118,184 | | |
| 78,789 | |
| (1) | Assumes
that the principal and interest thereon is converted into shares of our common stock at the
fixed conversion price of $5.00 per share. The number of shares of common stock to be issued
under the Convertible Notes may be substantially greater than this amount, because the principal
and interest thereon may be settled in shares of common stock, at a price per share based
on the then current market price, but in any event at a price per share not less than floor
price specified in the Convertible Notes. See the information under “Description
of Common Stock” below. |
| (2) | The
number of shares of stock reserved for issuance does not reflect future increases in the
size of the 2014 Plan and the ESPP that may occur on an annual basis pursuant to the terms
of such plans. See the information under “Description of Common Stock”
below. |
Effect
on the Preferred Stock
The
Reverse Split and the Authorized Capital Reduction will have no effect on the number of outstanding shares of Series B Preferred Stock
and no effect on the number of shares of preferred stock the Company is authorized to issue (or on the number of such shares designated
as Series B Preferred Stock). The Reverse Split will cause the conversion price and the number of shares issuable upon conversion of
the Series B Preferred Stock to be proportionately adjusted as described above.
Accounting
Consequences
Upon
implementation of the Reverse Split, the par value per share of the common stock will remain unchanged at $0.001 per share. As a result,
on the effective date of the Reverse Split, the stated capital on our consolidated balance sheet attributable to the common stock par
value will be reduced proportionally from its present amount, based on the Reverse Split ratio selected by the Board, with a corresponding
equal increase to the common stock additional paid-in capital. The loss per share and net book value per share will each be higher given
the reduced number of shares of common stock issued and outstanding. The shares of common stock held in treasury, if any, will also be
reduced proportionately based on the Reverse Split ratio selected by the Board. If the Reverse Split is implemented, it will reduce the
number of shares of common stock outstanding, and will require that proportionate adjustments be made to the conversion rate, the per
share exercise price and the number of shares issuable upon the exercise or conversion of the Company’s outstanding derivative
securities, in accordance with the Reverse Split ratio determined by the Board. Retroactive presentation will be given to all share numbers
in the financial statements, and accordingly all amounts including per share amounts will be shown on a post-Reverse Split basis. The
Company does not anticipate any other accounting consequences would arise as a result of the Reverse Split.
Material
Federal U.S. Income Tax Consequences of the Reverse Split
The
following is a summary of certain material U.S. federal income tax consequences of the Reverse Split to the Company’s stockholders.
The summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), applicable Treasury Regulations
promulgated thereunder, judicial authority and current administrative rulings and practices as in effect on the date of this proxy statement,
all of which are subject to change or differing interpretations which could alter the tax consequences described below, possibly with
retroactive effect. The Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service
regarding the federal income tax consequences of the Reverse Split. This discussion only addresses stockholders who hold common stock
as “capital assets” as defined in the Code (generally, property held for investment). It does not purport to be a complete
summary of all potential tax consequences and does not address stockholders subject to special tax treatment under the Code, including,
without limitation, financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign stockholders,
stockholders who hold their pre-reverse stock split shares as part of a straddle, hedge or conversion transaction, and stockholders who
acquired their pre-reverse stock split shares pursuant to the exercise of employee stock options or otherwise as compensation. If a partnership
(or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of the common stock, the U.S.
federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of
the partnership. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purpose) holding the
common stock and the partners in such entities should consult their own tax advisors regarding the U.S. federal income tax consequences
of the proposed Reverse Split to them. In addition, the following discussion does not address the tax consequences of the Reverse Split
under state, local and foreign tax laws. Furthermore, the following discussion does not address any tax consequences of transactions
effectuated before, after or at the same time as the Reverse Split, whether or not they are in connection with the Reverse Split. Each
stockholder should consult his, her or its own tax advisor as to the particular facts and circumstances that may be unique to such stockholder
and also as to any estate, gift, state, local or foreign tax considerations arising out of the Reverse Split.
In
general, the federal income tax consequences of a Reverse Split will vary among stockholders depending upon whether they receive an additional
whole share in lieu of a fractional share or solely a reduced number of shares of common stock in exchange for their old shares of common
stock. The Company believes that because the Reverse Split is not part of a plan to increase periodically a stockholder’s proportionate
interest in the Company’s assets or earnings and profits, the Reverse Split should have the following federal income tax effects.
The Company intends for the Reverse Split to qualify as a “reorganization” pursuant to Section 368(a)(1)(E) of the Code
that should qualify as a “recapitalization” for U.S. federal income tax purposes. However, the Company has not sought and
will not seek any ruling from the Internal Revenue Service regarding any matters relating to the transaction, and as a result, there
can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a contrary position, in which
case the consequences of the transaction could be materially different from those described herein. Provided
that the Reverse Split qualifies as a “recapitalization,” a stockholder
who receives solely a reduced number of shares of common stock will not recognize gain or loss, based upon the Reverse Split ratio. In
the aggregate, such a stockholder’s basis in the reduced number of shares of common stock will equal the stockholder’s basis
in its old shares of common stock and such stockholder’s holding period in the reduced number of shares will include the holding
period in its old shares exchanged. The Treasury Regulations provide detailed rules for allocating the tax basis and holding period of
shares of common stock surrendered in a recapitalization to shares received in the recapitalization. Stockholders of the common stock
acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding
period of such shares.
As
discussed above, we will not issue fractional shares in connection with the Reverse Split. Instead, stockholders who would be entitled
to receive fractional shares because they hold a number of shares not evenly divisible by the Reverse Split ratio would automatically
be entitled to receive an additional fraction of a share of common stock to round up to the next whole share of common stock. The U.S.
federal income tax consequences of the receipt of such an additional fraction of a share are not clear. The Internal Revenue Service
may take the position that a stockholder who, pursuant to the proposed Reverse Split, receives an additional whole share in lieu of a
fractional share should be treated as though the receipt by it of an additional portion
of a share results in a distribution, that it results in gain, or that no income or gain
is recognized. Any income or gain recognized should not exceed the excess, if any, of the fair market value of such whole share
over the fair market value of the fractional share to which the stockholder otherwise was entitled. Stockholders are urged to consult
their own tax advisors regarding the tax consequences to them of the issuance of an additional whole share in lieu of a fractional share
in the Reverse Split.
The
Company will not recognize any gain or loss as a result of the proposed Reverse Split.
A
stockholder of the common stock may be subject to information reporting and backup withholding on any additional share issued in lieu
of a fractional share in connection with the Reverse Split. A stockholder of the common stock will be subject to backup withholding if
such stockholder is not otherwise exempt and such stockholder does not provide its taxpayer identification number in the manner required
or otherwise fails to comply with backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or allowed as a credit against a stockholder’s U.S. federal income tax liability,
if any, provided the required information is timely furnished to the Internal Revenue Service. Stockholders of the common stock should
consult their own tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining
such an exemption.
THE
PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL U.S. INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT AND DOES NOT
PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS
AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE REVERSE SPLIT IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
Required
Vote, Appraisal Rights and Recommendation
Approval
of the Reverse Split Proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common stock
entitled to vote on such proposal. Neither the DGCL, nor the Company’s Certificate of Incorporation or bylaws, provides for appraisal
or other similar rights for dissenting stockholders in connection with the Reverse Split Proposal. Accordingly, stockholders will have
no right to dissent and obtain payment for their shares.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE REVERSE SPLIT PROPOSAL.
THE
ADJOURNMENT PROPOSAL
At
the Special Meeting, stockholders will vote on a proposal to approve the adjournment of the Special Meeting to the extent there are insufficient
proxies at the Special Meeting to approve the Reverse Split Proposal.
At
this proposal is adopted, the Board will have the discretion to adjourn the Special Meeting to a later date or dates to permit further
solicitation of proxies. It is possible for the Company to obtain sufficient votes to approve the Adjournment Proposal but not receive
sufficient votes to approve the Reverse Split Proposal. In such a situation, the Company could adjourn the meeting for any number of
days or hours as permitted under applicable law and attempt to solicit additional votes in favor of such other proposals.
In
addition to an adjournment of the Special Meeting upon approval of the Adjournment Proposal, if a quorum is not present at the Special
Meeting, the Company’s bylaws allow the Special Meeting to be adjourned for the purpose of obtaining a quorum. Any such adjournment
may be made without notice, other than the announcement made at the Special Meeting, by the affirmative vote of a majority of the shares
of common stock present in person or by proxy and entitled to vote at the Special Meeting. The Board also is empowered under Delaware
law to postpone the meeting at any time prior to the meeting being called to order. In such event, the Company would issue a press release
and take such other steps as it believes are necessary and practical in the circumstances to inform its stockholders of the postponement.
If
the stockholders approve the Adjournment Proposal, and the Special Meeting is adjourned, the Company expects to use the additional time
to solicit additional proxies in favor of the Reverse Split Proposal. Among other things, approval of the Adjournment Proposal could
mean that, even if a majority of the common stock has been voted against the Reverse Split Proposal, the Company could adjourn the Special
Meeting without a vote on such proposal, and seek to convince the holders of those shares to change their votes. Any adjournment of the
Special Meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke
them at any time prior to the voting on the Reverse Split Proposal.
The
Adjournment Proposal will only be presented at the Special Meeting if there are not sufficient votes represented in person or by proxy
for the other proposals. If the Adjournment Proposal is presented at the Special Meeting and is not approved, the Company may not be
able to adjourn the Special Meeting to a later date. As a result, the Company may be prevented from obtaining approval of the other matters.
Required
Vote and Recommendation
Approval
of the Adjournment Proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common stock,
represented in person or by proxy at the meeting and entitled to vote on such proposal.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL.
DESCRIPTION
OF COMMON STOCK
Authorized
and Outstanding Capital Stock
The
Company is authorized to issue 250,000,000 shares of common stock, par value $0.001, and 20,000,000 shares of preferred stock, par value
$0.001. On March 23, 2018, the Company filed a certificate of designations authorizing 1,800,000 shares of Series B Convertible Preferred
Stock (the “Series B Preferred Stock”). If the Reverse Split and the Authorized Capital Reduction are implemented,
the number of authorized shares of common stock will be reduced to 50,000,000 shares, but the number of authorized shares of preferred
stock will remain at 20,000,000 shares and the number of such shares designated as Series B Preferred Stock will remain at 1,800,000
shares.
As
of February 1, 2023, there were 97,721,415 shares of the Company’s common stock outstanding (inclusive of shares underlying unvested
restricted stock awards) and 1,229,887 shares of the Company’s Series B Preferred Stock outstanding, as well as:
|
● |
11,937,450
shares issuable upon exercise of the Company’s Series Z Warrants at an exercise price of $1.60 per share; |
|
|
|
|
● |
6,697,668
shares issuable upon conversion of the Company’s Senior Secured Convertible Notes, issued pursuant to that certain securities
purchase agreement dated as of March 31, 2022 (the “Convertible Notes”), assuming for the purposes hereof that
the principal and interest thereon is converted into shares of our common stock at the fixed conversion price of $5.00 per share.
The number of shares of common stock to be issued under the Convertible Notes may be substantially greater than this amount, because
the principal and interest thereon may be settled in shares of common stock, at a price per share based on the then current market
price, but in any event at a price per share not less than floor price specified in the Convertible Notes; |
|
|
|
|
● |
1,229,887
shares issuable upon conversion of the Company’s Series B Preferred Stock, assuming for the purposes hereof that all outstanding
shares are converted in full at the conversion price of $3.00 per share; |
|
|
|
|
● |
18,638,655
shares issuable upon exercise of stock options at a weighted average exercise price of $1.86 per share; |
|
|
|
|
● |
193,843
shares of our common stock reserved for issuance, but not subject to outstanding awards, under the Company’s Fifth Amended
and Restated 2014 Long Term Incentive Equity Plan (the “2014 Plan”); and |
|
|
|
|
● |
1,181,841
shares of our common stock reserved for issuance under the Company’s Second Amended and Restated Employee Stock Purchase Plan
(the “ESPP”). |
If
the Reverse Split is implemented, it will reduce the number of shares of common stock outstanding, and will require that proportionate
adjustments be made to the conversion rate, the per share exercise price and the number of shares issuable upon the exercise or conversion
of the Company’s outstanding derivative securities, in accordance with the Reverse Split ratio determined by the Board. The Reverse
Split will not effect the number of shares of Series B Preferred Stock outstanding. See the additional information under “Principal
Effects of the Reverse Split” above.
In
addition, the number of shares available under the 2014 Plan will automatically increase on January 1st of each year, through (and including)
January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock outstanding on December 31st
of the preceding calendar year, unless the Board provides for a lesser amount. Similarly, the number of shares available for issuance
under the ESPP will automatically increase on January 1st of each year, through (and including) January 1, 2031, in an amount equal to
the lesser of (a) 2% of the total number of shares of our common stock outstanding on December 31st of the preceding calendar year, and
(b) 2,500,000 shares, unless the Board provides for a lesser amount.
Furthermore,
we are party to a sales agreement with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which the Company may offer
and sell, from time to time, up to $50,000,000 in shares of our common stock to or through Cantor in an “at the market” offering.
Common
Stock
Holders
of common stock are entitled to one vote per share on matters on which the Company’s stockholders vote. There are no cumulative
voting rights. Subject to any preferential dividend rights of any outstanding shares of preferred stock, holders of common stock are
entitled to receive dividends, if declared by the Board, out of funds that the Company may legally use to pay dividends. If the Company
liquidates or dissolves, holders of common stock are entitled to share ratably in the Company’s assets once its debts and any liquidation
preference owed to any then-outstanding preferred stockholders is paid. The Certificate of Incorporation does not provide the common
stock with any redemption, conversion or preemptive rights, and there are no sinking fund provisions with respect to the common stock.
All shares of common stock that are outstanding are fully-paid and non-assessable.
Preferred
Stock
The
Certificate of Incorporation authorizes the issuance of blank check preferred stock. Accordingly, the Board is empowered, without stockholder
approval, to issue shares of preferred stock with dividend, liquidation, redemption, voting or other rights which could adversely affect
the voting power or other rights of the holders of shares of the common stock. In addition, shares of preferred stock could be utilized
as a method of discouraging, delaying or preventing a change in control of the Company.
Series
B Preferred Stock
The
Series B Preferred Stock has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and is convertible
into shares of common stock, as discussed below.
The
Series B Convertible Preferred stock is senior to the common stock with respect to dividends and assets distributed in liquidation. In
this regard, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation
Event (as defined in the certificate of designations for the Series B Preferred Stock), the holders of shares of Series B Preferred Stock
then outstanding shall be entitled to be paid out of the Company’s assets available for distribution to its stockholders, before
any payment shall be made to the holders of the common stock by reason of their ownership thereof, an amount per share equal to the greater
of (i) the stated value of the Series B Preferred Stock, plus any dividends accrued but unpaid thereon, or (ii) such amount per share
as would have been payable had all shares of Series B Preferred Stock been converted into common stock immediately prior to such liquidation,
dissolution, winding up or Deemed Liquidation Event.
At
the holders’ election, a share of Series B Preferred Stock is convertible into a number of shares of common stock determined by
dividing the stated value of such share of Series B Preferred Stock by the conversion price. The conversion price is $3.00 per share,
subject to adjustment for stock dividends, stock splits or similar events affecting the common stock. The Series B Preferred Stock shall
not be redeemed for cash and under no circumstances shall the Company be required to net cash settle the Series B Preferred Stock.
The
Series B Preferred Stock provides for dividends at a rate of 8% per annum of the stated value per share. Dividends are payable in arrears
on January 1, April 1, July 1, and October 1. Dividends accrue and cumulate whether or not declared by the Board. All accumulated and
unpaid dividends compound quarterly at the rate of 8% of the stated value per annum. Prior to October 1, 2021, dividends were payable
in additional shares of Series B Preferred Stock. Since October 1, 2021, dividends have been payable at our election in any combination
of shares of Series B Preferred Stock, cash or shares of common stock.
Dividends
The
Company has not paid any cash dividends on the common stock to date. Any future decisions regarding dividends will be made by the Board.
The Company does not anticipate paying dividends in the foreseeable future but expects to retain earnings to finance the growth of its
business. The Board has complete discretion on whether to pay dividends, subject to the restrictions set forth in the Convertible Notes
and related documents and in the certificate of designations for the Series B Preferred Stock. Even if the Board decides to pay dividends,
the form, frequency and amount will depend upon the Company’s future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors the Board may deem relevant.
Market
The
common stock and the Series Z warrants are traded on the Nasdaq Capital Market under the symbols PAVM and PAVMZ, respectively.
Anti-Takeover
Provisions
Provisions
of the DGCL and the Company’s Certificate of Incorporation and bylaws could make it more difficult to acquire the Company by means
of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, are
expected to discourage certain types of coercive takeover practices and takeover bids that the Board may consider inadequate and to encourage
persons seeking to acquire control of the Company to first negotiate with the Board. The Company believes that the benefits of increased
protection of the Company’s ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure
the Company outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of
these proposals could result in improved terms for the Company’s stockholders.
Delaware
Anti-Takeover Statute. The Company is subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the
DGCL prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder”
for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition
of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner. Generally, a “business
combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.
Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years
prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence
of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board,
including discouraging attempts that might result in a premium over the market price for the shares of common stock held by the Company’s
stockholders.
Classified
Board. The Board is divided into three classes. The number of directors in each class is as nearly equal as possible. Directors elected
to succeed those directors whose terms expire are elected for a term of office to expire at the third succeeding annual meeting of stockholders
after their election. The existence of a classified board may extend the time required to make any change in control of the Board when
compared to a corporation with an unclassified board. It may take two annual meetings for the Company’s stockholders to effect
a change in control of the Board, because in general less than a majority of the members of the Board will be elected at a given annual
meeting. Because the Board is classified and the Certificate of Incorporation does not otherwise provide, under the DGCL, the Company’s
directors may only be removed for cause.
Vacancies
in the Board of Directors. The Company’s Certificate of Incorporation and bylaws provide that, subject to limitations, any
vacancy occurring in the Board for any reason may be filled by a majority of the remaining members of the Board then in office, even
if such majority is less than a quorum. Each director elected to fill a vacancy resulting from the death, resignation or removal of a
director shall hold office until the expiration of the term of the director whose death, resignation or removal created the vacancy.
Advance
Notice of Nominations and Shareholder Proposals. The Company’s stockholders are required to provide advance notice and additional
disclosures in order to nominate individuals for election to the Board or to propose matters that can be acted upon at a stockholders’
meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own
slate of directors or otherwise attempting to obtain control of the Company.
Special
Meetings of Stockholders. Under the Company’s bylaws, special meetings of stockholders may be called by the directors, or the
president or the chairman, and shall be called by the secretary at the request in writing of stockholders owning a majority in amount
of the entire capital stock of the corporation outstanding and entitled to vote.
No
Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless
a corporation’s certificate of incorporation provides otherwise. The Company’s Certificate of Incorporation does not provide
for cumulative voting.