PAVmed Inc. 10-K

Item 3. Legal Proceedings In November 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint in the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws at the Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have been approved were not so approved (including matters relating to the increase in the size of the 2014 Equity Plan and the ESPP). The relief sought under the complaint includes certain corrective actions by the Company, but does not seek any specific monetary damages. The Company does not believe it is clear the prior approval of these matters is invalid or otherwise ineffective. However, on January 5, 2021, the Company’s Board of Directors determined, in order to avoid any uncertainty and to avoid the cost and expense of further litigation of the issue, it would be advisable and in the best interests of the Company and its stockholders to re-submit these proposals to the Company’s stockholders for ratification and/or approval. In this regard, the Company held a special meeting of stockholders on March 4, 2021, at which such matters were ratified and approved. The parties have reached agreement on a proposed term sheet to settle the complaint, the terms of which do not contemplate payment of monetary damages to the putative class in the proceeding. The settlement of the complaint is pending and is subject to court approval. On December 23, 2020, Benchmark Investments, Inc. filed a complaint against the Company in the U.S. District Court of the Southern District of New York alleging the registered direct offerings of shares of common stock of the Company completed in December 2020 were in violation of provisions set forth in an engagement letter between the Company and the plaintiff. The plaintiff is seeking monetary damages of up to $1.3 million. The Company disagrees with the allegations set forth in the complaint and intends to vigorously contest the complaint. Additionally, in the ordinary course of our business, particularly as we begin commercialization of our products, we may be subject to certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from time to time. Except as otherwise noted herein, we do not believe we are currently a party to any other pending legal proceedings. Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome could include monetary damages, and excessive verdicts can result from litigation, and as such, could result in a material adverse impact on our business, financial position, results of operations, and /or cash flows. Additionally, although we have specific insurance for certain potential risks, we may in the future incur judgments or enter into settlements of claims which may have a material adverse impact on our business, financial position, results of operations, and /or cash flows. Item 4. Mine Safety Disclosures Not applicable. 77 PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Equity Our common stock is traded on the Nasdaq Capital Market under the symbol “PAVM.” Our Series Z Warrants and Series W Warrants are also traded on the Nasdaq Capital Market under the symbols “PAVMZ” and “PAVMW,” respectively. Holders As of March 12, 2021, there were 82,460,720 shares of our common stock outstanding. Our shares of common stock are held by an estimated 9,000 holders of record and we believe our shares of common stock are held by more than beneficial owners. Dividends Common Stock We have not paid any cash dividends on our common stock to date. Any future decisions regarding dividends will be made by our board of directors. We do not anticipate paying dividends in the foreseeable future but expect to retain earnings to finance the growth of our business. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors the board of directors may deem relevant. Series B Convertible Preferred Stock The Series B Convertible Preferred Stock is issued pursuant to the PAVmed Inc. Certificate of Designation of Preferences, Rights, and Limitations of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock Certificate of Designation”), has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and at the holders’ election, shares of Series B Convertible Preferred Stock is immediately convertible upon issuance into a corresponding number of shares of common stock of PAVmed Inc. The Series B Convertible Preferred Stock Certificate of Designation provides for dividends at a rate of 8% per annum based on the $3.00 per share stated value, with such dividends compounded quarterly, accumulate, and are payable in arrears upon being declared by the Company’s board of directors, with the dividends earned from April 1, 2018 through October 1, 2021 payable-in-kind (“PIK”) by the issue of additional shares of Series B Convertible Preferred Stock. The dividends may be settled after October 1, 2021, at the election of the Company, through any combination of the issuance of shares of Series B Convertible Preferred Stock, shares of common stock of the Company, and /or cash payment. During the year ended December 31, 2020, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends, earned as of December 31, 2019, March 31, 2020, June 30, 2020, and September 30, 2020, of an aggregate of approximately $284,000, which were settled by the issue of an additional aggregate 94,866 shares of Series B Convertible Preferred Stock. During the prior year ended December 31, 2019, the Company’s board-of-directors declared of Series B Convertible Preferred Stock dividends earned as of December 31, 2018, March 31, 2019, June 30, 2019, and September 30, 2019, of an aggregate of approximately $265,000 which were settled by the issue of an additional aggregate 88,268 shares of Series B Convertible Preferred Stock. Subsequent to December 31, 2020, in January 2021, the Company’s board-of-directors declared a Series B Convertible Preferred Stock dividend earned as of December 31, 2020 and payable as of January 1, 2021, of approximately $73,000 to be settled by the issue of an additional 24,198 shares of Series B Convertible Preferred Stock 78