Item 3. Legal Proceedings
Item
3. Legal Proceedings
On
November 2, 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 did not seek any specific monetary damages. The Company did
not believe it was clear the prior approval of these matters was invalid or otherwise ineffective. However, to avoid any uncertainty
and the expense of further litigation, on January 5, 2021, the Company’s Board of Directors determined 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 Settlement Term Sheet Agreement, dated January 28, 2021, 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 approval by the Court.
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 Kingswood Capital Markets, a “division” of Benchmark
Investments, Inc. On December 16, 2021, the court granted PAVmed’s motion to dismiss the case for lack of subject matter jurisdiction.
On February 7, 2022, Benchmark Investments LLC, which claimed to be affiliated with Benchmark Investments, Inc., filed a new complaint
in the Supreme Court of the State of New York, New York County, asserting claims similar to those in the federal action, and adding to
its allegations that financings conducted by the Company in January 2021 and February 2021 also violated the Company’s engagement
letter with Kingswood Capital Markets. The Company disagrees with the allegations set forth in the complaint and intends to vigorously
contest the complaint.
In
the ordinary course of our business, particularly as it begins commercialization of its products, the Company 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, the Company does not believe it is 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 the Company’s business,
financial position, results of operations, and /or cash flows. Additionally, although the Company has specific insurance for certain
potential risks, the Company may in the future incur judgments or enter into settlements of claims which may have a material adverse
impact on the Company’s business, financial position, results of operations, and /or cash flows.
Item
4. Mine Safety Disclosures
Not
applicable.
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PART
II