Item
2.03. |
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
As
previously disclosed, on March 31, 2022, PAVmed Inc. (the “Company”) entered into a securities purchase agreement
(the “SPA”) with an accredited institutional investor (the “Investor”), for the sale of up to $50,000,000
in initial principal amount of Senior Secured Convertible Notes (the “Notes”), in a registered direct offering (the
“Offering”), for a purchase price equal to $1,000 for each $1,100 in principal amount of Notes. The Company consummated
an initial closing for the sale of $27,500,000 in principal amount of Notes on April 4, 2022. Under the SPA, subject to certain conditions
being met or waived, from time to time before March 31, 2024, one or more additional closings for up to the remaining principal amount
of Notes may occur.
In
accordance with the SPA, on September 8, 2022, the Company consummated a second closing for the sale of an additional $11,250,000 in
principal amount of Notes. The Company will not pay any selling commission in connection with the sale of the Notes, although it will
pay a financial advisory fee equal to 1.8% of the gross proceeds from the sale of the Notes to an independent financial advisor. The
Company expects the net proceeds from the sale of the Notes will be approximately $10.0 million, after the original issue discount
and the deduction of estimated aggregate offering expenses payable by the Company. The Company intends
to use the net proceeds for working capital and general corporate purposes. The Notes, along with the Offering, the SPA and the security
agreement pursuant to which the Notes are secured (the “Security Agreement”), including the payment terms, events
of default, dividend restrictions and minimum available cash requirements under the Notes, are more fully described in the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on April 4, 2022, and such description
is incorporated herein by reference.
In
connection with the sale of the additional Notes, the Company entered into an amendment and waiver (the “Amendment and Waiver”)
with the Investor, amending certain provisions of the SPA and waiving certain provisions of the SPA and the Notes. The SPA was amended
to, among other things, (a) permit the sale of up to $5,000,000 in shares of the Company’s common stock in an “at the market”
transaction with a registered broker-dealer, and (b) revise the form of additional Note so that (i) the Equity Condition (as defined
in the Note) relating to the market price of the Company’s common stock will be met if the VWAP of the common stock is not less
than the $1.00 threshold on any of the five trading days prior to the date of determination, and is not less than the same threshold
on more than four trading days during the 20 trading days prior to the date of determination, and (ii) the Equity Condition relating
to the trading volume of the Company’s common stock will be met if the aggregate daily dollar trading volume (as reported on Bloomberg)
is not less than the $2,000,000 threshold on any of the five trading days prior to the date of determination, and is not less than the
same threshold for more than four trading days during the 20 trading days prior to the date of determination. The Investor also waived
such Equity Conditions in the outstanding Notes, so that the corresponding Equity Conditions in the outstanding Notes will be met as
long as these Equity Conditions in the additional Notes are met. In addition, the Investor waived, through and including March 5, 2023,
the covenant requiring that the ratio of (a) the outstanding principal amount of the Notes (including the additional Notes), accrued
and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior
ten trading days, not exceed 30%, provided that during such period such ratio does not exceed 50% and the Company’s market capitalization
is at no time less than $75 million.
The
Offering is being made pursuant to the Company’s existing shelf registration statement on Form S-3 (Registration No. 333-261814),
which was filed with the SEC on December 21, 2021 and declared effective by the SEC on January 7, 2022. A prospectus supplement relating
to the Offering, together with the accompanying base prospectus included in the registration statement, were filed with the SEC on April
4, 2022.
Additional
Information
The
form of SPA, Note, Security Agreement and Amendment and Waiver are included as exhibits to this report. The descriptions of the SPA,
Note, Security Agreement and Amendment and Waiver included and/or incorporated by reference in this report do not purport to be complete
and are qualified in their entirety by reference to the full text of such documents, which are incorporated by reference in this report.
The
form of SPA, Note, Security Agreement and Amendment and Waiver have been included and/or incorporated by reference to provide investors
and security holders with information regarding their terms. The documents are not intended to provide any other factual information
about the Company. The representations, warranties and covenants contained in the SPA, Note, Security Agreement and Amendment and Waiver
were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements,
may in some cases be made solely for the allocation of risk between the parties and may be subject to limitations agreed upon by the
contracting parties.