PAVMW PAVmed Inc

DESCRIPTION OF NOTES

We are offering up to $50,000,000 in principal amount of the notes. The notes are being sold pursuant to the terms of the SPA between us and the investor in connection with this offering. The notes are not being issued pursuant to an indenture.

The following is a description of the material terms of the notes, which replaces the description of the general terms and provisions of our debt securities set forth in the accompanying prospectus, to which reference is hereby made, to the extent the description in the accompanying prospectus is inconsistent herewith. The following description is a summary and does not purport to be complete. It is subject to and is qualified by reference to all the provisions of the notes. We urge you to read the notes, as well as the SPA, because they, and not this description, define your rights as a holder of the notes. For more information on where you may obtain copies of the notes and the SPA, see “Where You Can Find More Information.”

This prospectus supplement also covers the shares of our common stock issuable from time to time upon conversion or otherwise under the notes (including shares that may be issued in payment of interest and in Installment Conversions). If all interest and Installment Amounts will be paid in shares of common stock at a price equal to the fixed conversion price, we estimate that we would issue 10,607,040 shares upon conversion of the notes. If such amounts are paid in shares of common stock at a price equal to the Floor Price, we estimate that we would issue 294,639,744 shares upon conversion of the notes (assuming we receive shareholder approval of such issuance). Our common stock is described in “Description of Capital Stock” in the accompanying base prospectus.

In this section, when we refer to “we”, “our” or “us”, we are referring to PAVmed and not to any of its subsidiaries. Capitalized terms not defined in this description have the meanings given to them in the notes.

Purchase Price

The notes will be sold for an issue price of $1,000 per $1,100 in principal amount of the notes, reflecting an original issue discount of approximately 9.1%.

Ranking

The notes will be our senior secured obligations, other than certain permitted indebtedness. The notes will be obligations of ours and not obligations of our subsidiaries, and are not guaranteed by any of our subsidiaries. As a result, the notes will be (i) effectively subordinated to (a) all permitted indebtedness (and all other liabilities) of our subsidiaries, and (b) permitted secured indebtedness of ours and our subsidiaries, if such security interest has priority over the noteholders’ security interest, but then solely to the extent of the value of the collateral securing such indebtedness, (ii) equal in right of payment to permitted indebtedness (and all other liabilities) of ours that does not expressly provide that it is subordinated to the notes; and (iii) senior to indebtedness of ours that expressly provides that it is subordinated to the notes.

Security

The notes will be secured by all our existing and future assets (including those of our significant subsidiaries, other than Lucid and its subsidiaries), but including only 9.99% of Lucid’s outstanding common stock held by us, pursuant to a security agreement by and between us and the investor.

Maturity Date

Each note will mature on the second anniversary of its issuance (which is sometimes referred to herein as the Maturity Date), unless earlier converted or redeemed; provided, however, the Maturity Date may be extended at the option of the noteholder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty business days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Change of Control notice is delivered prior to the Maturity Date, provided further that if a noteholder elects to convert some or all of a note, and the conversion amount would be limited as a result of the beneficial ownership limitation described below, the Maturity Date shall automatically be extended until such time as such provision shall not limit the conversion of the note. On the Maturity Date, we will pay to the noteholder an amount in cash representing 115% of all outstanding principal, accrued and unpaid interest and accrued and unpaid late charges, except to the extent such amount is paid in an Installment Conversion.

Interest

The face amount of each note will accrue interest at the rate of 7.875% per annum. Prior to the initial Installment Date and after the Maturity Date, interest will be payable on the first trading day of each calendar month in cash. During the period commencing on the initial Installment Date and ending on the Maturity Date, interest will be payable bi-monthly on the first and tenth trading day of each month in shares of our common stock, subject to the satisfaction of the Equity Conditions (including minimum price and volume thresholds), or otherwise (or at our option, in whole or in part), in cash. Such common stock, when issued, shall be issued at a price per share equal to the lower of (i) the fixed conversion price then in effect, and (ii) 82.5% of the average VWAP of our common stock for each of the two trading days with the lowest VWAP of our common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the applicable interest payment date, but in the case of clause (ii) not less than the Floor Price. After the occurrence and during the continuance of an Event of Default, each note will accrue interest at the rate of 18.0% per annum.

Late Charges

We are required to pay a late charge of 18.0% per annum on any principal or other amounts due which are not paid when due. Late charges will be included in the Installment Amount on each Installment Date.

Conversion

All or any portion of the principal amount of each note, plus accrued and unpaid interest and any late charges thereon, or the “Conversion Amount,” is convertible at any time, in whole or in part, at the option of the noteholder, into our common stock at an initial fixed conversion price of $5.00 per share. The fixed conversion price is subject to adjustment for stock splits, combinations or similar events, and as described in “—Issuance of Other Securities” below. The number of shares of our common stock issuable upon any conversion shall be determined by dividing (i) the Conversion Amount by (ii) the fixed conversion price then in effect. Subject to the rules and regulations of the Nasdaq Capital Market, we also may at any time during the term of the note, with the prior written consent of the Required Holders, reduce the then current fixed conversion price of each of the notes to any amount and for any period of time deemed appropriate by our board of directors. If we fail to timely deliver shares of our common stock upon conversion of a note, we have agreed to pay “buy-in” damages of the converting noteholder.

Alternate Conversion

At any time during an Event of Default Redemption Right Period (as defined below), a noteholder may, at the holder’s option, convert all, or any part of, the Conversion Amount into shares of our common stock at an alternate conversion price. The alternate conversion price, which we refer to as the “Alternate Conversion Price,” is the lower of (i) the fixed conversion price then in effect, and (ii) the lowest of (A) 80% of the VWAP of our common stock on the trading day immediately preceding the delivery or deemed delivery of the notice of conversion, (B) 80% of the VWAP of our common stock as of the trading day of the delivery or deemed delivery of the notice of conversion, and (C) 80% of the average VWAP of our common stock for each of the two trading days with the lowest VWAP of our common stock during the ten consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the notice of conversion, but in the case of clause (ii) not less than the Floor Price.

Limitations on Conversion and Issuance

A noteholder will not have the right to convert any portion of the notes, to the extent that, after giving effect to such conversion, the noteholder (together with certain of its affiliates and other related parties) would beneficially own in excess of 4.99% of the shares of our common stock outstanding immediately after giving effect to such conversion (which is sometimes referred to herein as the “Maximum Percentage”). The noteholder may from time to time increase the Maximum Percentage to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to us of such increase.

Unless we obtain the approval of our stockholders as required by Nasdaq, we are prohibited from issuing any shares of common stock upon conversion of the notes or otherwise pursuant to the terms of the notes, if the issuance of such shares of common stock would exceed 19.99% of our outstanding shares of common stock as of March 31, 2022 or otherwise exceed the aggregate number of shares of common stock which we may issue without breaching our obligations under the rules and regulations of Nasdaq.

Installment Conversions and Redemptions

On the first trading day after the six month anniversary of the issuance of the notes, on the first and tenth trading day of each month thereafter, and on the Maturity Date (which are sometimes referred to herein as the Installment Dates), we will amortize an amount of each note equal to the initial principal balance of the note divided by the total number of such amortization payments (such that the entire initial principal balance will be repaid by the Maturity Date), plus all accrued and unpaid interest and any late charges, plus any amounts that have been deferred or accelerated to the applicable Installment Date as described below (which total amount is sometimes referred to herein as an Installment Amount).

On each Installment Date, provided there has been no failure to satisfy the Equity Conditions, we shall pay to the noteholder the applicable Installment Amount due on such date by converting such Installment Amount into shares of our common stock (which is sometimes referred to herein as an Installment Conversion); provided, that we may, at our option, pay the Installment Amount by redeeming such Installment Amount in cash at 115% of the Installment Amount (which is sometimes referred to herein as an Installment Redemption), or by any combination of an Installment Conversion and an Installment Redemption.

On the applicable Installment Date, for any portion of the Installment Amount subject to Installment Conversion, we are required to deliver to the holders of Notes a number of shares of our common stock equal to that portion of the Installment Amount being converted divided by an installment conversion price equal to the lesser of (i) the fixed conversion price then in effect, and (ii) 82.5% of the average VWAP of our common stock for each of the two trading days with the lowest VWAP of our common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the applicable Installment Date, but in the case of clause (ii) not less than the Floor Price.

On or after the 16^th trading day prior to, but on or before the 11^th trading day prior to, each Installment Date, we are required to deliver a notice, or an “Installment Notice,” which shall either (i) confirm that the applicable Installment Amount shall be converted in whole pursuant to an Installment Conversion or (ii) (A) state that we elect to redeem for cash, or are required to redeem for cash pursuant to the terms of the Notes, in whole or in part, the applicable Installment Amount and (2) specify the portion of such Installment Amount which we elect or are required to redeem pursuant to an Installment Redemption and the portion of the applicable Installment Amount, if any, with respect to which we will, and are permitted to, effect an Installment Conversion (a failure to deliver a notice is deemed to be a delivery of a notice to effect an Installment Conversion with respect to the full Installment Amount).

If we have delivered or are deemed to have delivered an Installment Notice for an Installment Conversion, and the Equity Conditions are not satisfied (or waived) after the date of the Installment Notice and at any time through the Installment Date, then a noteholder, at its election, may (x) require us to pay a cash payment of 132.5% of all or a part of the unconverted Installment Amount and/or (y) declare the Installment Conversion null and void with respect to all or part of the unconverted Installment Amount and retain all its rights with respect to any such amount, provided that the conversion price applicable to any such amount will be equal to the lesser of (i) the installment conversion price in effect for an Installment Conversion on the date the holder voided the Installment Conversion and (ii) the installment conversion price that would be in effect for an Installment Conversion on the date on which the holder delivers a notice of conversion with respect to such amount as if such date was an Installment Date.

Acceleration and Deferral of Installment Amounts; Reallocations

A noteholder may, at its election, defer the payment of all or any portion of the Installment Amount due on any Installment Date to another Installment Date, in which case the amount deferred will become part of the Installment Amount on such subsequent Installment Date.

On any day during the period starting on an Installment Date and ending on the trading day immediately prior to the next Installment Date, a noteholder may, at its election, accelerate the conversion of other Installment Amounts at an acceleration conversion price per share equal to the lower of (i) the installment conversion price for the most recent Installment Date, and (ii) 82.5% of the average VWAP of our common stock for each of the two trading days with the lowest VWAP of our common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the acceleration date, but in the case of clause (ii) not less than the Floor Price.

A noteholder may, at its election, reallocate all or any portion of the Installment Amount for an Installment Date to a later date during the Installment Period, with such reallocated amount converted at a reallocation conversion price per share equal to the lower of (i) the fixed conversion price then in effect, and (ii) the lower of (x) the installment conversion price for such Installment Date, and (y) 82.5% of the average VWAP of our common stock for each of the two trading days with the lowest VWAP of our common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the reallocation date, but in the case of clause (y) not less than the Floor Price.

Equity Conditions

The Equity Conditions are, as of any given date of determination:

Events of Default

Each of the following events contained in each note will constitute an Event of Default with respect to such note and each of the events in clauses (vii), (viii) and (ix) shall constitute a “Bankruptcy Event of Default”:

Upon the occurrence of an Event of Default with respect to a note, we will within one business day deliver written notice thereof to the noteholder. At any time after the earlier of a holder’s receipt of an Event of Default notice and such holder becoming aware of an Event of Default and ending on the 20^th trading day after the later of (x) the date such Event of Default is cured and (y) the noteholder’s receipt of the Event of Default notice, which period we refer to as an “Event of Default Redemption Right Period,” the noteholder may require us to redeem all or any portion of the note, in cash, at a price equal to the greater of (i) 132.5% of the Conversion Amount being redeemed and (ii) the number of shares issuable upon conversion of the Conversion Amount to be redeemed at the fixed conversion price then in effect, multiplied by the greatest closing sale price of our common stock on any trading day during the period beginning on the date immediately before the Event of Default and ending on the date of redemption.

Notwithstanding anything to the contrary in the note, and notwithstanding any conversion that is then required or in process, upon any Event of Default described in clauses (viii), (ix) and (x) above, whether occurring prior to or following the Maturity Date, we shall immediately pay to the noteholder an amount in cash representing 132.5% of all outstanding principal, accrued and unpaid interest and accrued and unpaid late charges on such principal and interest, as well as any other amounts due under the note, without the requirement for any notice or demand or other action by the noteholder or any other person or entity, provided that the noteholder may, in its sole discretion, waive such right to receive payment upon such an Event of Default, in whole or in part.

Fundamental Transactions

Each note prohibits us from entering into a Fundamental Transaction, unless the successor entity assumes in writing all of our obligations under the note and the successor entity is a publicly traded corporation whose common stock is quoted on or listed for trading on an eligible exchange or market.

Change of Control

No sooner than twenty trading days nor later than ten trading days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, we will deliver written notice thereof to the noteholder. At any time during the period beginning after the noteholder’s receipt of a Change of Control notice or the noteholder becoming aware of a Change of Control if a Change of Control notice is not delivered to the noteholder in accordance with the immediately preceding sentence (as applicable) and ending twenty trading days after the later of (A) the date of consummation of such Change of Control or (B) the date of receipt of such Change of Control notice or (C) the date of the announcement of such Change of Control, the noteholder will have the right to require us to redeem all or any portion of its note, in cash, at a price equal to 115% the greater of: (i) the outstanding value of the notes; (ii) the underlying value of the shares then issuable upon conversion of the note (without regard to any limitation on conversion set forth in the notes); and (iii) the Change of Control consideration attributable to underlying value of the shares then issuable upon conversion of the note (without regard to any limitation on conversion set forth in the notes).

Issuance of Purchase Rights

If at any time we grant, issue or sell any options, convertible securities or rights to purchase shares, warrants, securities or other property, which we refer to as “Purchase Rights,” pro rata to all or substantially all of the record holders of our common stock, then a noteholder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number of shares of our common stock acquirable upon complete conversion of its note (without taking into account any limitations or restrictions on the convertibility of the note and assuming for such purpose that the note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of our common stock are to be determined for the grant, issue or sale of such Purchase Rights.

To the extent that a noteholder’s right to participate in any such Purchase Right would result in the noteholder (together with certain of its affiliates and other related parties) beneficially owning in excess of the Maximum Percentage of our common stock, then the noteholder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage and such Purchase Right to such extent shall be held in abeyance for the benefit of the noteholder until such time or times, if ever, as its right thereto would not result in the noteholder (together with certain of its affiliates and other related parties) beneficially owning in excess of the Maximum Percentage of our common stock.

Other Corporate Events

Prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of our common stock are entitled to receive securities or other assets with respect to or in exchange for shares of our common stock, we shall make appropriate provision to ensure that the noteholder will thereafter have the right to receive upon a conversion of its note, at the noteholder’s option, (i) in addition to the shares of our common stock receivable upon such conversion, such securities or other assets to which the noteholder would have been entitled with respect to such shares of our common stock had such shares of our common stock been held by the noteholder upon the consummation of such event (without taking into account any limitations or restrictions on the convertibility of the note) or (ii) in lieu of the shares of our common stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of our common stock in connection with the consummation of such event in such amounts as the noteholder would have been entitled to receive had the note initially been issued with conversion rights for the form of such consideration (as opposed to shares of our common stock) at a conversion rate for such consideration commensurate with the conversion rate for our common stock.

Issuance of Other Securities

If we at any time subdivide (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of outstanding shares of our common stock into a greater number of shares, the fixed conversion price in effect immediately prior to such subdivision will be proportionately reduced. If we at any time combine (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of outstanding shares of our common stock into a smaller number of shares, the fixed conversion price in effect immediately prior to such combination will be proportionately increased.

If we sell or issue any securities with “floating” conversion prices based on the market price of our common stock, a noteholder will have the right thereafter to substitute the “floating” conversion price for the fixed conversion price upon conversion of all or part of the note. In addition, from and after the date we sell or issue any such securities, for purposes of calculating the installment conversion price as of any time of determination, the “conversion price” as used therein shall mean the lower of (x) the fixed conversion price as of such time of determination and (y) the “floating” conversion price as of such time of determination.

Distributions

A noteholder is entitled to receive any dividends paid or distributions, which we refer to as “Distributions,” made to the holders of our common stock on an “as converted” basis (without taking into account any limitations or restrictions on the convertibility of the note and assuming for such purpose that the note was converted at the fixed conversion price as of the applicable record date).

To the extent that a noteholder’s right to participate in any such Distributions would result in the noteholder (together with certain of its affiliates and related parties) beneficially owning in excess of the Maximum Percentage of our common stock, then the noteholder shall not be entitled to participate in such Distributions to the extent of the Maximum Percentage and such Distributions to such extent shall be held in abeyance for the benefit of the holder until such time or times, if ever, as its right thereto would not result in the holder (together with certain of its affiliates and related parties)beneficially owning in excess of the Maximum Percentage of our common stock.

Subsequent Placements

At any time from and after the earlier of (x) the date the noteholder becomes aware of the occurrence of a subsequent placement of any equity security or any equity-linked or related security, any securities convertible into, or exchangeable or exercisable for, any of our capital stock or other security of ours, any debt, any preferred stock or any purchase rights, and (y) the time of consummation of such placement (other than with respect to certain excluded securities specified in the securities purchase agreement pursuant to which the notes were issued), the noteholder will have the right, in its sole discretion, to require that we redeem all, or any portion, of the Conversion Amount under a note not in excess of (together with the redemption amounts of any other notes held by the noteholder) the noteholder’s pro rata allocation of 50% of the gross proceeds of such placement by delivering written notice thereof to us. Notwithstanding the foregoing, if the noteholder is participating in such a placement, upon the written request of the noteholder, we shall apply all, or any part, as set forth in such written request, of any amounts that would otherwise be payable to the noteholder in such redemption, on a dollar-for-dollar basis, against the purchase price of the securities to be purchased by the noteholder in such placement.

In addition, pursuant to the securities purchase agreement, we will grant the purchasers of the notes participation rights in future offerings by us of any equity or equity-linked or related security, any debt, any preferred stock or any purchase rights, during the three years after the closing (or the date no notes remain outstanding, if later), in an amount of up to 100% of the securities being sold in such offerings.

Company Optional Redemption

We shall have the right to redeem, by delivery of a redemption notice to the noteholders, all, but not less than all, of the Conversion Amount in cash at a price equal to 132.5% of the greater of (i) sum of (A) the Conversion Amount being redeemed, plus (B) the amount of additional interest that would accrue under the note (assuming for calculation purposes that the principal outstanding under the note as of the applicable date of determination remained outstanding through and including the Maturity Date), plus (C) the remaining option value as determined in accordance with the note, and (ii) the sum of the product of (1) the conversion rate for our common stock multiplied by (2) the greatest closing sale price of our common stock on any trading day during the period commencing on the date immediately preceding our delivery of a notice of redemption to the noteholders and ending on the trading day immediately prior to the date we make the full redemption payment, (B) the amount of additional interest that would accrue under the note (assuming for calculation purposes that the principal outstanding under the note as of the applicable date of determination remained outstanding through and including the Maturity Date), plus (C) the remaining option value as determined in accordance with the note.

Covenants

Until all of the notes have been converted, redeemed or otherwise satisfied in accordance with their terms, we will be subject to certain affirmative and negative covenants, including without limitation the following:

In addition, the SPA contains certain customary covenants, as well as the following covenants: (a) during the period through and including the 90th day after March 31, 2024 (or such later date as is agreed between the parties), we may not issue any securities that would cause a breach of the notes, file a registration statement under the Securities Act relating to any securities other than the shares underlying the notes, amend or modify any outstanding warrants of ours, issue, offer, sell, grant any option or right to purchase, or otherwise dispose of any equity or equity-linked or related security, any debt, any preferred stock or any purchase rights, subject to certain exception, including issuances at a price greater than $5.00 per share; (b) so long as any of the notes remain outstanding, we will not effect or enter an agreement to effect any variable rate transaction; and (c) we will hold a stockholder meeting, by no later than July 31, 2022, to approve resolutions authorizing (i) an increase in the authorized shares of our common stock from 150 million to 250 million shares, and (ii) the issuance of shares of our common stock under the notes for the purposes of compliance with the stockholder approval rules of Nasdaq. We will be obligated to continue to seek stockholder approval quarterly until such approval is obtained.

Changes to the Notes

We may change, waive or amend the notes with the consent of the Required Holders. Any change, waiver or amendment so approved shall be binding upon all existing and future holders of the notes; provided that, that no such change, waiver or, as applied to any of the notes held by any particular holder of notes, shall, without the written consent of that particular noteholder, (i) reduce the amount of principal, reduce the amount of accrued and unpaid interest, or extend the Maturity Date, of the notes, (ii) disproportionally and adversely affect any rights under the notes of any holder of notes; or (iii) modify any of the provisions of, or impair the right of any holder of Notes to consent to such amendments.

Form, Denomination and Registration

The notes will be issued: (i) in certificated form; (ii) without interest coupons; and (iii) in minimum denominations of $1,000 principal amount and whole multiples of $1,000.

Governing Law

The notes will be governed by, and construed in accordance with, the laws of the State of New York without regard to its conflicts of law principles.

Certain Terms

A “Change of Control” means any Fundamental Transaction other than (i) any merger of us or any of our, direct or indirect, wholly-owned subsidiaries with or into any of the foregoing persons, (ii) any reorganization, recapitalization or reclassification of the shares of our common stock in which holders of our voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of us or any of our subsidiaries.

A “Fundamental Transaction” means a transaction in which: (A) we, directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not we are the surviving corporation) another person, persons or group, or any affiliate or associate of any such person, persons or group, which we refer to as a “Subject Entity,” or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of us and our significant subsidiaries to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow us to be subject to or have our common stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of our common stock, (y) 50% of the outstanding shares of our common stock calculated as if any shares of our common stock held by all Subject Entities making or party to, or affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of our common stock such that all Subject Entities making or party to, or affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of our common stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of our common stock, (y) at least 50% of the outstanding shares of our common stock calculated as if any shares of our common stock held by all the Subject Entities making or party to, or affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of our common stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of our common stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) we, directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of our common stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding our common stock, (y) at least 50% of the aggregate ordinary voting power represented by our issued and outstanding common stock not held by all such Subject Entities as of the date of the note calculated as if any shares of our common stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of our common stock or other equity securities of ours sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of ours to surrender their shares of common stock without approval of our stockholders, or (C) directly or indirectly, including through subsidiaries, affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction is structured in a manner to circumvent, or that circumvents, the intent of this definition, in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.

The “Required Holders” means the investor in the offering, so long as it holds any notes or the right to acquire any notes, or otherwise holders of a majority in aggregate principal amount of the notes as of such time (excluding any notes held by us or any of our subsidiaries as of such time) issued or issuable hereunder or pursuant to the notes.

“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Nasdaq Capital Market (or, if the Nasdaq Capital Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 9:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by us and the noteholder. If we and the noteholder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures set forth in the note. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.

DESCRIPTION OF CAPITAL STOCK

Introduction

In the discussion that follows, we have summarized selected provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law, or “DGCL,” relating to our capital stock. This summary is not complete. This discussion is subject to the relevant provisions of Delaware law and is qualified in its entirety by reference to our certificate of incorporation and our bylaws. You should read the provisions of our certificate of incorporation and our bylaws as currently in effect for provisions that may be important to you.

Authorized Capital Stock

We are authorized to issue 50,000,000 shares of common stock, par value $0.001, and 20,000,000 shares of preferred stock, par value $0.001.

In addition, as of September 18, 2017, we had outstanding:

Common Stock

Holders of common stock are entitled to one vote per share on matters on which our 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 our board of directors, out of funds that we may legally use to pay dividends. If we liquidate or dissolve, holders of common stock are entitled to share ratably in our assets once our debts and any liquidation preference owed to any then-outstanding preferred stockholders are paid. Our certificate of incorporation does not provide the common stock with any redemption, conversion or preemptive rights. All shares of common stock that are outstanding as of the date of this prospectus will be fully-paid and non-assessable.

Preferred Stock

Our certificate of incorporation authorizes the issuance of blank check preferred stock. Accordingly, our board of directors 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 our common stock. In addition, shares of preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. As of the date of this prospectus, we have authorized two series of preferred stock, the Series A Preferred and the Series A-1 Preferred.

The following outlines some of the general terms and provisions of the preferred stock that we may issue. A prospectus supplement will describe the particular terms of any preferred stock offered from time to time, and may supplement or change the terms outlined below. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, a form of the certificate of designations that sets forth the terms of the particular preferred stock we are offering. The summary of such terms contained in this prospectus and in the applicable prospectus supplement is qualified in its entirety by reference to such form of certificate of designations. We urge you to read the form of certificate of designations and the additional description of the terms of the preferred stock included in the prospectus supplement.

If we offer a series of preferred stock, we will describe the specific terms of that series in a prospectus supplement, including:

When the consideration for which the board of directors authorized the issuance of shares is received, the shares of preferred stock will be fully paid and nonassessable.

Series A Preferred Stock

On January 26, 2017, we filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, or the “Series A Certificate of Designation,” with the Delaware Secretary of State. The Series A Certificate of Designation fixes the rights, preferences, powers, restrictions and limitations of the Series A Preferred.

Each share of Series A Preferred shall be convertible, at any time and from time to time, at the option of the holder thereof, into that number of shares of common stock determined by dividing the Stated Value (as defined in the Series A Certificate of Designation) of such share of Series A Preferred (which is $6.00) by the conversion price. The conversion price (which was initially $6.00, and was subsequently adjusted to $4.99) shall be adjusted in the event we (i) pay a stock dividend or otherwise make a distribution or distributions payable in shares of common stock on shares of common stock or any other Common Stock Equivalents (as defined in the Series A Certificate of Designation) (which, for avoidance of doubt, shall not include any shares of common stock issued by us upon conversion of, or payment of a dividend on, the Series A Preferred), (ii) subdivide outstanding shares of common stock into a larger number of shares, (iii) combine (including by way of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issue, in the event of a reclassification of shares of the common stock, any shares of our capital stock. In addition, the conversion price is subject to weighted average anti-dilution protection. This protection is intended to compensate the holders of the Series A Preferred Stock for the dilution they will sustain if we issue shares of common stock or Common Stock Equivalents, such as convertible securities or warrants, having a purchase price per share of common stock which is less than the conversion price in effect immediately prior to such issuance. Weighted average anti-dilution takes account of the number of shares of common stock being issued, or deemed to have been issued in the case of convertible securities, options and warrants, in relation to the then outstanding shares of common stock, and the price at which such shares are issued or deemed issued. The application of weighted average anti-dilution protection reduces the conversion price and increases the number of shares of common stock issuable upon conversion of the Series A Preferred.

The holders of Series A Preferred shall be entitled to receive, when, as and if declared by our board of directors cumulative dividends at the rate of 8% per annum of the Stated Value per share of Series A Preferred per annum. Such dividends shall accrue and cumulate whether or not we have earnings or surplus, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared by our board of directors. All accumulated and unpaid dividends shall compound quarterly at the rate of 8% of the Stated Value per annum. Through the Dividend Payment Date (as defined in the Series A Certificate of Designation) of April 1, 2021, the dividends shall be payable in-kind in additional shares of Series A Preferred, rounded up to the nearest whole share. For Dividend Payment Dates occurring after the April 1, 2021 Dividend Payment Date, such dividends shall be paid at our option in any combination of shares of Series A Preferred, cash or shares of common stock. If we determine to pay any dividends in shares of common stock, the number of shares of common stock payable shall be equal to the quotient of (i) the amount of the dividend per share of Series A Preferred to be paid in shares of common stock and (ii) the average of the volume weighted average price per share for the ten (10) consecutive Trading Days (as defined in the Series A Certificate of Designation) ending on the Trading Day that is immediately prior to the applicable Dividend Payment Date determined as of the Dividend Payment Date.

The holders of Series A Preferred shall have no voting rights. However, as long as any shares of Series A Preferred are outstanding, we shall not, without the affirmative vote of holders representing at least two-thirds of the then outstanding shares of the Series A Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred or alter or amend the Series A Certificate of Designation, (ii) amend our certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (iii) increase the number of authorized shares of Series A Preferred except as to pay dividends, (iv) create any class of equity security that would rank senior to the Series A Preferred as to dividends or rights in a Liquidation (as defined in the Series A Certificate of Designation), or (v) enter into any agreement with respect to any of the foregoing.

In the event of our voluntary or involuntary liquidation, dissolution or winding up or any Deemed Liquidation Event (as defined in the Series A Certificate of Designation), the holders of shares of Series A Preferred then outstanding shall be entitled to be paid out of our assets available for distribution to our stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred been converted into common stock in accordance with the Series A Certificate of Designation immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event.

Series A-1 Preferred Stock

On August 4, 2017, we filed a Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock, or the “Series A-1 Certificate of Designation,” with the Delaware Secretary of State. The Series A-1 Certificate of Designation fixes the rights, preferences, powers, restrictions and limitations of the Series A-1 Preferred.

Each share of Series A-1 Preferred Stock shall be convertible, at any time and from time to time at the option of the holder thereof into that number of shares of common stock determined by dividing the Stated Value (as defined in the Series A-1 Certificate of Designation) of such share of Series A-1 Preferred (which is $4.00) by the conversion price. The conversion price is initially $4.00 and shall be adjusted in the event we (i) pay a stock dividend or otherwise make a distribution or distributions payable in shares of common stock on shares of common stock or any other Common Stock Equivalents (as defined in the Series A-1 Certificate of Designation) (which, for avoidance of doubt, shall not include any shares of common stock issued by us upon conversion of, or payment of a dividend on, the Series A-1 Preferred Stock), (ii) subdivide outstanding shares of common stock into a larger number of shares, (iii) combine (including by way of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issue, in the event of a reclassification of shares of the common stock, any shares of our capital stock.

The holders of Series A-1 Preferred shall be entitled to receive, when, as and if declared by our board of directors, cumulative dividends at the rate of 8% per annum of the Stated Value per share of Series A-1 Preferred per annum. Such dividends shall accrue and cumulate whether or not we have earnings or surplus, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared by our board of directors. All accumulated and unpaid dividends shall compound quarterly at the rate of 8% of the Stated Value per annum. Through the Dividend Payment Date (as defined in the Series A-1 Certificate of Designation) of April 1, 2021, the dividends shall be payable in-kind in additional shares of Series A-1 Preferred, rounded up to the nearest whole share. For Dividend Payment Dates occurring after the April 1, 2017 Dividend Payment Date, such dividends shall be paid at our option in any combination of shares of Series A-1 Preferred, cash or shares of common stock. If we determine to pay any dividends in shares of common stock, the number of shares of common stock payable shall be equal to the quotient of (i) the amount of the dividend per share of Series A-1 Preferred to be paid in shares of common stock and (ii) the average of the volume weighted average price per share for the ten (10) consecutive Trading Days (as defined in the Series A-1 Certificate of Designation) ending on the Trading Day that is immediately prior to the applicable Dividend Payment Date determined as of the Dividend Payment Date.

The holders of Series A-1 Preferred shall have no voting rights. However, as long as any shares of Series A-1 Preferred are outstanding, we shall not, without the affirmative vote of holders representing at least two-thirds of the then outstanding shares of the Series A-1 Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series A-1 Preferred or alter or amend the Series A-1 Certificate of Designation, (ii) amend our certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (iii) increase the number of authorized shares of Series A-1 Preferred except as to pay dividends, (iv) create any class of equity security that would rank senior to the Series A-1 Preferred as to dividends or rights in a Liquidation (as defined in the Series A-1 Certificate of Designation), or (v) enter into any agreement with respect to any of the foregoing.

In the event of our voluntary or involuntary liquidation, dissolution or winding up or any Deemed Liquidation Event (as defined in the Series A-1 Certificate of Designation), the holders of shares of Series A-1 Preferred then outstanding shall be entitled to be paid out of our assets available for distribution to our stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A-1 Preferred been converted into common stock in accordance with the Series A-1 Certificate of Designation immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event.

Series S Warrants

On June 30, 2017, we entered into a Note and Securities Purchase Agreement, or the “NSPA,” with Scopia Holdings, LLC, or “Scopia.” Effective July 3, 2017, we consummated the sale of securities pursuant to the NSPA, upon the issuance by us of a 15.0% senior secured promissory note with a principal amount of $5,000,000 to Scopia; the issuance by us of an aggregate of 2,660,000 Series S Warrants to purchase shares of our common stock to Scopia and its designees; and the delivery by Scopia to us of $4.8 million in cash, representing the principal amount of the secured promissory note net of Scopia’s costs. Each Series S Warrant is exercisable immediately for one share of common stock and will remain exercisable until June 30, 2032. The exercise price (which is $0.01) and number of shares of common stock issuable upon exercise of the Series S Warrants are subject to adjustment in the event of stock dividends, stock splits, pro rata distributions or similar events affecting the common stock. The Series S Warrants may also be exercised, in whole or in part, on a cashless basis. Any Series S Warrants outstanding on the expiration date of the warrants shall be automatically exercised via cashless exercise.

Series A Warrants

Each Series A Warrant is exercisable immediately for one share of common stock and will remain exercisable until April 30, 2024. The exercise price (which was initially $8.00 per share, and was subsequently adjusted to $6.65 per share) of the Series A Warrants is subject to weighted average anti-dilution protection which could cause the exercise price to decrease upon any issuances of shares of common stock or common stock equivalents at less than the current exercise price. No such reduction, however, shall cause the number of shares issuable upon exercise of a Series A Warrant to increase. Holders may exercise Series A Warrants by paying the exercise price in cash or, if at any time after February 4, 2017, there is no effective registration statement registering, or no current prospectus available for, the resale of the shares of common stock underlying the Series A Warrants, then each Series A Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”. In addition, each Series A Warrant can be exchanged through April 30, 2024 for four Series X Redeemable Warrants.

Series A-1 Warrants

Each Series A-1 Warrant is exercisable immediately for one share of common stock and will remain exercisable until April 30, 2024. The exercise price (which is $6.67) and number of shares of common stock issuable upon exercise of the Series A-1 Warrants are subject to adjustment in the event of stock dividends, stock splits or similar events affecting the common stock. Holders may exercise Series A-1 Warrants by paying the exercise price in cash or, if at any time there is no effective Registration Statement registering, or no current prospectus available for, the resale of the shares of common stock underlying the Series A-1 Warrants, then each Series A-1 Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”. In addition, each Series A-1 Warrant can be exchanged through April 30, 2024 for four Series X Redeemable Warrants.

Series X Redeemable Warrants

Each Series X Redeemable Warrant will be exercisable for one share of common stock at an exercise price of $6.00 per share, subject to adjustment, commencing at 9:00 a.m., New York City time, on the first trading day following October 31, 2018 and ending at 5:00 p.m., New York City time, on April 30, 2024, or earlier upon redemption. The Series X Redeemable Warrants have no anti-dilution protection.

Holders may exercise Series X Redeemable Warrants by paying the exercise price in cash or, if at any time after July 26, 2017, there is no effective registration statement registering, or no current prospectus available for, the issuance or resale of the shares of common stock underlying the Series X Redeemable Warrants, then each Series X Redeemable Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”. At any time after April 30, 2019, we may at our option, redeem all, but not less than all, of the outstanding Series X Redeemable Warrants at a price of $0.01 per Series X Redeemable Warrant if the volume weighted average price per share of the common stock has been at least $18.00 (as adjusted for stock splits, stock dividends, or similar events) for twenty trading days out of the thirty trading day period ending three business days prior to the notice of redemption in addition to certain other conditions.

Each Series X Redeemable Warrant outstanding as of April 30, 2024 will be automatically exercised as a cashless exercise unless the exercise price of the Series X Redeemable Warrant (subject to adjustment as set forth in this prospectus) is greater than the volume weighted average price per share of common stock as of April 30, 2024.

We provide certain rights to a holder if we fail to deliver the shares of common stock underlying the Series X Redeemable Warrants by the third trading day after the date on which the holder of such warrant delivers a notice of exercise and the original warrant to us. If we fail to meet this deadline, then we must pay the holder for each trading day that elapses until the shares are delivered or until the holder rescinds the exercise of the Series X Redeemable Warrant a cash penalty between $10 and $20 for each $1,000 of shares subject to such exercise. Additionally, if we fail to deliver the shares to a holder by the prescribed date and the holder is required by its brokerage firm to purchase, or the holder’s brokerage firm purchases, shares of common stock to satisfy a prior sale of the shares by the holder, then we will (i) pay the amount lost by having to cover the sale and (ii) at the holder’s option (x) reissue the Series X Redeemable Warrant in an amount equal to the number of shares exercised by the holder thereby rescinding the prior exercise or (y) deliver shares of common stock to the holder that would have been issued if we had timely delivered the shares of common stock to the holder by the prescribed delivery date.

In the event of a stock dividend or stock split, the number of shares of common stock issuable on exercise of the Series X Redeemable Warrants will be adjusted, but the aggregate exercise price will remain unchanged.

If we declare or make a dividend or other distribution of its assets to holders of shares of common stock after a Series X Redeemable Warrant is issued, then the holder of a Series X Redeemable Warrant will be entitled to participate in such dividend or distribution as if they actually held the number of shares of common stock they would be entitled to if they had exercised their Series X Redeemable Warrant.

If we, directly or indirectly, in one or more related transactions enters into a Fundamental Transaction (as defined in the warrant agreement governing the Series X Redeemable Warrants), then upon the subsequent exercise of a Series X Redeemable Warrant, the holder (at its option) will be entitled to receive, for each share that would have been issuable upon the holder’s exercise of such warrant immediately prior to the Fundamental Transaction, the number of shares of common stock of the successor or surviving company or of us (if we survive the Fundamental Transaction) and any additional consideration receivable in connection with the Fundamental Transaction by a holder of the number of shares of common stock for which the Series X Redeemable Warrant is exercisable immediately prior to the Fundamental Transaction.

The Series X Redeemable Warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement will require the written consent of us and the holders of Series X Redeemable Warrants representing at least two-thirds of the shares of common stock issuable upon exercise of such Series X Redeemable Warrants in order to amend the terms of the Series X Redeemable Warrants. Under the terms of the warrant agreement, we will agree to use our commercially reasonable best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the Series X Redeemable Warrants until the expiration of the Series X Redeemable Warrants.

IPO Warrants

Each IPO Warrant entitles the registered holder to purchase one share of our common stock at a price of $5.00 per share, subject to adjustment as discussed below. Each IPO Warrant is currently exercisable and will expire on January 29, 2022 at 5:00 p.m., New York City time, or earlier upon redemption. However, no IPO Warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of common stock issuable upon exercise of the IPO Warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the IPO Warrants is not effective when the IPO Warrants become exercisable, IPO Warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise IPO Warrants on a cashless basis in the same manner as if we called the IPO Warrants for redemption and required all holders to exercise their IPO Warrants on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the IPO Warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the IPO Warrants, multiplied by the difference between the exercise price of the IPO Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the trading day prior to the date of exercise. Pursuant to an agreement between us and our founders (HCFP/Capital Partners III LLC and Pavilion Venture Partners LLC, affiliates of certain of our officers and directors), the 8,083,049 IPO Warrants originally issued to our founders prior to our IPO shall be exercisable on a “cashless” basis in their hands.

We may redeem the outstanding IPO Warrants (other than those outstanding prior to our IPO held by our management, founders and members thereof, but including IPO Warrants originally issued to other investors prior to our IPO), at our option, in whole or in part, at a price of $0.01 per IPO Warrant:

The right to exercise will be forfeited unless the IPO Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of an IPO Warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such IPO Warrant.

If we call the IPO Warrants for redemption as described above, we will have the option to require all holders that wish to exercise IPO Warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the IPO Warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the IPO Warrants, multiplied by the difference between the exercise price of the IPO Warrants and the “fair market value” (defined below) by (y) the fair market value. In this case, the “fair market value” shall mean the average reported last sale price of the shares of common stock for the ten (10) trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of IPO Warrants. Whether we will exercise our option to require all holders to exercise their IPO Warrants on a “cashless basis” will depend on a variety of factors including the price of our shares of common stock at the time the IPO Warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances.

The IPO Warrants have been issued in registered form under a Warrant Agreement, or the “IPO Warrant Agreement,” between Continental Stock Transfer & Trust Company, or the “IPO Warrant Agent,” and us. The IPO Warrant Agreement provides that the terms of the IPO Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval, by written consent or vote, of the holders of a majority of the then outstanding IPO Warrants in order to make any change that adversely affects the interests of the registered holders.

The exercise price and number of shares of common stock issuable on exercise of the IPO Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the IPO Warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices.

The IPO Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the IPO Warrant Agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of IPO Warrants being exercised. The IPO Warrant holders do not have the rights or privileges of holders of shares of common stock and any voting rights until they exercise their IPO Warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the IPO Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Except as described above, no IPO Warrants will be exercisable and we will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such IPO Warrant, a prospectus relating to the shares of common stock issuable upon exercise of the IPO Warrants is current and the shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the IPO Warrants. Under the terms of the Warrant Agreement, we have agreed to use our commercially reasonable best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the IPO Warrants until the expiration of the IPO Warrants.

No fractional shares will be issued upon exercise of the IPO Warrants. If, upon exercise of the IPO Warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of common stock to be issued to the IPO Warrant holder.

Unit Purchase Options

On April 28, 2016, we issued the UPOs to the selling agents in our IPO. The UPOs provide for the purchase of 53,000 units at an exercise price of $5.50 per unit. Each unit covered by the UPOs is identical to the units sold in our IPO and consists of one share of common stock and one IPO Warrant.

Dividends

We have not paid any cash dividends on our shares of common stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition and will be within the discretion of our board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future.

Limitation on Directors’ Liability and Indemnification

Our certificate of incorporation provides that no director of ours will be personally liable to us or any of our stockholders for monetary damages arising from the director’s breach of fiduciary duty as a director. However, this does not apply with respect to any action in which the director would be liable under Section 174 of the DGCL nor does it apply with respect to any liability in which the director (i) breached his duty of loyalty to us or our stockholders; (ii) did not act in good faith or, in failing to act, did not act in good faith; (iii) acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law; or (iv) derived an improper personal benefit. This provision could have the effect of reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders.

Our certificate of incorporation and bylaws provide that all directors and officers shall be entitled to be indemnified by such company to the fullest extent permitted by law. The certificate of incorporation provides that we may indemnify to the fullest extent permitted by law all employees. Our bylaws provide that, if authorized by our board of directors, we may indemnify any other person whom it has the power to indemnify under section 145 of the DGCL. We have entered, and intend to continue to enter, into separate indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our certificate of incorporation and bylaws. We also maintain directors’ and officers’ liability insurance.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or person controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

Anti-Takeover Provisions

Provisions of the DGCL and our certificate of incorporation and bylaws could make it more difficult to acquire us 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 our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders.

Delaware Anti-Takeover Statute. We are 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 of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Amendments to Our Certificate of Incorporation. Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation’s certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would:

If any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for the purposes of this provision.

Classified Board. Our board of directors 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 shall be 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 our 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 our board is classified and our certificate of incorporation does not otherwise provide, under Delaware law, our directors may only be removed for cause.

Vacancies in the Board of Directors. Our certificate of incorporation and bylaws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a majority of the remaining members of our board of directors 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.

Special Meetings of Stockholders. Under our 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 issued and 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 our certificate of incorporation provides otherwise. Our certificate of incorporation does not provide for cumulative voting.

Listing

Our common stock and IPO Warrants are traded on the NASDAQ Capital Market under the symbols “PAVM” and “PAVMW”, respectively. As of the date of this prospectus, no other class of capital stock that we may offer by this prospectus is listed on any national securities exchange or automated quotation system.

DESCRIPTION OF WARRANTS

We may issue warrants for the purchase of common stock, preferred stock, debt securities or any other security offered hereby. Warrants may be issued independently or together with other securities and may be attached to or separate from any offered securities. We may issue the warrants directly or under warrant agreements to be entered into between a warrant agent and us. Any warrant agent will act solely as our agent in connection with the warrants and will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.

The following outlines some of the general terms and provisions of the warrants that we may issue. A prospectus supplement will describe the particular terms of any warrants offered from time to time, and may supplement or change the terms outlined below. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, a form of the warrant or form of the warrant agreement and warrant certificate that sets forth the terms of the particular warrants we are offering. The summary of such terms contained in this prospectus and in the applicable prospectus supplement is qualified in its entirety by reference to such warrant or warrant agreement and warrant certificate. We urge you to read the warrant or warrant agreement and warrant certificate and the additional description of the terms of the warrants included in the prospectus supplement.

General

The prospectus supplement relating to a particular issue of warrants will describe the terms of the warrants, including the following:

Exercise of Warrants

Each warrant will entitle the holder of the warrant to purchase at the exercise price set forth in the applicable prospectus supplement the principal amount of debt securities or shares of common stock or preferred stock being offered. Holders may exercise warrants at any time up to the close of business on the expiration date set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will be void. Holders may exercise warrants as set forth in the prospectus supplement relating to the warrants being offered.

Until a holder exercises the warrants to purchase any securities underlying the warrants, the holder will not have any rights as a holder of the underlying securities by virtue of ownership of warrants.

DESCRIPTION OF DEBT SECURITIES

We may offer any combination of senior debt securities or subordinated debt securities. We may issue the senior debt securities and the subordinated debt securities under separate indentures between us, as issuer, and the trustee or trustees identified in a prospectus supplement. Further information regarding the trustee may be provided in the prospectus supplement. The form for each type of indenture is filed as an exhibit to the registration statement of which this prospectus is a part.

The following outlines some of the general terms and provisions of the debt securities that we may issue. A prospectus supplement will describe the particular terms of any debt securities offered from time to time, and may supplement or change the terms outlined below. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, a form of the indenture supplement that sets forth the terms of the particular debt securities we are offering. The summary of such debt securities contained in this prospectus and in the applicable prospectus supplement is qualified in its entirety by reference to the indentures and the applicable indenture supplement. We urge you to read the indentures, the applicable indenture supplement and the additional description of the debt securities in the prospectus supplement.

General

Within the total dollar amount of this shelf registration statement, we may issue an unlimited principal amount of debt securities in separate series. We may specify a maximum aggregate principal amount for the debt securities of any series. The debt securities will have terms that are consistent with the indentures. Senior debt securities will be unsubordinated obligations and will rank equal with all our other unsubordinated debt. Subordinated debt securities will be paid only if all payments due under our senior indebtedness, including any outstanding senior debt securities, have been made.

The indentures might not limit the amount of other debt that we may incur or whether that debt is senior to the debt securities offered by this prospectus, and might not contain financial or similar restrictive covenants. The indentures might not contain any provision to protect holders of debt securities against a sudden or dramatic decline in our ability to pay our debt.

The prospectus supplement will describe the debt securities and the price or prices at which we will offer the debt securities. The description will include:

We may sell the debt securities at a substantial discount below their stated principal amount. We will describe U.S. federal income tax considerations, if any, applicable to debt securities sold at an original issue discount in the prospectus supplement. An “original issue discount security” is any debt security sold for less than its face value, and which provides that the holder cannot receive the full face value if maturity is accelerated. The prospectus supplement relating to any original issue discount securities will describe the particular provisions relating to acceleration of the maturity upon the occurrence of an event of default. In addition, we will describe U.S. federal income tax or other considerations applicable to any debt securities that are denominated in a currency or unit other than U.S. dollars in the prospectus supplement.

Conversion and Exchange Rights

The prospectus supplement will describe, if applicable, the terms on which you may convert debt securities into or exchange them for debt securities, preferred stock and common stock or other securities or property. The conversion or exchange may be mandatory or may be at our option or at your option. The prospectus supplement will describe how the amount of debt securities, number of shares of preferred stock and common stock or other securities or property to be received upon conversion or exchange would be calculated.

Subordination of Subordinated Debt Securities

The indebtedness underlying any subordinated debt securities will be payable only if all payments due under our senior indebtedness, as defined in the applicable indenture and any indenture supplement, including any outstanding senior debt securities, have been made. If we distribute our assets to creditors upon any dissolution, winding-up, liquidation or reorganization or in bankruptcy, insolvency, receivership or similar proceedings, we must first pay all amounts due or to become due on all senior indebtedness before we pay the principal of, or any premium or interest on, the subordinated debt securities. In the event the subordinated debt securities are accelerated because of an event of default, we may not make any payment on the subordinated debt securities until we have paid all senior indebtedness or the acceleration is rescinded. If the payment of subordinated debt securities accelerates because of an event of default, we must promptly notify holders of senior indebtedness of the acceleration.

If we experience a bankruptcy, dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and holders of subordinated debt securities may receive less, ratably, than our other creditors. The indenture for subordinated debt securities may not limit our ability to incur additional senior indebtedness.

Form, Exchange and Transfer

We will issue debt securities only in fully registered form, without coupons, and only in denominations of $1,000 and integral multiples thereof, unless the prospectus supplement provides otherwise. The holder of a debt security may elect, subject to the terms of the indentures and the limitations applicable to global securities, to exchange them for other debt securities of the same series of any authorized denomination and of similar terms and aggregate principal amount.

Holders of debt securities may present them for exchange as provided above or for registration of transfer, duly endorsed or with the form of transfer duly executed, at the office of the transfer agent we designate for that purpose. We will not impose a service charge for any registration of transfer or exchange of debt securities, but we may require a payment sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange. We will name the transfer agent in the prospectus supplement. We may designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, but we must maintain a transfer agent in each place where we will make payment on debt securities.

If we redeem the debt securities, we will not be required to issue, register the transfer of or exchange any debt security during a specified period prior to mailing a notice of redemption. We are not required to register the transfer of or exchange of any debt security selected for redemption, except the unredeemed portion of the debt security being redeemed.

Global Securities

The debt securities may be represented, in whole or in part, by one or more global securities that will have an aggregate principal amount equal to that of all debt securities of that series. Each global security will be registered in the name of a depositary identified in the prospectus supplement. We will deposit the global security with the depositary or a custodian, and the global security will bear a legend regarding the restrictions on exchanges and registration of transfer.

No global security may be exchanged in whole or in part for debt securities registered, and no transfer of a global security in whole or in part may be registered, in the name of any person other than the depositary or any nominee or successor of the depositary unless:

The depositary will determine how all securities issued in exchange for a global security will be registered.

As long as the depositary or its nominee is the registered holder of a global security, we will consider the depositary or the nominee to be the sole owner and holder of the global security and the underlying debt securities. Except as stated above, owners of beneficial interests in a global security will not be entitled to have the global security or any debt security registered in their names, will not receive physical delivery of certificated debt securities and will not be considered to be the owners or holders of the global security or underlying debt securities. We will make all payments of principal, premium and interest on a global security to the depositary or its nominee. The laws of some jurisdictions require that some purchasers of securities take physical delivery of such securities in definitive form. These laws may prevent you from transferring your beneficial interests in a global security.

Only institutions that have accounts with the depositary or its nominee and persons that hold beneficial interests through the depositary or its nominee may own beneficial interests in a global security. The depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities represented by the global security to the accounts of its participants. Ownership of beneficial interests in a global security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the depositary or any such participant.

The policies and procedures of the depositary may govern payments, transfers, exchanges and other matters relating to beneficial interests in a global security. We and the trustee will assume no responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in a global security.

Payment and Paying Agents

We will pay principal and any premium or interest on a debt security to the person in whose name the debt security is registered at the close of business on the regular record date for such interest.

We will pay principal and any premium or interest on the debt securities at the office of our designated paying agent. Unless the prospectus supplement indicates otherwise, the corporate trust office of the trustee will be the paying agent for the debt securities.

Any other paying agents we designate for the debt securities of a particular series will be named in the prospectus supplement. We may designate additional paying agents, rescind the designation of any paying agent or approve a change in the office through which any paying agent acts, but we must maintain a paying agent in each place of payment for the debt securities.

The paying agent will return to us all money we pay to it for the payment of the principal, premium or interest on any debt security that remains unclaimed for a specified period. Thereafter, the holder may look only to us for payment, as an unsecured general creditor.

Consolidation, Merger and Sale of Assets

Under the terms of the indentures, so long as any securities remain outstanding, we may not consolidate or enter into a share exchange with or merge into any other person, in a transaction in which we are not the surviving corporation, or sell, convey, transfer or lease our properties and assets substantially as an entirety to any person, unless:

Events of Default

Each of the following will constitute an event of default under each indenture:

If an event of default occurs and continues, both the trustee and holders of a specified percentage in aggregate principal amount of the outstanding securities of that series may declare the principal amount of the debt securities of that series to be immediately due and payable. The holders of a majority in aggregate principal amount of the outstanding securities of that series may rescind and annul the acceleration if all events of default, other than the nonpayment of accelerated principal, have been cured or waived.

Except for its duties in case of an event of default, the trustee will not be obligated to exercise any of its rights or powers at the request or direction of any of the holders, unless the holders have offered the trustee reasonable indemnity. If they provide this indemnification and subject to conditions specified in the applicable indenture, the holders of a majority in aggregate principal amount of the outstanding securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the debt securities of that series.

No holder of a debt security of any series may institute any proceeding with respect to the indentures, or for the appointment of a receiver or a trustee, or for any other remedy, unless:

Modification and Waiver

We and the trustee may change an indenture without the consent of any holders with respect to specific matters, including:

In addition, under the indentures, the rights of holders of a series of notes may be changed by us and the trustee with the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is affected. However, we and the trustee may only make the following changes with the consent of the holder of any outstanding debt securities affected:

The holders of a majority in principal amount of the outstanding debt securities of any series may waive any past default under the indenture with respect to debt securities of that series, except a default in the payment of principal, premium or interest on any debt security of that series or in respect of a covenant or provision of the indenture that cannot be amended without each holder’s consent.

Except in limited circumstances, we may set any day as a record date for the purpose of determining the holders of outstanding debt securities of any series entitled to give or take any direction, notice, consent, waiver or other action under the indentures. In limited circumstances, the trustee may set a record date. To be effective, the action must be taken by holders of the requisite principal amount of such debt securities within a specified period following the record date.

Defeasance

To the extent stated in the prospectus supplement, we may elect to apply the provisions in the indentures relating to defeasance and discharge of indebtedness, or to defeasance of restrictive covenants, to the debt securities of any series. The indentures provide that, upon satisfaction of the requirements described below, we may terminate all of our obligations under the debt securities of any series and the applicable indenture, known as legal defeasance, other than our obligation:

In addition, we may terminate our obligation to comply with any restrictive covenants under the debt securities of any series or the applicable indenture, known as covenant defeasance.

We may exercise our legal defeasance option even if we have previously exercised our covenant defeasance option. If we exercise either defeasance option, payment of the notes may not be accelerated because of the occurrence of events of default.

To exercise either defeasance option as to debt securities of any series, we must irrevocably deposit in trust with the trustee money and/or obligations backed by the full faith and credit of the United States that will provide money in an amount sufficient in the written opinion of a nationally recognized firm of independent public accountants to pay the principal of, premium, if any, and each installment of interest on the debt securities. We may only establish this trust if, among other things:

Notices

We will mail notices to holders of debt securities as indicated in the prospectus supplement.

Title

We may treat the person in whose name a debt security is registered as the absolute owner, whether or not such debt security may be overdue, for the purpose of making payment and for all other purposes.

Governing Law

The indentures and the debt securities will be governed by and construed in accordance with the laws of the State of New York.

DESCRIPTION OF THE UNITS

We may issue units comprised of one or more of the other classes of securities offered hereby in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.

The units may be, but are not required to be, issued under unit agreements to be entered into between us and a unit agent, as detailed in the prospectus supplement relating to the units being offered. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, a form of the unit agreement and unit certificate, if any, that sets forth the terms of the particular units we are offering. The summary of such terms contained in this prospectus and in the applicable prospectus supplement is qualified in its entirety by reference to such unit agreement and unit certificate. We urge you to read the unit agreement and unit certificate, if any, and the additional description of the terms of the units included in the prospectus supplement.

The prospectus supplement will describe the units and the price or prices at which we will offer the units. The description will include:

The descriptions of the units in this prospectus and in any prospectus supplement are summaries of the material provisions of the applicable agreements.

PLAN OF DISTRIBUTION OF SECURITIES

We may sell or issue the securities offered by this prospectus from time to time in any one or more of the following ways:

The manner in which we may sell some or all of the securities covered by this prospectus includes, without limitation, through:

The distribution of the securities may be effected from time to time in one or more transactions:

For each offering of securities hereunder, we will describe the method of distribution of such securities, among other things, in a prospectus supplement. A prospectus supplement will set forth the terms of the offering of the securities, including: