Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.19.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 9 — Stock-Based Compensation

 

PAVmed Inc. 2014 Long-Term Incentive Equity Plan

 

The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (“PAVmed Inc. 2014 Equity Plan”), adopted by the Company’s board of directors and stockholders in November 2014, is designed to enable the Company to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire a proprietary interest in the Company. The PAVmed Inc. 2014 Equity Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, and other stock-based awards subject to limitations under applicable law. All awards under the PAVmed Inc. 2014 Equity Plan are subject to approval by the compensation committee of the Company’s board of directors. Stock options and restricted stock awards are issued and outstanding under the PAVmed Inc. 2014 Equity Plan.

 

A total of 7,951,081 shares of common stock of PAVmed Inc. are reserved for issuance under the PAVmed Inc. 2014 Equity Plan, with 2,648,406 shares available for grant as of June 30, 2019, exclusive of 500,854 PAVmed Inc. stock options previously granted outside the PAVmed Inc. 2014 Equity Plan.

 

PAVmed Inc 2014 Equity Plan - Stock Options

 

          Weighted        
    Number     Average     Aggregate  
    Stock     Exercise     Intrinsic  
PAVmed Inc. 2014 Equity Plan - Stock Options   Options     Price     Value  
Outstanding stock options at December 31, 2018     3,327,140     $ 4.40          
Granted     1,825,000     $ 1.00          
Exercised         $          
Forfeited     (48,611 )   $ 5.00          
Outstanding stock options at June 30, 2019     5,103,529     $ 2.71     $ 257,500  
Vested and exercisable stock options at June 30, 2019     2,620,019     $ 3.83     $ 43,292  
Unvested stock options at June 30, 2019     2,483,510     $ 1.53     $ 214,208  

 

The aggregate intrinsic value is computed as the difference between the quoted price of the PAVmed Inc. common stock on each of June 30, 2019 and December 31, 2018 and the exercise price of the underlying PAVmed Inc. stock options, to the extent such quoted price is greater than the exercise price.

 

During the six months ended June 30, 2019, an aggregate of 1,825,000 stock options were granted under the PAVmed Inc. 2014 Equity Plan, each with a ten year contractual term from date-of-grant, including:

 

March 2019 - 800,000 stock options granted to non-executive members of the Company’s board of directors and 950,000 stock options granted to employees and an executive member of the Company’s board of directors, with a grant date of March 7, 2019, an exercise price of $1.00 per share of PAVmed Inc. common stock, and vesting ratably on a quarterly basis commencing March 31, 2019 and ending December 31, 2021; and,

 

May 2019 - 25,000 stock options granted to a non-employee consultant, with a grant date of May 21, 2019, an exercise price of $1.10 per share of PAVmed Inc. common stock, and vesting ratably on a quarterly basis commencing June 30, 2019 and ending March 31, 2022; and,

 

June 2019 - 50,000 stock options granted to a new hire employee, with a grant date of June 3, 2019, an exercise price of $1.08 per share of PAVmed Inc. common stock, and vesting ratably on a quarterly basis commencing June 30, 2019 and ending March 31, 2022.

 

In April 2019, 48,611 stock options previously granted under the PAVmed Inc. 2014 Equity Plan were forfeited upon expiring unexercised.

 

As of June 30, 2019, the weighted average remaining contractual term of outstanding stock options was 8.6 years for stock options outstanding and 7.8 years for stock options vested and exercisable, under the PAVmed Inc. 2014 Equity Plan.

 

PAVmed Inc 2014 Equity Plan - Restricted Stock Awards

 

On March 15, 2019, a total of 700,000 restricted stock awards were granted to employees under the PAVmed Inc. 2014 Equity Plan, representing a corresponding number of shares of common stock of the Company, which vest ratably on an annual basis commencing March 15, 2020 and ending March 15, 2022. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. As of June 30, 2019, no restricted stock awards had vested.

 

PAVmed Inc Employee Stock Purchase Plan

 

The PAVmed Inc. Employee Stock Purchase Plan (“ESPP”), adopted by the Company’s board of directors effective April 1, 2019, with a reservation of 250,000 shares of PAVmed Inc. common stock, provides eligible employees the opportunity to purchase shares of PAVmed Inc. common stock through payroll deductions during six month periods, wherein the “purchase price per share” is the lower of 85% of the quoted closing price per share of PAVmed Inc. common stock at the beginning or end of each six month share purchase period. The PAVmed Inc. ESPP share purchase dates are April 1 and October 1, with an initial six month payroll deduction period of April 1, 2019 to September 30, 2019 with a corresponding share purchase date of October 1, 2019. The payroll deductions are included in accrued expense and other current liabilities, as discussed in Note 4, Accrued Expense and Other Current Liabilities.

 

Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan

 

The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (the “Lucid Diagnostics Inc. 2018 Equity Plan”) became effective on May 12, 2018 and is separate and apart from the PAVmed Inc. 2014 Equity Plan discussed above. The Lucid Diagnostics Inc. 2018 Equity Plan is designed to enable Lucid Diagnostics Inc. to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of Lucid Diagnostics Inc. The Lucid Diagnostics Inc. 2018 Equity Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the Lucid Diagnostics Inc. board of directors. Stock options are issued and outstanding under the Lucid Diagnostics Inc. 2018 Equity Plan.

 

A total of 2,000,000 shares of common stock of Lucid Diagnostics Inc. are reserved for issuance under the Lucid Diagnostics Inc. 2018 Equity Plan, with 1,525,000 shares available for grant as of June 30, 2019, exclusive of 300,000 Lucid Diagnostics Inc. stock options previously granted outside the Lucid Diagnostics Inc. 2018 Equity Plan.

 

Lucid Diagnostics Inc 2018 Equity Plan - Stock Options

 

          Weighted  
    Number     Average  
    Stock     Exercise  
Lucid Diagnostics Inc. 2018 Equity Plan - Stock Options   Options     Price  
Outstanding stock options at December 31, 2018     375,000     $ 0.60  
Granted     400,000     $ 1.00  
Exercised         $  
Forfeited         $  
Outstanding stock options at June 30, 2019     775,000     $ 0.81  
Vested and exercisable stock options at June 30, 2019     374,999     $ 0.83  
Unvested stock options at June 30, 2019     400,001     $ 0.78  

 

During the six months ended June 30, 2019, an aggregate of 400,000 Lucid Diagnostics Inc. stock options were granted under the Lucid Diagnostics Inc. 2018 Equity Plan, each having a ten year contractual term from date-of-grant, including: 300,000 stock options granted to an employee of PAVmed Inc., with a grant date of February 18, 2019, an exercise price of $1.00 per share of common stock of Lucid Diagnostics Inc., with 200,000 such stock options vesting immediately upon grant, and 100,000 of such stock options vesting ratably on a quarterly basis commencing March 31, 2019 and ending December 31, 2021; and, 100,000 stock options granted to an employee of PAVmed Inc., with a grant date of June 3, 2019, an exercise price of $1.00 per share of common stock of Lucid Diagnostics Inc., vesting ratably on a quarterly basis commencing June 30, 2019 and ending March 31, 2022.

 

As of June 30, 2019, the weighted average remaining contractual term was 9.3 years for stock options outstanding and 9.3 years for stock options vested and exercisable, under the Lucid Diagnostics Inc. 2018 Equity Plan.

 

Stock-Based Compensation Expense

 

Consolidated stock-based compensation expense recognized for both the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, with respect to stock options and restricted stock awards, for the periods indicated, was as follows:

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2019     2018     2019     2018  
General and administrative expenses   $ 299,346     $ 233,962     $ 584,009     $ 453,356  
Research and development expenses     89,017       69,928       263,040       121,820  
Total   $ 388,363     $ 303,890     $ 847,049     $ 575,176  

 

The stock-based compensation expense related to stock options granted to employees and directors is based on the grant-date estimated fair value, and for stock options granted to non-employees is based on the vesting date estimated fair value, with the expense recognized on a straight-line basis over the award’s requisite service period, which is generally the vesting period.

 

The consolidated research and development stock-based compensation expense presented above includes expense recognized by Lucid Diagnostics Inc. of $4,202 and $8,305 in the three and six months ended June 30, 2019, respectively, and $3,633 in the three and six months ended June 30, 2018, with respect to stock options granted under the PAVmed Inc. 2014 Equity Plan to non-employees providing services to Lucid Diagnostics Inc., and $28,555 and $133,058 in the three and six months ended June 30, 2019 and $8,277 in the three and six months ended June 30, 2018, with respect to stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan to PAVmed Inc. employees and to non-employees, each providing services to Lucid Diagnostics Inc.

 

As of June 30, 2019, with respect to PAVmed Inc. stock options, total unrecognized stock-based compensation expense of approximately $1.7 million is expected to be recognized over the weighted average remaining requisite service period of 1.5 years; and, with respect to PAVmed Inc. restricted stock awards, total unrecognized stock-based compensation expense of approximately $0.7 million is expected to be recognized over the weighted average remaining requisite service period of 2.7 years. As of June 30, 2019, with respect to Lucid Diagnostics Inc. stock options, total unrecognized stock-based compensation expense of approximately $0.2 million is expected to be recognized over the weighted average remaining requisite service period of 2.2 years.

 

Stock-based compensation expense recognized for PAVmed Inc. stock options granted to employees and members of the board of directors was based on a weighted average estimated fair value of $0.93 and $1.23 per share of PAVmed Inc. common stock, during the six months ended June 30, 2019 and 2018, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:

 

    Six Months Ended June 30,  
    2019     2018  
Risk free interest rate     2.3 %     2.0 %
Expected term of stock options (in years)     5.7       5.8  
Expected stock price volatility     50 %     50 %
Expected dividend yield     0 %     0 %

 

Stock-based compensation expense recognized for PAVmed Inc. stock options granted to non-employees was based on a weighted average estimated fair value of $1.90 and $1.96 per share of PAVmed Inc. common stock, during the six months ended June 30, 2019 and 2018, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:

 

    Six Months Ended June 30,  
    2019     2018  
Risk free interest rate     2.3 %     2.6 %
Expected term of stock options (in years)     8.7       9.0  
Expected stock price volatility     60 %     60 %
Expected dividend yield     0 %     0 %

 

The PAVmed Inc. restricted stock awards granted to employees were measured at their grant date estimated fair value based on the date-of-grant quoted price per share of PAVmed Inc. common stock. The 700,000 restricted stock awards granted on March 15, 2019 had an aggregate fair value of $742,000, recognized ratably over the requisite service period, which is the vesting period, commencing on the March 15, 2019 grant date and ending on the March 15, 2022 final vesting date. In this regard, the stock-based compensation expense recognized for such restricted stock awards in the three and six months ended June 30, 2019 was $61,833 and $82,444, respectively.

 

Stock-based compensation expense recognized for Lucid Diagnostics Inc. stock options granted to employees during the three and six months ended June 30, 2019 was calculated using the following weighted average Black-Scholes valuation model assumptions:

 

    Six Months Ended  
    June 30,  
    2019  
Risk free interest rate     2.3 %
Expected term of stock options (in years)     5.8  
Expected stock price volatility     63 %
Expected dividend yield     0 %

 

There was no stock-based compensation expense recognized for Lucid Diagnostics Inc. stock options granted to employees in the corresponding prior year period.

 

Stock-based compensation expense recognized for Lucid Diagnostics Inc. stock options granted to non-employees during the six months ended June 30, 2019 and 2018 was calculated using the following weighted average Black-Scholes valuation model assumptions:

 

    Six Months Ended  
    June 30,     June 30,  
    2019     2018  
Risk free interest rate     2.2 %     2.9 %
Expected term of stock options (in years)     9.1       9.9  
Expected stock price volatility     62 %     63 %
Expected dividend yield     0 %     0 %

 

The Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, which requires the Company to make certain estimates and assumptions, with the weighted-average valuation assumptions for stock-based awards, as follows: weighted-average risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period commensurate with the assumed expected option term; expected term of stock options represents the period of time stock options are expected to be outstanding, which for employees is the expected term derived using the simplified method and for non-employees is the contractual term; expected stock price volatility is based on historical stock price volatilities of similar entities within the Company’s industry over the period commensurate with the expected term of the stock option; and, expected dividend yield is based on annual dividends of $0.00 as the Company has not historically paid, and does not expect to pay dividends for the foreseeable future.