UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2018
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-36199
PULMATRIX, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 46-1821392 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 99 Hayden Avenue, Suite 390 | ||
| Lexington, MA | 02421 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (781) 357-2333
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class |
Name of each exchange on which registered | |
| Common Stock, par value $0.0001 per share | The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging Growth Company | ☒ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, as of June 30, 2018, the last business day of registrants most recently completed second fiscal quarter, was $17,229,294.
As of February 14, 2019, the registrant had 8,027,895 shares of common stock outstanding.
| Page No. | ||||||
| ii | ||||||
| PART III | ||||||
| Item 11. | Executive Compensation. | 1 | ||||
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 7 | ||||
| Item 13. | Certain Relationships and Related Transactions, and Director Independence. | 14 | ||||
| PART IV | ||||||
| Item 15. | Exhibits, Financial Statement Schedules. | 16 | ||||
| 19 | ||||||
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This Amendment No. 1 (“Amendment No. 1”) amends the Annual Report on Form 10-K of Pulmatrix, Inc. (the “Company”) for the fiscal year ended December 31, 2018, originally filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2019 (the “Original Filing”). This Amendment No. 1 is being filed to amend and restate Items 11, 12 and 13 of Part III of the Original Filing.
| • | Item 11 of Part III is being amended and restated to remove James Roach, M.D. as a named executive officer of the Company, who was mistakenly included as a named executive officer as a result of an error calculating compensation, and to identify Teofilo David Raad, who would have been a named executive officer for the fiscal year ended December 31, 2018, if Mr. Roach’s compensation were calculated correctly, as a named executive officer and to provide disclosure required under Item 402 of Regulation S-K under the Securities Act of 1933, as amended, regarding Mr. Raad’s compensation. |
| • | Item 12 of Part III is being amended and restated to provide a revised disclosures under “Equity Compensation Plan Information” to (i) reflect the rounding adjustments made after the filing of the Original Filing that resulted from the reverse stock split effected on February 3, 2019, to the number of securities to be issued upon exercise of outstanding options, warrants and rights, and (ii) correct a typo in footnote (3) in the total number of shares of our common stock available for issuance following the January 1, 2019, increase pursuant to the “evergreen” provision. |
| • | Item 12 of Part III is also being amended and restated to report under “STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” 30,700 shares of common stock purchased by Mark Iwicki, the Company’s chairman of the board of directors, and 2,000 shares of common stock purchased by Matthew L. Sherman, M.D., the Company’s director, in an underwritten public offering of common units and pre-funded units which closed on April 3, 2018, which were inadvertently omitted from the Original Filing. The “Number of Shares Beneficially Owned” and “Beneficially Owned as a result of stock ownership” for each of Mr. Iwicki and Dr. Sherman were updated to include the omitted shares, and as a result, the “Number of Shares Beneficially Owned,” “Percentage of Shares Outstanding” and “Beneficially Owned as a result of stock ownership” for all directors and executive officers as a group were also updated. |
| • | Item 13 of Part III is being amended and restated to provide the disclosure required under Item 404(d) of Regulation S-K under the Securities Act of 1933, as amended, under “Transactions with Related Persons”, regarding purchase of common units by Mr. Iwicki, Polaris funds and ARCH Venture Fund VII, L.P. in the underwritten public offering of common units and pre-funded units which closed on April 3, 2018, which were inadvertently omitted from the Original Filing. |
In connection with the filing of this Amendment No. 1 and pursuant to the rules of the SEC, we are including with this Amendment No.1 new certifications by our principal executive and principal financial officers. Accordingly, Item 15 of Part IV has also been amended to reflect the filing of these new certifications.
Accordingly, this Amendment No. 1 consists of a cover page, this Explanatory Note, a revised Item 11, Item 12 and Item 13 of Part III, an updated Exhibit Index under Item 15 of Part IV and new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing other than as expressly indicated in this Amendment No. 1. In this Amendment No. 1, unless the context indicates otherwise, the terms “Company,” “we,” “us,” and “our” refer to Pulmatrix, Inc. Other defined terms used in this Amendment No. 1 but not defined herein shall have the meaning specified for such terms in the Original Filing.
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All statements in this Amendment No.1 that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can generally be identified as such because the context of the statement will include words such as “may,” “will,” “intend,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “predicts,” “potential,” “continue,” “opportunity,” “goals,” or “should,” the negative of these words or words of similar import. Similarly, statements that describe our future plans, strategies, intentions, expectations, objectives, goals or prospects are also forward-looking statements. These forward-looking statements are or will be, as applicable, based largely on our expectations and projections about future events and future trends affecting our business, and so are or will be, as applicable, subject to risks and uncertainties including but not limited to the risk factors discussed in the Original Filing, that could cause actual results to differ materially from those anticipated in the forward-looking statements.
We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements. Our views and the events, conditions and circumstances on which these future forward-looking statements are based, may change.
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PART III
| ITEM 11. | EXECUTIVE COMPENSATION. |
Compensation Information
The following table sets forth the names and positions of: (i) each person who served as our principal executive officer during the last completed fiscal year; and (ii) our two most highly compensated executive officers, other than our principal executive officer, who were serving as executive officers, as determined in accordance with the rules and regulations promulgated by the SEC, as of December 31, 2018, with compensation of $100,000 or more (our “Named Executive Officers”) for the year ended December 31, 2018:
| Name |
Position | |
| Robert W. Clarke, Ph.D. |
President, Chief Executive Officer, Director | |
| William Duke, Jr. |
Chief Financial Officer | |
| Teofilo David Raad |
Chief Business Officer |
Summary Compensation Table
The following table sets forth information regarding compensation awarded to, earned by or paid to the Named Executive Officers for the fiscal year ended December 31, 2018 and the fiscal year ended December 31, 2017.
| Name and Principal Position |
Year | Salary | Incentive Compensation |
Stock Awards |
Option Awards |
Non-equity incentive plan compensation |
Nonqualified deferred compensation earnings |
All Other Compensation |
Total | |||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) (1) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
| Robert W. Clarke, Ph.D. |
2018 | 434,074 | 176,516 | (2) | 634,012 | 6,022 | (3) | 1,250,624 | ||||||||||||||||||||||||||||
| (Chief Executive Officer) |
2017 | 407,862 | 82,484 | (4) | 305,011 | 5,776 | (5) | 801,133 | ||||||||||||||||||||||||||||
| William Duke, Jr. |
2018 | 338,226 | 120,874 | (2) | 269,455 | 6,022 | (3) | 734,577 | ||||||||||||||||||||||||||||
| (Chief Financial Officer) |
2017 | 313,337 | 55,447 | (4) | 144,013 | 5,776 | (5) | 518,573 | ||||||||||||||||||||||||||||
| Teofilo Raad (6) |
2018 | 345,135 | 121,396 | (2) | 234,904 | 6,022 | (3) | 707,457 | ||||||||||||||||||||||||||||
| (Chief Business Officer) |
2017 | 215,769 | 39,938 | (4) | 594,589 | 4,663 | (7) | 854,959 | ||||||||||||||||||||||||||||
| (1) | In accordance with SEC rules, this column reflects the aggregate fair value of the stock awards and option awards granted during the respective fiscal year computed as of their respective grant dates in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transactions. The assumptions made in the valuation of the share-based payments are contained in Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2018 in our Annual Report on Form 10-K for the year ended December 31, 2018. |
| (2) | Represents incentive compensation earned. |
| (3) | Represents Company 401(k) plan contributions of $5,500 and payment made by the Company for life, AD&D and LTD premiums in the amount of $522. |
| (4) | Represents incentive compensation payments made. |
| (5) | Represents Company 401(k) plan contributions of $5,300 and payment made by the Company for life, AD&D and LTD premiums in the amount of $476. |
| (6) | Began to serve on May 1, 2017. |
| (7) | Represents Company 401(k) plan contributions of $4,315 and payment made by the Company for life, AD&D and LTD premiums in the amount of $348. |
Narrative Disclosure to Summary Compensation Table
Executive Employment Agreements
We have entered into executive employment agreements with each of our Named Executive Officers. The executive employment agreements provide for “at will” employment and set forth the terms and conditions of employment, including annual base salary, discretionary bonus opportunities, benefits and eligibility to participate in our employee benefit plans and programs. As a condition of their employment, our Named Executive Officers were each required to execute our standard proprietary information, inventions and non-competition agreement. The material terms of these executive employment agreements are summarized below.
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Retirement Plans
As part of our overall compensation program, we provide all full-time employees, including our Named Executive Officers, with the opportunity to participate in a defined contribution 401(k) plan. Our 401(k) plan is intended to qualify under Section 401 of the Internal Revenue Code so that employee pre-tax contributions and income earned on such contributions are not taxable to employees until withdrawn. Employees may elect to defer up to 100 percent of their eligible compensation (not to exceed the statutorily prescribed annual limit) in the form of elective deferral contributions to our 401(k) plan. Our 401(k) plan also has a “catch-up contribution” feature for employees aged 50 or older (including those who qualify as “highly compensated” employees) who can defer amounts over the statutory limit that applies to all other employees.
Employee Benefits and Perquisites
Dr. Clarke and Messrs. Duke and Raad are eligible to participate in our health and welfare plans, including: medical and dental benefits, short-term and long-term disability insurance, and life insurance.
No Tax Gross-Ups
We do not make gross-up payments to cover our executives’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us.
Dr. Clarke
In June 2015, we entered into an employment agreement with Dr. Clarke to serve as our president and chief executive officer. Dr. Clarke’s employment with us is “at-will,” and the agreement does not include a specified term. Both Dr. Clarke’s salary and bonus are subject to review and adjustment by the Board or an appropriate committee thereof. The actual bonus amount is based on both the Company and individual performance during the year.
Termination Benefits
If Dr. Clarke’s employment is terminated (i) by the Company without cause or (ii) by Dr. Clarke for good reason, then the Company must pay Dr. Clarke, in addition to any then-accrued and unpaid obligations owed to him, (x) twelve (12) months of his then-current base salary, (y) fifty percent (50%) of a pro rata portion of the bonus for the year in which the termination occurs, based on year-to-date performance as determined by the Company’s Board, or a committee thereof, and (z) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, all unvested equity awards held by Dr. Clarke that would have vested during the twenty-four (24) months following the termination date will immediately vest and become exercisable. If Dr. Clarke’s employment is terminated (i) by the Company without cause or (ii) by Dr. Clarke for good reason, within twelve (12) months following a change in control, then Dr. Clarke shall be entitled to receive, in addition to any then-accrued and unpaid obligations owed to him, (x) a lump sum payment equal to twelve (12) months of his then-current base salary and a pro rata portion of the target bonus for the year in which the termination occurs, and (y) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, in that case, all unvested equity awards will immediately vest and become exercisable. Receipt of Dr. Clarke’s severance and other termination benefits is subject to his execution of a release of claims and his compliance with the restrictive covenants contained in his agreements with the Company.
Under Dr. Clarke’s employment agreement, “good reason” is defined as (i) relocation of Dr. Clarke’s principal business location to a location more than fifty (50) miles from his then-current business location; (ii) a material diminution in Dr. Clarke’s duties, authority or responsibilities; or (iii) a material reduction in Dr. Clarke’s base salary; provided that (A) Dr. Clarke provides the Company with written notice that he intends to terminate his
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employment for good reason within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, the Company has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Dr. Clarke terminates his employment within sixty five (65) days from the date that good reason first occurs.
Mr. Duke
In June 2015, we entered into an employment agreement with Mr. Duke to serve as our chief financial officer. Mr. Duke’s employment with us is “at-will,” and the agreement does not include a specified term. Both Mr. Duke’s salary and bonus are subject to review and adjustment by the Board or an appropriate committee thereof. The actual bonus amount is based on both the Company and individual performance during the year.
Termination Benefits
If Mr. Duke’s employment is terminated (i) by the Company without cause or (ii) by Mr. Duke for good reason, then the Company must pay Mr. Duke, in addition to any then-accrued and unpaid obligations owed to him, (x) nine (9) months of his then-current base salary, (y) seventy-five percent (75%) of a pro rata portion of the bonus for the year in which the termination occurs, based on year-to-date performance as determined by the Company’s Board, or a committee thereof, and (z) up to nine (9) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, all unvested equity awards held by Mr. Duke that would have vested during the nine (9) months following the termination date will immediately vest and become exercisable. If Mr. Duke’s employment is terminated (i) by the Company without cause or (ii) by Mr. Duke for good reason, within twelve (12) months following a change in control, then Mr. Duke shall be entitled to receive, in addition to any then-accrued and unpaid obligations owed to him, (x) a lump sum payment equal to twelve (12) months of his then-current base salary and a pro rata portion of the target bonus for the year in which the termination occurs, and (y) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, in that case, all unvested equity awards will immediately vest and become exercisable. Receipt of Mr. Duke’s severance and other termination benefits is subject to his execution of a release of claims and his compliance with the restrictive covenants contained in his agreements with the Company.
Under Mr. Duke’s employment agreement, “good reason” is defined as (i) relocation of Mr. Duke’s principal business location to a location more than fifty (50) miles from his then-current business location; (ii) a material diminution in Mr. Duke’s duties, authority or responsibilities; or (iii) a material reduction in Mr. Duke’s base salary; provided that (A) Mr. Duke provides the Company with written notice that he intends to terminate his employment for good reason within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, the Company has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Mr. Duke terminates his employment within sixty five (65) days from the date that good reason first occurs.
Mr. Raad
In May 2017, we entered into an employment agreement with Mr. Raad to serve as our chief business officer. Mr. Raad’s employment with us is “at-will,” and the agreement does not include a specified term. Both Mr. Raad’s salary and bonus are subject to review and adjustment by the Board or an appropriate committee thereof. The actual bonus amount is based on both the Company and individual performance during the year.
Termination Benefits
If Mr. Raad’s employment is terminated (i) by the Company without cause or (ii) by Mr. Raad for good reason, then the Company must pay Mr. Raad, in addition to any then-accrued and unpaid obligations owed to him, (x) nine (9) months of his then-current base salary, (y) seventy-five percent (75%) of a pro rata portion of the
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bonus for the year in which the termination occurs, based on year-to-date performance as determined by the Company’s Board, or a committee thereof, and (z) up to nine (9) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, all unvested equity awards held by Mr. Raad that would have vested during the nine (9) months following the termination date will immediately vest and become exercisable. If Mr. Raad’s employment is terminated (i) by the Company without cause or (ii) by Mr. Raad for good reason, within twelve (12) months following a change in control, then Mr. Raad shall be entitled to receive, in addition to any then-accrued and unpaid obligations owed to him, (x) a lump sum payment equal to twelve (12) months of his then-current base salary and a pro rata portion of the target bonus for the year in which the termination occurs, and (y) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, in that case, all unvested equity awards will immediately vest and become exercisable. Receipt of Mr. Raad’s severance and other termination benefits is subject to his execution of a release of claims and his compliance with the restrictive covenants contained in his agreements with the Company.
Under Mr. Raad’s employment agreement, “good reason” is defined as (i) relocation of Mr. Raad’s principal business location to a location more than fifty (50) miles from his then-current business location; (ii) a material diminution in Mr. Raad’s duties, authority or responsibilities; or (iii) a material reduction in Mr. Raad’s base salary; provided that (A) Mr. Raad provides the Company with written notice that he intends to terminate his employment for good reason within thirty (30) days of such circumstance occurring, (B) if such circumstance is capable of being cured, the Company has failed to cure such circumstance within a period of thirty (30) days from the date of such written notice, and (C) Mr. Raad terminates his employment within sixty five (65) days from the date that good reason first occurs.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning the outstanding equity awards that have been previously awarded to each of our Named Executive Officers and which remain outstanding as of December 31, 2018:
Outstanding Equity Awards at Fiscal Year End Table
2018
Option Awards
| Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option exercise price ($) |
Option expiration date |
|||||||||||||||
| Robert W. Clarke, Ph.D. |
267 | (1) | — | — | 22.10 | 02/10/2020 | ||||||||||||||
| 242 | (1) | — | — | 22.10 | 05/24/2020 | |||||||||||||||
| 1,186 | (1) | — | — | 22.10 | 06/15/2021 | |||||||||||||||
| 2,371 | (1) | — | — | 20.30 | 06/08/2022 | |||||||||||||||
| 17,101 | (1) | — | — | 20.30 | 09/18/2022 | |||||||||||||||
| 6,563 | (1) | — | — | 18.80 | 10/11/2023 | |||||||||||||||
| 40,791 | (1) | — | — | 118.00 | 06/16/2025 | |||||||||||||||
| 4,435 | (1) | — | — | 110.00 | 06/24/2025 | |||||||||||||||
| 22,525 | (2) | 9,276 | — | 28.00 | 02/03/2026 | |||||||||||||||
| 6,956 | (2) | 8,945 | — | 27.80 | 03/20/2027 | |||||||||||||||
| 74,996 | (3) | 125,004 | — | 4.68 | 06/05/2028 | |||||||||||||||
| William Duke, Jr. |
20,582 | (3) | 2,941 | — | 110.00 | 06/24/2025 | ||||||||||||||
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| Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option exercise price ($) |
Option expiration date |
|||||||||||||||
| 10, 639 | (3) | 4,381 | — | 28.00 | 02/03/2026 | |||||||||||||||
| 3,286 | (3) | 4,225 | — | 27.80 | 03/20/2027 | |||||||||||||||
| 31,874 | (3) | 53,127 | — | 4.68 | 06/05/2028 | |||||||||||||||
| Teofilo Raad |
13,086 | (2) | 19,965 | — | 27.00 | 05/01/2027 | ||||||||||||||
| 27,789 | (3) | 46,312 | — | 4.68 | 06/05/2028 | |||||||||||||||
| (1) | Fully vested. |
| (2) | Each of these options vests over a four (4) year period, with twenty-five percent (25%) vesting on the first anniversary of the date of grant and 2.083% vesting each month thereafter for the next thirty-six (36) months. |
| (3) | Each of these options vests over a three (3) year period, with twenty-five percent (25%) vesting on the grant date and 2.083% vesting each month thereafter for the next thirty-six (36) months. |
Director Compensation
The following table presents the total compensation for each person who served as a member of our Board during 2018. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation to any of the other members of our Board in such period.
Director Compensation Table
2018
| Name |
Fees earned or paid in cash ($) |
Stock awards ($) |
Option awards ($) |
All other compensation ($) |
Total ($) |
|||||||||||||||
| Steven Gillis, Ph.D |
30,000 | — | 39,703 (1) | — | 69,703 | |||||||||||||||
| Michael J. Higgins |
50,000 | — | 39,703 (2) | — | 89,703 | |||||||||||||||
| Mark Iwicki |
68,000 | — | 49,629 (3) | — | 117,629 | |||||||||||||||
| Terrance G. McGuire |
47,000 | — | 39,703 (4) | — | 86,703 | |||||||||||||||
| Amit D. Munshi |
37,000 | 39,703 (5) | 76,703 | |||||||||||||||||
| Matthew L. Sherman, M.D. |
33,000 | — | 39,703 (6) | — | 72,703 | |||||||||||||||
| (1) | As of December 31, 2018, Dr. Gillis had outstanding options representing the right to purchase 15,602 shares of our common stock. |
| (2) | As of December 31, 2018, Mr. Higgins had outstanding options representing the right to purchase 17,484 shares of our common stock |
| (3) | As of December 31, 2018, Mr. Iwicki had outstanding options representing the right to purchase 23,289 shares of our common stock. |
| (4) | As of December 31, 2018, Mr. McGuire had outstanding options representing the right to purchase 15,602 shares of our common stock. |
| (5) | As of December 31, 2018, Mr. Munshi had outstanding options representing the right to purchase 13,280 shares of our common stock. |
| (6) | As of December 31, 2018, Dr. Sherman had outstanding options representing the right to purchase 13,720 shares of our common stock. |
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We have entered into a director’s agreement with each of our non-employee directors. In 2018, under these agreements, non-employee directors were paid cash compensation payable in four quarterly payments as set forth in the table below.
| Annual Retainer | ||||
| Board of Directors: |
||||
| All Non-Employee Members |
$ | 30,000 | ||
| Chairperson |
$ | 60,000 | ||
| Audit Committee: |
||||
| Members |
$ | 7,000 | ||
| Chairperson |
$ | 15,000 | ||
| Compensation Committee: |
||||
| Members |
$ | 3,000 | ||
| Chairperson |
$ | 7,000 | ||
| Nominating and Corporate Governance Committee: |
||||
| Members |
$ | 5,000 | ||
| Chairperson |
$ | 10,000 | ||
The agreements also provide that such directors will be reimbursed for reasonable out-of-pocket expenses incurred in connection with the attendance of board meetings.
During 2018, we issued stock options to non-employee members of our Board with an exercise price equal to the fair market value of our common stock on the date of grant. On June 5, 2018, each of Messrs. Higgins, McGuire, Munshi and Drs. Gillis and Sherman received an option to purchase 12,400 shares of the Company’s common stock and Mr. Iwicki received an option to purchase 15,500 shares of the Company’s common stock. All option awards had an exercise price of $4.68 per share, which was the closing price on June 5, 2018, the grant date.
For all stock options issued to non-employee members of our Board in 2015, 2.08333% of the options vest in 48 equal installments on a monthly basis. For the grants made on March 20, 2017 and June 13, 2017, 25% of the options vest on the first anniversary of the date of grant, and the remaining options vest in 36 equal monthly installments thereafter. For the grants made on June 5, 2018, 25% of the options vest immediately on the grant date and the remaining shares vest in 36 equal monthly installments thereafter.
We did not pay any compensation or award any stock options to Dr. Clarke for his service as a director.
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| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
Equity Compensation Plan Information
The following table provides information regarding the number of securities to be issued under the 2013 Plan and Old Pulmatrix Equity Plans (as defined below), the weighted-average exercise price of options issued under the 2013 Plan and Old Pulmatrix Equity Plans and the number of securities remaining available for future issuance under the 2013 Plan and Old Pulmatrix Equity Plans, in each case as of December 31, 2018:
| Plan category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (3) |
|||||||||
| Equity compensation plans approved by security holders (1) |
975,569 | $ | 24.14 | 272,222 | ||||||||
| Equity compensation plans not approved by security holders (2) |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
975,569 | $ | 24.14 | 272,222 | ||||||||
| (1) | Represents shares available for issuance under the 2013 Plan. |
| (2) | Excludes 49,108 shares of our common stock issuable upon outstanding options granted under equity compensation plans granted under the Original 2013 Plan and the 2003 plan. No additional awards may be issued under the Original 2013 Plan nor the 2003 Plan. As of December 31, 2018, there were 9,521 options with a weighted average exercise price of $18.75 per share outstanding pursuant to the Original 2013 Plan. As of December 31, 2018, there were 39,587 options with a weighted average exercise price of $21.02 per share outstanding pursuant to the 2003 Plan. |
| (3) | The number of authorized shares under the 2013 Plan is subject to annual increases based upon an “evergreen” provision, which allows for an annual increase in the number of shares of our common stock available for issuance under the plan on the first day of each fiscal year beginning in calendar year 2016. The annual increase in the number of shares shall be equal to: (i) five percent (5%) of the number of shares of our common stock outstanding as of such date; or (ii) an amount determined by our Board. On January 1, 2019, under the 2013 Plan’s “evergreen” provision, the number of shares of our common stock available for issuance increased by 246,637 shares to a total of 1,496,637 shares. |
Incentive Plans
We sponsor the 2013 Plan. The 2013 Plan was amended and restated as of June 15, 2015 to, among other things, (i) increase the number of shares of our common stock authorized under the plan, (ii) comply with the requirements imposed by Section 162(m) of the Code, and (iii) provide an increase in the number of shares of our common stock available for issuance under the 2013 Plan’s “evergreen” provision. The 2013 Plan was amended and restated as of June 7, 2018 to increase the number of shares of our common stock authorized under the plan and as of December 31, 2018, the 2013 Plan provided for the grant of up to 1,250,000 shares of our common stock, of which 272,219 shares remained available for future grant. Effective January 1, 2019, under the 2013 Plan’s “evergreen” provision, the number of shares of our common stock available for issuance was increased by 246,636. As of February 14, 2019, the total authorized shares under the 2013 Plan were 1,496,636 shares of which 521,137 shares were available for future issuance.
At the effective time of the merger with Pulmatrix operating, we assumed Pulmatrix Operating’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Original 2013 Plan”) and Pulmatrix Operating’s 2003 Employee, Director, and Consultant Stock Plan (the “2003 Plan”), and terminated the Original 2013 Plan as to future awards. The 2003 Plan expired on August 1, 2013; however, awards previously granted and outstanding
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prior to that date continue to remain in full force and effect according to their respective terms. A total of 9,522 and 39,588 shares of our common stock may be delivered under options outstanding as of December 31, 2018 under the Original 2013 Plan and the 2003 Plan, respectively, however, no additional awards may be granted under the Original 2013 Plan or the 2003 Plan. The 2003 Plan and Original 2013 Plan are collectively referred to as the “Old Pulmatrix Equity Plans.”
2013 Plan
In connection with the merger agreement with Pulmatrix Operating, our compensation committee, our Board and stockholders approved the 2013 Plan.
Eligibility. The 2013 Plan allows our Company, under the direction of our compensation committee, to make grants of stock options, restricted and unrestricted stock awards and other stock-based awards to employees, consultants and directors who, in the opinion of our compensation committee, are in a position to make a significant contribution to our long-term success. The purpose of these awards is to attract and retain key individuals, further align employee and stockholder interests, and to closely link compensation with Company performance. All employees, directors and consultants of the Company and its affiliates are eligible to participate in the 2013 Plan.
Shares Available for Issuance. As of February 14, 2019, the total authorized shares under the 2013 Plan were 1,496,636 shares of which 521,137 shares were available for future issuance. The 2013 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of our common stock available for issuance under the plan on the first day of each fiscal year beginning in calendar year 2016. The annual increase in the number of shares shall be equal to: (i) five percent (5%) of the number of shares of our common stock outstanding as of such date; or (ii) an amount determined by our Board.
Generally, shares of common stock subject to awards under the 2013 Plan that lapse, are forfeited or are canceled will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant.
Plan Administration. In accordance with the terms of the 2013 Plan, our Board has authorized our compensation committee to administer the 2013 Plan. The compensation committee may delegate part of its authority and powers under the 2013 Plan to one or more of our directors and/or officers, but only the compensation committee can make awards to participants who are directors or executive officers of the Company. In accordance with the provisions of the 2013 Plan, our compensation committee determines the terms of awards, including:
| • | which employees, directors and consultants will be granted awards; |
| • | the number of shares subject to each award; |
| • | the vesting provisions of each award; |
| • | the termination or cancellation provisions applicable to awards; and |
| • | all other terms and conditions upon which each award may be granted in accordance with the 2013 Plan. |
In addition, our compensation committee may, in its discretion, amend any term or condition of an outstanding award provided (i) such term or condition as amended is permitted by the 2013 Plan, and (ii) any such amendment shall be made only with the consent of the participant to whom such award was made, if the amendment is adverse to the participant; and provided, further, that, without the prior approval of our stockholders, options will not be repriced, replaced or regranted through cancellation or by lowering the exercise price of a previously granted award and will not be exchanged for another type of award or cash.
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Performance Goals. In order for the Company to have the ability to grant awards under the 2013 Plan that qualify as “performance-based compensation” under Section 162(m) of the Code, the 2013 Plan provides that our compensation committee may require that the vesting of certain awards be conditioned on the satisfaction of performance criteria related to objectives of the Company, an affiliate of the Company or a division or strategic business unit of the Company in which the relevant participant is employed, such as: (i) pre-tax income or after-tax income; (ii) income or earnings including operating income, earnings before or after taxes, interest, depreciation, amortization, and/or extraordinary or special items; (iii) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (iv) earnings or book value per share (basic or diluted); (v) return on assets (gross or net), return on investment, return on capital, return on invested capital or return on equity; (vi) return on revenues; (vii) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (viii) economic value created; (ix) operating margin or profit margin; (x) stock price or total stockholder return; (xi) income or earnings from continuing operations; (xii) cost targets, reductions and savings, expense management, productivity and efficiencies; (xiii) operational objectives, consisting of one or more objectives based on achieving progress in research and development programs or achieving regulatory milestones related to development and or approval of products; or (xiv) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share of one or more products or customers, geographical business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions. As discussed above, if we determine to make awards under the 2013 Plan subject to the attainment of performance goals relating to any of the foregoing performance criteria, the compensation committee intends that compensation paid under the 2013 Plan will not be subject to the deductibility limitation imposed under Section 162(m) of the Code.
Stock Options. Stock options granted under the 2013 Plan may either be incentive stock options, which are intended to satisfy the requirements of Section 422 of the Code, or non-qualified stock options, which are not intended to meet those requirements. Incentive stock options may be granted to employees of the Company and its affiliates that are corporations. Non-qualified stock options may be granted to employees, directors and consultants of the Company and its affiliates. The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the combined voting power of all classes of our capital stock, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant and the term of the incentive stock option may not be longer than five years. Non-qualified stock options may not have a term longer than ten years.
Award agreements for stock options will include rules for exercise of the stock options after termination of service. Stock options may not be exercised unless they are vested, and no stock option may be exercised after the end of the term set forth in the award agreement. Unless otherwise provided in an award agreement, in general, stock options will be exercisable for three months after termination of service for any reason other than death or total and permanent disability, and for twelve (12) months after termination of service on account of death or total and permanent disability.
Restricted Stock. Restricted stock is common stock that is subject to restrictions, including a prohibition against transfer and a substantial risk of forfeiture, until the end of a “restricted period” during which the participant must satisfy certain vesting conditions (including, continued service with the Company through the restricted period and/or the achievement of performance goals). If the participant does not satisfy the vesting conditions by the end of the restricted period, the restricted stock is forfeited. During the restricted period, the holder of restricted stock has the rights and privileges of a regular stockholder, except that the restrictions set forth in the applicable award agreement apply. For example, the holder of restricted stock may vote and receive dividends on the restricted shares; but he or she may not sell the shares until the restrictions are lifted.
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Other Stock-Based Awards. The 2013 Plan also authorizes the grant of other types of stock-based compensation including, but not limited to phantom stock awards, stock appreciation rights and stock unit awards. Our compensation committee may award such stock-based awards subject to such conditions and restrictions as it may determine; provided, however, each stock appreciation right shall have an exercise price which shall not be less than the fair market value of our common stock on the date of grant and shall terminate no more than ten years from the date of grant. These conditions and restrictions may include continued service with our Company through a specified restricted period and/or the achievement of performance goals.
Stock Dividends and Stock Splits. If our common stock shall be subdivided or combined into a greater or smaller number of shares or if we issue any shares of common stock as a stock dividend, the number of shares of our common stock deliverable upon exercise of an option issued or upon issuance of an award shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend.
Corporate Transactions. Upon a merger, consolidation, sale of all or substantially all of the Company’s assets, or such other corporate transaction event, our Board, may, in its sole discretion, take any one or more of the following actions pursuant to the 2013 Plan, as to some or all of the outstanding awards:
| • | provide that all outstanding stock options shall be assumed or substituted by the successor corporation; |
| • | upon written notice to a participant provide that the participant’s unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the participant; |
| • | in the event of a merger pursuant to which holders of our common stock will receive a cash payment for each share surrendered in the merger, make or provide for a cash payment to the participants equal to the difference between the merger price times the number of shares of our common stock subject to such outstanding options, and the aggregate exercise price of all such outstanding options, in exchange for the termination of such options; |
| • | provide that outstanding awards shall be assumed or substituted by the successor corporation, become realizable or deliverable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon the merger or reorganization event; and |
| • | with respect to stock grants, in lieu of any of the foregoing, the Board or an authorized committee may provide that, upon consummation of the transaction, each outstanding stock grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such transaction to a holder of the number of shares of common stock comprising such award (to the extent such stock grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Board or an authorized committee, all forfeiture and repurchase rights being waived upon such transaction). |
Amendment and Termination. The 2013 Plan may be amended by our stockholders. It may also be amended by our Board, provided that any amendment approved by our Board which is of a scope that requires stockholder approval as required by the NASDAQ Rules, in order to ensure favorable federal income tax treatment for any incentive stock options under Code Section 422, or for any other reason is subject to obtaining such stockholder approval. However, no such action may adversely affect any rights under any outstanding award without the participant’s consent.
Duration of Plan. The 2013 Plan will expire by its terms ten (10) years from the earlier of the date of its adoption by our Board and its approval by our stockholders.
2003 Plan and Original 2013 Plan
On August 1, 2003, Pulmatrix Operating adopted the 2003 Plan, which provided for awards of stock options and shares of Pulmatrix Operating common stock to certain employees, directors, and consultants who were selected
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for participation by the 2003 Plan’s administrator. The 2003 Plan expired on August 1, 2013; however, awards previously granted and outstanding prior to that date continued to remain in full force and effect according to their respective terms. As of February 14, 2019, 39,588 shares of our common stock may be issued pursuant to outstanding stock options under the 2003 Plan and no additional awards may be granted under the 2003 Plan.
On August 26, 2013, Pulmatrix Operating adopted the Original 2013 Plan, which provides for awards of stock options, stock grants, and other stock-based awards to certain employees, directors, and consultants who were selected for participation by the Original 2013 Plan’s administrator. Immediately prior to the adoption of the 2013 Plan, we terminated the Original 2013 Plan as to future awards. As of February 14, 2019, 9,522 shares of our common stock may be issued pursuant to outstanding stock options under the Original 2013 Plan and no additional awards may be granted under the Original 2013 Plan.
The Old Pulmatrix Equity Plans are administered by our compensation committee, which has been delegated to act on the Board’s behalf. The administrator has discretion to, among other things, interpret the Old Pulmatrix Equity Plans and make all rules and determinations necessary to administer the Old Pulmatrix Equity Plans, select those persons eligible to receive awards under the Old Pulmatrix Equity Plans, determine the number of shares of our stock subject to, and the terms and conditions of, awards under the Old Pulmatrix Equity Plans, amend outstanding awards and adopt any sub-plans applicable to residents of a specified jurisdiction in order to comply with or take advantage of such jurisdiction’s tax or other applicable laws.
Stock options granted under the Old Pulmatrix Equity Plans could either be “incentive stock options” within the meaning of Section 422 of the Code or “nonqualified stock options.” Incentive stock options may not have an exercise price per share of less than 100% (110% in the case of a participant who owns more than 10% of the combined voting power of Pulmatrix or an affiliate (a “10% Stockholder”)) of the fair market value of a share of our stock on the date of grant or a term longer than ten years (five years in the case of a 10% Stockholder). The exercise price per share of a nonqualified stock option granted under the Original 2013 Plan may not be less than 100% of the fair market value of a share of our stock on the date of grant, unless the option complies with Section 409A of the Code or is granted to a consultant to whom Section 409A of the Code does not apply. A stock grant awarded under the Old Pulmatrix Equity Plans will state the purchase price per share, if any, and may include the right for us to restrict or reacquire the shares covered by the award, subject to the terms and conditions of the applicable award agreement. Other stock-based awards permitted under the Original 2013 Plan include securities convertible into our stock, stock appreciation rights, phantom stock awards and stock units, and are intended to be exempt from or comply with Section 409A of the Code.
Participants in the Old Pulmatrix Equity Plans do not have any voting or other rights as a stockholder of Pulmatrix until the exercise of the award, payment of the aggregate exercise or purchase price, if any, and registration of the acquired shares in the participant’s name. Except as otherwise permitted by the administrator, awards granted under the Old Pulmatrix Equity Plans are transferable only by will or through the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant (or his or her legal representative).
Except as otherwise provided in an award agreement, if a participant’s employment with us or an affiliate is terminated for any reason, all unvested stock options granted under the Old Pulmatrix Equity Plans will expire and be forfeited and all stock grants and stock-based awards granted under the Old Pulmatrix Equity Plans that have not been accepted by the participant, and the purchase price, if any, not paid, shall terminate. If the participant’s employment with us or an affiliate is terminated for any reason other than by us for cause or due to the participant’s death or total and permanent disability, then vested stock options granted under the Old Pulmatrix Equity Plans remain exercisable for the duration of the term specified in the award agreement, which cannot exceed three months in the case of an incentive stock option, and all stock grants under the Old Pulmatrix Equity Plans that remain subject to forfeiture or our repurchase rights shall be cancelled or repurchased, as applicable. If the termination of employment is due to the participant’s death or total and permanent disability (or the participant dies or becomes disabled within three months of the participant’s termination of employment
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other than for cause), then outstanding, vested stock options granted under the Old Pulmatrix Equity Plans may be exercised for up to one year following the participant’s termination date and the forfeiture provisions of, or our repurchase rights in, outstanding stock grants under the Old Pulmatrix Equity Plans shall lapse, provided that, to the extent such forfeiture provisions or repurchase rights otherwise lapse over time, such provisions or rights shall lapse only as to the pro rata number of shares of stock subject to such provisions or rights, based on the number of days in the relevant time period prior to the date of death or total and permanent disability. If a participant’s employment with us or an affiliate is terminated for cause, or a participant subsequently commits an act constituting cause, then all outstanding, unexercised stock options granted under the Old Pulmatrix Equity Plans will be immediately forfeited and any shares of stock subject to any stock grant under the Old Pulmatrix Equity Plans, whether or not then subject to forfeiture or right of repurchase, shall be immediately subject to repurchase by us, with the repurchase price determined as provided in the 2003 Plan or the Original 2013 Plan, as applicable.
Pursuant to the Old Pulmatrix Equity Plans, all unexercised stock options and any stock grants or stock-based awards that have not been accepted by the participant, to the extent required by the applicable award agreement, will terminate immediately prior to our dissolution or liquidation. Unless otherwise determined by the administrator or specifically provided in the applicable award agreement, all outstanding stock-based awards shall immediately terminate upon our dissolution or liquidation.
In the event of a “Corporate Transaction” (as defined in the Old Pulmatrix Equity Plans), all outstanding stock options shall be (i) substituted, on an equitable basis, for stock options in the successor or acquiring entity, (ii) terminated, if not exercised by the participant upon receiving advance written notice that such options, to the extent exercisable or made exercisable at the discretion of the administrator, must be exercised by a specific date or (iii) terminated in exchange for payment of an amount equal to the consideration payable upon consummation of the Corporate Transaction for the number of shares covered by the stock options then exercisable or made exercisable at the discretion of the administrator, less the stock options’ aggregate exercise price. In the event of a Corporate Transaction, all outstanding stock grants shall either be (x) substituted for stock grants, with the same terms and conditions, but in securities of the successor or acquiring entity or (y) terminated in exchange for a payment of an amount equal to the consideration payable upon consummation of the Corporate Transaction for the number of shares covered by the stock grant that are no longer subject to any forfeiture or repurchase rights, whether by their terms or that were waived in the administrator’s discretion. In the event of a Corporate Transaction, the administrator or the Board of the successor or acquiring entity shall determine the specific adjustments to be made to any outstanding stock-based awards, which determination shall be conclusive.
The administrator or our stockholders may amend the Old Pulmatrix Equity Plans, provided that no such amendment shall adversely affect the rights of any participant without the participant’s consent.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of February 14, 2019 by (i) each person known to us to beneficially own five percent (5%) or more of our common stock, (ii) each director and Named Executive Officer and (iii) all of our directors and executive officers as a group. The persons named in the table have sole voting and investment power with respect to all shares of common stock owned by them and have an address of c/o Pulmatrix Inc., 99 Hayden Avenue, Suite 390, Lexington, MA 02421, unless otherwise noted. Percentage of ownership is based on 8,027,895 shares of common stock issued and outstanding as of February 14, 2019.
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Beneficial ownership is determined in accordance with the rules of the SEC. For the purpose of calculating the number of shares beneficially owned by a stockholder and the percentage ownership of that stockholder, shares of common stock subject to options or warrants that are currently exercisable or exercisable within sixty (60) days of February 14, 2019 by that stockholder are deemed outstanding.
| Name |
Number of Shares Beneficially Owned (1)(2) |
Percentage of Shares Outstanding (1)(2) |
Beneficially Owned as a result of stock ownership (1)(2) |
Beneficially Owned as a result of stock option ownership (1)(2) |
Beneficially Owned as a result of warrant ownership (1)(2) |
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| Directors and Officers |
||||||||||||||||||||
| Robert W. Clarke, Ph.D. |
200,065 | 2.43 | % | 2,320 | 197,745 | — | ||||||||||||||
| William E. Duke, Jr. |
76,654 | * | — | 76,654 | — | |||||||||||||||
| Steven Gillis, Ph.D. |
467,011 | 5.73 | % | 343,646 | 8,365 | 115,000 | ||||||||||||||
| Michael J. Higgins (3) |
10,129 | * | — | 10,129 | — | |||||||||||||||
| Mark Iwicki |
74,848 | * | 30,700 | 13,448 | 30,700 | |||||||||||||||
| Terrance G. McGuire (4) |
641,392 | 7.87 | % | 518,025 | 8,365 | 115,002 | ||||||||||||||
| Amit D. Munshi |
6,087 | * | — | 6,087 | — | |||||||||||||||
| Teofilo Raad |
49,796 | * | — | 49,796 | — | |||||||||||||||
| James Roach, M.D. |
49,460 | * | — | 49,460 | — | |||||||||||||||
| Matthew L. Sherman, M.D. |
10,453 | * | 2,000 | 6,453 | 2,000 | |||||||||||||||
| All directors and executive officers as a group of ten persons |
1,585,895 | 18.19 | % | 896,691 | 426,502 | 262,702 | ||||||||||||||
| Five Percent (5%) Stockholders |
||||||||||||||||||||
| Polaris (5) |
633,027 | 7.78 | % | 518,025 | — | 115,002 | ||||||||||||||
| ARCH Venture Fund |
458,646 | 5.63 | % | 343,646 | — | 115,000 | ||||||||||||||
| * | Less than 1%. |
| (1) | Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 promulgated under the Exchange Act and is not necessarily indicative of beneficial ownership for any other purpose. The number of shares of common stock shown as beneficially owned includes shares of common stock issuable upon the exercise of stock options that will become exercisable within sixty (60) days of February 14, 2019. |
| (2) | Exercisable as of February 14, 2019 or will become exercisable within 60 days after such date. |
| (3) | Mr. Higgins is affiliated with the investment manager of the PVP IV Funds and PVP V Funds (each defined below) but does not have any voting or dispositive power with respect to the shares owned by the PVP IV Funds and PVP V Funds referenced in footnote (4) below. |
| (4) | Consists of 518,025 shares of our common stock of which (i) 155,668 shares are held by Polaris Venture Partners IV, L.P. (“PVP IV”), 2,918 shares are held by Polaris Venture Partners Entrepreneurs’ Fund IV, L.P. (“PVPEF IV” and, together with PVP IV, the “PVP IV Funds”), 346,819 shares are held by Polaris Venture Partners V, L.P. (“PVP V”), 6,773 shares are held by Polaris Venture Partners Entrepreneurs’ Fund V, L.P. (“PVPEF V”), 2,388 shares are held by Polaris Venture Partners Founders’ Fund V, L.P. (“PVPFF V”) and 3,459 shares are held by Polaris Venture Partners Special Founders’ Fund V, L.P. (“PVPSFF V” and, together with PVP V, PVPEF V and PVPFF V, the “PVP V Funds”) and (ii) 115,002 shares of our common stock issuable upon the exercise of warrants within 60 days of February 14, 2019. Of such 115,002 shares, 34,556 are held by PVP IV, 648 are held by PVPEF IV, 76,999 are held by PVP V, 1,501 are held by PVPEF V, 528 are held by PVPFF V and 770 are held by PVPSFF V. Excluded are 116,965 shares issuable upon the exercise of warrants (of such 116,965 shares 35,145 are held by PVP IV, 659 are held by PVPEF IV, 78,313 are held by PVP V, 1,527 are held by PVPEF V, 537 are held by PVPFF V and 784 are held by PVPSFF V), which shares were excluded because exercisability of such warrants is conditioned upon the occurrence of events outside the holder’s control and not deemed to be or become exercisable within sixty (60) days of February 14, 2019. Polaris Venture Management Co. IV, L.L.C. (“PVM IV”) is the general |
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| partner of the PVP IV Funds and Polaris Venture Management Co. V, L.L.C. (“PVM V”) is the general partner of the PVP V Funds. Each of Mr. McGuire and Jonathan Flint are the managing members of each of PVM IV and PVM V and may be deemed to have shared voting and dispositive power with respect to the shares held by each of the PVP IV Funds and the PVP V Funds. Each of PVM IV and Messrs. McGuire and Flint disclaim beneficial ownership of the shares held by each of the PVP IV Funds and each of PVM V and Messrs. McGuire and Flint disclaim beneficial ownership of the shares held by each of the PVM V Funds. This report shall not be deemed an admission that any of PVM IV, PVM V or Messrs. McGuire or Flint is the beneficial owner of any of the shares owned by the PVP IV Funds and PVP V Funds for any purpose, except to the extent of their respective pecuniary interests therein. |
| (4) | The business address of Polaris is One Marina Park Dr., Boston, Massachusetts 02210. |
| (5) | Consists of the shares held by the PVP IV Funds and PVP V Funds and described in footnote (3) above. |
| (6) | Includes the following shares which are also reported on this table as being beneficially owned by ARCH Venture Fund: (i) 343,646 shares of Pulmatrix common stock and (ii) 115,000 shares of Pulmatrix common stock issuable upon the exercise of warrants within 60 days of February 14, 2019. Excluded are 79,751 shares issuable upon the exercise of warrants, which shares were excluded because exercisability of such warrants is conditioned upon the occurrence of events outside the holder’s control. The sole general partner of ARCH Venture Fund is ARCH Venture Partners VII, L.P. (“ARCH Partners VII”). The sole general partner of ARCH Partners VII is ARCH Venture Partners VII, LLC (“ARCH VII LLC”). Each of the Managing Directors of ARCH VII LLC, Robert T. Nelsen, Keith Crandell and Clinton Bybee, may be deemed to have voting and dispositive power over the shares and may be deemed to beneficially own shares held by ARCH Venture Fund. Dr. Gillis owns an interest in ARCH Venture Fund but does not have voting or investment control over the shares held by ARCH Venture Fund. Each of Robert T. Nelsen, Keith Crandell, Clinton Bybee and Dr. Gillis disclaim beneficial ownership of such shares, except to the extent of any pecuniary interest therein, and this disclosure shall not be deemed an admission that Robert T. Nelsen, Keith Crandell, Clinton Bybee or Dr. Gillis are the beneficial owners of such securities for purposes of Section 13(d) of the Exchange Act or any other purpose. |
| (7) | The business address of ARCH Venture Fund is 8725 W. Higgins Rd., Suite 290, Chicago, IL 60631. |
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
General
Transactions with related persons are governed by our Code of Corporate Conduct and Ethics and Whistleblower Policy, which applies to all of our associates, as well as each of our directors and certain persons performing services for us. This code covers a wide range of potential activities, including, among others, conflicts of interest, self-dealing and related party transactions. Waiver of the policies set forth in this code will only be permitted when circumstances warrant. Such waivers for directors and executive officers, or that provide a benefit to a director or executive officer, may be made only by our Board, as a whole, or the Audit Committee and must be promptly disclosed as required by applicable law or regulation. Absent such a review and approval process in conformity with the applicable guidelines relating to the particular transaction under consideration, such arrangements are not permitted. All related party transactions for which disclosure is required to be provided herein were approved in accordance with our Code of Corporate Conduct and Ethics and Whistleblower Policy.
Certain Relationships
Three of our directors are employed by venture capital investors that beneficially own the majority of our Company’s common stock through a series of private placements, rounds of venture capital financing and a recapitalization since its formation, Polaris and ARCH Venture Fund. Terrance G. McGuire is a General Partner of and owns an interest in Polaris Venture Management Co. IV, L.L.C., which is the sole general partner of Polaris Venture Partners IV, L.P., and Polaris Venture Partners Entrepreneurs’ Fund IV, L.P, and Polaris Venture
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Management Co. V, L.L.C., which is the sole general partner of Polaris Venture Partners V, L.P., Polaris Venture Partners Founders’ Fund V, L.P., Polaris Venture Partners Special Founders’ Fund V, L.P. and Polaris Venture Partners Entrepreneurs’ Fund V, L.P. In addition, Michael J. Higgins is an Entrepreneur-in-Residence at Polaris. As of February 14, 2019, Polaris beneficially owns approximately 7.78% of our Company’s outstanding common stock. Dr. Steven Gillis is a Managing Director of and owns an interest in ARCH Venture Fund, a venture capital firm. As of February 14, 2019, ARCH Venture Fund beneficially owns approximately 5.63 % of our Company’s outstanding common stock.
Transactions with Related Persons
On April 3, 2018, we completed an underwritten public offering for a total of (i) 1,566,000 common units, with each common unit being comprised of one share of our common stock, one Series A Warrant to purchase one share of common stock and one Series B Warrant to purchase one share of common stock, and (ii) 784,000 pre-funded units, with each pre-funded unit being comprised of one Pre-funded Warrant to purchase one share of common stock, one Series A Warrant and one Series B Warrant. The offering price to the public was $6.50 per common unit and $6.40 per pre-funded unit. The Series A Warrants included in the common units and the pre-funded units were immediately exercisable at a price of $6.50 per share of common stock, subject to adjustment in certain circumstances, and expired six months from the date of issuance. The Series B Warrants included in the common units and the pre-funded units are immediately exercisable at a price of $7.50 per share of common stock, subject to adjustment in certain circumstances, and will expire five years from the date of issuance. The pre-funded units were issued and sold to purchasers whose purchase of units in the offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of the offering, if the purchaser so chooses in lieu of common units that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding common stock (or at the election of the purchaser, 9.99%). Each Pre-Funded Warrant contained in a pre-funded unit is exercisable for one share of our common stock at an exercise price of $0.10 per share. The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.
The purchasers in the offering included the following related persons:
(1) Mark Iwicki, the chairman of our board of directors, purchased 30,700 units, for a purchase price of $199,550.
(2) PVP V, PVPEF V, PVPFF V, PVPSFF V, PVP IV and PVPEF IV purchased 76,999, 1,501, 528, 770, 34,556 and 648 common units, respectively, for an aggregate purchase price of $747,500. At the time of the underwritten public offering, Polaris funds beneficial owned more than 5% of our common stock. Mr. McGuire, our director, is one of the managing members of each of PVM IV and PVM V.
(3) ARCH Venture Fund VII purchased 115,000 common units for an aggregate purchase price of $747,500. At the time of the underwritten public offering, ARCH Venture Fund VII beneficial owned more than 5% of our common stock. Dr. Gillis, our director, owns an interest in ARCH Venture Fund VII.
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PART IV
| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
| (a) | The following documents are filed as part of this Annual Report on Form 10-K: |
| (1) | Financial Statements: |
No financial statements are filed with this Amendment No. 1. These items were included as part of the Original Filing.
| (2) | Financial Statement Schedules: |
None.
| (3) | Exhibits: |
See “Index to Exhibits” for a description of our exhibits.
INDEX TO EXHIBITS
16
17
| # | Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Pulmatrix, Inc. hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the Securities and Exchange Commission. |
| * | These exhibits are management contracts |
| ^ | Previously filed (or, with respect to Exhibits 32.1 and 32.2, furnished) with the Original Filing, which is being amended hereby. |
18
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PULMATRIX, INC. | ||||||
| Date: July 24, 2019 | By: | /s/ Teofilo David Raad | ||||
| Teofilo David Raad | ||||||
| Chief Executive Officer and President (Principal Executive Officer) | ||||||
| By: | /s/ William Duke, Jr. | |||||
| William Duke, Jr. | ||||||
| Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer) | ||||||
19
Exhibit 31.3
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14 and 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Teofilo David Raad, President and Chief Executive Officer, certify that:
1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Pulmatrix, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Date: July 24, 2019
| /s/ Teofilo David Raad |
| Teofilo David Raad |
| President & Chief Executive Officer |
| (Principal Executive Officer) |
Exhibit 31.4
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14 and 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William Duke, Jr., Chief Financial Officer, certify that:
1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Pulmatrix, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Date: July 24, 2019
| /s/ William Duke, Jr. |
| William Duke, Jr. |
| Chief Financial Officer |