PAVmed Inc. 10-Q

Item 1. Financial Statements PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and per share data) (unaudited) September 30, 2021 December 31, 2020 Assets: Current assets: Cash $ 37,341 $ 17,256 Accounts receivable 200 — Inventory 50 — Prepaid expenses, deposits, and other current assets 4,141 1,685 Total current assets 41,732 18,941 Fixed assets, net 451 82 Intangible assets, net 47 — Other assets 755 755 Total assets $ 42,985 $ 19,778 Liabilities, Preferred Stock and Stockholders’ Deficit Current liabilities: Accounts payable $ 6,080 $ 2,966 Accrued expenses and other current liabilities 1,671 2,325 CARES Act Paycheck Protection Program note payable — 300 Senior Secured Convertible Notes - at fair value — 10,060 Senior Convertible Note - at fair value — 4,600 Total liabilities 7,751 20,251 Commitments and contingencies (Note 6) — — Stockholders’ Equity (Deficit): Preferred stock, $ 0.001 par value. Authorized, 20,000,000 shares; Series B Convertible Preferred Stock, par value $ 0.001 , issued and outstanding 1,091,448 at September 30, 2021 and 1,228,075 shares at December 31, 2020 2,352 2,537 Common stock, $ 0.001 par value. Authorized, 150,000,000 shares; 84,400,822 and 63,819,935 shares outstanding as of September 30, 2021 and December 31, 2020, respectively 84 64 Additional paid-in capital 154,059 87,570 Accumulated deficit ( 121,625 ) ( 88,275 ) Total PAVmed Inc. Stockholders’ Equity 34,870 1,896 Noncontrolling interests 364 ( 2,369 ) Total Stockholders’ Equity (Deficit) 35,234 ( 473 ) Total Liabilities and Stockholders’ Equity $ 42,985 $ 19,778 See accompanying notes to the unaudited condensed consolidated financial statements. 1 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except number of shares and per share amounts) (unaudited) 2021 2020 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ 200 $ — $ 200 $ — Cost of revenue 144 — 144 — Gross profit 56 — 56 — Operating expenses: Commercial operations 2,432 687 5,792 1,532 General and administrative 5,987 2,222 16,100 6,942 Research and development 5,305 2,619 12,878 7,321 Total operating expenses 13,724 5,528 34,770 15,795 Loss from operations ( 13,668 ) ( 5,528 ) ( 34,714 ) ( 15,795 ) Other income (expense): Interest expense — — — ( 53 ) Change in fair value - Senior Secured Convertible Notes and Senior Convertible Note — 367 1,682 ( 5,521 ) Offering costs - Senior Secured Convertible Note and Senior Convertible Note — ( 50 ) — ( 660 ) Debt extinguishments loss - Senior Secured Convertible Notes — ( 663 ) ( 3,715 ) ( 4,600 ) Debt forgiveness — — 300 — Other income (expense), net — ( 346 ) ( 1,733 ) ( 10,834 ) Loss before provision for income tax ( 13,668 ) ( 5,874 ) ( 36,447 ) ( 26,629 ) Provision for income taxes — — — — Net loss before noncontrolling interests ( 13,668 ) ( 5,874 ) ( 36,447 ) ( 26,629 ) Net loss attributable to the noncontrolling interests 1,441 391 3,318 1,093 Net loss attributable to PAVmed Inc. ( 12,227 ) ( 5,483 ) ( 33,129 ) ( 25,536 ) Less: Series B Convertible Preferred Stock dividends earned ( 67 ) ( 74 ) ( 216 ) ( 215 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 12,294 ) $ ( 5,557 ) $ ( 33,345 ) $ ( 25,751 ) Per share information: Net loss per share attributable to PAVmed Inc. - basic and diluted $ ( 0.15 ) $ ( 0.11 ) $ ( 0.41 ) $ ( 0.56 ) Net loss per share attributable to PAVmed Inc. common stockholders – basic and diluted $ ( 0.15 ) $ ( 0.11 ) $ ( 0.42 ) $ ( 0.57 ) Weighted average common shares outstanding, basic and diluted 83,307,170 48,380,677 79,873,583 45,563,961 See accompanying notes to the unaudited condensed consolidated financial statements. 2 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) for the THREE MONTHS ENDED September 30, 2021 (in thousands except number of shares and per share data) (unaudited) PAVmed Inc. Stockholders’ Deficit Series B Convertible Additional Non Preferred Stock Common Stock Paid-In Accumulated controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - June 30, 2021 1,185,685 $ 2,499 82,576,816 $ 83 $ 149,694 $ ( 109,325 ) $ ( 911 ) $ 42,040 Dividends declared - Series B Convertible Preferred Stock 24,577 73 — — — ( 73 ) — — Conversions - Series B Convertible Preferred Stock ( 118,814 ) ( 220 ) 118,814 — 220 — — — Exercise - Series Z Warrants — — 1,186,467 1 1,897 — — 1,898 Exercise - Series W Warrants — — 3,945 — 20 — — 20 Exercise - stock options — — 483,668 — 823 — — 823 Purchase - Employee Stock Purchase Plan — — 31,112 — 131 — — 131 Stock-based compensation – PAVmed Inc. — — — — 1,218 — — 1,218 Stock-based compensation – majority-owned subsidiary — — — — 56 — 2,716 2,772 Conversions - Senior Secured Convertible Note Conversions - Senior Secured Convertible Note , shares Registered offerings, net Registered offerings, net , shares Vest - restricted stock awards vests Vest - restricted stock awards vests , shares Issue common stock of majority-owned subsidiary Exercise - Series S warrants Exercise - Series S warrants , shares Exercise - stock options - majority-owned subsidiary Net loss — — — — — ( 12,227 ) ( 1,441 ) ( 13,668 ) Balance - September 30, 2021 1,091,448 $ 2,352 84,400,822 $ 84 $ 154,059 $ ( 121,625 ) $ 364 $ 35,234 See accompanying notes to the unaudited condensed consolidated financial statements. 3 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) for the THREE MONTHS ENDED September 30, 2020 (in thousands except number of shares and per share data) (unaudited) PAVmed Inc. Stockholders’ Deficit Series B Convertible Additional Non Preferred Stock Common Stock Paid-In Accumulated controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - June 30, 2020 1,179,872 $ 2,393 47,919,386 $ 48 $ 60,147 $ ( 73,908 ) $ ( 1,485 ) $ ( 12,805 ) Dividends declared - Series B Convertible Preferred Stock 23,616 70 — — — ( 70 ) — — Conversions - Senior Secured Convertible Note — — 1,584,140 2 3,100 — — 3,102 Exercise - Series Z warrants — — 100 — — — — — Purchase - Employee Stock Purchase Plan — — 152,289 — 230 — — 230 Stock-based compensation - PAVmed Inc. — — — — 570 — — 570 Stock-based compensation – majority-owned subsidiary — — — — 3 — 13 16 Net loss — — — — — ( 5,483 ) ( 391 ) ( 5,874 ) Balance - September 30, 2020 1,203,488 $ 2,463 49,655,915 $ 50 $ 64,050 $ ( 79,461 ) $ ( 1,863 ) $ ( 14,761 ) See accompanying notes to the unaudited condensed consolidated financial statements. 4 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) for the NINE MONTHS ENDED September 30, 2021 (in thousands except number of shares and per share data) (unaudited) PAVmed Inc. Stockholders’ Deficit Series B Convertible Additional Non Preferred Stock Common Stock Paid-In Accumulated controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - December 31, 2020 1,228,075 $ 2,537 63,819,935 $ 64 $ 87,570 $ ( 88,275 ) $ ( 2,369 ) $ ( 473 ) Dividends declared - Series B Convertible Preferred Stock 73,821 221 — — — ( 221 ) — — Conversions - Series B Convertible Preferred Stock ( 210,448 ) ( 406 ) 210,448 — 406 — — — Registered offerings, net — — 15,782,609 16 53,688 — — 53,704 Vest - restricted stock awards vests — — 150,000 — — — — — Exercise - Series Z warrants — — 2,927,125 3 4,680 — — 4,683 Exercise - Series W warrants — — 3,945 — 20 — — 20 Conversions - Senior Secured Convertible Note — — 667,668 1 1,722 — — 1,723 Exercise - stock options — — 604,500 — 953 — — 953 Purchase - Employee Stock Purchase Plan — — 234,592 — 436 — — 436 Issue common stock of majority-owned subsidiary — — — — — — 6 6 Stock-based compensation - PAVmed Inc. — — — — 4,473 — — 4,473 Stock-based compensation - majority-owned subsidiary — — — — 111 — 6,045 6,156 Net loss — — — — — ( 33,129 ) ( 3,318 ) ( 36,447 ) Balance - September 30, 2021 1,091,448 $ 2,352 84,400,822 $ 84 154,059 ( 121,625 ) 364 35,234 See accompanying notes to the unaudited condensed consolidated financial statements. 5 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT) for the NINE MONTHS ENDED September 30, 2020 (in thousands except number of shares and per share data) (unaudited) PAVmed Inc. Stockholders’ Deficit Series B Convertible Additional Non Preferred Stock Common Stock Paid-In Accumulated controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - December 31, 2019 1,158,209 $ 2,296 40,478,861 $ 41 $ 47,554 $ ( 53,715 ) $ ( 814 ) $ ( 4,638 ) Dividends declared - Series B Convertible Preferred Stock 70,279 210 — — — ( 210 ) — — Conversion - Series B Convertible Preferred Stock ( 25,000 ) ( 43 ) 25,000 — 43 — — — Conversions - Senior Secured Convertible Note — — 7,412,682 8 14,667 — — 14,675 Exercise - Series S warrants — — 1,199,383 1 11 — — 12 Exercise - Series Z warrants — — 100 — — — — — Purchase - Employee Stock Purchase Plan — — 306,555 — 356 — — 356 Vest - restricted stock awards — — 233,334 — — — — — Vest - restricted stock awards vests — — 233,334 — — — — — Exercise - stock options - majority-owned subsidiary — — — — — — 5 5 Stock-based compensation - PAVmed Inc. — — — — 1,409 — — 1,409 Stock-based compensation - majority-owned subsidiary — — — — 10 — 39 49 Net loss — — — — — ( 25,536 ) ( 1,093 ) ( 26,629 ) Balance at September 30, 2020 1,203,488 $ 2,463 49,655,915 $ 50 $ 64,050 $ ( 79,461 ) $ ( 1,863 ) $ ( 14,761 ) See accompanying notes to the unaudited condensed consolidated financial statements. 6 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands except number of shares and per share data) (unaudited) 2021 2020 Nine Months Ended September 30, 2021 2020 Cash flows from operating activities Net loss - before non controlling interest (“NCI”) $ ( 36,447 ) $ ( 26,629 ) Adjustments to reconcile net loss - before NCI to net cash used in operating activities Depreciation and amortization expense 60 17 Stock-based compensation 10,629 1,458 In-process R&D charge 133 — Change in fair value - Senior Secured Convertible Notes and Senior Convertible Note ( 1,682 ) 5,521 Debt extinguishment loss - Senior Secured Convertible Notes and Senior Convertible Note 3,715 4,600 Debt forgiveness ( 300 ) — Changes in operating assets and liabilities: Accounts receivable ( 200 ) — Prepaid expenses and other current assets ( 1,918 ) ( 1,159 ) Accounts payable 2,911 854 Accrued expenses and other current liabilities ( 715 ) 152 Net cash flows used in operating activities ( 23,814 ) ( 15,186 ) Cash flows from investing activities Purchase of equipment ( 192 ) ( 47 ) Acquisition, net of cash acquired ( 147 ) — Net cash flows used in investing activities ( 339 ) ( 47 ) Cash flows from financing activities Proceeds – issue of common stock – registered offerings 55,016 — Payment – offering costs – registered offerings ( 1,312 ) — Proceeds – issue of Senior Secured Convertible Notes — 13,300 Proceeds – issue of Senior Convertible Note — 3,700 Proceeds – Cares Act Paycheck Protection Program Loan — 300 Payment – repayment of Senior Convertible Note and Senior Secured Convertible Note ( 14,816 ) — Payment – Senior Convertible Note and Senior Secured Convertible Note – non-installment payments ( 154 ) ( 366 ) Proceeds – exercise of Series Z warrants 4,115 — Proceeds – exercise of Series S warrants — 12 Proceeds – exercise of stock options 953 — Proceeds – issue common stock – Employee Stock Purchase Plan 436 356 Proceeds – exercise of stock options issued under equity incentive plan of majority owned subsidiary — 5 Net cash flows provided by financing activities 44,238 17,307 Net increase (decrease) in cash 20,085 2,074 Cash, beginning of period 17,256 6,219 Cash, end of period $ 37,341 $ 8,293 See accompanying notes to the unaudited condensed consolidated financial statements. 7 PAVMED INC. and SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.) Note 1 — The Company PAVmed Inc. (“PAVmed” or the “Company”) together with its majority owned subsidiaries, Lucid Diagnostics, Inc. (“Lucid Diagnostics” or “LUCID”), Veris Health, Inc. (“Veris Health” or “VERIS”), and Solys Diagnostics, Inc. (“Solys Diagnostics” or “SOLYS”), were organized to advance a broad pipeline of innovative medical technologies from concept to commercialization, employing a business model focused on capital efficiency and speed to market. The Company’s activities have focused on advancing the lead products towards regulatory approval and commercialization, protecting its intellectual property, and building its corporate infrastructure and management team. The Company operates in one segment as a medical technology company. The ability of the Company to generate revenue depends upon the Company’s ability to successfully advance the commercialization of EsoGuard and CarpX while also completing the development and the necessary regulatory approvals of its other products and services. In this regard: ● EsoCheck has received 510(k) marketing clearance from the FDA as an esophageal cell collection device in June 2019; ● EsoGuard completed the certification required by the Clinical Laboratory Improvement Amendment (“CLIA”) and accreditation of the College of American Pathologists (“CAP”) making it commercially available as a Laboratory Developed Test (“LDT”) at LUCID’s contract diagnostic laboratory service provider in California in December 2019; and, ● CarpX, developed as a patented, single-use, disposable, minimally invasive device designed as a precision cutting tool to treat carpal tunnel syndrome while reducing recovery times, received 510(k) marketing clearance from the FDA in April 2020 with the first commercial procedure successfully performed in December 2020. Although the Company’s current operational activities are principally focused on the commercialization of EsoGuard and CarpX its development activities are focused on pursuing FDA approval and clearance of other lead products in our product portfolio pipeline, including EsoGuard IVD, PortIO, DisappEAR, NextFlo, EsoCure and digital health technologies acquired by the Company’s majority-owned subsidiary Veris Health Inc. Lucid Diagnostics Inc. Initial Public Offering - October 14, 2021 Subsequent to September 30, 2021, on October 14, 2021, Lucid Diagnostics Inc. completed an initial public offering (“IPO”) of its common stock under an effective registration statement on Form S-1 (SEC File No. 333-259721), wherein a total of 5.0 million IPO shares of common stock of Lucid Diagnostics Inc. were issued, with such total IPO shares inclusive of 571,428 shares issued to PAVmed Inc., at an IPO offering price of $ 14.00 per share, resulting gross proceeds of $70.0 million, before underwriting fees of $ 4.9 million, and approximately $ 0.7 million of offering costs incurred by Lucid Diagnostics Inc. See Note 12, Noncontrolling Interest, with respect to Lucid Diagnostics Inc. 8 Note 2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Significant Accounting Policies The Company’s significant accounting policies are as disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on March 15, 2021, except as otherwise noted herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company holds a majority ownership interest and has controlling financial interest in each of: Lucid Diagnostics Inc., Veris Health Inc., and Solys Diagnostics Inc. with the corresponding noncontrolling interest included as a separate component of consolidated stockholders’ equity (deficit), including the recognition in the unaudited condensed consolidated statement of the net loss attributable to the noncontrolling interest based on the respective minority interest equity ownership of each majority-owned subsidiary. See Note 12, Noncontrolling Interest , for a discussion of each of the majority-owned subsidiaries noted above. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting. As permitted under SEC rules, certain footnotes or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair presentation of the Company’s unaudited condensed consolidated financial information. The consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future periods. The accompanying unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read in conjunction with the PAVmed Inc and Subsidiaries audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 15, 2021. Subsequent to September 30, 2021, effective October 6, 2021, the Lucid Diagnostics Inc. board of directors: increased the authorized shares of common stock of Lucid Diagnostics Inc. to 100.0 million shares; and declared a 1.411-to-1.0 common stock-split with respect to Lucid Diagnostics Inc. common stock (with no adjustment to the par value per share). All shares of Lucid Diagnostics Inc. common stock, stock options, and restricted stock awards, and per share amounts, have been adjusted for the common stock-split and are presented for all periods on a retrospective basis. All amounts in the accompanying unaudited notes to the unaudited condensed consolidated financial statements are presented in thousands, if not otherwise noted as being presented in millions, except for the number of shares and per share amounts. 9 Note 2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued Significant Accounting Policies - continued Use of Estimates In preparing unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include the estimated fair value of stock-based equity awards, and the estimated fair value of financial instruments recognized as liabilities. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Revenue Recognition The Company recognizes revenue under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , (“ASC 606”). At its inception, an arrangement is accounted for under the provisions of ASC 606 as a contract with a customer when there is: a legally enforceable contract between the parties; the rights of the parties are identified; the arrangement has commercial substance; and collectability of the contract consideration is deemed probable. To determine revenue recognition for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Statement of Cash Flows - Supplemental Information The unaudited condensed consolidated statement of cash flows supplemental information as of September 30, 2021 is as follows: cash flows used in investing activities with respect to the purchase of fixed assets of $ 192 is net of $ 153 included in accounts payable and $ 60 included in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2021; and cash flows from financing activities with respect to proceeds from exercise of warrants of $ 4,115 is net of each of $ 568 of exercise proceeds from the exercise of 354,996 Series Z Warrants, and $ 20 from the exercise of 3,945 Series W Warrants, with such exercise proceeds received from the Company’s transfer agent subsequent to September 30, 2021 on October 4, 2021, with such amounts due from the transfer agent included prepaid expenses, deposits, and other current assets, in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2021. Financial Condition The Company has financed its operations principally through the public and private issuances of its common stock, preferred stock, common stock purchase warrants, and debt. The Company is subject to all of the risks and uncertainties typically faced by medical device and diagnostic and medical device companies that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing R&D and clinical trials. The Company expects to continue to experience recurring losses from operations and will continue to fund its operations with debt and equity financing transactions. Notwithstanding, however, with the cash on-hand as of the date hereof, the Company expects to be able to fund its future operations for one year from the date of the issue of the Company’s unaudited condensed consolidated financial statements, as included herein in this Quarterly Report on Form 10-Q for the period ended September 30, 2021. 10 Note 2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued Recent Accounting Standards Updates Accounting Standards Updates Adopted In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) , (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, by eliminating the beneficial conversion and cash conversion accounting models previously contained in ASC 470-20 that required separate accounting for embedded conversion features. ASU 2020-06 also simplified the assessment of a financial instruments settlement to determine whether a contract is an entity’s own equity qualifies for equity classification by removing certain conditions from ASC 815-4-25. The ASU 2020-06 amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company’s adoption of the ASU 2020-06 guidance as of January 1, 2021 did not have an effect on the Company’s financial statements. In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes”, (“ASU 2019-12”). The guidance of ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods, and adds revised guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. Adoption of the guidance of ASU 2019-12 is required for annual and interim financial statements beginning after December 15, 2020. The Company’s adoption of the ASU 2019-12 guidance as of January 1, 2021 did not have an effect on the Company’s financial statements. Accounting Standards Updates Not Yet Adopted FASB ASC Topic 842, Leases , (“ASC 842”) (ASU No. 2016-02, Leases , February-2016 - “ASU 2016-02” ) which established a right-of-use (“ROU”) model requiring a lessee to recognize a ROU asset and a lease liability for all leases with terms greater-than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The ASC 842 effective date for the Company is December 31, 2022 for its annual financial statements, and for interim quarterly financial statements commencing March 31, 2023. 11 Note 3 — Patent License Agreement – Case Western Reserve University Overview The Company, through its majority-owned subsidiary Lucid Diagnostics Inc., entered into a patent license agreement with Case Western Reserve University (“CWRU”), captioned the Amended and Restated License Agreement and dated August 23, 2021 (“Amended CWRU License Agreement”). The Amended CWRU License Agreement is a successor to and replaced in its entirety the previous CWRU License Agreement, dated May 12, 2018, between Lucid Diagnostics Inc. and CWRU. The Amended CWRU License Agreement terminates upon the expiration of certain related patents, or on May 12, 2038 in countries where no such patents exist, or upon expiration of any exclusive marketing rights granted by the FDA or other U.S. government agency, whichever comes later. The Amended CWRU License Agreement (as did the predecessor CWRU License Agreement) provides for the exclusive worldwide license of the intellectual property rights for the proprietary technologies of two distinct technology components - the “EsoCheck Cell Collection Device” referred to as “EsoCheck®”; and a panel of proprietary methylated DNA biomarkers, a laboratory developed test (“LDT”), referred to as “EsoGuard®”; and together are collectively referred to as the “EsoGuard Technology”. The CWRU License Agreement Fee was $ 273 , of which $ 50 was previously paid in 2018. On the August 23, 2021 effective date of the Amended CWRU License Agreement, the remaining balance of $ 223 became payable, and such amount was paid in September 2021. Additionally, also in September 2021, the Company paid a $ 10 amendment fee in connection with the Amended CWRU License Agreement. Additionally, the Amended CWRU License Agreement provides for each of patent fees reimbursement payments; milestone payments; and royalty payments - each as discussed below. Patent Fees Reimbursement Lucid Diagnostics Inc. is responsible for reimbursement of certain CWRU billed patent fees. See Note 4, Related Party Transactions , for patent fee reimbursement payments paid to CWRU in the three and nine months ended September 30, 2021 and 2020. Milestones The (predecessor) CWRU License Agreement contained milestones, including regulatory milestones with respect to the FDA 501(k) submission of EsoCheck and the FDA clearance of EsoCheck, respectively regulatory submissions and clearances; which were achieved in accordance with the requisite contractual due dates, for which a $ 75 research and development expense was recognized and paid with respect to the achievement of the regulatory milestone related to FDA clearance of EsoCheck. The CWRU License Agreement was amended effective February 12, 2021, to: change the achievement date of commercialization milestone from November 2020 to August 2021; to eliminate the payment with respect to the commercialization milestone; and to add a non-refundable $ 100 payment to CWRU in consideration for such changes to the commercialization milestone (“CWRU License Agreement Amendment Fee”), with such fee recognized as general and administrative expense as of December 31, 2020 and paid in February 2021. The regulatory milestone related to FDA PMA submission of a licensed product (“PMA Milestone”) is included in the Amended CWRU License Agreement, and is the sole remaining unachieved milestone, for which a $ 200 milestone payment would be payable to CWRU upon its achievement. 12 Note 3 — Patent License Agreement – Case Western Reserve University - continued Royalty Fee Under the Amended CWRU License Agreement. the Company is required to pay a royalty fee to CWRU with respect to the “Licensed Products” (as defined in the CWRU License Agreement) of a percentage of “Net Sales”, as defined in the Amended CWRU License Agreement, as follows: 5.0 % of Net Sales up to $ 100.0 million per year; and 8.0 % of Net Sales of $ 100.0 million or greater per year, with such amounts subject-to a minimum annual royalty fee. The base minimum annual royalty fee is $ 50 commencing January 1 following the first anniversary of the “First Commercial Sale” of a “Licensed Product” (as such terms are defined in the Amended CWRU License Agreement). The minimum annual royalty fee increases to each of: $ 150 if the annual “Net Sales” (as defined in the Amended CWRU License Agreement) exceed $ 25.0 million up to $ 50.0 million; $ 300 if annual Net Sales exceed $ 50.0 million up to $ 100.0 million; and $ 600 if annual Net Sales exceed $ 100.0 million. The Company recognized a 5.0 % royalty fee payment liability as of September 30, 2021 with respect to the revenue recognized under the EsoGuard Commercialization Agreement, dated August 1, 2021, between Lucid Diagnostics Inc. and Research Dx Inc. Prior to September 30, 2021, no royalty fee has been incurred under the CWRU license agreements. Additionally, the Company is required to pay a royalty fee on (sub-license) “Other Proceeds” (as defined in the Amended CWRU License Agreement) of: 30 % of sub-license proceeds to extent the sub-license proceeds are realized prior to the first commercial Sale of a Licensed Product; or 15 % of sub-license proceeds to extent the sub-license proceeds are realized after the first commercial Sale of a Licensed Product. Consulting Agreements with Physician Inventors - Intellectual Property - CWRU License Agreement Lucid Diagnostics Inc. entered into consulting agreements with each of the three physician inventors of the intellectual property licensed under the Amended CWRU License Agreement (“Physician Inventors”), with each such consulting agreement providing for compensation on a contractual rate per hour for consulting services provided, and an expiration date of May 12, 2024, upon each of the respective the agreements’ renewal effective May 12, 2021. Additionally, each of the Physician Inventors have been granted stock options and restricted stock awards under the Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan; and stock options under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan. See Note 4, Related Party Transactions , with respect to the consulting fee expense and stock based compensation expense recognized with respect to the Physician Inventors consulting agreements and stock options and restricted awards discussed above; and Note 9, Stock-Based Compensation , for information regarding each of the “Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan” and the separate “PAVmed Inc. 2014 Long-Term Incentive Equity Plan”. 13 Note 4 — Related Party Transactions Case Western Reserve University and Physician Inventors - CWRU License Agreement Case Western Reserve University (“CWRU”) and each of the three physician inventors of the intellectual property licensed under the CWRU License Agreement (“Physician Inventors”) each hold equity ownership minority interests in Lucid Diagnostics Inc. The expenses incurred with respect to the CWRU License Agreement and the three Physician Inventors, as classified in the accompanying unaudited condensed consolidated statement of operations for the periods indicated are summarized as follows: Schedule of Incurred Expenses of Minority Shareholders 2021 2020 2021 2020 For the three months ended September 30, For the nine months ended September 30, 2021 2020 2021 2020 Cost of Revenue CWRU – Royalty Fee $ 10 $ — $ 10 $ — General and Administrative Expense CWRU – License Agreement - Amendment Fee - Milestone III 10 — 10 — Stock-based compensation expense – Physician Inventors’ restricted stock awards 273 — 637 — Research and Development Expense CWRU License Agreement - reimbursement of patent legal fees 82 80 195 138 EsoCheck devices provided to CWRU — — — 15 Fees - Physician Inventors’ consulting agreements 8 20 22 74 Stock-based compensation expense – Physician Inventors’ stock options 56 6 114 17 Total Related Party Expenses $ 439 $ 106 $ 988 $ 244 Lucid Diagnostics Inc. entered into consulting agreements with each of the three Physician Inventors, with each such consulting agreement providing for compensation on a contractual rate per hour for consulting services provided, and an expiration date of May 12, 2024, upon the agreements’ renewal effective May 12, 2021. Additionally, as discussed below, each of the Physician Inventors have been granted stock options under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan, and stock options and restricted stock awards under the Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan. Under each of their respective (initial) consulting agreements with Lucid Diagnostics Inc., the three Physician Inventors were each granted 25,000 stock options under the PAVmed Inc. 2014 Equity Plan, with a grant date of May 12, 2018, an exercise price of $ 1.59 per share of common stock of PAVmed Inc., vesting ratably on a quarterly basis commencing June 30, 2018 and ending March 31, 2021, and a contractual period of ten years from the date of grant. As of March 31, 2021, such stock options were fully vested and exercisable. Subsequent to March 31, 2021, each of the Physician Inventors were granted 50,000 stock options under the PAVmed Inc. 2014 Equity Plan, with a grant date of June 21, 2021, an exercise price of $ 6.41 per share of common stock of PAVmed Inc., vesting ratably on a quarterly basis commencing June 30, 2021 and ending March 31, 2024, and a contractual period of ten years from the date of grant. On March 1, 2021, restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan to each of the three Physician Inventors, with such restricted stock awards having a single vesting date of March 1, 2023, with the fair value of such restricted stock awards recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. See Note 9, Stock-Based Compensation , for information regarding each of the “PAVmed Inc. 2014 Long-Term Incentive Equity Plan” and the separate. “Lucid Diagnostics Inc 2018 Long-Term Incentive Equity Plan”; and Note 12, Noncontrolling Interest , for a discussion of Lucid Diagnostics Inc. and the corresponding noncontrolling interests. 14 Note 4 —Related Party Transactions - continued Other Related Party Transactions Lucid Diagnostics Inc. previously entered into a consulting agreement with Stanley N. Lapidus, effective June 2020 with such consulting agreement providing for compensation on a contractual rate per hour for consulting services provided. In July 2021, Mr. Lapidus was appointed as Vice Chairman of the Board of Directors of Lucid Diagnostics Inc. Lucid Diagnostics Inc. recognized as general and administrative expense $ 8 and $ 21 in the three and nine months ended September 30, 2021, respectively, and $ 3 and $ 4 in the three and nine months ended September 30, 2020, respectively, in connection with the consulting agreement. Note 5 — Acquisitions Oncodisc Inc. On May 28, 2021, Veris Health Inc., a majority-owned subsidiary of PAVmed Inc., acquired all of the outstanding common stock of Oncodisc Inc. (“Oncodisc”) for total (gross) purchase consideration of approximately $ 261 , consisting of: the issue of 1,564,514 shares of common stock of Veris Health Inc., with such shares having an estimated fair value of approximately $ 6 ; and cash paid of approximately $ 255 , inclusive of approximately $ 155 paid at the time of the transaction closing and the remaining balance paid in the three months ended September 30, 2021. Additionally, the cash acquired was approximately $ 108 and liabilities assumed were approximately $ 50 . The acquisition of Oncodisc was accounted for by Veris Health Inc as an asset acquisition. Veris Health Inc. has allocated the preliminary purchase price based upon the respective fair values as of the date of acquisition as follows: Schedule of Assets Acquired and Liabilities Assumed Cash acquired $ 108 Intangible asset - in-process research and development 133 Intangible asset - assembled workforce 70 Liabilities assumed ( 50 ) Total net assets acquired $ 261 The intangible asset recognized for the in-process research and development (“IPRD”) of $ 133 was determined to have no alternative future use and was recognized as a current period research and development expense. The intangible asset recognized for the assembled workforce of approximately $ 70 , which is included in “Other assets” on the accompanying unaudited condensed consolidated balance sheet, has an expected useful life of one year, and is being recognized as a research and development expense on a ratable basis over such period, commencing in June 2021. See Note 12, Noncontrolling Interest , for a discussion of Veris Health Inc. and the corresponding noncontrolling interests. CapNostics, LLC. On October 5, 2021, PAVmed Subsidiary Corporation, a majority-owned subsidiary of PAVmed Inc., acquired all of the outstanding common stock of CapNostics, LLC (“CapNostics”) for total (gross) purchase consideration of approximately $ 2,000 of cash, paid at the closing of the transaction. 15 Note 6 — Commitment and Contingencies Legal Proceedings On November 2, 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint in the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws at the Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have been approved were not so approved (including matters relating to the increase in the size of the 2014 Equity Plan and the ESPP). The relief sought under the complaint includes certain corrective actions by the Company, but does not seek any specific monetary damages. The Company does not believe it is clear the prior approval of these matters is invalid or otherwise ineffective. However, to avoid any uncertainty and the expense of further litigation, on January 5, 2021, the Company’s Board of Directors determined it would be advisable and in the best interests of the Company and its stockholders to re-submit these proposals to the Company’s stockholders for ratification and/or approval. In this regard, the Company held a special meeting of stockholders on March 4, 2021, at which such matters were ratified and approved. The parties have reached agreement on a proposed Settlement Term Sheet Agreement, dated January 28, 2021, to settle the complaint, the terms of which do not contemplate payment of monetary damages to the putative class in the proceeding. The settlement of the complaint is pending and is subject to court approval. On December 23, 2020, Benchmark Investments, Inc. filed a complaint against the Company in the U.S. District Court of the Southern District of New York alleging the registered direct offerings of shares of common stock of the Company completed in December 2020 were in violation of provisions set forth in an engagement letter between the Company and the plaintiff. The plaintiff is seeking monetary damages of up to $ 1.3 million. The Company disagrees with the allegations set forth in the complaint and intends to vigorously contest the complaint. In the ordinary course of our business, particularly as it begins commercialization of its products, the Company may be subject to certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from time to time. Except as otherwise noted herein, the Company does not believe it is currently a party to any other pending legal proceedings. Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome could include monetary damages, and excessive verdicts can result from litigation, and as such, could result in a material adverse impact on the Company’s business, financial position, results of operations, and /or cash flows. Additionally, although the Company has specific insurance for certain potential risks, the Company may in the future incur judgments or enter into settlements of claims which may have a material adverse impact on the Company’s business, financial position, results of operations, and /or cash flows. 16 Note 7 — Financial Instruments Fair Value Measurements Recurring Fair Value Measurements The fair value hierarchy table for the reporting dates noted is as follows: Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis Fair Value Measurement on a Recurring Basis at Reporting Date Using (1) Level-1 Level-2 Level-3 Inputs Inputs Inputs Total December 31, 2020 Senior Secured Convertible Note - November 2019 $ — $ — $ 1,270 $ 1,270 Senior Convertible Note - April 2020 $ — $ — $ 4,600 $ 4,600 Senior Secured Convertible Note – August 2020 $ — $ — $ 8,790 $ 8,790 Totals $ — $ — $ 14,660 $ 14,660 (1) As noted above, as presented in the fair value hierarchy table, Level-1 represents quoted prices in active markets for identical items, Level-2 represents significant other observable inputs, and Level-3 represents significant unobservable inputs. The Senior Secured Convertible Note dated August 6, 2020, the Senior Convertible Note dated April 30, 2020, the Senior Secured Convertible Note (Series-A and Series-B), dated November 19, 2019, and the Senior Secured Convertible Note dated December 27, 2018, were each accounted for under the fair value option (“FVO”) election, wherein, each of the convertible notes were initially measured at their respective issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with the resulting fair value adjustment recognized as other income (expense) in the unaudited condensed consolidated statement of operations. There were no fair value measurements as of September 30, 2021 as each of the convertible notes were previously repaid-in-full in the three months ended March 31, 2021, as discussed herein below in Note 8, Debt . The estimated fair value of each of the convertible notes as of December 31, 2020, were computed using a Monte Carlo simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate-of-return, and were therefore classified within the Level 3 category, as the fair value was determined using both observable inputs and unobservable inputs. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs. The estimated fair values reported utilized the Company’s common stock price along with certain Level 3 inputs, as discussed above, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models. The estimated fair values are subjective and are affected by changes in inputs to the valuation models /analyses, including the Company’s common stock price, the Company’s dividend yield, the risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s common stock price. Changes in these assumptions can materially affect the estimated fair values. 17 Note 8 — Debt Convertible Notes All of the convertible notes, as such convertible notes are discussed below, were repaid-in-full during the three months ended March 31, 2021. The fair value and face value principal of outstanding convertible notes at December 31, 2020 were as follows: Summary of Outstanding Debt Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value November 2019 Senior Secured Convertible Note September 30, 2021 7.875 % $ 1.60 $ 956 $ 1,270 April 2020 Senior Convertible Note April 30, 2022 7.875 % $ 5.00 $ 4,111 $ 4,600 August 2020 Senior Secured Convertible Note August 6, 2022 7.875 % $ 5.00 $ 7,750 $ 8,790 Balance - December 31, 2020 $ 12,817 $ 14,660 Senior Secured Convertible Note issued November 4, 2019 - Series A and Series B - (“November 2019 Senior Convertible Notes”) The “November 2019 Senior Convertible Notes” remaining unpaid outstanding face value principal of approximately $ 956 as of December 31, 2020 was repaid-in-full as of January 5, 2021, with the remaining principal balance, along with the payment of interest thereon of approximately $ 7 , settled with the issuance of 667,668 shares common stock of the Company, with a fair value of approximately $ 1,723 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). Senior Convertible Note issued April 30, 2020 - (“April 2020 Senior Convertible Note”) The “April 2020 Senior Convertible Note” unpaid outstanding face value principal of approximately $ 4,111 as of December 31, 2020 was repaid-in-full in March 2021, as discussed herein below. In the three months ended September 30, 2020 approximately $ 81 of non-installment payments were paid in cash. In the nine months ended September 30, 2021 and 2020, approximately $ 52 and $ 135 , respectively, of non-installment payments were paid in cash. Senior Secured Convertible Note issued August 6, 2020 - (“August 2020 Senior Convertible Note”) The “August Senior Convertible Note” unpaid outstanding face value principal of approximately $ 7,750 as of December 31, 2020 was repaid-in-full in March 2021, as discussed herein below. In the nine months ended September 30, 2021 and 2020, approximately $ 102 and $ 93 , respectively, of non-installment payments were paid in cash. Principal Repayments - April 2020 Senior Convertible Note and August 2020 Senior Convertible Note On January 30, 2021, the Company paid in cash a $ 350 partial principal repayment of the April 2020 Senior Convertible Note; and on March 2, 2021, the Company paid in cash a total of $ 14,466 of principal repayments, resulting in both the April 2020 Senior Convertible Note and the August 2020 Senior Convertible Note being repaid-in-full as of such date. The Company recognized a debt extinguishment loss of approximately $ 2,955 in the nine months ended September 30, 2021 in connection with the repayments of the April 2020 Senior Convertible Note and the August 2020 Senior Convertible Note. 18 Note 8 — Debt - continued Convertible Notes - continued A reconciliation in the fair value of debt during the nine months ended September 30, 2021 is as follows: Schedule of Senior Convertible Note Estimated Fair Value November 2019 Senior Secured Convertible Notes April 2020 Senior Convertible Note August 2020 Senior Secured Convertible Note Sum of Balance Sheet Fair Value Components Other Income (Expense) Fair Value - December 31, 2020 $ 1,270 $ 4,600 $ 8,790 $ 14,660 - Installment repayments – common stock ( 956 ) — — ( 956 ) - Non-installment payments – common stock ( 7 ) — — ( 7 ) - Non-installment payments – cash — ( 52 ) ( 102 ) ( 154 ) - Change in fair value ( 307 ) ( 437 ) ( 938 ) ( 1,682 ) 1,682 Principal repayments – cash — ( 4,111 ) ( 7,750 ) ( 11,861 ) Fair Value at September 30, 2021 (1) $ — — $ — $ — - Other Income (Expense) - Change in fair value - nine months ended September 30, 2021 (1) $ 1,682 (1) As discussed above, all remaining convertible notes were previously repaid during the three months ended March 31, 2021. 19 Note 8 — Debt - continued A reconciliation in the fair value of debt during the three and nine months ended September 30, 2020 is as follows: December 2018 Senior Secured Convertible Note November 2019 Senior Secured Convertible Notes April 2020 Senior Convertible Note August 2020 Senior Secured Convertible Note Sum of Balance Sheet Fair Value Components Other Income (Expense) Fair Value - December 31, 2019 $ 1,700 $ 6,439 $ — $ — $ 8,139 - Face value principal – issue date — 7,000 — — 7,000 Fair value adjustment – issue date — 2,600 — — 2,600 $ ( 2,600 ) Installment repayments – common stock ( 1,642 ) — — — ( 1,642 ) Non-installment payments – common stock ( 4 ) — — — ( 4 ) Non-installment payments – cash — ( 138 ) — — ( 138 ) Change in fair value 9 4,699 — — 4,708 ( 4,708 ) Lender Fee - November 2019 Senior Secured Convertible Notes — — — — — ( 700 ) Fair Value at March 31, 2020 $ 63 $ 20,600 — $ — $ 20,663 - Other Income (Expense) - Change in fair value - three months ended March 31, 2020 $ ( 8,008 ) Face value principal – issue date — — 4,111 — 4,111 Fair value adjustment – issue date — — ( 411 ) — ( 411 ) 411 Installment repayments – common stock ( 50 ) ( 5,695 ) — — ( 5,745 ) Non-installment payments – common stock ( 2 ) ( 242 ) — — ( 244 ) Non-installment payments – cash — — ( 54 ) — ( 54 ) Change in fair value ( 11 ) ( 2,363 ) 254 — ( 2,120 ) 2,120 Lender Fee - April 2020 Senior Convertible Note — — — — — ( 411 ) Fair Value at June 30, 2020 $ — $ 12,300 3,900 $ — $ 16,200 - Other Income (Expense) - Change in fair value - three months ended June 30, 2020 $ 2,120 Other Income (Expense) - Change in fair value - six months ended June 30, 2020 $ ( 5,888 ) Face value principal – issue date — — — 7,750 7,750 Fair value adjustment – issue date — — — ( 750 ) ( 750 ) 750 Installment repayments – common stock — ( 2,298 ) — — ( 2,298 ) Non-installment payments – common stock — ( 141 ) — — ( 141 ) Non-installment payments – cash — — ( 81 ) ( 93 ) ( 174 ) Change in fair value — ( 2,961 ) 781 1,813 ( 367 ) 367 Lender Fee - August 2020 Senior Secured Convertible Note — — — — — ( 750 ) Fair Value at September 30, 2020 $ — $ 6,900 $ 4,600 $ 8,720 $ 20,220 - Other Income (Expense) - Change in fair value - three months ended September 30, 2020 $ 367 Other Income (Expense) - Change in fair value - nine months ended September 30, 2020 $ ( 5,521 ) The Senior Convertible Notes presented above were each accounted for under the ASC 825-10-15-4 fair value option (“FVO”) election, wherein, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with the resulting fair value adjustment recognized as other income (expense) in the consolidated statement of operations. In this regard, as provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is presented as a single line item within other income (expense) in the accompanying consolidated statement of operations. See Note 7, Financial Instruments Fair Value Measurements , for a further discussion of fair value assumptions. 20 Note 8 — Debt – continued Cares Act Paycheck Protection Program Loan On April 8, 2020 the Company entered into a loan agreement with JP Morgan Chase, N.A., and received approximately $ 300 of proceeds, pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) Paycheck Protection Program (“PPP”) - the “PPP Loan”. Through the life of the PPP Loan, the Company made no principal or interest payments. The Company submitted its PPP Loan forgiveness application on April 21, 2021 and the forgiveness application was approved on June 9, 2021. Upon PPP Loan forgiveness, the Company recognized a gain of $ 300 in its unaudited condensed consolidated results of operations in the nine months ended September 30, 2021. 21 Note 9 — Stock-Based Compensation PAVmed Inc. 2014 Long-Term Incentive Equity Plan The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed Inc. 2014 Equity Plan”), provides for the granting, subject to approval by the compensation committee of the PAVmed Inc. board of directors, of stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. As of September 30, 2021, the PAVmed Inc. 2014 Equity Plan has 1,249,653 shares available-for-grant of stock-based awards, with such shares available for grant, not diminished by 500,854 PAVmed Inc. stock options previously granted outside the PAVmed Inc. 2014 Equity Plan. PAVmed Inc. 2014 Long-Term Incentive Equity Plan - Stock Options Stock options issued and outstanding under the PAVmed Inc. 2014 Equity Plan is as follows: Schedule of Summarizes Information About Stock Options Number Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Intrinsic Value (2) Outstanding stock options - December 31, 2020 6,798,529 $ 2.55 7.3 Granted (1) 2,615,000 $ 4.86 Exercised ( 604,500 ) $ 1.58 Forfeited ( 161,247 ) $ 2.73 Outstanding stock options - September 30, 2021 8,647,782 $ 3.32 6.9 $ 45,267 Vested and exercisable stock options - September 30, 2021 5,919,023 $ 2.84 5.7 $ 33,031 (1) Stock options granted under the PAVmed Inc. 2014 Equity Plan generally vest ratably over twelve quarters, with the vesting commencing with the grant date quarter, and have a ten-year contractual term from date-of-grant. (2) The intrinsic value is computed as the difference between the quoted price of the PAVmed Inc. common stock on each of September 30, 2021 and December 31, 2020 and the exercise price of the underlying PAVmed Inc. stock options, to the extent such quoted price is greater than the exercise price. 22 Note 9 — Stock-Based Compensation - continued PAVmed Inc. 2014 Long-Term Incentive Equity Plan - Restricted Stock Awards On April 1, 2021, a total of 300,000 restricted stock awards were granted to employees under the PAVmed Inc. 2014 Equity Plan, with such restricted stock awards having a single vesting date of April 1, 2024. The (April 1, 2021) restricted stock awards fair value of approximately $ 1,491 , which was measured using the grant date quoted closing price per share of PAVmed Inc. common stock, is being recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. A total of 1,650,000 restricted stock awards were previously granted under the PAVmed Inc. 2014 Equity Plan, with such restricted stock awards having an aggregate fair value of approximately $ 2,680 , which was measured using the respective grant date quoted closing price per share of PAVmed Inc. common stock, with the fair value being recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The vesting of the previously granted restricted stock awards is as follows: 233,334 vested on March 15, 2020; 466,666 vesting on March 15, 2022; 450,000 vesting ratably on an annual basis over a three year period with the initial annual vesting date on May 1, 2021; and 500,000 restricted stock awards having a single vesting date of May 1, 2023. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. 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”), provides for the granting, subject to approval by the Lucid Diagnostics Inc. board of directors, of stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. As of September 30, 2021, the Lucid Diagnostics Inc. 2018 Equity Plan has 2,850,220 shares of common stock of Lucid Diagnostics Inc. available-for-grant of stock-based awards. Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan - Stock Options Stock options issued and outstanding under the Lucid Diagnostics Inc. 2018 Equity Plan is as follows: Schedule of Summarizes Information About Stock Options Number Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Outstanding stock options at December 31, 2020 1,399,242 $ 0.61 8.0 Granted (1) — $ — Exercised — $ — Forfeited — $ — Outstanding stock options at September 30, 2021 1,399,242 $ 0.61 7.2 Vested and exercisable stock options at September 30, 2021 1,286,361 $ 0.59 7.2 (1) Stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan generally vest ratably over twelve quarters, with the vesting commencing with the grant date quarter, and have a ten-year contractual term from date-of-grant. 23 Note 9 — Stock-Based Compensation - continued Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan – Restricted Stock Awards As of September 30, 2021, a total of 1,813,135 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan, summarized as follows: A total of 1,467,440 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan in March 2021, inclusive of grants to employees of PAVmed Inc., a member of the board of directors of Lucid Diagnostics Inc. (who is also a member of the board of directors of PAVmed Inc.), and to each of the three physician inventors of the intellectual property licensed under the CWRU License Agreement (“Physician Inventors”), with such restricted stock awards having a single vesting date of March 1, 2023 , and an aggregate grant date fair value of approximately $ 18.9 million, measured as discussed below, with such aggregate estimated fair value recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period, and classified in general and administrative expense in the accompanying unaudited condensed statement of operations. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. See Note 4, Related Party Transactions , for a summary of the stock based compensation expense recognized with respect to the restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan to the Physician Inventors. A total of 91,715 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan in April 2021, inclusive of grants to an employee of PAVmed Inc. and a member of the board of directors of Lucid Diagnostics Inc., with such restricted stock awards having a single vesting date in April 2023 , and an aggregate grant date fair value of approximately $ 1.2 million, measured as discussed below, with such aggregate estimated fair value recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period, with approximately $ 1.1 million classified in general and administrative expense and $ 0.1 million classified in research and development expense in the accompanying unaudited condensed statement of operations. Subsequent to September 30, 2021, as of October 1, 2021, 7,055 restricted stock awards granted in April 2021 were forfeited upon the employee’s termination of employment. The restricted stock awards are subject to forfeiture if the requisite service period is not completed . A total of 253,980 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan in the three months ended September 30, 2021, to members of the board of directors of Lucid Diagnostics Inc., with 169,320 restricted stock awards having annual vesting dates on the grant date anniversary in each of September 2022 and 2023; and 84,660 restricted stock awards having a single vesting date in July 2023. The restricted stock awards granted in the three months ended September 30, 2021, had an aggregate grant date fair value of approximately 3.4 million, measured as discussed below, with such aggregate estimated fair value recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period, classified in general and administrative expense in the accompanying unaudited condensed statement of operations. Subsequent to September 30, 2021, as of October 14, 2021, an additional 84,660 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan to a member of the board of directors of Lucid Diagnostics Inc. The estimated fair value of the restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan, as discussed above, was determined using a probability-weighted average expected return methodology (“PWERM”), which involves the determination of equity value under various exit scenarios and an estimation of the return to the common stockholders under each scenario. In this regard, the Lucid Diagnostics Inc. common stock grant-date estimated fair value was based upon an analysis of future values, assuming various outcomes, based upon the probability-weighted present value of expected future investment returns, considering each of the possible future outcomes available to Lucid Diagnostics Inc. The PWERM principally involved (i) the identification of scenarios and related probabilities; (ii) determine the equity value under each scenario; and (iii) determine the common stock shareholders’ return in each scenario. The two scenarios identified were an initial public offering (“IPO”) of Lucid Diagnostics Inc. common stock (“IPO scenario”); and, to continue on as a private company (“stay private scenario”). With respect to the IPO scenario, the valuation of the Lucid Diagnostics Inc. common stock was computed using assumptions, including dates of the IPO, to calculate an estimated pre-money valuation; and, with respect to the stay private scenario, an income approach was used, wherein a risk-adjusted discount rate is applied to projected future cash flows. For the awards during 2021, a relative weighting ranged from 75%-97.5% for to the IPO scenario and the relative weighting ranged from 25% - 2.5% for the stay private scenario. 24 Note 9 — Stock-Based Compensation - continued Consolidated Stock-Based Compensation Expense The consolidated stock-based compensation expense recognized by each of PAVmed Inc. and Lucid Diagnostics Inc. 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 as discussed above, for the periods indicated, was as follows: Schedule of Stock-Based Compensation Awards Granted Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Commercial operations expenses $ 341 $ 85 $ 840 $ 183 General and administrative expenses 3,339 363 9,062 948 Research and development expenses 310 138 727 327 Total stock-based compensation expenses $ 3,990 $ 586 $ 10,629 $ 1,458 Stock-Based Compensation Expense Recognized by Lucid Diagnostics Inc. As noted, the consolidated stock-based compensation expense presented above is inclusive of stock-based compensation expense recognized by Lucid Diagnostics Inc., inclusive of each of: stock options granted under the PAVmed Inc. 2014 Equity Plan to the three physician inventors of the intellectual property underlying the CWRU License Agreement (“Physician Inventors”) (as discussed above in Note 4, Related Party Transactions ); and stock options and restricted stock awards granted to employees of PAVmed Inc. and non-employee consultants under the Lucid Diagnostics Inc. 2018 Equity Plan. The stock-based compensation expense recognized by Lucid Diagnostics Inc. 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 as discussed above, for the periods indicated, was as follows: Schedule of Stock-Based Compensation Expense Classified in Research and Development Expenses Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Lucid Diagnostics Inc 2018 Equity Plan – general and administrative expense $ 2,695 $ — $ 5,988 $ — Lucid Diagnostics Inc 2018 Equity Plan – research and development expenses 21 13 57 39 PAVmed Inc 2014 Equity Plan - research and development expenses 56 3 111 10 Total stock-based compensation expense – recognized by Lucid Diagnostics Inc $ 2,772 $ 16 $ 6,156 $ 49 25 Note 9 — Stock-Based Compensation - continued Consolidated Stock-Based Compensation Expense - continued The consolidated unrecognized stock-based compensation expense and weighted average remaining requisite service period with respect to stock options and restricted stock awards issued under each of the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, as discussed above, is as follows: Schedule of Unrecognized Compensation Expense Unrecognized Expense Weighted Average Remaining Service Period PAVmed Inc. 2014 Equity Plan Stock Options $ 7,641 1.4 years Restricted Stock Awards $ 2,368 1.4 years Lucid Diagnostics Inc. 2018 Equity Plan Stock Options $ 15 0.3 years Restricted Stock Awards $ 17,491 1.5 years Stock-based compensation expense recognized with respect to stock options granted under the PAVmed Inc. 2014 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 3.47 per share and $ 1.28 per share during the nine months ended September 30, 2021 and 2020, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions: Schedule of Fair Values of Stock Options Granted Using Black-scholes Valuation Model Assumptions Nine Months Ended September 30, 2021 2020 Expected term of stock options (in years) 5.6 5.8 Expected stock price volatility 76 % 73 % Risk free interest rate 0.9 % 0.5 % Expected dividend yield 0 % 0 % PAVmed Inc. Employee Stock Purchase Plan (“ESPP”) The PAVmed Inc. Employee Stock Purchase Plan (“PAVmed Inc. ESPP”), adopted by the Company’s board of directors effective April 1, 2019, 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 of common stock 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 March 31 and September 30. A total of 203,480 shares and 154,266 shares of common stock of the Company were purchased for proceeds of approximately $ 304 and $ 126 , on the ESPP purchase dates of March 31, 2021 and 2020, respectively. A total of 31,112 shares and 152,289 shares of common stock of the Company were purchased for proceeds of approximately $ 131 and $ 231 , on the ESPP purchase dates of September 30, 2021 and 2020, respectively. The PAVmed Inc. ESPP has a total reservation of 1,250,000 shares of common stock of PAVmed Inc. of which 626,081 shares are available-for-issue remaining as of September 30, 2021. 26 Note 10 — Preferred Stock The Company is authorized to issue 20 million shares of its preferred stock, par value of $ 0.001 per share, with such designation, rights, and preferences as may be determined by the Company’s board of directors. There were 1,091,448 and 1,228,075 shares of Series B Convertible Preferred Stock (classified in permanent equity) issued and outstanding as of September 30, 2021 and December 31, 2020, respectively. In the nine months ended September 30, 2021, at each of the respective holders’ election, a total of 210,448 shares of Series B Convertible Preferred Stock were converted into the same number of shares of common stock of PAVmed Inc. As of September 30, 2021, the Company’s board-of-directors declared an aggregate of approximately $ 221 of Series B Convertible Preferred Stock dividends, inclusive of approximately $ 73 earned as of December 31, 2020, $ 75 earned as of March 31, 2021, and $ 74 earned as of June 30, 2021 which were settled by the issue of an additional aggregate 73,821 shares of Series B Convertible Preferred Stock. In the corresponding period of the prior year, the board of directors declared an aggregate of approximately $ 211 of Series B Convertible Preferred Stock dividends, inclusive of approximately $ 70 earned as of December 31, 2019, $ 70 earned as of March 31, 2020, and $ 71 earned as of June 30, 2020 which were settled by the issue of an additional aggregate 70,279 shares of Series B Convertible Preferred Stock. Subsequent to September 30, 2021, in October 2021, the Company’s board-of-directors declared a Series B Convertible Preferred Stock dividend earned as of September 30, 2021 and payable as of October 1, 2021, of approximately $ 67 , which will be settled by the issue of an additional 22,471 shares of Series B Convertible Preferred Stock (with such dividend not recognized as a dividend payable as of September 30, 2021, as the Company’s board of directors had not declared such dividends payable as of such date). 27 Note 11 — Common Stock and Common Stock Purchase Warrants The Company is authorized to issue up to 150 million shares of its common stock, par value of $ 0.001 per share. There were 84,400,822 and 63,819,935 shares of common stock issued and outstanding as of September 30, 2021 and December 31, 2020, respectively. ● On January 5, 2021, a total of 6,000,000 shares of common stock of the Company were issued for gross proceeds of approximately $ 13,434 , before a placement agent fee and expenses of approximately $ 951 , and offering costs incurred by the Company of approximately $ 71 . The shares of common stock were issued in a registered direct offering pursuant to a Prospectus Supplement dated January 5, 2021 with respect to the Company’s effective shelf registration statement on Form S-3 (File No. 333-248709). ● On February 23, 2021, a total of 9,782,609 shares of common stock of the Company were issued for proceeds of approximately $ 41,566 , before offering costs incurred by the Company of approximately $ 290 . The shares of common stock were issued in an underwritten registered offering pursuant to a final Prospectus Supplement dated February 23, 2021, with respect to the Company’s effective shelf registration statement on Form S-3 (File No. 333-248709 and File No. 333-253384). ● In January 2021, 667,668 shares of the Company’s common stock were issued upon conversion, at the election of the holder, of the November 2019 Senior Convertible Note remaining face value principal of approximately $ 956 along with approximately $ 7 of interest thereon, as discussed in Note 8, Debt . ● During the nine months ended September 30, 2021, 210,448 shares of common stock of the Company were issued upon conversion of the same number of shares of Series B Convertible Preferred Stock. See Note 10, Preferred Stock , for a discussion of the Series B Convertible Preferred Stock. ● During the nine months ended September 30, 2021, an aggregate of 2,931,070 shares of common stock of the Company were issued upon exercise of common stock purchase warrants, including 2,927,125 with respect to Series Z Warrants; and 3,945 with respect to Series W Warrants. Subsequent to September 30, 2021, as of November 18, 2021, 1,946,259 shares of common stock of the Company were issued upon exercise of the same number of Series Z Warrants. ● During the nine months ended September 30, 2021, 604,500 shares of common stock of the Company were issued upon exercise of stock options for cash of approximately $ 953 . Subsequent to September 30, 2021, as of November 18, 2021, 16,664 shares of common stock of the Company were issued upon exercise of the same number of stock options for cash of approximately $ 26 . See Note 9, Stock-Based Compensation , for a discussion of the PAVmed Inc. 2014 Equity Plan. ● On March 31, 2021 and September 30, 2021, the PAVmed Inc. Employee Stock Purchase Plan purchased 203,480 shares and 31,112 shares, respectively, of common stock of the Company. See in the Note 9, Stock-Based Compensation , for a discussion of the PAVmed Inc. Employee Stock Purchase Plan. 28 Note 11 — Common Stock and Common Stock Purchase Warrants - continued Common Stock Purchase Warrants The common stock purchase warrants (classified in permanent equity) outstanding as of the dates indicated are as follows: Schedule of Outstanding Warrants to Purchase Common Stock Common Stock Purchase Warrants Issued and Outstanding at Weighted Weighted September 30, Average Exercise December 31, Average Exercise Expiration 2021 Price /Share 2020 Price/Share Date Series Z Warrants 13,887,814 $ 1.60 16,814,939 $ 1.60 April 2024 UPO - Series Z Warrants — $ — 53,000 $ 1.60 January 2021 Series W Warrants 377,873 $ 5.00 381,818 $ 5.00 January 2022 Total 14,265,687 $ 1.68 17,249,757 $ 1.57 During the three and nine months ended September 30, 2021, a total of 1,186,467 and 2,927,125 shares of common stock of the Company were issued, respectively, resulting from the exercise cash of $ 1.60 per share of the same number of Series Z Warrants. Subsequent to September 30, 2021, as of November 18, 2021, a total of 1,946,259 Series Z Warrants were exercised for cash of $ 1.60 per share, resulting in the issue of the same number of shares of common stock of the Company. During the three and nine months ended September 30, 2021, a total of 3,945 shares of common stock of the Company were issued resulting from the exercise for cash of $ 5.00 per share of the same number of Series W Warrants. The Unit Purchase Options (UPO) expired unexercised as of January 29, 2021. 29 Note 12 — Noncontrolling Interest The noncontrolling interest (“NCI”) included as a component of consolidated total stockholders’ equity is summarized for the periods indicated as follows: Schedule of Noncontrolling Interest of Stockholders' Equity Nine Months Ended September 30, 2021 Year Ended December 31, 2020 NCI – equity (deficit) – beginning of period $ ( 2,369 ) $ ( 814 ) Investment in Veris Health Inc. 6 — Net loss attributable to NCI – Lucid Diagnostics Inc. ( 3,044 ) ( 1,503 ) Net loss attributable to NCI – Solys Diagnostics Inc. ( 29 ) ( 109 ) Net loss attributable to NCI – Veris Health Inc. ( 245 ) — Lucid Diagnostics Inc. 2018 Equity Plan stock option exercise — 5 Stock-based compensation expense - Lucid Diagnostics Inc. 2018 Equity Plan 6,045 52 NCI – equity (deficit) – end of period $ 364 $ ( 2,369 ) The consolidated NCI presented above is with respect to the Company’s consolidated majority-owned subsidiaries, inclusive of: Lucid Diagnostics Inc. and Solys Diagnostics Inc., as a component of consolidated total stockholders’ equity as of September 30, 2021 and December 31, 2020, and the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2021 and 2020; and Veris Health Inc. as a component of consolidated total stockholders’ equity as of September 30, 2021, and the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2021 and for the period May 28, 2021 (inception date) to September 30, 2021. Lucid Diagnostics Inc. As of September 30, 2021 and December 31, 2020, PAVmed Inc. holds a 81.85 % majority -interest equity ownership and has a controlling financial interest in Lucid Diagnostics Inc., with the remaining 18.15 % minority-interest equity ownership held by Case Western Reserve University (“CWRU”); the individual physician inventors of the intellectual property underlying the Amended CWRU License Agreement (the “Physician Inventors”); and a consultant upon the exercise of stock options issued under the Lucid Diagnostics Inc. 2018 Equity Plan. Subsequent to September 30, 2021, on October 13, 2021, Lucid Diagnostics Inc. issued 15,803,200 shares of its common stock to PAVmed Inc. upon the election by PAVmed Inc. to convert the $ 22.4 million face value principal under the terms of a Senior Unsecured Promissory Note, dated June 1, 2021. The Senior Unsecured Promissory Note was issued by Lucid Diagnostics Inc. to PAVmed Inc. with a face value principal of $ 22.4 million, which replaced the aggregate outstanding and payable balance of the intercompany Due To: PAVmed Inc. as of June 1, 2021, had an annual interest rate of 7.875 %, a contractual maturity date of May 18, 2028 , and, at the election of PAVmed Inc., provided for the partial or full repayment of the face value principal and accrued but unpaid interest thereon by the issue of shares of Lucid Diagnostics Inc. common stock at a conversion price of $ 1.42 per share of Lucid Diagnostics Inc. common stock. Subsequent to September 30, 2021, on October 14, 2021, Lucid Diagnostics Inc. completed an initial public offering (“IPO”) of its common stock under an effective registration statement on Form S-1 (SEC File No. 333-259721), wherein a total of 5.0 million IPO shares of common stock of Lucid Diagnostics Inc. were issued, with such total IPO shares inclusive of 571,428 shares issued to PAVmed Inc., at an IPO offering price of $ 14.00 per share, resulting gross proceeds of $ 70.0 million, before underwriting fees of $ 4.9 million, and approximately $ 0.7 million of offering costs incurred by Lucid Diagnostics Inc. 30 Note 12 — Noncontrolling Interest - continued Veris Health Inc. As of September 30, 2021, PAVmed Inc. holds an 80.44 % majority-interest ownership and has a controlling financial interest in Veris Health Inc., with the remaining 19.56 % minority-interest ownership held by an unrelated third-party. Solys Diagnostics Inc. As of each of September 30, 2021 and December 31, 2020, PAVmed Inc. holds a 90.3235 % majority-interest ownership and has a controlling financial interest in Solys Diagnostics Inc., with the remaining 9.6765 % minority-interest ownership held by unrelated third parties. 31 Note 13 — Net Loss Per Share The respective “Net loss per share - attributable to PAVmed Inc. - basic and diluted” and “Net loss per share - attributable to PAVmed Inc. common stockholders - basic and diluted” - for the periods indicated - is as follows: Schedule of Comparison of Basic and Fully Diluted Net Loss Per Share 2021 2020 2021 2020 Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator Net loss - before noncontrolling interest $ ( 13,668 ) $ ( 5,874 ) $ ( 36,447 ) $ ( 26,629 ) Net loss attributable to noncontrolling interest 1,441 391 3,318 1,093 Net loss - as reported, attributable to PAVmed Inc. $ ( 12,227 ) $ ( 5,483 ) $ ( 33,129 ) $ ( 25,536 ) Series B Convertible Preferred Stock dividends: $ ( 67 ) $ ( 74 ) $ ( 216 ) $ ( 215 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 12,294 ) $ ( 5,557 ) $ ( 33,345 ) $ ( 25,751 ) Denominator Weighted average common shares outstanding, basic and diluted 83,307,170 48,380,677 79,873,583 45,563,961 Net Loss per share Basic and diluted Net loss - as reported, attributable to PAVmed Inc. $ ( 0.15 ) $ ( 0.11 ) $ ( 0.41 ) $ ( 0.56 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 0.15 ) $ ( 0.11 ) $ ( 0.42 ) $ ( 0.57 ) The Series B Convertible Preferred Stock dividends earned as of the each of the respective periods noted, are included in the calculation of basic and diluted net loss attributable to PAVmed Inc. common stockholders for each respective period presented. Notwithstanding, the Series B Convertible Preferred Stock dividends are recognized as a dividend payable only upon the dividend being declared payable by the Company’s board of directors. Basic weighted-average number of shares of common stock outstanding for the three and six months ended September 30, 2021 and 2020 include the shares of the Company issued and outstanding during such periods, each on a weighted average basis. The basic weighted average number of shares common stock outstanding excludes common stock equivalent incremental shares, while diluted weighted average number of shares outstanding includes such incremental shares. However, as the Company was in a loss position for all periods presented, basic and diluted weighted average shares outstanding are the same, as the inclusion of the incremental shares would be anti-dilutive. The common stock equivalents excluded from the computation of diluted weighted average shares outstanding are as follows: Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share 2021 2020 September 30, 2021 2020 PAVmed Inc. 2014 Equity Plan stock options and unvested restricted stock awards 10,213,615 8,090,195 Unit purchase options - as to shares of common stock — 53,000 Unit purchase options - as to shares underlying Series Z Warrants — 53,000 Series Z Warrants 13,887,814 16,814,939 Series W Warrants 377,873 381,818 Series B Convertible Preferred Stock 1,091,448 1,203,488 Total 25,570,750 26,596,440 Antidilutive securities excluded from computation of diluted weighted shares outstanding 25,570,750 26,596,440 32 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations should be read together with our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”) as filed with the Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, references herein to “we”, “us”, and “our”, and to the “Company” or “PAVmed” are to PAVmed Inc. and Subsidiaries, including each of the PAVmed Inc. and its majority-owned subsidiaries, including: Lucid Diagnostics Inc. (“Lucid Diagnostics” or “LUCID”), Veris Health Inc. (“Veris Health” or “VERIS”), and Solys Diagnostics, Inc. (“Solys Diagnostics” or “SOLYS”). Forward-Looking Statements This Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our (unaudited) condensed consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Form 10-Q, including without limitation statements regarding our future consolidated results of operations and consolidated financial position, our estimates regarding expenses, future revenue, capital and operating expenditure requirements and needs for additional financing, our business strategy and plans and the objectives of management for future operations, are forward-looking statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.” Important factors that may affect our actual results include: ● our limited operating history; ● our financial performance, including our ability to generate revenue; ● our ability to obtain regulatory approval for commercialization of our products; ● the ability of our products to achieve market acceptance; ● our success in retaining or recruiting, or changes required in, our officers, key employees, or directors; ● our potential ability to obtain additional financing when and if needed; ● our ability to sustain status as a going concern; ● our ability to protect our intellectual property; ● our ability to identify and complete strategic acquisitions and integrate the acquired operations; ● our ability to manage growth; ● the liquidity and trading of our securities; ● our regulatory or operational risks; ● cybersecurity risks; ● risks related to the COVID-19 pandemic; ● our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; and ● our status as an “emerging growth company” under the JOBS Act. In addition, our forward-looking statements do not incorporate the potential impact of any future financings, acquisitions, mergers, dispositions, joint ventures, or investments we may make. We may not actually achieve the plans, intentions, and /or expectations disclosed in our forward-looking statements, and you should not rely on our forward-looking statements. You should read this Form 10-Q, together with the Form 10-K, and the documents we have filed as exhibits to this Form 10-Q and the Form 10-K, completely and with the understanding our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. 33 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued Overview PAVmed is a highly differentiated, multi-product, commercial-stage technology medical device company organized to advance a broad pipeline of innovative medical technologies from concept to commercialization, employing a business model focused on capital efficiency and speed to market. Since inception on June 26, 2014, the Company’s activities have focused on advancing its lead products towards regulatory approval and commercialization, protecting its intellectual property, and building its corporate infrastructure and management team. The Company operates in one segment as a medical technology company, with the following lines-of-business: “GI Health”, “Minimally Invasive Interventions”, “Infusion Therapy”, “Digital Health”, and “Emerging Innovations”. The Company has ongoing operations conducted through PAVmed Inc. and its majority-owned subsidiaries of Lucid Diagnostics, Veris Health, and Solys Diagnostics. PAVmed Inc. and /or its subsidiaries have proprietary rights to the trademarks used herein, including, among others, PAVmed™, Lucid Diagnostics™, LUCID™, Veris Health™, VERIS™, Oncodisc™, Solys Diagnostics™, SOLYS™, Caldus™, CarpX ® , DisappEAR™, EsoCheck ® , EsoGuard ® , EsoCheck Cell Collection Device ® , EsoCure Esophageal Ablation Device™, NextCath™, NextFlo™, PortIO™, and “Innovating at the Speed of Life”™. Solely as a matter of convenience, trademarks and trade names referred to herein may or may not be accompanied with the requisite marks of “™” or “®”. However, the absence of such marks is not intended to indicate, in any way, PAVmed Inc. or its subsidiaries will not assert, to the fullest extent possible under applicable law, their respective rights to such trademarks and trade names. Our multiple products and services are in various phases of development, regulatory clearances, approvals, and commercialization. ● The EsoCheck device received 510(k) marketing clearance from the U.S. Food and Drug Administration (“FDA”), in June 2019 and European CE Mark Certification in May 2021 as an esophageal cell collection device; and, EsoGuard has been established as a Laboratory Developed Test (“LDT”), completed European CE Mark Certification in June 2021, and was launched commercially in December 2019 after Clinical Laboratory Improvement Amendment (“CLIA”) and College of American Pathologists accreditation of the test at Lucid Diagnostics commercial diagnostic laboratory partner ResearchDx Inc. (“RDx”), headquartered in Irvine, California. In August 2021, Lucid Diagnostics launched a strategic partnership with direct-to-consumer telemedicine company UpScriptHealth to support our commercialization efforts. Also in August 2021, we tested our first patients referred by primary care physicians (“PCPs”) in three Lucid Test Centers opened in the Phoenix metropolitan area. ● Our CarpX device is a patented, single-use, disposable, minimally-invasive surgical device designed as a precision cutting tool to treat carpal tunnel syndrome while reducing recovery times that was cleared by the FDA under section 510(k) in April 2020, with the first commercial procedure successfully performed in December 2020. In May 2021 European CE Mark Certification was received for CarpX. ● In May 2021, we formed Veris Health, which is our newest majority-owned subsidiary. In connection with it formation, Veris Health acquired Oncodisc Inc (“Oncodisc”), a digital health company with ground breaking tools to improve personalized cancer care through remote patient monitoring. Oncodisc’s core technologies include the first intelligent implantable vascular healthcare platform that provides patients and physicians with new tools to improve outcomes and optimize the delivery of cost-effective care through remote monitoring and data analytics. Its vascular access port contains biologic sensors capable of generating continuous data on key physiologic parameters known to predict adverse outcomes in cancer patients undergoing treatment. Wireless communication to the patient’s smartphone and its cloud-based digital healthcare platform efficiently and effectively delivers actionable real time data to patients and physicians. The technologies are the subject of multiple patent applications and one allowed patent awaiting final issuance. 34