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) June 30, 2022 December 31, 2021 Assets: Current assets: Cash $ 65,153 $ 77,258 Accounts receivable — 200 Prepaid expenses, deposits, and other current assets 5,662 5,179 Total current assets 70,815 82,637 Fixed assets, net 2,253 1,585 Operating lease right-of-use assets 3,205 — Intangible assets, net 4,456 2,029 Other assets 1,725 725 Total assets $ 82,454 $ 86,976 Liabilities, Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 4,492 $ 3,299 Accrued expenses and other current liabilities 2,932 4,259 Operating lease liabilities, current portion 943 — Senior Secured Convertible Notes - at fair value 29,500 — Purchase consideration payable 1,000 — Total current liabilities 38,867 7,558 Long-term liabilities Operating lease liabilities, less current portion 2,183 — Total long-term liabilities 2,183 — Total liabilities 41,050 7,558 Commitments and contingencies (Note 9) - Stockholders’ Equity: Preferred stock, $ 0.001 par value. Authorized, 20,000,000 shares; Series B Convertible Preferred Stock, par value $ 0.001 , issued and outstanding 1,158,950 at June 30, 2022 and 1,113,919 shares at December 31, 2021 2,554 2,419 Common stock, $ 0.001 par value. Authorized, 250,000,000 shares; 87,023,211 and 86,367,845 shares outstanding as of June 30, 2022 and December 31, 2021, respectively 87 86 Additional paid-in capital 201,327 198,071 Accumulated deficit ( 181,442 ) ( 138,910 ) Treasury stock ( 548 ) — Total PAVmed Inc. Stockholders’ Equity 21,978 61,666 Noncontrolling interests 19,426 17,752 Total Stockholders’ Equity 41,404 79,418 Total Liabilities and Stockholders’ Equity $ 82,454 $ 86,976 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) 2022 2021 2022 2021 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenue $ — $ — $ 189 $ — Cost of revenue — — 369 — Gross profit (loss) — — ( 180 ) — Operating expenses: Sales and marketing 4,898 1,875 8,823 3,262 General and administrative 11,839 6,837 21,436 10,211 Research and development 6,740 4,258 12,671 7,573 Total operating expenses 23,477 12,970 42,930 21,046 Loss from operations ( 23,477 ) ( 12,970 ) ( 43,110 ) ( 21,046 ) Other income (expense): Interest expense ( 523 ) — ( 523 ) — Change in fair value - Senior Secured Convertible Note ( 2,000 ) — ( 2,000 ) 1,682 Loss on issue and offering costs - Senior Secured Convertible Note ( 3,101 ) — ( 3,101 ) — Debt extinguishments loss - Senior Secured Convertible Notes — — — ( 3,715 ) Debt forgiveness — 300 — 300 Other income (expense), net ( 5,624 ) 300 ( 5,624 ) ( 1,733 ) Loss before provision for income tax ( 29,101 ) ( 12,670 ) ( 48,734 ) ( 22,779 ) Provision for income taxes — — — — Net loss before noncontrolling interests ( 29,101 ) ( 12,670 ) ( 48,734 ) ( 22,779 ) Net loss attributable to the noncontrolling interests 3,576 1,199 6,337 1,877 Net loss attributable to PAVmed Inc. ( 25,525 ) ( 11,471 ) ( 42,397 ) ( 20,902 ) Less: Series B Convertible Preferred Stock dividends earned ( 70 ) ( 74 ) ( 138 ) ( 149 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 25,595 ) $ ( 11,545 ) $ ( 42,535 ) $ ( 21,051 ) Per share information: Net loss per share attributable to PAVmed Inc. - basic and diluted $ ( 0.29 ) $ ( 0.14 ) $ ( 0.49 ) $ ( 0.27 ) Net loss per share attributable to PAVmed Inc. common stockholders – basic and diluted $ ( 0.29 ) $ ( 0.14 ) $ ( 0.49 ) $ ( 0.27 ) Weighted average common shares outstanding, basic and diluted 86,957,352 82,235,397 86,689,857 78,117,637 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 June 30, 2022 (in thousands except number of shares and per share data - unaudited) Shares Amount Shares Amount Capital Deficit Stock Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Treasury Non controlling Shares Amount Shares Amount Capital Deficit Stock Interest Total Balance - March 31, 2022 1,136,210 $ 2,486 86,911,646 $ 87 $ 199,719 $ ( 155,849 ) $ ( 512 ) $ 18,802 $ 64,733 Dividends declared - Series B Convertible Preferred Stock 22,740 68 — — — ( 68 ) — — — Vest - restricted stock awards — — 75,000 — ( 1 ) — — — ( 1 ) Exercise - stock options — — 62,500 — 61 — — — 61 Exercise - stock options of majority-owned subsidiary — — — — — — — 501 501 Impact of subsidiary equity transactions — — — — 99 — — 142 241 Stock-based compensation - PAVmed Inc. — — — — 1,449 — — — 1,449 Stock-based compensation - majority-owned subsidiary — — — — — — — 3,557 3,557 Treasury stock — — ( 25,935 ) — — — ( 36 ) — ( 36 ) Net loss — — — — — ( 25,525 ) — ( 3,576 ) ( 29,101 ) Balance - June 30, 2022 1,158,950 $ 2,554 87,023,211 $ 87 $ 201,327 $ ( 181,442 ) $ ( 548 ) $ 19,426 $ 41,404 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 SIX MONTHS ENDED June 30, 2022 (in thousands except number of shares and per share data - unaudited) PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Treasury Non controlling Shares Amount Shares Amount Capital Deficit Stock Interest Total Balance - December 31, 2021 1,113,919 $ 2,419 86,367,845 $ 86 $ 198,071 $ ( 138,910 ) $ — $ 17,752 $ 79,418 Dividends declared - Series B Convertible Preferred Stock 45,031 135 — — — ( 135 ) — — — Exercise - Series Z Warrants — — 5 — — — — — — Vest - restricted stock awards — — 541,666 — ( 1 ) — — — ( 1 ) Exercise - stock options — — 299,999 1 302 — — — 303 Exercise - stock options of majority-owned subsidiary — — — — — — — 688 688 Purchase - Employee Stock Purchase Plan — — 194,240 — 217 — — — 217 Impact of subsidiary equity transactions — — — — 12 — — 229 241 Stock-based compensation - PAVmed Inc. — — — — 2,726 — — — 2,726 Stock-based compensation - majority-owned subsidiary — — — — — — — 7,094 7,094 Treasury stock — — ( 380,544 ) — — — ( 548 ) — ( 548 ) Net loss — — — — — ( 42,397 ) — ( 6,337 ) ( 48,734 ) Balance - June 30, 2022 1,158,950 $ 2,554 87,023,211 $ 87 $ 201,327 $ ( 181,442 ) $ ( 548 ) $ 19,426 $ 41,404 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 THREE MONTHS ENDED June 30, 2021 (in thousands, except number of shares and per share data - unaudited) PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Non controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - March 31, 2021 1,241,438 $ 2,587 81,424,744 $ 81 $ 145,396 $ ( 97,778 ) - $ ( 2,246 ) $ 48,040 Dividends declared - Series B Convertible Preferred Stock 25,046 76 — — — ( 76 ) — — Conversions - Series B Convertible Preferred Stock ( 80,799 ) ( 164 ) 80,799 — 164 — — — Vest - restricted stock awards — — 150,000 — — — - — — Exercise - Series Z warrants — — 880,441 2 1,409 — — 1,411 Exercise - stock options — — 40,832 — 51 — — 51 Stock-based compensation - PAVmed Inc. — — — — 2,622 — — 2,622 Stock-based compensation - majority-owned subsidiary — — — — 52 — 2,528 2,580 Investment in Veris Health Inc. subsidiary — — — — — — 6 6 Net loss — — — — — ( 11,471 ) - ( 1,199 ) ( 12,670 ) Balance - June 30, 2021 1,185,685 $ 2,499 82,576,816 $ 83 $ 149,694 $ ( 109,325 ) - $ ( 911 ) $ 42,040 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 SIX MONTHS ENDED June 30, 2021 (in thousands, except number of shares and per share data - unaudited) Shares Amount Shares Amount Capital Deficit Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Non 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 ) Issue common stock – registered offerings, net — — 15,782,609 16 53,688 — — 53,704 Issue common stock upon partial conversions of Senior Secured Convertible Note — — 667,668 1 1,722 — — 1,723 Issue common stock – exercise Series Z warrants — — 1,740,658 2 2,783 — — 2,785 Issue common stock – conversion Series B Convertible Preferred Stock ( 91,634 ) ( 186 ) 91,634 — 186 — — — Series B Convertible Preferred Stock dividends declared 49,244 148 — — — ( 148 ) - — — Issue common stock - Employee Stock Purchase Plan — — 203,480 — 304 — — 304 Exercise - stock options — — 120,832 — 131 — — 131 Vest - restricted stock awards — — 150,000 — — — — — Stock-based compensation - PAVmed Inc. — — — — 3,254 — — 3,254 Stock-based compensation - majority-owned subsidiary — — — — 56 — 3,329 3,385 Investment in Veris Health Inc. subsidiary — — — — — — 6 6 Net Loss — — — — — ( 20,902 ) - ( 1,877 ) ( 22,779 ) Balance - June 30, 2021 1,185,685 $ 2,499 82,576,816 $ 83 $ 149,694 $ ( 109,325 ) - $ ( 911 ) $ 42,040 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) 2022 2021 Six Months Ended June 30, 2022 2021 Cash flows from operating activities Net loss - before noncontrolling interest (“NCI”) $ ( 48,734 ) $ ( 22,779 ) Adjustments to reconcile net loss - before NCI to net cash used in operating activities Depreciation and amortization expense 1,031 28 Stock-based compensation 9,820 6,639 In-process R&D charge — 133 APA-RDx: Issue common stock of majority-owned subsidiary - settle installment payment 239 — Change in fair value - Senior Secured Convertible Note 2,000 ( 1,682 ) Loss upon Issuance - Senior Secured Convertible Note 2,500 — Debt extinguishment loss - Senior Secured Convertible Notes and Senior Convertible Note — 3,715 Debt forgiveness — ( 300 ) Non-cash lease expense 57 — Changes in operating assets and liabilities: Accounts receivable 200 — Prepaid expenses and other current and non-current assets ( 1,665 ) ( 1,441 ) Accounts payable 1,057 650 Accrued expenses and other current liabilities ( 1,326 ) ( 759 ) Net cash flows used in operating activities ( 34,821 ) ( 15,796 ) Cash flows from investing activities Purchase of equipment ( 926 ) ( 157 ) Payments - Acquisitions, net of cash ( 2,200 ) ( 47 ) Net cash flows used in investing activities ( 3,126 ) ( 204 ) 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 Note 25,000 — 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 ) Proceeds – exercise of Series Z warrants — 2,785 Proceeds – exercise of stock options 303 131 Proceeds – issue common stock – Employee Stock Purchase Plan 217 304 Proceeds – exercise of stock options issued under equity plan of majority owned subsidiary 688 — Purchase Treasury Stock – payment of employee payroll tax obligation in connection with stock-based compensation ( 366 ) — Net cash flows provided by financing activities 25,842 41,954 Net increase (decrease) in cash ( 12,105 ) 25,954 Cash, beginning of period 77,258 17,256 Cash, end of period $ 65,153 $ 43,210 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 Description of the Business PAVmed Inc and Subsidiaries, referred to herein as “PAVmed” or the “Company” is comprised of PAVmed Inc. and its wholly-owned subsidiary and its majority-owned subsidiaries, inclusive of Lucid Diagnostics Inc. (“Lucid Diagnostics” or “LUCID”), Veris Health Inc. (“Veris Health” or “VERIS”), and Solys Diagnostics Inc. (“Solys Diagnostics” or “SOLYS”). The Company is 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’s current operational activities are principally focused on the commercialization of EsoGuard and CarpX, while its development activities are focused on pursuing FDA approval and clearance of other lead products in our product portfolio pipeline, including EsoGuard IVD, PortIO, EsoCure and digital health technologies acquired by the Company’s majority-owned subsidiary Veris Health Inc. 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. There are no assurances, however, the Company will be able to obtain an adequate level of financial resources required for the long-term commercialization and development of its products and services. The Company has financed its operations principally through 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 companies that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing research and development activities and conducting 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 and other debt and equity committed sources of financing, the Company expects to be able to fund its operations and meet its financial obligations as they become due for the one year period 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 June 30, 2022. 8 Note 2 — Summary of Significant Accounting Policies 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, 2021 as filed with the SEC on April 6, 2022, except as otherwise noted herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PAVmed Inc. and Subsidiaries 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”), and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant 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 operations of a net loss attributable to the noncontrolling interest based on the respective minority-interest equity ownership of each majority-owned subsidiary. See Note 15, Noncontrolling Interest , for a discussion of each of the majority-owned subsidiaries noted above. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. All amounts in the accompanying unaudited condensed consolidated financial statements and these notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts. Use of Estimates In preparing the 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 the determination of corresponding carrying value reserve, if any, and liabilities and the disclosure of contingent losses, as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these (unaudited) condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards, intangible assets, and common stock purchase warrants. Other significant estimates include the estimated incremental borrowing rate, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. Additionally, 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. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. 9 Note 2 — Summary of Significant Accounting Policies - continued Significant Accounting Policies - Continued Leases The Company adopted FASB ASC Topic 842, Leases , (“ASC 842”) effective December 31, 2021, with such adoption not having an effect on the Company’s consolidated financial statements. All significant lease agreements and contractual agreements with embedded lease agreements are accounted for under the provisions of ASC 842, wherein, if the contractual arrangement: involves the use of a distinct identified asset; provides for the right to substantially all the economic benefits from the use of the asset throughout the contractual period; and provides for the right to direct the use of the asset. A lease agreement is accounted for as either a finance lease (generally with respect real estate) or an operating lease (generally with respect to equipment). Under both a finance lease and an operating lease, the Company recognizes as of the lease commencement date a lease right-of-use (“ROU”) asset and a corresponding lease payment liability. A lease ROU asset represents the Company’s right to use an underlying asset for the lease term, and the lease liability represents its contractual obligation to make lease payments. The lease ROU asset is measured at the lease commencement date as the present value of the future lease payments plus initial direct costs incurred. The Company recognizes lease expense of the amortization of the lease ROU asset for an operating lease on a straight-line basis over the lease term; and for financing leases on a straight-line basis unless another basis is more representative of the pattern of economic benefit. The operating ROU asset also includes any lease incentives received for improvements to leased property, when the improvements are lessee-owned. Improvements to leased property that are lessor-owned, the Company includes amounts the Company incurred for the improvements as ROU assets which are amortized on a straight-line basis over the life of the lease. The lease liability is measured at the lease commencement date with the discount rate generally based on the Company’s incremental borrowing rate (to the extent the lease implicit rate is not known nor determinable), with interest expense recognized using the interest method for financing leases. Certain leases may include options to extend or terminate the agreement. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement. As well, an option to terminate is considered unless it is reasonably certain the Company will not exercise the option. The Company elected the practical expedient to not recognize a lease ROU asset and lease payment liability for leases with a term of twelve months or less (“short-term leases”), resulting in the aggregate lease payments being recognized on a straight line basis over the lease term. The Company’s leases with a commencement date prior to January 1, 2022 were short-term leases and therefore did not require recording a ROU asset or lease liability at December 31, 2021. Additionally, the Company elected the practical expedient to not separate lease and non-lease components. 10 Note 2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued Significant Accounting Policies - Continued Fair Value Option (“FVO”) Election Under a Securities Purchase Agreement dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022 - referred to herein as the “April 2022 Senior Convertible Note” - which is accounted under the “fair value option election” as discussed below. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging , (“ASC 815”), a financial instrument containing embedded features and /or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date. Alternatively, FASB ASC Topic 825, Financial Instruments , (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the April 2022 Senior Convertible Note is presented in a single line item within other income (expense) in the accompanying unaudited condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022 Senior Convertible Note). See Note 10, Financial Instruments Fair Value Measurements , with respect to the FVO election; and Note 11, Debt , for a discussion of the April 2022 Senior Convertible Note. 11 Note 3 — Revenue from Contracts with Customers Revenue is recognized when the satisfaction of the performance obligation occurs, which is when the delivery of product and /or the provision of service is rendered, and is measured as the amount of estimated consideration expected to be realized. In the period ended June 30, 2022, the Company recognized revenue under the EsoGuard Commercialization Agreement, dated August 1, 2021, as discussed below. EsoGuard Commercialization Agreement The Company, through its majority-owned subsidiary, Lucid Diagnostics Inc., entered into the EsoGuard Commercialization Agreement, dated August 1, 2021, with its Commercial Laboratory Improvements Act (“CLIA”) certified commercial laboratory service provider, ResearchDx Inc. (“RDx”), an unrelated third-party. The EsoGuard Commercialization Agreement was on a month-to-month basis, and was terminated on February 25, 2022 upon the execution of an asset purchase agreement (“APA”) dated February 25, 2022, between LucidDx Labs Inc. (a wholly-owned subsidiary of Lucid Diagnostics Inc.) and RDx, with such agreement further discussed in Note 5, Asset Purchase Agreement and Management Services Agreement ,. Revenue Recognized In the six months ended June 30, 2022, the Company recognized total revenue of $ 189 , under the EsoGuard Commercialization Agreement, which represents the minimum fixed monthly fee of $ 100 for the period January 1, 2022 to the February 25, 2022 termination date as discussed above, The monthly fee was deemed to be collectible for such period as RDx has timely paid the applicable respective monthly fee. Cost of Revenue The cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement for the period January 1, 2022 to February 25, 2022 totaled $ 369 , inclusive of employee related costs of personnel engaged in the delivery of the administration to patients of the EsoCheck cell sample collection procedure, EsoCheck devices and EsoGuard mailers (cell sample shipping costs) distributed to medical practitioners’ locations and the Lucid Test Centers; Lucid Test Centers operating expenses, including rent expense and supplies; and royalty fees incurred under the Amended CWRU License Agreement. 12 Note 4 — Related Party Transactions Case Western Reserve University and Physician Inventors - Amended CWRU License Agreement Case Western Reserve University (“CWRU”) and each of the three physician inventors (“Physician Inventors”) of the intellectual property licensed under the amended and restated patent license agreement with CWRU, dated August 23, 2021 (the “Amended CWRU License Agreement”), each hold a minority equity ownership interest in Lucid Diagnostics Inc. The expenses incurred with respect to the Amended CWRU License Agreement and the three Physician Inventors, as classified in the accompanying consolidated statement of operations for the periods indicated are summarized as follows: Schedule of Incurred Expenses of Minority Shareholders 2022 2021 2022 2021 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of Revenue CWRU – Royalty Fee $ — $ — $ 9 $ — General and Administrative Expense Stock-based compensation expense – Physician Inventors’ restricted stock awards 272 273 544 364 Research and Development Expense Amended CWRU License Agreement - reimbursement of patent legal fees 209 113 209 113 Fees - Physician Inventors’ consulting agreements 10 1 18 14 Sponsored research agreement — — 3 — Stock-based compensation expense – Physician Inventors’ stock options 52 52 99 58 Total Related Party Expenses $ 543 $ 439 $ 882 $ 549 See Note 12, 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 15, Noncontrolling Interest , for a discussion of Lucid Diagnostics Inc. and the corresponding noncontrolling interests. 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 general and administrative expense of $ 8 and $ 14 in the three and six months ended June 30, 2021 in connection with the consulting agreement. Effective June 2021, Veris Health Inc. entered into a consulting agreement with Andrew Thoreson, M.D. which provides for compensation on a contractual rate per hour for consulting services provided. Dr. Thoreson holds a partial ownership interest in the legal entity which holds a minority interest in Veris Health Inc. Veris Health Inc. recognized general and administrative expense of $ 13 and $ 37 in the three and six months ended June 30, 2022 in connection with the consulting agreement. 13 Note 5 — Asset Purchase Agreement and Management Services Agreement Asset Purchase Agreement - ResearchDx Inc. LucidDx Labs Inc., a wholly-owned subsidiary of Lucid Diagnostics Inc., entered into an asset purchase agreement (“APA”) dated February 25, 2022, with ResearchDx, Inc. (“RDx”), an unrelated third-party - “APA-RDx”. Under the APA-RDx, LucidDx Labs Inc. acquired certain assets from RDx which were combined with LucidDx Labs Inc. purchased and leased property and equipment to establish a Company-owned Commercial Lab Improvements Act (“CLIA”) certified, College of American Pathologists (“CAP”) accredited commercial clinical laboratory capable of performing the EsoGuard® Esophageal DNA assay, inclusive of DNA extraction, next generation sequencing (“NGS”) and specimen storage. Prior to February 25, 2022, RDx provided such laboratory services at its owned CLIA-certified, CAP-accredited clinical laboratory. The total purchase price consideration payable under the APA-RDx is a face value of $ 3,200 comprised of three contractually specified periodic payments. The APA-RDx is being accounted for as an asset acquisition, with the recognition of an intangible asset of approximately $ 3,200 , which is included in “Intangible assets, net” on the accompanying unaudited condensed consolidated balance sheet, as further discussed in Note 8, Intangible Assets, net . In the three and six months ended June 30, 2022, a total of $ 2,200 of cash was paid with respect to the periodic payments. Subsequent to June 30, 2022, in July 2022, $ 1,000 of cash was paid with respect to the remaining unpaid balance of the periodic payments. Additionally, the APA-RDx requires the Company to pay a total of $ 3,000 to be paid as twelve (12) equal installment payments commencing May 25, 2022 and then on each three month anniversary thereof, inclusive of a final installment payment on February 25, 2025, with such installment payments recognized as current period expense as incurred. In the three and six months ended June 30, 2022, as provided for in the APA-RDx, an installment payment was settled by the issue of 117,371 shares of common stock of Lucid Diagnostics Inc., with such shares having a fair value of $ 239 (with the fair value measured as the quoted closing price on the date the shares were issued), which was recognized as a current period expense included in general and administrative expenses in the accompanying unaudited condensed consolidated statement of operations. The APA-RDx provides for each of an acceleration and a cancellation of the remaining unpaid installment payments, summarized as follows: ● The payment of the remaining unpaid installment payments will be accelerated as immediately due and payable as of the date the “MSA-RDx” (as such agreement is discussed below) is either terminated by LucidDx Labs Inc. or if it is terminated by mutual agreement between LucidDx Labs Inc. and RDx. ● The payment of the remaining unpaid installment payments will be cancelled if the MSA-RDx is terminated by LucidDx Labs Inc. for cause, defined as the occurrence of any one of: (i) a material breach by RDx which is not cured within thirty days of LucidDx Labs Inc. written notice; (ii) RDx becomes insolvent and /or bankrupt; or (ii) RDx fails to comply with applicable statutes, is barred from participating in federal health care programs, or by action of changes in law or regulation, or by action of judicial interpretation of law, or by judicial civil proceedings decisions. Management Services Agreement - Research Dx Inc LucidDx Labs Inc. and RDx entered into a separate management services agreement (“MSA-RDx”), dated and effective February 25, 2022, with such agreement having a term of three years commencing on the agreement’s effective date, and an initial fee of $ 150 per quarter. The MSA-RDx provides for the cancellation of the remaining unpaid installment payments upon termination of the MSA-RDx for any reason or no reason by either party thereto. 14 Note 6 — Prepaid Expenses, Deposits, and Other Current Assets Prepaid expenses and other current assets consisted of the following as of: Schedule of Prepaid Expenses and Other Current Assets June 30, 2022 December 31, 2021 Advanced payments to service providers and suppliers $ 834 $ 808 Prepaid insurance 1,156 1,856 Deposits 3,317 1,989 EsoCheck cell collection supplies 215 434 EsoGuard mailer supplies 65 59 CarpX devices 75 33 Total prepaid expenses, deposits and other current assets $ 5,662 $ 5,179 Note 7 — Leases During the six months ended June 30, 2022, the Company entered into additional lease agreements that have commenced and are classified as operating leases and short-term leases, including for each of: a research and development facility; a commercial clinical laboratory; additional Lucid Test Centers; and for office space. The Company’s future lease payments as of June 30, 2022, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows: Schedule of future minimum lease payments for capital leases 2022 (remainder of year) $ 562 2023 1,175 2024 1,139 2025 272 2026 272 Thereafter 132 Total lease payments $ 3,552 Less: imputed interest ( 426 ) Present value of lease liabilities $ 3,126 Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows: Schedule of Supplemental Balance Sheet Information Related to Cash and Non-cash Activities with Leases 2022 2021 Six Months Ended June 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 483 $ — Non-cash investing and financing activities Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,633 $ — Weighted-average remaining lease term - operating leases (in years) 3.31 — Weighted-average discount rate - operating leases 7.875 % — % As of June 30, 2022, the Company’s right-of-use assets from operating leases are $ 3,205 , which are reporting in right-of-use assets - operating leases in the unaudited condensed consolidated balance sheets. As of June 30, 2022, the Company has outstanding operating lease obligations of $ 3,126 , of which $ 943 is reported in operating lease liabilities, current portion and $ 2,183 is reporting in operating lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. The Company did not have operating leases as of December 31, 2021. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the financing terms the Company would likely receive on the open market. 15 Note 8 — Intangible Assets, net Intangible assets, less accumulated amortization, consisted of the following as of: Schedule of Intangible Assets Accumulated Amortization Estimated Useful Life June 30, 2022 December 31, 2021 Defensive asset 60 months $ 2,105 $ 2,105 Laboratory licenses and certifications and laboratory information management software (“LIMSDx”) 24 months 3,200 --- Other 1 year 70 70 Total Intangible assets 5,375 2,175 Less Accumulated Amortization ( 919 ) ( 146 ) Intangible Assets, net $ 4,456 $ 2,029 The defensive technology intangible asset was recognized by PAVmed Subsidiary Corp upon its acquisition of CapNostics, LLC, an unrelated third-party, for total purchase consideration paid on the October 5, 2021 acquisition date of approximately $ 2.1 million in cash. The CapNostics LLC transaction was accounted for as an asset acquisition, resulting in the recognition of the defensive technology intangible asset. The defensive technology intangible asset is being amortized on a straight-line basis over an expected useful life 60 months commencing on the acquisition date. As noted in Note 5, Asset Purchase Agreement and Management Services Agreement , the asset purchase agreement between the Company and ResearchDx Inc. (“APA-RDx”), is being accounted as asset acquisition. The intangible assets recognized under the APA-RDx are the laboratory licenses and certifications, inclusive of inclusive of a CLIA certification, CAP accreditation, and clinical laboratory licenses for five (5) U.S. States transfer to the Company from RDx, and a laboratory information management software (“LIMSDx”) perpetual-use royalty-free license granted under the APA-RDx, with such intangible asset having a useful life of twenty-four months commencing on the APA-RDx February 25, 2022 transaction date. Amortization expense of the intangible assets discussed above was $ 650 and $ 6 for the three month periods ended June 30, 2022 and 2021, respectively, and $ 773 and $ 6 for the six month periods ended June 30, 2022 and 2021, respectively, and is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. As of June 30, 2022, the estimated future amortization expense associated with the Company’s identified finite-lived intangible assets for each of the five succeeding fiscal years is as follows: Schedule of Estimated Amortization Expense for Intangible Assets 2022 (remainder of year) $ 1,010 2023 2,021 2024 688 2025 421 2026 316 Total $ 4,456 16 Note 9 — Commitment and Contingencies Legal Proceedings Delaware Court of Chancery Complaint 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 PAVmed Inc. 2014 Long-Term Incentive Equity Plan and the PAVmed Inc. Employee Stock Purchase Plan). The relief sought under the complaint includes certain corrective actions by the Company, but did not seek any specific monetary damages. The Company did not believe it was clear the prior approval of these matters was 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. In connection with the foregoing, on August 3, 2022, the parties agreed that plaintiff’s counsel would not seek an award from the Court in excess of $ 450 , to be paid by the Company, upon Court approval, as compensation for the benefits conferred by the settlement, and the Company would not object to an award of up to such maximum amount. Such agreement was approved by the Company’s board of directors as of August 5, 2022.The settlement of the complaint and plaintiff’s counsel’s fee award is subject-to the approval of the Court. The settlement hearing before the Court is scheduled for November 3, 2022. Benchmark Investments, Inc. / Benchmark Investments LLC 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 Kingswood Capital Markets, a “division” of Benchmark Investments, Inc. On December 16, 2021, the court granted PAVmed’s motion to dismiss the case for lack of subject matter jurisdiction. On February 7, 2022, Benchmark Investments LLC, which claimed to be a successor to Benchmark Investments, Inc., filed a new complaint in the Supreme Court of the State of New York, New York County, asserting claims similar to those in the federal action, and adding to its allegations that financings conducted by the Company in January 2021 and February 2021 also violated the Company’s engagement letter with Kingswood Capital Markets. The Company has made a motion to dismiss this complaint for Benchmark Investments LLC’s lack of standing, which motion is pending. In any event, the Company disagrees with the allegations set forth in the complaint and intends to vigorously contest the complaint. Other Matters 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. 17 Note 10 — Financial Instruments Fair Value Measurements Recurring Fair Value Measurements The fair value hierarchy table for the reporting date 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 Inputs Level-2 Inputs Level-3 Inputs Total June 30, 2022 Senior Secured Convertible Note - April 2022 $ — $ — $ 29,500 $ 29,500 Totals $ — $ — $ 29,500 $ 29,500 (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. There were no transfers between the respective Levels during the period ended June 30, 2022. As discussed in Note 11, Debt , the Company issued a Senior Secured Convertible Note dated April 4, 2022, with an initial $ 27.5 million face value principal (“April 2022 Senior Convertible Note”). The April 2022 Senior Convertible Note is 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. The estimated fair value of the financial instruments classified within the Level 3 category 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 value of the April 2022 Senior Convertible Note as of each of April 4, 2022 and June 30, 2022, 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, using the following assumptions: Schedule of Fair Value Assumption Used April 2022 Senior Convertible Note: April 4, 2022 April 2022 Senior Convertible Note: June 30, 2022 Fair Value $ 30,100 $ 29,500 Face value principal payable $ 27,500 $ 27,500 Required rate of return 7.875 % 11.20 % Conversion Price $ 5.00 $ 5.00 Value of common stock $ 1.26 $ 0.94 Expected term (years) 2.00 1.76 Volatility 115.00 % 130.00 % Risk free rate 2.40 % 2.85 % Dividend yield — % — % 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. 18 Note 11 — Debt The Company entered into a Securities Purchase Agreement (“SPA”) dated March 31, 2022, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein, the Company agreed to sell, and the Investor agreed to purchase an aggregate of $ 50.0 million face value principal of debt - comprised of: an initial issuance of $ 27.5 million face value principal; and up to an additional $ 22.5 million of face value principal (upon the satisfaction of certain conditions). The debt is being issued in a registered direct offering under the Company’s effective shelf registration statement. Under the SPA dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior Convertible Note”, with such note having a $ 27.5 million face value principal, a 7.875 % annual stated interest rate, a contractual conversion price of $ 5.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of April 4, 2024. The April 2022 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election, as discussed below. The April 2022 Senior Convertible Note proceeds were $ 25.0 million after deducting a $ 2.5 million lender fee; and additionally, the Company incurred total offering costs of approximately $ 601 , inclusive of the payment of a total of $ 450 placement agent fees. The lender fee and offering costs were recognized as of the April 4, 2022 issue date as a current period expense in other income (expense) in the consolidated statement of operations. During the period from April 4, 2022 to October 3, 2022, the Company is required to pay interest expense only (on the $ 27.5 million face value principal), at 7.875 % per annum, computed on a 360 day year. The Company paid in cash interest expense of approximately $ 523 for the period April 4, 2022 to June 30, 2022; and approximately $ 181 subsequent to June 30, 2022 as of August 10, 2022. Commencing October 4, 2022, and then on each of the successive first and tenth trading day of each month thereafter through to and including April 1, 2024 (each referred to as an “Installment Date”); and on the April 4, 2024 maturity date, the Company will be required to make a principal repayment of $ 724 together with accrued interest thereon, with such 38 payments referred to herein as the “Installment Amount”, settled in shares of common stock of the Company, subject to customary equity conditions, including minimum share price and volume thresholds, or at the election of the Company, in cash, in whole or in part. In addition to the Installment Amount repayments, the Holder may elect to accelerate the conversion of future Installment Amount repayments, and interest thereon, subject to certain restrictions, as defined, utilizing the then current conversion price of the most recent Installment Date conversion price. Subject to certain conditions being met or waived, from time to time, one or more additional closings may occur, for up to the remaining $ 22.5 million face value principal, upon five trading days’ notice given by the Company to the Investor. The Investor’s obligation to purchase the additional notes at each additional closing is subject to certain conditions set forth in the SPA dated March 31, 2022, including, among others, contractual closing requirements: minimum price and trading volume thresholds of the Company’s common stock; the maximum ratio of debt to market capitalization (as defined); and minimum market capitalization (as defined), with such requirements being waived by the Investor in its sole discretion. Additionally, effective March 31, 2023, the Investor may by written notice elect to require the Company to issue additional notes of up to $ 22.5 million in face value principal, so long as in doing so it would not cause the ratio of (a) the outstanding principal amount of the April 2022 Senior Convertible Note (and any additional notes issued under the SPA dated March 31, 2022), accrued and unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days, to exceed 25%. If the Company does not issue the additional notes contemplated by any such written notice, or if the Investor is unable to deliver any such notice prior to March 31, 2024 as a result of the limitation described in the preceding sentence, then the Company will be obligated to pay up to a maximum of a $1.35 million a break-up fee . 19 Note 11 — Debt - continued The payment of all amounts due and payable under the April 2022 Senior Convertible Note is guaranteed by the Company and its wholly-owned and majority-owned subsidiaries, except for Lucid Diagnostics Inc and its wholly-owned subsidiaries; and the obligations under the April 2022 Senior Convertible Note are secured by all of the assets of the Company and each guarantor, except only up to 9.99% of the shares of common stock of Lucid Diagnostics Inc. held by PAVmed Inc. are pledged to secure the indebtedness under the April 2022 Senior Convertible Note. The Company is subject to certain customary affirmative and negative covenants regarding the rank of the notes, along with the incurrence of further indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. The Company is subject to financial covenants requiring: (i) a minimum of $8.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the April 2022 Senior Convertible Note, (and any additional notes issued under the SPA dated March 31, 2022), accrued and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, to not exceed 30% (the “Debt to Market Cap Ratio Test”); and (iii) the Company’s market capitalization to at no time be less than $75 million. (the “Market Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”). The Company is currently in compliance with these financial covenants, although from time to time since the date of issuance of the April 2022 Senior Convertible Note through August 10, 2022 (including, in the case of the Debt to Market Cap Ratio Test, as of June 30, 2022), the Company was not in compliance with the Financial Tests. As of August 9, 2022, the Investor agreed to waive any such non-compliance during such aforementioned time periods, under each of the SPA dated March 31, 2022 and the April 2022 Senior Convertible Note. In connection with the waiver dated August 9, 2022, the Company and the Investor also amended the April 2022 Senior Convertible Note to permit the Investor to convert up to $ 5.0 million of the face value principal of the April 2022 Senior Convertible Note at the then current conversion price as if the date of conversion were an Installment Date, i.e. a price per share of common stock equal to the lower of (i) the fixed conversion price then in effect (currently $ 5.00 ) and (ii) 82.5 % of the average VWAP of the Company’s common stock for each of the two trading days with the lowest VWAP of the Company’s common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the applicable conversion date, but in the case of clause (ii), not less than $ 0.18 per share. As contemplated by such amendment, subsequent to June 30, 2022, on August 10, 2022, approximately $ 2,882 of principal repayments along with approximately $ 6 of interest expense thereon, were settled through the issuance of 3,000,867 shares of common stock of the Company, with such shares having a fair value of approximately $ 5,462 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). The fair value and face value principal of outstanding of the April 2022 Senior Convertible Note as of June 30, 2022 is as follows: Summary of Outstanding Debt Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value April 2022 Senior Convertible Note April 4, 2024 7.875 % $ 5.00 $ 27,500 $ 29,500 Balance as of June 30, 2022 $ 27,500 $ 29,500 The Company did not have convertible debt outstanding at December 31, 2021. During the six month period ended June 30, 2021, the Company recognized debt extinguishment losses of approximately $ 3,715 , in connection with repaying-in-full all remaining convertible notes outstanding at the time. The April 2022 Senior Convertible Note is 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 (unaudited) condensed 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 10, Financial Instruments Fair Value Measurements , for a further discussion of fair value assumptions. 20 Note 12 — 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”) is designed to enable PAVmed Inc. to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of PAVmed Inc. The types of awards that may be granted under the PAVmed Inc. 2014 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the PAVmed Inc. board of directors. A total of 16,352,807 shares of common stock of PAVmed Inc. are reserved for issuance under the PAVmed Inc. 2014 Equity Plan, with 2,830,092 shares available for grant as of June 30, 2022. The share reservation is not diminished by a total of 600,854 PAVmed Inc. stock options and restricted stock awards granted outside the PAVmed Inc. 2014 Equity Plan as of June 30, 2022. PAVmed Inc. Stock Options PAVmed Inc. stock options granted under the PAVmed Inc. Inc. 2014 Equity Plan and stock options granted outside such plan are summarized as follows: Schedule of Summarizes Information About Stock Options Number of Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Intrinsic Value (2) Outstanding stock options at December 31, 2021 8,720,198 $ 3.39 6.8 $ 3,516 Granted (1) 4,219,350 $ 1.49 Exercised ( 299,999 ) $ 1.01 Forfeited ( 1,437,143 ) $ 3.04 Outstanding stock options at June 30, 2022 (3) 11,202,406 $ 2.79 7.9 $ 8 Vested and exercisable stock options at June 30, 2022 5,994,046 $ 3.07 6.5 $ 1 (1) Stock options granted under the PAVmed Inc. 2014 Equity Plan and those granted outside such plan generally vest ratably over twelve quarters, with the vesting commencing with the grant date quarter-end, 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 June 30, 2022 and December 31, 2021 and the exercise price of the underlying PAVmed Inc. stock options, to the extent such quoted price is greater than the exercise price. (3) The outstanding stock options presented in the table above, are inclusive of 500,854 stock options granted outside the PAVmed Inc. 2014 Equity Plan. as of June 30, 2022 and December 31, 2021. PAVmed Inc. Restricted Stock Awards PAVmed Inc. restricted stock awards granted under the PAVmed Inc. 2014 Equity Plan and restricted stock awards granted outside such plan are summarized as follows: Schedule of Restricted Stock Award Activity Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested restricted stock awards as of December 31, 2021 1,666,666 $ 2.36 Granted — — Vested ( 541,666 ) 1.20 Forfeited ( 150,000 ) 2.04 Unvested restricted stock awards as of June 30, 2022 (1) 975,000 $ 3.05 (1) The unvested restricted stock awards presented in the table above, are inclusive of 100,000 restricted stock awards granted outside the PAVmed Inc. 2014 Equity Plan. as of June 30, 2022 and December 31, 2021. 21 Note 12 — Stock-Based Compensation - continued Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc. 2018 Equity Plan”) is separate and apart from the PAVmed Inc. 2014 Equity Plan discussed above. The Lucid Diagnostics Inc. 2018 Equity Plan is designed to enable Lucid Diagnostics Inc. to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of Lucid Diagnostics Inc. The types of awards that may be granted under the Lucid Diagnostics Inc. 2018 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the Lucid Diagnostics Inc. board of directors. A total of 9,144,000 shares of common stock of Lucid Diagnostics Inc. are reserved for issuance under the Lucid Diagnostics Inc. 2018 Equity Plan, with 3,932,802 shares available for grant as of June 30, 2022, with the share reservation not diminished by a total of 473,300 Lucid Diagnostics Inc. stock options and restricted stock awards granted outside the Lucid Diagnostics Inc. 2018 Equity Plan. Lucid Diagnostics Inc. Stock Options Lucid Diagnostics Inc. stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan and stock options granted outside such plan are summarized as follows: Schedule of Summarizes Information About Stock Options Number of Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Outstanding stock options at December 31, 2021 1,419,242 $ 0.73 7.0 Granted (1) 2,107,500 $ 3.82 Exercised ( 959,389 ) $ 0.72 Forfeited ( 107,687 ) $ 4.45 Outstanding stock options at June 30, 2022 (2) 2,459,666 $ 3.22 9.0 Vested and exercisable stock options at June 30, 2022 741,869 $ 1.90 7.4 (1) Stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan and those granted outside such 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 outstanding stock options presented in the table above, are inclusive of 423,300 stock options granted outside the Lucid Diagnostics Inc. 2018 Equity Plan. as of June 30, 2022 and December 31, 2021. Lucid Diagnostics Inc. Restricted Stock Awards Lucid Diagnostics Inc. restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan and restricted stock awards granted outside such plan are summarized as follows: Schedule of Restricted Stock Award Activity Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested restricted stock awards as of December 31, 2021 1,940,740 $ 12.76 Granted 320,000 4.53 Vested — — Forfeited — — Unvested restricted stock awards as of June 30, 2022 (1) 2,260,740 $ 11.59 (1) The unvested restricted stock awards presented in the table above, are inclusive of 50,000 restricted stock awards granted outside the Lucid Diagnostics Inc. 2018 Equity Plan. as of June 30, 2022 and December 31, 2021. On January 7, 2022, 320,000 restricted stock awards were granted under the Lucid Diagnostics Inc 2018 Equity Plan, with such restricted stock awards having a single vesting date on January 7, 2025 , and an aggregate grant date fair value of approximately $ 1.4 million, measured as the grant date closing price of Lucid Diagnostics Inc. common stock, 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. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. 22 Note 12 — 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Sales and marketing expenses $ 591 $ 298 $ 1,216 $ 500 General and administrative expenses 4,162 4,599 8,164 5,722 Research and development expenses 254 306 440 417 Total stock-based compensation expense $ 5,007 $ 5,203 $ 9,820 $ 6,639 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Lucid Diagnostics Inc 2018 Equity Plan – sales and marketing expenses $ 215 $ — $ 480 $ — Lucid Diagnostics Inc 2018 Equity Plan – general and administrative expenses 3,313 2,505 6,514 3,295 Lucid Diagnostics Inc 2018 Equity Plan – research and development expenses 26 22 97 34 PAVmed Inc 2014 Equity Plan - sales and marketing expenses 161 — 336 — PAVmed Inc 2014 Equity Plan - general and administrative expenses 77 — 145 — PAVmed Inc 2014 Equity Plan - research and development expenses 52 53 107 56 Total stock-based compensation expense – recognized by Lucid Diagnostics Inc $ 3,844 $ 2,580 $ 7,679 $ 3,385 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 (Years) PAVmed Inc. 2014 Equity Plan Stock Options $ 9,127 2.3 Restricted Stock Awards $ 1,510 1.2 Lucid Diagnostics Inc. 2018 Equity Plan Stock Options $ 4,030 2.6 Restricted Stock Awards $ 10,873 1.0 23 Note 12 — Stock-Based Compensation - continued 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 $0.74 per share and $3.32 per share during the periods ended June 30, 2022 and 2021, 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 Six Months Ended June 30, 2022 2021 Expected term of stock options (in years) 5.8 5.6 Expected stock price volatility 84.0 % 75.0 % Risk free interest rate 3.0 % 1.0 % Expected dividend yield — % — % Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 1.48 per share during the year ended June 30, 2022. There were no stock-based awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan during the period ended June 30, 2021. The stock-based compensation was 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 Six Months Ended June 30, 2022 Expected term of stock options (in years) 5.7 Expected stock price volatility 71.0 % Risk free interest rate 3.0 % Expected dividend yield — % PAVmed Inc. Employee Stock Purchase Plan (“ESPP”) A total of 194,240 shares and 203,480 shares of common stock of the Company were purchased for proceeds of approximately $ 217 and $ 304 , on March 31, 2022 and 2021, respectively under the PAVmed Inc Employee Stock Purchase Plan (“PAVmed Inc ESPP”). The PAVmed Inc. ESPP has a total reservation of 1,750,000 shares of common stock of PAVmed Inc. of which 931,841 shares are available-for-issue as of June 30, 2022. Lucid Diagnostics, Inc Employee Stock Purchase Plan (“ESPP”) The Lucid Diagnostics Inc Employee Stock Purchase Plan (“Lucid Diagnostics Inc ESPP”), initial six-month stock purchase period is April 1, 2022 to September 30, 2022. The Lucid Diagnostics Inc. ESPP share purchase dates are March 31 and September 30. The Lucid Diagnostics Inc. ESPP has a total reservation of 500,000 shares of common stock of Lucid Diagnostics Inc. for which all shares are available-for-issue as of June 30, 2022. 24 Note 13 — Preferred Stock The Series B Convertible Preferred Stock dividends are 8.0 % per annum based on the $ 3.00 per share stated value of the Series B Convertible Preferred Stock, with such dividends compounded quarterly, accumulate, and are payable in arrears upon being declared by the Company’s board of directors. The Series B Convertible Preferred Stock dividends earned are included in the calculation of basic and diluted net loss attributable to PAVmed Inc. common stockholders for each of the respective corresponding periods presented in the accompanying unaudited condensed consolidated statement of operations, inclusive of dividends earned of $ 68 as of the three months ended March 31, 2022 and $ 70 as of the three months ended June 30, 2022; and dividends earned of $ 75 as of the three months ended March 31, 2021 and $ 74 as of the three months ended June 30, 2021. 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. In this regard, in the six months ended June 30, 2022, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends of an aggregate of approximately $ 135 , inclusive of approximately $ 67 earned as of December 31, 2021, and approximately $ 68 earned as of March 31, 2022, with each such dividends settled by the issue of an aggregate 45,031 additional shares of Series B Convertible Preferred Stock, inclusive of 22,291 shares issued with respect to the dividends earned as of December 31, 2021, and 22,740 shares issued with respect to the dividends earned as of March 31, 2022. In the six months ended June 30, 2021, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends of an aggregate of approximately $ 148 , inclusive of approximately $ 73 earned as of December 31, 2020, and approximately $ 75 earned as of March 31, 2021, with each such dividends settled by the issue of an aggregate 49,244 additional shares of Series B Convertible Preferred Stock, inclusive of 24,198 shares issued with respect to the dividends earned as of December 31, 2020, and 25,046 shares issued with respect to the dividends earned as of March 31, 2021. Subsequent to June 30, 2022, in July 2022, the Company’s board-of-directors declared a Series B Convertible Preferred Stock dividend earned as of June 30, 2022 and payable as of July 1, 2022, of approximately $ 70 , to be settled by the issue of an additional 23,196 shares of Series B Convertible Preferred Stock (with such dividend not recognized as a dividend payable as of June 30, 2022, as the Company’s board of directors had not declared such dividends payable as of such date). Note 14 — Common Stock and Common Stock Purchase Warrants Common Stock In June 2022, the Company received shareholder approval to issue up to 250 million shares of its common stock, an increase of 100 million shares. During the six months ended June 30, 2022, 299,999 shares of common stock of the Company were issued upon exercise of stock options for cash of approximately $ 302 ; and . during the six months ended June 30, 2022, a total of 194,240 shares of common stock of the Company were issued under the PAVmed Inc. Employee Stock Purchase Plan (“ESPP”). See Note 12, Stock-Based Compensation , for a discussion of each of the PAVmed Inc. 2014 Equity Plan and the PAVmed Inc ESPP. Common Stock Purchase Warrants As of June 30, 2022 and December 31, 2021, Series Z Warrants outstanding totaled 11,937,450 and 11,937,455 , respectively. A Series Z Warrant is exercisable to purchase one share of common stock of the Company at an exercise price of $ 1.60 per share, and expire April 30, 2024 . During the six months ended June 30, 2022, a total of 5 Series Z Warrants were exercised for cash at $ 1.60 per share, resulting in the issue of the same number of shares of common stock of the Company. As of December 31, 2021, Series W Warrants outstanding totaled 377,873 . The remaining 377,873 Series W Warrants expired unexercised as of January 29, 2022 . 25 Note 15 — 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 June 30, 2022 December 31, 2021 NCI – equity (deficit) – beginning of period $ 17,752 $ ( 2,369 ) Investment in Veris Health Inc. — 6 Net loss attributable to NCI - Lucid Diagnostics Inc. ( 5,711 ) ( 5,779 ) Net loss attributable to NCI – Solys Diagnostics Inc. ( 6 ) — Net loss attributable to NCI – Veris Health Inc. ( 620 ) — Impact of subsidiary equity transactions 229 16,760 Lucid Diagnostics Inc. 2018 Equity Plan stock option exercise 688 — Stock-based compensation expense - Lucid Diagnostics Inc. 2018 Equity Plan 7,091 9,134 Stock-based compensation expense - Veris Health Inc. 2021 Equity Plan 3 — NCI – equity (deficit) – end of period $ 19,426 $ 17,752 The consolidated NCI presented above is with respect to the Company’s consolidated majority-owned subsidiaries, inclusive of: Lucid Diagnostics Inc., Veris Health Inc. and Solys Diagnostics Inc., as a component of consolidated total stockholders’ equity as of June 30, 2022 and December 31, 2021; and the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations with respect to Lucid Diagnostics Inc. and Solys Diagnostics Inc. for the three and six months ended June 30, 2022 and 2021; and with respect to Veris Health Inc. for the three and six months ended June 30, 2022 and from the period of May 28, 2021 to June 30, 2021 (as the Veris Health Inc. inception date was May 28, 2021). Lucid Diagnostics Inc. As of June 30, 2022, there were 35,171,796 shares of common stock of Lucid Diagnostics Inc. issued and outstanding, of which, PAVmed Inc. holds 27,927,190 shares, representing a majority ownership equity interest and PAVmed Inc. has a controlling financial interest in Lucid Diagnostics Inc., and accordingly, Lucid Diagnostics Inc. is a consolidated majority-owned subsidiary of PAVmed Inc. On March 28, 2022, Lucid Diagnostics, Inc. entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”). Under the terms of the committed equity facility, Cantor has committed to purchase up to $ 50 million of Lucid Diagnostics Inc. common stock from time to time at the request of Lucid Diagnostics Inc. While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity facility, insofar as it allows the Company to raise primary equity capital on a periodic basis at prices based on the existing market price. As of June 30, 2022, there were no shares of common stock issued under the committed equity facility. Subsequent to June 30, 2022, as of August 10, 2022, under the committed equity facility, a total of 308,152 shares of common stock of Lucid Diagnostics Inc. were issued for proceeds of approximately $ 927 . Veris Health Inc. As of June 30, 2022, there were 8,000,000 shares of common stock of Veris Health Inc. issued and outstanding, of which PAVmed Inc. holds an 80.44 % majority-interest ownership and PAVmed Inc. has a controlling financial interest, with the remaining 19.56 % minority-interest ownership held by an unrelated third-party. Accordingly, Veris Health Inc. is a consolidated majority-owned subsidiary of the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component of consolidated stockholders’ equity in the unaudited condensed consolidated balance sheet as of June 30, 2022 along with the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations for the period of May 28, 2021 to December 31, 2021, upon its formation and contemporaneous acquisition of Oncodisc Inc. Solys Diagnostics Inc. As of each of June30, 2022 and December 31, 2021, there were 9,189,190 shares of common stock of Solys Diagnostics Inc. issued and outstanding, of which PAVmed Inc. holds a 90.3235 % majority-interest ownership and PAVmed Inc. has a controlling financial interest, with the remaining 9.6765 % minority-interest ownership held by unrelated third parties. 26 Note 16 — 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 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Numerator Net loss - before noncontrolling interest $ ( 29,101 ) $ ( 12,670 ) $ ( 48,734 ) $ ( 22,779 ) Net loss attributable to noncontrolling interest 3,576 1,199 6,337 1,877 Net loss - as reported, attributable to PAVmed Inc. $ ( 25,525 ) $ ( 11,471 ) $ ( 42,397 ) $ ( 20,902 ) Series B Convertible Preferred Stock dividends – earned $ ( 70 ) $ ( 74 ) $ ( 138 ) $ ( 149 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 25,595 ) $ ( 11,545 ) $ ( 42,535 ) $ ( 21,051 ) Denominator Weighted average common shares outstanding, basic and diluted 86,957,352 82,235,397 86,689,857 78,117,637 Loss per share Basic and diluted Net loss - as reported, attributable to PAVmed Inc. $ ( 0.29 ) $ ( 0.14 ) $ ( 0.49 ) $ ( 0.27 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 0.29 ) $ ( 0.14 ) $ ( 0.49 ) $ ( 0.27 ) The common stock equivalents have been excluded from the computation of diluted weighted average shares outstanding as their inclusion would be anti-dilutive, are as follows: 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 periods ended June 30, 2022 and 2021 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 of 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 2022 2021 June 30, 2022 2021 Stock options and restricted stock awards 12,177,406 10,573,530 Series Z Warrants 11,937,450 15,074,281 Series W Warrants — 381,818 Series B Convertible Preferred Stock 1,158,950 1,185,685 Total 25,273,806 27,215,314 The total stock options and restricted stock awards are inclusive of 500,854 stock options as of June 30, 2022 and 2021; and 100,000 restricted stock awards as of June 30, 2022, granted outside the PAVmed Inc. 2014 Equity Plan. 27