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, 2023 December 31, 2022 Assets: Current assets: Cash $ 26,408 $ 39,744 Accounts receivable 36 17 Prepaid expenses, deposits, and other current assets 6,017 4,165 Total current assets 32,461 43,926 Fixed assets, net 1,820 2,451 Operating lease right-of-use assets 4,663 3,037 Intangible assets, net 1,929 3,445 Other assets 1,147 1,121 Total assets $ 42,020 $ 53,980 Liabilities, Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 2,165 $ 2,704 Accrued expenses and other current liabilities 5,485 3,705 Operating lease liabilities, current portion 1,574 1,141 Senior Secured Convertible Notes - at fair value 44,990 33,650 Derivative liability - at fair value 291 — Total current liabilities 54,505 41,200 Operating lease liabilities, less current portion 3,343 1,846 Total liabilities 57,848 43,046 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 1,279,601 at September 30, 2023 and 1,205,759 shares at December 31, 2022 2,916 2,695 Common stock, $ 0.001 par value. Authorized, 250,000,000 shares; 119,701,959 and 94,510,537 shares outstanding as of September 30, 2023 and December 31, 2022, respectively 120 95 Additional paid-in capital 232,234 216,106 Accumulated deficit ( 278,529 ) ( 228,169 ) Treasury stock — ( 408 ) Total PAVmed Inc. Stockholders’ Equity (Deficit) ( 43,259 ) ( 9,681 ) Noncontrolling interests 27,431 20,615 Total Stockholders’ Equity (Deficit) ( 15,828 ) 10,934 Total Liabilities and Stockholders’ Equity (Deficit) $ 42,020 $ 53,980 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 data - unaudited) 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ 791 $ 76 $ 1,403 $ 265 Operating expenses: Cost of revenue 1,779 1,626 4,809 1,996 Sales and marketing 4,016 4,736 12,893 13,559 General and administrative 6,858 10,374 23,916 31,254 Amortization of acquired intangible assets 505 505 1,516 1,278 Research and development 3,161 6,202 10,681 18,664 Total operating expenses 16,319 23,443 53,815 66,751 Operating loss ( 15,528 ) ( 23,367 ) ( 52,412 ) ( 66,486 ) Other income (expense): Interest income 124 54 408 63 Interest expense ( 159 ) ( 525 ) ( 570 ) ( 1,049 ) Change in fair value - Senior Secured Convertible Notes ( 4,392 ) 261 ( 5,772 ) ( 1,739 ) Loss on issue and offering costs - Senior Secured Convertible Note — ( 1,232 ) ( 1,186 ) ( 4,332 ) Debt extinguishments loss - Senior Secured Convertible Notes ( 1,764 ) ( 5,123 ) ( 3,032 ) ( 5,123 ) Change in fair value - derivative liability ( 31 ) — ( 291 ) — Gain on sale of intellectual property — — 1,000 — Other income (expense), net ( 6,222 ) ( 6,565 ) ( 9,443 ) ( 12,180 ) Loss before provision for income tax ( 21,750 ) ( 29,932 ) ( 61,855 ) ( 78,666 ) Provision for income taxes — — — — Net loss before noncontrolling interests ( 21,750 ) ( 29,932 ) ( 61,855 ) ( 78,666 ) Net loss attributable to the noncontrolling interests 4,079 3,806 11,716 10,143 Net loss attributable to PAVmed Inc. ( 17,671 ) ( 26,126 ) ( 50,139 ) ( 68,523 ) Less: Series B Convertible Preferred Stock dividends earned ( 77 ) ( 71 ) ( 226 ) ( 209 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 17,748 ) $ ( 26,197 ) $ ( 50,365 ) $ ( 68,732 ) Per share information: Net loss per share attributable to PAVmed Inc. - basic and diluted $ ( 0.16 ) $ ( 0.29 ) $ ( 0.48 ) $ ( 0.78 ) Net loss per share attributable to PAVmed Inc. common stockholders – basic and diluted $ ( 0.16 ) $ ( 0.29 ) $ ( 0.48 ) $ ( 0.78 ) Weighted average common shares outstanding, basic and diluted 111,941,269 89,758,927 104,516,464 87,724,124 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, 2023 (in thousands except number of shares and per share data) 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 - June 30, 2023 1,254,497 $ 2,841 108,537,994 $ 109 $ 226,321 $ ( 260,783 ) $ — $ 30,682 $ ( 830 ) Dividends declared - Series B Convertible Preferred Stock 25,104 75 — — — ( 75 ) — — — Conversions - Senior Secured Convertible Note — — 10,859,964 10 3,978 — — — 3,988 Conversions - majority-owned subsidiary common stock - Senior Secured Convertible Note — — — — — — — 167 167 Purchase - Employee Stock Purchase Plan — — 304,001 1 76 — — — 77 Purchase - majority-owned subsidiary common stock - Employee Stock Purchase Plan — — — — — — — 275 275 Impact of subsidiary equity transactions — — — — 651 — — ( 651 ) — Stock-based compensation - PAVmed Inc. — — — — 978 — — — 978 Stock-based compensation - majority-owned subsidiary — — — — 230 — — 1,037 1,267 Net loss — — — — — ( 17,671 ) — ( 4,079 ) ( 21,750 ) Balance - September 30, 2023 1,279,601 $ 2,916 119,701,959 $ 120 $ 232,234 $ ( 278,529 ) $ — $ 27,431 $ ( 15,828 ) 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 NINE MONTHS ENDED September 30, 2023 (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, 2022 1,205,759 $ 2,695 94,510,537 $ 95 $ 216,106 $ ( 228,169 ) $ ( 408 ) $ 20,615 $ 10,934 Dividends declared - Series B Convertible Preferred Stock 73,842 221 — — — ( 221 ) — — — Issue common stock - PAVM ATM Facility — — 2,330,747 2 1,164 — — — 1,166 Vest - restricted stock awards — — 100,000 — — — — — — Conversions - Senior Secured Convertible Note — — 20,383,445 20 8,388 — — — 8,408 Conversions - majority-owned subsidiary common stock - Senior Secured Convertible Note — — — — — — — 167 167 Purchase - Employee Stock Purchase Plan — — 688,384 1 198 — 60 — 259 Purchase - majority-owned subsidiary common stock - Employee Stock Purchase Plan — — — — — — — 551 551 Issuance - majority-owned subsidiary common stock - At-The-Market Facility, net of financing charges — — — — — — — 284 284 Impact of subsidiary equity transactions — — — — 1,984 — — ( 1,984 ) — Issuance - majority-owned subsidiary common stock - Settlement APA-RDx - Termination Payment — — — — — — — 713 713 Issuance - vendor service agreement — — 1,500,000 2 600 — — 147 749 Issuance - majority-owned subsidiary preferred stock — — — — — — — 13,625 13,625 Stock-based compensation - PAVmed Inc. — — — — 3,266 — — — 3,266 Stock-based compensation - majority-owned subsidiaries — — — — 876 — — 5,029 5,905 Treasury stock — — 188,846 — ( 348 ) — 348 — — Net loss — — — — — ( 50,139 ) — ( 11,716 ) ( 61,855 ) Balance - September 30, 2023 1,279,601 $ 2,916 119,701,959 $ 120 $ 232,234 $ ( 278,529 ) $ — $ 27,431 $ ( 15,828 ) 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 September 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 - June 30, 2022 1,158,950 $ 2,554 87,023,211 $ 87 $ 201,327 $ ( 181,442 ) $ ( 548 ) $ 19,426 $ 41,404 Dividends declared - Series B Convertible Preferred Stock 23,196 70 — — — ( 70 ) — — — Conversions - Series B Convertible Preferred Stock ( 45 ) — 45 — — — — — — Conversions - Senior Secured Convertible Note — — 5,013,908 5 10,107 — — — 10,112 Exercise - stock options of majority-owned subsidiary — — — — — — — 6 6 Purchase - Employee Stock Purchase Plan — — — — — — 140 — 140 Purchase - majority-owned subsidiary common stock - Employee Stock Purchase Plan — — — — — — — 109 109 Issuance - majority-owned subsidiary common stock - Committed Equity Facility, net of financing charges — — — — — — — 1,767 1,767 Impact of subsidiary equity transactions — — — — 1,363 — — ( 1,363 ) — Issuance - majority-owned subsidiary common stock - Settlement APA-RDx - Installment Payment — — — — — — — 186 186 Stock-based compensation - PAVmed Inc. — — — — 1,481 — — — 1,481 Stock-based compensation - majority-owned subsidiary — — — — — — — 3,283 3,283 Treasury stock — — 191,698 — — — — — — Net loss — — — — — ( 26,126 ) — ( 3,806 ) ( 29,932 ) Balance - September 30, 2022 1,182,101 $ 2,624 92,228,862 $ 92 $ 214,278 $ ( 207,638 ) $ ( 408 ) $ 19,608 $ 28,556 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, 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 Beginning balance 1,113,919 $ 2,419 86,367,845 $ 86 $ 198,071 $ ( 138,910 ) $ — $ 17,752 $ 79,418 Dividends declared - Series B Convertible Preferred Stock 68,227 205 — — — ( 205 ) — — — Conversions - Series B Convertible Preferred Stock ( 45 ) — 45 — — — — — — Vest - restricted stock awards — — 541,666 — ( 1 ) — — — ( 1 ) Exercise - Series Z warrants — — 5 — — — — — — Conversions - Senior Secured Convertible Note — — 5,013,908 5 10,107 — — — 10,112 Exercise - stock options — — 299,999 1 302 — — — 303 Exercise - stock options of majority-owned subsidiary — — — — — — — 694 694 Purchase - Employee Stock Purchase Plan — — 194,240 — 218 — 140 — 358 Purchase - majority-owned subsidiary common stock - Employee Stock Purchase Plan — — — — — — — 109 109 Issuance - majority-owned subsidiary common stock - Committed Equity Facility, net of financing charges — — — — — — — 1,767 1,767 Impact of subsidiary equity transactions — — — — 1,375 — — ( 1,375 ) — Issuance - majority-owned subsidiary common stock - Settlement APA-RDx - Installment Payment — — — — — — — 427 427 Stock-based compensation - PAVmed Inc. — — — — 4,206 — — — 4,206 Stock-based compensation - majority-owned subsidiaries — — — — — — — 10,377 10,377 Treasury stock — — ( 188,846 ) — — — ( 548 ) — ( 548 ) Net Loss — — — — — ( 68,523 ) — ( 10,143 ) ( 78,666 ) Balance - September 30, 2022 1,182,101 $ 2,624 92,228,862 $ 92 $ 214,278 $ ( 207,638 ) $ ( 408 ) $ 19,608 $ 28,556 Ending balance 1,182,101 $ 2,624 92,228,862 $ 92 $ 214,278 $ ( 207,638 ) $ ( 408 ) $ 19,608 $ 28,556 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) 2023 2022 Nine Months Ended September 30, 2023 2022 Cash flows from operating activities Net loss - before noncontrolling interest (“NCI”) $ ( 61,855 ) $ ( 78,666 ) Adjustments to reconcile net loss - before NCI to net cash used in operating activities Depreciation and amortization expense 2,207 1,731 Stock-based compensation 9,171 14,583 Gain on sale of intellectual property ( 1,000 ) — APA-RDx: Issue common stock of majority-owned subsidiary - settle termination payment 713 427 Issue common stock - vendor service agreement 625 — Change in fair value - Senior Secured Convertible Notes 5,772 1,739 Loss on issue - Senior Secured Convertible Note 1,111 3,523 Debt extinguishment loss - Senior Secured Convertible Note 3,032 5,123 Change in fair value - derivative liability 291 — Non-cash lease expense 304 82 Changes in operating assets and liabilities: Accounts receivable ( 18 ) 169 Prepaid expenses, deposits and current and other assets ( 1,757 ) ( 563 ) Accounts payable ( 538 ) ( 981 ) Accrued expenses and other current liabilities 1,780 ( 1,329 ) Net cash flows used in operating activities ( 40,162 ) ( 54,162 ) Cash flows from investing activities Purchase of equipment ( 59 ) ( 1,242 ) Proceeds from sale of intellectual property 1,000 — Asset acquisitions — ( 3,200 ) Net cash flows used in investing activities 941 ( 4,442 ) Cash flows from financing activities Proceeds – issue of preferred stock - majority-owned subsidiary 13,625 — Proceeds – issue of Senior Secured Convertible Note 10,000 35,227 Proceeds – issue of common stock - At-The-Market Facility 1,166 — Proceeds – majority-owned subsidiary common stock - Committed Equity Facility and At-The-Market Facility 284 1,807 Proceeds – exercise of stock options — 302 Proceeds – issue common stock – Employee Stock Purchase Plan 259 358 Proceeds – majority-owned subsidiary common stock – Employee Stock Purchase Plan 551 109 Proceeds – exercise of stock options issued under equity plan of majority owned subsidiary — 694 Purchase Treasury Stock – payment of employee payroll tax obligation in connection with stock-based compensation — ( 366 ) Net cash flows provided by financing activities 25,885 38,131 Net increase (decrease) in cash ( 13,336 ) ( 20,473 ) Cash, beginning of period 39,744 77,258 Cash, end of period $ 26,408 $ 56,785 See accompanying notes to the unaudited condensed consolidated financial statements. 7 PAVMED INC. and SUBSIDIARIES NOTES TO 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”) and Veris Health Inc. (“Veris Health” or “Veris”). PAVmed is a diversified commercial-stage medical technology company operating in the medical device, diagnostics, and digital health sectors, including through Lucid Diagnostics, a commercial-stage cancer prevention diagnostics company, and Veris Health, a private digital health company focused on enhanced personalized cancer care through remote patient monitoring using implantable biologic sensors with wireless communication along with a custom suite of connected external devices. The Company’s current central focus is on the commercialization of Lucid’s EsoGuard assay and Veris Health’s Veris Cancer Care Platform. As resources permit, we will continue to explore internal and external innovations that fulfill our project selection criteria without limiting ourselves to any target specialty or condition. Liquidity 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, including current obligations on the Company’s existing convertible debt which in accordance with management’s plans may include conversions to equity and refinancing our existing debt obligations to extend maturity dates. Notwithstanding, however, with the cash on-hand as of the date hereof and other debt and equity committed sources of financing, conversion and refinancing of existing convertible notes, the Company expects to be able to fund its operations for one year from the date of the issue of the Company’s consolidated financial statements included herein in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. 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, 2022 as filed with the SEC on March 14, 2023, except as otherwise noted herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PAVmed and its 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 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 and Veris Health, 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. 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, 2022 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 statement of the Company’s unaudited condensed consolidated financial information. The consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2023 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 Company’s audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023. All amounts in the accompanying unaudited condensed consolidated financial statements and the 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. 8 Note 2 — Summary of Significant Accounting Policies - continued 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. Revenue Recognition Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. The Company’s revenue is primarily generated by its laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services are completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The key aspects considered by the Company include the following: Contracts —The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company establishes a contract with a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and a patient specimen has been returned to the laboratory for testing. Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable reimbursement contracts established between the Company and payers. However, when a patient is considered self-pay, the Company requires payment from the patient prior to the commencement of the Company’s performance obligations. The Company’s consideration can be deemed variable or fixed depending on the structure of specific payer contracts, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. Performance obligations —A performance obligation is a promise in a contract to transfer a distinct good or service (or a bundle of goods or services) to the customer. The Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the release of a patient’s test result to the ordering healthcare provider. The Company elects the practical expedient related to the disclosure of unsatisfied performance obligations, as the duration of time between providing testing supplies, the receipt of a sample, and the release of a test result to the ordering healthcare provider is far less than one year. Transaction price —The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration expected to be collected from a contract with a customer may include fixed amounts, variable amounts, or both. If the consideration derived from the contracts is deemed to be variable, the Company estimates the amount of consideration to which it will be entitled in exchange for the promised goods or services. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of patient EsoGuard test results to the ordering healthcare provider. As such, the Company recognizes revenue up to the amount of variable consideration not subject to a significant reversal until additional information is obtained or the uncertainty associated with additional payments or refunds, if any, is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in estimated expected variable consideration, with the change in estimate recognized in the period of such revised estimate. With respect to a contracted service arrangement, the fixed consideration revenue is recognized on an as-billed basis upon delivery of the laboratory test report with realization of such fixed consideration deemed probable based upon actual historical experience. Allocate transaction price —The transaction price is allocated entirely to the performance obligation contained within the contract with a customer on the basis of the relative standalone selling prices of each distinct good or service. Practical Expedients —The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less. 9 Note 2 — Summary of 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”, and a Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September 2022 Senior Convertible Note”, which are accounted under the “fair value option election” as discussed below. Under a Securities Purchase Agreement dated March 13, 2023, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid March 2023 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, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note are 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, the September 2022 Senior Convertible Note or the Lucid March 2023 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, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note. Reclassifications Certain prior-year amounts have been reclassified to conform to the current year presentation, which includes presenting costs of revenue within operating expenses on the statements of operations, in the unaudited condensed consolidated financial statements and accompanying notes to the unaudited condensed consolidated financial statements. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The guidance was adopted by the Company on January 1, 2023. The adoption of the ASU did not have an impact on the Company’s unaudited condensed consolidated financial statements. Note 3 — Revenue from Contracts with Customers EsoGuard Commercialization Agreement The Company, through its majority-owned subsidiary, Lucid Diagnostics, entered into the EsoGuard Commercialization Agreement, dated August 1, 2021, with its former 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) and RDx, with such agreement further discussed in Note 5 , Asset Purchase Agreement and Management Services Agreement. 10 Note 3 — Revenue from Contracts with Customers - continued Revenue Recognized In the three and nine months ended September 30, 2023, the Company recognized total revenue of $ 791 and $ 1,403 , respectively, primarily resulting from the delivery of patient EsoGuard test results. Revenue recognized from customer contracts deemed to include a variable consideration transaction price is limited to the unconstrained portion of the variable consideration. The Company’s revenue for the three months ended September 30, 2022 was $ 76 , primarily resulting from the delivery of patient EsoGuard test results. The Company’s revenue for the nine months ended September 30, 2022 was $ 265 , and includes the activity described for the three months ended September 30, 2022, along with the revenue recognized under the EsoGuard Commercialization Agreement, which represented 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 revenues principally includes the costs related to the Company’s laboratory operations (excluding estimated costs associated with research activities), the costs related to the EsoCheck cell collection device, cell sample mailing kits and license royalties. In the three and nine months ended September 30, 2023, the cost of revenue was $ 1,779 and $ 4,809 , respectively, and was primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the three months ended September 30, 2022 was $ 1,626 , and was primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the nine months ended September 30, 2022 was $ 1,996 , and includes the activity described for the three months ended September 30, 2022, along with the costs attributable to delivering the services under the EsoGuard Commercialization Agreement for the period January 1, 2022 thru its termination on February 25, 2022. 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 unaudited condensed consolidated statement of operations for the periods indicated are summarized as follows: Schedule of Incurred Expenses of Minority Shareholders 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of Revenue CWRU – Royalty Fees $ 42 $ 4 $ 76 $ 13 Cost of revenue $ 42 $ 4 $ 76 $ 13 General and Administrative Expense Amended CWRU – License Agreement - reimbursement of patent legal fees 343 — 732 209 Stock-based compensation expense – Physician Inventors’ restricted stock awards — 275 180 819 Research and Development Expense Fees - Physician Inventors’ consulting agreements 5 15 15 32 Sponsored research agreement — 4 — 6 Stock-based compensation expense – Physician Inventors’ stock options 52 52 157 151 Total Related Party Expenses $ 442 $ 350 $ 1,160 $ 1,230 As of September 30, 2023, Lucid had an outstanding payable of $ 820 . 11 Note 4 — Related Party Transactions - continued 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 Effective June 2021, Veris Health 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. Veris Health recognized general and administrative expense of $ 0 and $ 25 in the three and nine months ended September 30, 2023, respectively, and $ 8 and $ 45 in the three and nine months ended September 30, 2022, respectively, in connection with the consulting agreement. Note 5 — Asset Purchase Agreement and Management Services Agreement Asset Purchase Agreement and Management Services Agreement - ResearchDx Inc. LucidDx Labs, a wholly-owned subsidiary of Lucid Diagnostics, 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 acquired certain assets from RDx which were combined with LucidDx Labs 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. In connection with the execution and delivery of the APA-RDx, LucidDx Labs and RDx entered into a separate management services agreement (“MSA-RDx”), dated and effective February 25, 2022, pursuant to which RDx provided certain testing and related services for the 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. Termination of Management Services Agreement and Modification of Other Payment Obligations - ResearchDx Inc On February 14, 2023, Lucid Diagnostics and LucidDx Labs entered into an agreement (the “MSA Termination Agreement”) with RDx, pursuant to which the parties mutually agreed to terminate the MSA-RDx without cause. The termination was effective as February 10, 2023. Until the termination of the management service agreement with RDx, RDx had continued to provide certain testing and related services for the Laboratory in accordance with the terms of the MSA-RDx. The MSA Termination Agreement reduces the remaining amounts of the earnout payments and management fees due under the APA-RDx and the MSA-RDx to $ 713 . The payment was satisfied through the issuance of 553,436 shares of Lucid Diagnostics’ common stock in February 2023. Lucid Diagnostics was not required to make any cash payments in connection with the termination. 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 September 30, 2023 December 31, 2022 Advanced payments to service providers and suppliers $ 432 $ 599 Prepaid insurance 479 300 Deposits 4,581 3,005 EsoCheck cell collection supplies 190 59 EsoGuard mailer supplies — 52 Veris Box supplies 335 150 Total prepaid expenses, deposits and other current assets $ 6,017 $ 4,165 12 Note 7 — Leases During the nine months ended September 30, 2023, the Company entered into additional lease agreements that have commenced and are classified as operating leases and short-term leases, including for each of: principal corporate offices and additional Lucid Test Centers. The Company’s future lease payments as of September 30, 2023, 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 Lease Payments 2023 (remainder of year) $ 485 2024 1,852 2025 835 2026 787 2027 617 Thereafter 1,319 Total lease payments $ 5,895 Less: imputed interest ( 978 ) Present value of lease liabilities $ 4,917 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 Cash Flow Information Related to Cash and Non-cash Activities with Leases 2023 2022 Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,080 $ 763 Non-cash investing and financing activities Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,728 $ 3,753 Weighted-average remaining lease term - operating leases (in years) 4.68 3.08 Weighted-average discount rate - operating leases 7.875 % 7.875 % As of September 30, 2023 and December 31, 2022, the Company’s right-of-use assets from operating leases were $ 4,663 and $ 3,037 , respectively, which are reported in operating lease right-of-use assets in the unaudited condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the Company had outstanding operating lease obligations of $ 4,917 and $ 2,987 , respectively, of which $ 1,574 and $ 1,141 , respectively, are reported in operating lease liabilities, current portion and $ 3,343 and $ 1,846 , respectively, are reported in operating lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. 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. In September 2022, the Company entered into a lease agreement for its principal corporate offices, in New York, New York. The lease agreement term is from the September 15, 2022 execution date to the date which is seven years and eight months from the lease commencement date, with the rent abated for the first eight months of the lease term . The lease commenced on February 1, 2023. The aggregate (undiscounted) rent payments are approximately $ 3.2 million over the lease term. 13 Note 8 — Intangible Assets, net Intangible assets, less accumulated amortization, consisted of the following as of: Schedule of Intangible Assets, Less Accumulated Amortization Estimated Useful Life September 30, 2023 December 31, 2022 Defensive asset 60 months $ 2,105 $ 2,105 Laboratory licenses and certifications and laboratory information management software 24 months 3,200 3,200 Other 1 year 70 70 Total Intangible assets 5,375 5,375 Less Accumulated Amortization ( 3,446 ) ( 1,930 ) Intangible Assets, net $ 1,929 $ 3,445 The defensive technology intangible asset was recognized upon its acquisition of CapNostics, 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 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. The intangible assets recognized under the APA-RDx are the laboratory licenses and certifications, 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 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 $ 505 and $ 505 for the three month periods ended September 30, 2023 and 2022, respectively, and $ 1,516 and $ 1,278 for the nine month periods ended September 30, 2023 and 2022, respectively, and is included in amortization of acquired intangible assets in the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2023, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows: Schedule of Estimated Amortization Expense for Intangible Assets 2023 (remainder of year) $ 505 2024 688 2025 421 2026 315 Total $ 1,929 Note 9 — Commitment and Contingencies Other Matters In the ordinary course of PAVmed 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. The Company is not aware of any such pending legal or other proceedings that are reasonably likely to have a material impact on the Company. 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. 14 Note 10 — Financial Instruments Fair Value Measurements Recurring Fair Value Measurements The fair value hierarchy table for the periods indicated 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 September 30, 2023 Senior Secured Convertible Note - April 2022 $ — $ — $ 19,400 $ 19,400 Senior Secured Convertible Note - September 2022 — — 11,100 11,100 Lucid Senior Secured Convertible Note - March 2023 — — 14,490 14,490 Derivative liability — — 291 291 Totals $ — $ — $ 45,281 $ 45,281 Level-1 Inputs Level-2 Inputs Level-3 Inputs Total December 31, 2022 Senior Secured Convertible Note - April 2022 $ — $ — $ 22,000 $ 22,000 Senior Secured Convertible Note - September 2022 — — 11,650 11,650 Totals $ — $ — $ 33,650 $ 33,650 1 There were no transfers between the respective Levels during the period ended September 30, 2023. As discussed in Note 11, Debt , the Company issued Senior Secured Convertible Notes dated April 4, 2022 and September 8, 2022, with an initial $ 27.5 million face value principal (“April 2022 Senior Convertible Note”) and an initial $ 11.25 million face value principal (“September 2022 Senior Convertible Note”), respectively. Both convertible notes are 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. As discussed in Note 11, Debt, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, with an initial $ 11.1 million face value principal (“Lucid March 2023 Senior Convertible Note”). This convertible note is also 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 Lucid March 2023 Senior Convertible Note as of each of March 21, 2023 and September 30, 2023, and the estimated fair value of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as of September 30, 2023, 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: September 30, 2023 September 2022 Senior Convertible Note: September 30, 2023 Lucid March 2023 Senior Convertible Note: March 21, 2023 Lucid March 2023 Senior Convertible Note: September 30, 2023 Fair Value $ 19,400 $ 11,100 $ 11,900 $ 14,490 Face value principal payable $ 17,602 $ 10,043 $ 11,111 $ 11,019 Required rate of return 11.350 % 11.300 % 11.00 % 11.10 % Conversion Price $ 5.00 $ 5.00 $ 5.00 $ 5.00 Value of common stock $ 0.30 $ 0.30 $ 1.54 $ 1.17 Expected term (years) 0.51 0.94 2.00 1.47 Volatility 240.00 % 240.00 % 75.00 % 65.00 % Risk free rate 5.40 % 5.32 % 4.09 % 5.13 % Dividend yield — % — % — % — % 15 Note 10 — Financial Instruments Fair Value Measurements - continued Derivative Liability - Written Protective Put The Company, through its majority-owned subsidiary Veris Health, entered into a Research and Development Agreement, with an effective date of May 31, 2023, with an unrelated third-party technical services provider (the “May 31, 2023 R&D Agreement”). The principal service to be provided by the service provider under the May 31, 2023 R&D Agreement was the continued development of the electronics and firmware for the Veris Health implantable physiologic monitor. As discussed in Note 14, Common Stock and Common Stock Purchase Warrants , 1.5 million shares of PAVmed common stock were issued to the service provider as the consideration for a $ 750 portion of the services to be rendered under the May 31, 2023 R&D Agreement. The issued shares of common stock are (contingently) settlement-in-full of the consideration obligations of the Company under the May 31, 2023 R&D Agreement, subject-to a contractual “minimum fair market value” as such amount is discussed below. The resolution of the contingent settlement-in-full with respect to the issued shares of common stock of the Company is predicated on and subject-to such issued shares having a $ 750 minimum “fair market value” (as defined), with such derived fair market value computed using a contractual formula based on the PAVmed Inc. common stock volume weighted average price per share (“VWAP”) during the last ten days of the six month anniversary of the May 31, 2023 R&D Agreement. If the fair market value, as such amount is computed as described above, is equal-to or greater than $750, then no further contractual consideration is required. However, if such fair market value is less than $ 750 , then, the Company will incur an additional contractual consideration obligation in amount equal to the difference between the required minimum fair market value of $ 750 and the contractual formula based computed fair market value . At the election of the Company, the additional contractual consideration obligation, if any, may be paid in cash or settled with the issue of additional shares of PAVmed common stock. The contingent additional contractual consideration obligation is deemed to be a separate unit-of-account, in the form of a written protective put, and recognized as a derivative liability measured at estimated fair value. The derivative liability had an initial May 31, 2023 estimated fair value of approximately $ 262 which was recognized as an initial period charge classified in other income (expense) in the accompanying (unaudited) condensed consolidated statement of operations. Further, such recognized derivative liability is further remeasured at estimated fair value as of each quarterly reporting period date, with changes in the estimated fair value recognized as current period other income (expense), with such remeasurement recognized through the date of the final determination and settlement or extinguishment of the contingent additional contractual consideration obligation, if any. In this regard, as of September 30, 2023, the remeasured estimated fair value was approximately $ 291 , with the change in the estimated fair value recognized as other income (expense). The estimated fair value of the written protective put derivative liability, as such is discussed above, were computed using a Monte Carlo simulation to generate stock price paths (assuming geometric-Brownian motion) of the PAVmed Inc. common stock to compute the respective written protective put expected fair value, with the principal assumptions of such estimated fair value computation, for the respective measurement dates noted, as follows: Schedule of Fair Value Assumption Used As of: May 31, 2023 As of: September 30, 2023 Fair Value $ 262 $ 291 Contractual minimum effective conversion price $ 0.50 $ 0.50 Price per share $ 0.40 $ 0.30 Remaining expected term (years) 0.50 0.17 Volatility 160.00 % 240.00 % Risk free rate 5.30 % 5.40 % Dividend yield — % — % The estimated fair values recognized with respect to the senior secured convertible debt and the written protective put derivative liability, as each is discussed above, utilized PAVmed and Lucid Diagnostics common stock prices, along with certain Level 3 inputs (as presented in the respective tables 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 and analyses, including the respective common stock prices, the dividend yields, 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 respective common stock prices. Changes in these assumptions can materially affect the recognized estimated fair values. 16 Note 11 — Debt The fair value and face value principal outstanding of the Senior Convertible Notes as of the dates indicated are 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 $ 17,602 $ 19,400 September 2022 Senior Convertible Note September 6, 2024 7.875 % $ 5.00 $ 10,043 $ 11,100 Lucid March 2023 Senior Convertible Note March 21, 2025 7.875 % $ 5.00 $ 11,019 $ 14,490 Balance as of September 30, 2023 $ 38,664 $ 44,990 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 $ 21,497 $ 22,000 September 2022 Senior Convertible Note September 6, 2024 7.875 % $ 5.00 $ 11,250 $ 11,650 Balance as of December 31, 2022 $ 32,747 $ 33,650 The changes in the fair value of debt during the three and nine months ended September 30, 2023 is as follows: Schedule of Changes in Fair Value of Debt April 2022 Senior Convertible Note September 2022 Senior Convertible Note Lucid March 2023 Senior Convertible Note Sum of Balance Sheet Fair Value Components Other Income (expense) Fair Value - June 30, 2023 $ 19,530 $ 11,850 $ 11,610 $ 42,990 $ — Face value principal – issue date Fair value adjustment – issue date Installment repayments – common stock ( 952 ) ( 1,207 ) ( 92 ) ( 2,251 ) — Non-installment payments – common stock ( 41 ) ( 51 ) ( 49 ) ( 141 ) — Change in fair value 863 508 3,021 4,392 ( 4,392 ) Fair Value at September 30, 2023 $ 19,400 $ 11,100 $ 14,490 $ 44,990 - Other Income (Expense) - Change in fair value – three months ended September 30, 2023 $ ( 4,392 ) April 2022 Senior Convertible Note September 2022 Senior Convertible Note Lucid March 2023 Senior Convertible Note Sum of Balance Sheet Fair Value Components Other Income (expense) Fair Value - December 31, 2022 $ 22,000 $ 11,650 $ — $ 33,650 $ — Fair Value, Beginning $ 22,000 $ 11,650 $ — $ 33,650 $ — Face value principal – issue date — — 11,111 11,111 — Fair value adjustment – issue date — — 789 789 ( 789 ) Installment repayments – common stock ( 3,895 ) ( 1,207 ) ( 92 ) ( 5,194 ) — Non-installment payments – common stock ( 249 ) ( 51 ) ( 49 ) ( 349 ) — Change in fair value 1,544 708 2,731 4,983 ( 4,983 ) Fair Value at September 30, 2023 $ 19,400 $ 11,100 $ 14,490 $ 44,990 Fair Value, Ending $ 19,400 $ 11,100 $ 14,490 $ 44,990 Other Income (Expense) - Change in fair value – nine months ended September 30, 2023 $ ( 5,772 ) 17 Note 11 — Debt - continued PAVmed - Senior Secured Convertible Notes 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 was issued in a registered direct offering under the Company’s effective shelf registration statement. Under the SPA, 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. Under the same SPA, the Company issued an additional Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September 2022 Senior Convertible Note”, with such note having a $ 11.25 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 September 6, 2024 . The September 2022 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election. 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 total senior convertible notes outstanding, 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”). From time to time from and after June 1, 2023 through August 14, 2023, the Company was not in compliance with the Financial Tests. As of August 14, 2023, the Investor agreed to waive any such non-compliance during such time period and thereafter through November 30, 2023. In the nine months ended September 30, 2023, approximately $ 5,102 of principal repayments along with approximately $ 300 of interest expense thereon, were settled through the issuance of 20,383,445 shares of common stock of the Company, with such shares having a fair value of approximately $ 8,408 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). The conversions resulted in a debt extinguishment loss of $ 1,738 and $ 3,006 in the three and nine months ended September 30, 2023. Lucid Diagnostics - Senior Secured Convertible Note Lucid Diagnostics entered into a Securities Purchase Agreement (“Lucid SPA”) dated March 13, 2023, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein, Lucid agreed to sell, and the Investor agreed to purchase an aggregate of $ 11.1 million face value principal of debt. The debt was issued in a registered direct offering under the Lucid’s effective shelf registration statement. Under the SPA dated March 13, 2023, Lucid issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid March 2023 Senior Convertible Note”, with such note having a $ 11.1 million face value principal, a 7.875 % annual stated interest rate, a contractual conversion price of $ 5.00 per share of Lucid’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 March 21, 2025 . The Lucid March 2023 Senior Convertible Note may be converted into shares of common stock of Lucid at the Holder’s election. The Lucid March 2023 Senior Convertible Note proceeds were $ 9.925 million after deducting a $ 1.186 million lender fee and offering costs. The lender fee and offering costs were recognized as of the March 21, 2023 issue date as a current period expense in other income (expense) in the Company’s unaudited condensed consolidated statement of operations. During the period from March 21, 2023 to September 20, 2023, Lucid is required to pay interest expense only (on the $ 11.1 million face value principal), at 7.875 % per annum, computed on a 360 day year. Lucid paid in cash interest expense of $ 148 and $ 391 for the three and nine months ended September 30, 2023. Commencing September 21, 2023, and then on each of the successive first and tenth trading day of each month thereafter through to and including March 14, 2025 (each referred to as an “Installment Date”); and on the March 21, 2025 maturity date, Lucid will be required to make a principal repayment of $ 292 together with accrued interest thereon, with such 38 payments referred to herein as the “Installment Amount”, settled in shares of common stock of Lucid, subject to customary equity conditions, including minimum share price and volume thresholds, or at the election of Lucid, in cash, in whole or in part. 18 Note 11 — Debt - continued 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. The payment of all amounts due and payable under this senior convertible note is guaranteed by Lucid’s subsidiaries; and the obligations under this senior convertible note are secured by all of the assets of Lucid and its subsidiaries. Lucid is subject to certain customary affirmative and negative covenants regarding the rank of the note, 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. Lucid is subject to financial covenants requiring: (i) a minimum of $5.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the total senior convertible notes outstanding, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) Lucid’s average market capitalization over the prior ten trading days, as of the last day of any fiscal quarter commencing with September 30, 2023, to not exceed 30%; and (iii) Lucid’s market capitalization to at no time be less than $30 million . In the nine months ended September 30, 2023, approximately $ 92 of principal repayments along with approximately $ 48 of interest expense thereon, were settled through the issuance of 115,388 shares of common stock of Lucid, with such shares having a fair value of approximately $ 166 (with such fair value measured as the respective conversion date quoted closing price of the common stock of Lucid). The conversions resulted in a debt extinguishment loss of $ 26 in the three and nine months ended September 30, 2023. During the three and nine months ended September 30, 2023, the Company recognized debt extinguishment losses in total of approximately $ 1,764 and $ 3,032 , in connection with issuing common stock for principal repayments on convertible debt mentioned above. During the three and nine months ended September 30, 2022, the Company recognized debt extinguishment losses in total of approximately $ 5,123 , in connection with issuing common stock for principal repayments on convertible debt mentioned above. See Note 10, Financial Instruments Fair Value Measurements , for a further discussion of fair value assumptions. Note 12 — Stock-Based Compensation PAVmed Inc. 2014 Long-Term Incentive Equity Plan The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed 2014 Equity Plan”) is designed to enable PAVmed to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of PAVmed. The types of awards that may be granted under the PAVmed 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 compensation committee. A total of 21,052,807 shares of common stock of PAVmed are reserved for issuance under the PAVmed 2014 Equity Plan, with 1,570,086 shares available for grant as of September 30, 2023. The share reservation is not diminished by a total of 600,854 PAVmed Inc. stock options and restricted stock awards granted outside the PAVmed 2014 Equity Plan as of September 30, 2023. In January 2023, the number of shares available for grant was increased by 4,700,000 in accordance with the evergreen provisions of the plan. 19 Note 12 — Stock-Based Compensation - continued PAVmed Stock Options PAVmed stock options granted under the PAVmed 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, 2022 11,568,655 $ 2.71 7.4 $ — Granted (1) 7,455,000 $ 0.47 Exercised — $ — Forfeited ( 1,944,170 ) $ 1.75 Outstanding stock options at September 30, 2023 (3) 17,079,485 $ 1.85 7.5 $ — Vested and exercisable stock options at September 30, 2023 8,379,277 $ 2.89 5.9 $ — (1) Stock options granted under the PAVmed 2014 Equity Plan and those granted outside such plan generally vest one-third in one year then ratably over the next eight quarters, 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 common stock on each of September 30, 2023 and December 31, 2022 and the exercise price of the underlying PAVmed 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 2014 Equity Plan, as of September 30, 2023 and December 31, 2022. Subsequent to September 30, 2023, on November 7, 2023, the company granted to employees 775,000 stock options under the PAVmed Inc 2014 Equity Plan with a weighted average exercise price of $ 0.28 for which will generally vest one-third after one year then ratably over the next eight quarters. PAVmed Restricted Stock Awards PAVmed restricted stock awards granted under the PAVmed 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, 2022 (1) 975,000 $ 3.05 Granted 182,927 0.39 Vested ( 100,000 ) 3.10 Forfeited — — Unvested restricted stock awards as of September 30, 2023 1,057,927 $ 2.58 (1) The unvested restricted stock awards presented in the table above, are inclusive of 100,000 restricted stock awards granted outside the PAVmed 2014 Equity Plan as of December 31, 2022. These 100,000 restricted stock awards were fully vested during the period ended September 30, 2023. Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics 2018 Equity Plan”) is separate and apart from the PAVmed 2014 Equity Plan discussed above. The Lucid Diagnostics 2018 Equity Plan is designed to enable Lucid Diagnostics to offer employees, officers, directors, and consultants, an opportunity to acquire shares of common stock of Lucid Diagnostics. The types of awards that may be granted under the Lucid Diagnostics 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 compensation committee. A total of 11,644,000 shares of common stock of Lucid Diagnostics are reserved for issuance under the Lucid Diagnostics 2018 Equity Plan, with 3,929,301 shares available for grant as of September 30, 2023. The share reservation is not diminished by a total of 423,300 stock options and 50,000 restricted stock awards granted outside the Lucid Diagnostics 2018 Equity Plan, as of September 30, 2023. In January 2023, the number of shares available for grant was increased by 2,500,000 in accordance with the evergreen provisions of the plan. 20 Note 12 — Stock-Based Compensation - continued Lucid Diagnostics Stock Options Lucid Diagnostics stock options granted under the Lucid Diagnostics 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) Intrinsic Value (2) Outstanding stock options at December 31, 2022 2,565,377 $ 3.14 8.3 $ 428 Granted (1) 2,982,500 $ 1.32 Exercised — $ — Forfeited ( 590,662 ) $ 2.70 Outstanding stock options at September 30, 2023 (3) 4,957,215 $ 2.10 8.6 $ 347 Vested and exercisable stock options at September 30, 2023 1,439,442 $ 2.77 7.0 $ 347 (1) Stock options granted under the Lucid Diagnostics 2018 Equity Plan and those granted outside such plan generally vest one-third in one year then ratably over the next eight quarters, 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 Lucid Diagnostics common stock on each of September 30, 2023 and December 31, 2022 and the exercise price of the underlying Lucid Diagnostics 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 423,300 stock options granted outside the Lucid Diagnostics 2018 Equity Plan, as of September 30, 2023 and December 31, 2022. Subsequent to September 30, 2023, on November 6, 2023, the company granted to employees 500,000 stock options under the Lucid Diagnostics Inc 2018 Equity Plan with a weighted average exercise price of $ 1.29 for which will generally vest one-third after one year then ratably over the next eight quarters. Lucid Diagnostics Restricted Stock Awards Lucid Diagnostics restricted stock awards granted under the Lucid Diagnostics 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, 2022 (1) 2,091,420 $ 11.44 Granted — — Vested ( 303,980 ) 11.95 Forfeited — — Unvested restricted stock awards as of September 30, 2023 1,787,440 $ 11.36 (1) The unvested restricted stock awards presented in the table above, are inclusive of 50,000 restricted stock awards granted outside the Lucid Diagnostics 2018 Equity Plan as of December 31, 2022. These 50,000 restricted stock awards were fully vested during the period ended September 30, 2023. Subsequent to September 30, 2023, on November 6, 2023, 550,000 restricted stock awards were granted under the Lucid Diagnostics Inc 2018 Equity Plan, with such restricted stock awards vesting one third each year for the next three years with the final vesting date on November 6, 2026 , and an aggregate grant date fair value of approximately $ 0.7 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. Consolidated Stock-Based Compensation Expense The consolidated stock-based compensation expense recognized by each of PAVmed and Lucid Diagnostics for both the PAVmed 2014 Equity Plan and the Lucid Diagnostics 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 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 32 $ 9 $ 86 $ 9 Sales and marketing expenses 403 643 1,302 1,859 General and administrative expenses 1,499 3,854 6,761 12,016 Research and development expenses 311 258 1,022 699 Total stock-based compensation expense $ 2,245 $ 4,764 $ 9,171 $ 14,583 21 Note 12 — Stock-Based Compensation - continued Stock-Based Compensation Expense Recognized by Lucid Diagnostics As noted, the consolidated stock-based compensation expense presented above is inclusive of stock-based compensation expense recognized by Lucid Diagnostics, inclusive of each of: stock options granted under the PAVmed 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 and non-employee consultants under the Lucid Diagnostics 2018 Equity Plan. The stock-based compensation expense recognized by Lucid Diagnostics for both the PAVmed 2014 Equity Plan and the Lucid Diagnostics 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 Recognized by Lucid Diagnostics 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Lucid Diagnostics 2018 Equity Plan – cost of revenue $ 16 $ 9 $ 44 $ 9 Lucid Diagnostics 2018 Equity Plan – sales and marketing 228 253 697 733 Lucid Diagnostics 2018 Equity Plan – general and administrative 721 2,990 4,069 9,504 Lucid Diagnostics 2018 Equity Plan – research and development 67 28 204 125 PAVmed 2014 Equity Plan - cost of revenue 10 — 26 — PAVmed 2014 Equity Plan - sales and marketing 106 161 359 497 PAVmed 2014 Equity Plan - general and administrative 7 78 170 224 PAVmed 2014 Equity Plan - research and development 97 52 290 159 Total stock-based compensation expense – recognized by Lucid Diagnostics $ 1,252 $ 3,571 $ 5,859 $ 11,251 Total stock-based compensation expense $ 1,252 $ 3,571 $ 5,859 $ 11,251 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 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan, as discussed above, is as follows: Schedule of Unrecognized Compensation Expense Unrecognized Expense Weighted Average Remaining Service Period (Years) PAVmed 2014 Equity Plan Stock Options $ 4,736 2.0 Restricted Stock Awards $ 316 1.4 Lucid Diagnostics 2018 Equity Plan Stock Options $ 3,620 2.1 Restricted Stock Awards $ 633 1.0 Stock-based compensation expense recognized with respect to stock options granted under the PAVmed 2014 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 0.35 per share and $ 1.08 per share during the periods ended September 30, 2023 and 2022, 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, 2023 2022 Expected term of stock options (in years) 5.7 5.8 Expected stock price volatility 88 % 86 % Risk free interest rate 3.7 % 2.9 % Expected dividend yield — % — % 22 Note 12 — Stock-Based Compensation - continued Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 0.88 per share and $ 1.61 per share during the periods ended September 30, 2023 and 2022, 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, 2023 2022 Expected term of stock options (in years) 5.6 5.8 Expected stock price volatility 75 % 72 % Risk free interest rate 3.7 % 3.2 % Expected dividend yield — % — % PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”) A total of 573,229 shares and 194,240 shares of common stock of the Company were purchased for proceeds of approximately $ 182 and $ 218 , on March 31, 2023 and 2022, respectively, under the PAVmed ESPP. A total of 304,001 shares and 191,698 shares of common stock of the Company were purchased for proceeds of approximately $ 76 and $ 140 , on September 30, 2023 and 2022, respectively, under the PAVmed ESPP. The March 31, 2023 purchase was partially settled through the redeployment of 188,846 shares of treasury stock. The September 30, 2022 purchase was settled through the redeployment of treasury stock. The PAVmed ESPP has a total reserve of 2,000,000 shares of common stock of PAVmed of which 112,913 shares are available for issue as of September 30, 2023. In January 2023, the number of shares available-for-issue was increased by 250,000 in accordance with the evergreen provisions of the plan. Lucid Diagnostics Inc. Employee Stock Purchase Plan (“Lucid ESPP”) A total of 231,987 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 276 on March 31, 2023 under the Lucid ESPP. A total of 276,213 and 84,030 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 275 and $ 109 on September 30, 2023 and 2022, respectively, under the Lucid ESPP.The Lucid ESPP has a total reserve of 1,000,000 shares of common stock of Lucid Diagnostics of which 407,770 shares are available-for-issue as of September 30, 2023. In January 2023, the number of shares available for issue was increased by 500,000 in accordance with the evergreen provisions of the plan. Note 13 — Preferred Stock As of September 30, 2023 and December 31, 2022, there were 1,279,601 and 1,205,759 shares of PAVmed Series B Convertible Preferred Stock, classified in permanent equity, issued and outstanding, respectively. Series B Convertible Preferred Stock Dividends The PAVmed Inc. 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. Such dividends may be settled, at the discretion of the board of directors, through any combination of the issue of additional shares of Series B Convertible Preferred Stock, the issue shares of common stock of the Company, and /or cash payment. Series B Convertible Preferred Stock Dividends Earned The Series B Convertible Preferred Stock dividends earned are included in the calculation of basic and diluted net loss attributable to PAVmed common stockholders for each of the respective corresponding periods presented in the accompanying unaudited condensed consolidated statement of operations, inclusive of $ 77 and $ 226 of such dividends earned in the three and nine months ended September 30, 2023, respectively; and $ 71 and $ 209 of such dividends earned in the three and nine months ended September 30, 2022, respectively. Series B Convertible Preferred Stock Dividends Declared In the nine months ended September 30, 2023, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends of an aggregate of $ 221 , inclusive of $ 72 earned as of December 31, 2022; and $ 74 earned as of March 31, 2023; and $ 75 earned as of June 30, 2023; with such dividends settled by the issue of an aggregate 73,842 additional shares of Series B Convertible Preferred Stock, inclusive of 24,128 shares issued with respect to the dividends earned as of December 31, 2022; and 24,610 shares issued with respect to the dividends earned as of March 31, 2023; and 25,104 shares issued with respect to the dividends earned as of June 30, 2023. 23 Note 13 — Preferred Stock - continued In the nine months ended September 30, 2022, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends of an aggregate of $ 205 , inclusive of: $ 67 earned as of December 31, 2021; and $ 68 earned as of March 31, 2022; and $ 70 earned as of June 30, 2022; with such dividends settled by the issue of an aggregate 68,227 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; and 23,196 shares issued with respect to the dividends earned as of June 30, 2022. Subsequent to September 30, 2023, in October 2023, the Company’s board of directors declared a Series B Convertible Preferred Stock dividend, earned as of September 30, 2023, of $ 77 , to be settled by the issue of 25,612 additional shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock dividends are recognized as a dividend payable liability only upon the dividend being declared payable by the Company’s board of directors. Accordingly, the dividends declared payable subsequent to the date of the accompanying condensed consolidated balance sheet were not recognized as a dividend payable liability as the Company’s board of directors had not declared the dividends payable as of each such date. Note 14 — Common Stock and Common Stock Purchase Warrants Common Stock On December 29, 2022, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30 consecutive business days (through December 28, 2022), the closing bid price of the Company’s common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). The notification letter stated that the Company would be afforded 180 calendar days (until June 27, 2023) to regain compliance. On June 28, 2023, the Company received a second notice from the Listing Qualifications Department of Nasdaq granting the Company a 180-day extension (or until December 26, 2023) to regain compliance with the minimum bid price requirement. In order to regain compliance, the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days . During the special meeting (“Special Meeting”) of shareholders held on March 31, 2023, the shareholders approved a proposal to amend the Company’s Certificate of Incorporation, to effect, at any time prior to the one-year anniversary date of the Special Meeting, (i) a reverse split of the Company’s outstanding shares of common stock at a specific ratio, ranging from 1-for-5 to 1-for-15, to be determined by the board of directors of the Company in its sole discretion, and (ii) an associated reduction in the number of shares of common stock the Company is authorized to issue, from 250,000,000 shares to 50,000,000 shares. If the Company’s board of directors authorizes the Company to consummate the reverse stock split, the Company anticipates it will regain compliance with the Nasdaq requirements for continued listing through such transaction. As discussed above in Note 10, Financial Instruments Fair Value Measurements , a total of 1,500,000 shares of PAVmed common stock was issued to a service provider as the consideration for the services rendered under the May 31, 2023 R&D Agreement. The issued shares of common stock had a fair value of approximately $ 602 (with such fair value measured using the quoted closing price of the common stock of the Company on the effective date of the respective underlying agreement). The issued shares of common stock are nonrefundable. As the service provider has substantially rendered the services under the May 31, 2023 R&D Agreement as of September 30, 2023, the estimated fair value of the issued shares was recognized as a research and development expense in the accompanying (unaudited) condensed consolidated statement of operations for the three and nine months ended September 30, 2023. See Note 10, Financial Instruments Fair Value Measurements , for a further discussion of the May 31, 2023 R&D Agreement, including the contingent additional contractual consideration obligation. During the nine months ended September 30, 2023 a total of 877,230 shares of common stock of the Company were issued under the PAVmed ESPP. See Note 12, Stock-Based Compensation , for a discussion of each of the PAVmed 2014 Equity Plan and the PAVmed ESPP. In the nine months ended September 30, 2023, 20,383,445 shares of the Company’s common stock were issued upon conversion, at the election of the holder, of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note, for $ 5,102 face value principal repayments, as discussed in Note 11, Debt . In the nine months ended September 30, 2023, the Company sold 2,330,747 shares through their at-the-market equity facility for net proceeds of approximately $ 1,165 , after payment of 3 % commissions. Common Stock Purchase Warrants As of September 30, 2023 and December 31, 2022, Series Z Warrants outstanding totaled 11,937,450 . The Series Z Warrants are 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 . There were no Series Z Warrants exercised during the nine months ended September 30, 2023. 24 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 2023 NCI – equity – December 31, 2022 $ 20,615 Net loss attributable to NCI ( 11,716 ) Impact of subsidiary equity transactions ( 1,984 ) Lucid Diagnostics Inc. proceeds from issuance of preferred stock 13,625 Lucid Diagnostics Inc. proceeds from At-The-Market Facilities, net of deferred financing charges 284 Lucid Diagnostics Inc. issuance of common stock for settlement of APA-RDx installment and termination payment 713 Lucid Diagnostics Inc. issuance of common stock for settlement of vendor service agreement 147 Lucid Diagnostics Inc. Employee Stock Purchase Plan Purchase 551 Conversion of Lucid Diagnostics Inc. common stock for Senior Secured Convertible Debt 167 Stock-based compensation expense - Lucid Diagnostics Inc. 2018 Equity Plan 5,014 Stock-based compensation expense - Veris Health Inc. 2021 Equity Plan 15 NCI – equity – September 30, 2023 $ 27,431 The consolidated NCI presented above is with respect to the Company’s consolidated majority-owned subsidiaries as a component of consolidated total stockholders’ equity as of September 30, 2023 and December 31, 2022; and the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations for the periods beginning on the acquisition date of the respective majority-owned subsidiaries. Lucid Diagnostics As of September 30, 2023, there were 42,329,864 shares of common stock of Lucid Diagnostics issued and outstanding, of which, PAVmed holds 31,302,420 shares, representing a majority ownership equity interest and PAVmed has a controlling financial interest in Lucid Diagnostics, and accordingly, Lucid Diagnostics is a consolidated majority-owned subsidiary of PAVmed. On March 7, 2023, Lucid issued 13,625 shares of newly designated Lucid Series A Convertible Preferred Stock (the “Lucid Series A Preferred Stock”). Each share of the Lucid Series A Preferred Stock has a stated value of $ 1,000 and a conversion price of $ 1.394 . The Lucid Series A Preferred Stock is convertible into shares of Lucid Diagnostics’ common stock at any time at the option of the holder from and after the six-month anniversary of its issuance, and automatically converts into shares of Lucid Diagnostics’ common stock on the second anniversary of its issuance. The terms of the Lucid Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20 % of the number of shares of Lucid common stock into which such Lucid Series A Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date. The Lucid Series A Preferred Stock is a non-voting security, other than with respect to limited matters related to changes in terms of the Lucid Series A Preferred Stock. The aggregate gross proceeds from the sale of shares in such offering were $ 13.625 million. In November 2022, Lucid Diagnostics entered into an “at-the-market offering” for up to $ 6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor Fitzgerald & Co. In the nine months ended September 30, 2023, Lucid Diagnostics sold 230,068 shares through their at-the-market equity facility for net proceeds of approximately $ 0.3 million, after payment of 3 % commissions. No shares were sold through Lucid’s at-the-market equity facility during the three months ended September 30, 2023. Subsequent to September 30, 2023, on October 17, 2023, Lucid issued 5,000 shares of newly designated Lucid Series A-1 Convertible Preferred Stock (the “Lucid Series A-1 Preferred Stock”). The terms of the Lucid Series A-1 Preferred Stock are substantially identical to the terms of the Lucid Series A Preferred Stock, except that the Lucid Series A-1 Preferred Stock has a conversion price of $ 1.2592 . The aggregate gross proceeds from the sale of shares in such offering were $ 5.0 million. Veris Health As of September 30, 2023, there were 8,000,000 shares of common stock of Veris Health issued and outstanding, of which PAVmed holds an 80.44 % majority-interest ownership and PAVmed has a controlling financial interest, with the remaining 19.56 % minority-interest ownership held by an unrelated third-party. Accordingly, Veris Health 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 accompanying unaudited condensed consolidated balance sheets. 25 Note 16 — Net Loss Per Share The 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 respective periods indicated - is as follows: Schedule of Comparison of Basic and Fully Diluted Net Loss Per Share 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator Net loss - before noncontrolling interest $ ( 21,750 ) $ ( 29,932 ) $ ( 61,855 ) $ ( 78,666 ) Net loss attributable to noncontrolling interest 4,079 3,806 11,716 10,143 Net loss - as reported, attributable to PAVmed Inc. $ ( 17,671 ) $ ( 26,126 ) $ ( 50,139 ) $ ( 68,523 ) Series B Convertible Preferred Stock dividends – earned $ ( 77 ) $ ( 71 ) $ ( 226 ) $ ( 209 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 17,748 ) $ ( 26,197 ) $ ( 50,365 ) $ ( 68,732 ) Denominator Weighted average common shares outstanding, basic and diluted 111,941,269 89,758,927 104,516,464 87,724,124 Net loss per share Basic and diluted Net loss - as reported, attributable to PAVmed Inc. $ ( 0.16 ) $ ( 0.29 ) $ ( 0.48 ) $ ( 0.78 ) Net loss attributable to PAVmed Inc. common stockholders $ ( 0.16 ) $ ( 0.29 ) $ ( 0.48 ) $ ( 0.78 ) 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 each of the respective periods noted, are included in the calculation of basic and diluted net loss attributable to PAVmed 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 September 30, 2023 and 2022 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 2023 2022 September 30, 2023 2022 Stock options and restricted stock awards 18,137,412 12,586,571 Series Z Warrants 11,937,450 11,937,450 Series B Convertible Preferred Stock 1,279,601 1,182,101 Total 31,354,463 25,706,122 The total stock options and restricted stock awards are inclusive of 500,854 stock options as of September 30, 2023 and 2022; and 100,000 restricted stock awards as of September 30, 2022 granted outside the PAVmed 2014 Equity Plan. These 100,000 restricted stock awards were fully vested during the period ended September 30, 2023. 26