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, 2024 December 31, 2023 Assets: Current assets: Cash $ 765 $ 19,639 Accounts receivable 16 61 Inventory 6 278 Prepaid expenses, deposits, and other current assets 1,343 4,520 Total current assets 2,130 24,498 Fixed assets, net 216 1,783 Operating lease right-of-use assets 2,618 4,267 Intangible assets, net — 1,424 Equity method investment - at fair value 25,511 — Other assets 75 1,147 Total assets $ 30,550 $ 33,119 Liabilities, Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 465 $ 1,786 Accrued expenses and other current liabilities 4,543 6,626 Operating lease liabilities, current portion 499 1,565 Senior Secured Convertible Notes - at fair value 32,050 44,200 Total current liabilities 37,557 54,177 Operating lease liabilities, less current portion 2,380 2,960 Total liabilities 39,937 57,137 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 1,385,149 at September 30, 2024 and 1,305,213 shares at December 31, 2023 3,232 2,993 Common stock, $ 0.001 par value. Authorized, 50,000,000 shares; 10,660,394 and 8,578,505 shares outstanding as of September 30, 2024 and December 31, 2023, respectively 11 9 Additional paid-in capital 248,200 237,600 Accumulated deficit ( 256,312 ) ( 294,433 ) Total PAVmed Inc. Stockholders’ Equity (Deficit) ( 4,869 ) ( 53,831 ) Noncontrolling interests ( 4,518 ) 29,813 Total Stockholders’ Equity (Deficit) ( 9,387 ) ( 24,018 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 30,550 $ 33,119 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) 2024 2023 2024 2023 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue $ 996 $ 791 $ 2,985 $ 1,403 Operating expenses: Cost of revenue 1,381 1,779 4,792 4,809 Sales and marketing 2,920 4,016 11,472 12,893 General and administrative 6,649 6,858 20,337 23,916 Amortization of acquired intangible assets 82 505 559 1,516 Research and development 1,542 3,161 5,125 10,681 Total operating expenses 12,574 16,319 42,285 53,815 Operating loss ( 11,578 ) ( 15,528 ) ( 39,300 ) ( 52,412 ) Other income (expense): Interest income 70 124 252 408 Interest expense ( 12 ) ( 159 ) ( 38 ) ( 570 ) Gain on deconsolidation of subsidiary 72,287 — 72,287 — Change in fair value - equity method investment 407 — 407 — Change in fair value - Senior Secured Convertible Notes 240 ( 4,392 ) ( 2,488 ) ( 5,772 ) Loss on issue and offering costs - Senior Secured Convertible Note — — — ( 1,186 ) Debt extinguishments loss - Senior Secured Convertible Notes ( 1,403 ) ( 1,764 ) ( 2,535 ) ( 3,032 ) Debt modification expense — — ( 2,000 ) — Change in fair value - derivative liability — ( 31 ) — ( 291 ) Management fee income 700 — 700 — Gain on sale of intellectual property — — — 1,000 Other income (expense), net 72,289 ( 6,222 ) 66,585 ( 9,443 ) Income (loss) before provision for income tax 60,711 ( 21,750 ) 27,285 ( 61,855 ) Provision for income taxes — — — — Net income (loss) before noncontrolling interests 60,711 ( 21,750 ) 27,285 ( 61,855 ) Net loss attributable to the noncontrolling interests 3,688 4,079 11,075 11,716 Net income (loss) attributable to PAVmed Inc. 64,399 ( 17,671 ) 38,360 ( 50,139 ) Less: Series B Convertible Preferred Stock dividends earned ( 83 ) ( 77 ) ( 244 ) ( 226 ) Less: Deemed dividend on Subsidiary Preferred Stock attributable to the noncontrolling interests — — ( 7,496 ) — Net income (loss) attributable to PAVmed Inc. common stockholders $ 64,316 $ ( 17,748 ) $ 30,620 $ ( 50,365 ) Per share information: Net income (loss) per share attributable to PAVmed Inc. common stockholders – basic $ 6.43 $ ( 2.38 ) $ 3.30 $ ( 7.23 ) Net income (loss) per share attributable to PAVmed Inc. common stockholders – diluted $ 1.44 $ ( 2.38 ) $ 0.79 $ ( 7.23 ) Weighted average common shares outstanding, basic 10,005,379 7,462,751 9,286,999 6,967,764 Weighted average common shares outstanding, diluted 44,475,638 7,462,751 43,069,449 6,967,764 See accompanying notes to the unaudited condensed consolidated financial statements. 2 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the THREE MONTHS ENDED September 30, 2024 (in thousands except number of shares and per share data - unaudited) Shares Amount Shares Amount In Capital Deficit Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid- Accumulated Non controlling Shares Amount Shares Amount In Capital Deficit Interest Total Balance - June 30, 2024 1,357,976 $ 3,151 9,554,381 $ 10 $ 243,524 $ ( 320,630 ) - $ 55,303 $ ( 18,642 ) Dividends declared - Series B Convertible Preferred Stock 27,173 81 — — — ( 81 ) — — Issue common stock - PAVM ATM Facility — — 294,003 — 284 — — 284 Vest - restricted stock awards — — 131,016 — — — — — Conversions - Senior Secured Convertible Note — — 509,942 1 907 — — 908 Conversions - subsidiary common stock - Senior Secured Convertible Note — — — — — — 1,260 1,260 Impact of subsidiary equity transactions — — — — 2,245 — - ( 2,245 ) — Issuance - vendor service agreement — — 171,052 — 150 — — 150 Stock-based compensation - PAVmed Inc. — — — — 696 — — 696 Stock-based compensation - subsidiary — — — — 44 — 1,191 1,235 Transfer of intellectual property to Lucid Diagnostics Inc — — — — 350 — — 350 Deconsolidation of subsidiary — — — — — — ( 56,339 ) ( 56,339 ) Net income (loss) — — — — — 64,399 ( 3,688 ) 60,711 Balance - September 30, 2024 1,385,149 $ 3,232 10,660,394 $ 11 $ 248,200 $ ( 256,312 ) - $ ( 4,518 ) $ ( 9,387 ) See accompanying notes to the unaudited condensed consolidated financial statements. 3 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the NINE MONTHS ENDED September 30, 2024 (in thousands, except number of shares and per share data - unaudited) Shares Amount Shares Amount In Capital Deficit Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid- Accumulated Non controlling Shares Amount Shares Amount In Capital Deficit Interest Total Balance - December 31, 2023 1,305,213 $ 2,993 8,578,505 $ 9 $ 237,600 $ ( 294,433 ) - $ 29,813 $ ( 24,018 ) Dividends declared - Series B Convertible Preferred Stock 79,936 239 — — — ( 239 ) — — Issue common stock - PAVM ATM Facility — — 627,302 — 977 — — 977 Vest - restricted stock awards — — 135,080 — — — — — Conversions - Senior Secured Convertible Note — — 1,084,366 2 2,019 — — 2,021 Conversions - subsidiary common stock - Senior Secured Convertible Note — — — — — — 3,801 3,801 Exercise - stock options of subsidiary — — — — — — 4 4 Purchase - Employee Stock Purchase Plan — — 34,332 — 62 — - — 62 Purchase - subsidiary common stock - Employee Stock Purchase Plan — — — — — — 353 353 Impact of subsidiary equity transactions — — — — 4,414 — ( 4,414 ) — Issuance - vendor service agreement — — 200,809 — 200 — 401 601 Issuance - subsidiary preferred stock (Series A-1) — — — — — — 5,670 5,670 Exchange - subsidiary preferred stock (Series A and Series A-1) — — — — — — ( 24,294 ) ( 24,294 ) Issuance through exchange - subsidiary preferred stock (Series B and Series B-1) — — — — — — 31,790 31,790 Issuance through sale - subsidiary preferred stock (Series B and Series B-1) — — — — — — 24,129 24,129 Subsidiary deemed dividends on preferred stock attributable to noncontrolling interests — — — — — — ( 7,496 ) ( 7,496 ) Stock-based compensation - PAVmed Inc. — — — — 2,228 — — 2,228 Stock-based compensation - subsidiaries — — — — 350 — 3,139 3,489 Transfer of intellectual property to Lucid Diagnostics Inc — — — — 350 — — 350 Deconsolidation of subsidiary — — — — — — ( 56,339 ) ( 56,339 ) Net income (loss) — — — — — 38,360 - ( 11,075 ) 27,285 Balance - September 30, 2024 1,385,149 $ 3,232 10,660,394 $ 11 $ 248,200 $ ( 256,312 ) - $ ( 4,518 ) $ ( 9,387 ) See accompanying notes to the unaudited condensed consolidated financial statements. 4 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the THREE MONTHS ENDED September 30, 2023 (in thousands, except number of shares and per share data - unaudited) Shares Amount Shares Amount In Capital Deficit Stock Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid- Accumulated Treasury Non controlling Shares Amount Shares Amount In Capital Deficit Stock Interest Total Balance - June 30, 2023 1,254,497 $ 2,841 7,235,867 $ 7 $ 226,423 $ ( 260,783 ) $ — $ 30,682 $ ( 830 ) Dividends declared - Series B Convertible Preferred Stock 25,104 75 — — — ( 75 ) — — — Conversions - Senior Secured Convertible Note — — 723,998 1 3,988 — — — 3,989 Conversions - subsidiary common stock - Senior Secured Convertible Note — — — — — — — 167 167 Purchase - Employee Stock Purchase Plan — — 20,267 — 76 — — — 76 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 - subsidiary — — — — 230 — — 1,037 1,267 Net loss — — — — — ( 17,671 ) — ( 4,079 ) ( 21,750 ) Balance - September 30, 2023 1,279,601 $ 2,916 7,980,131 $ 8 $ 232,346 $ ( 278,529 ) $ — $ 27,431 $ ( 15,828 ) See accompanying notes to the unaudited condensed consolidated financial statements. 5 PAVMED INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ 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- Accumulated Treasury Non controlling Shares Amount Shares Amount In Capital Deficit Stock Interest Total Balance - December 31, 2022 1,205,759 $ 2,695 6,300,703 $ 6 $ 216,195 $ ( 228,169 ) $ ( 408 ) $ 20,615 $ 10,934 Balance 1,205,759 $ 2,695 6,300,703 $ 6 $ 216,195 $ ( 228,169 ) $ ( 408 ) $ 20,615 $ 10,934 Dividends declared - Series B Convertible Preferred Stock 73,842 221 — — — ( 221 ) — — — Issue common stock - PAVM ATM Facility — — 155,384 — 1,166 — — — 1,166 Vest - restricted stock awards — — 6,666 — — — — — — Conversions - Senior Secured Convertible Note — — 1,358,896 2 8,409 — — — 8,411 Conversions - subsidiary common stock - Senior Secured Convertible Note — — — — — — — 167 167 Purchase - Employee Stock Purchase Plan — — 45,892 — 198 — 60 — 258 Purchase - subsidiary common stock - Employee Stock Purchase Plan — — — — — — — 551 551 Issuance - subsidiary common stock - Committed Equity Facility, net of financing charges — — — — — — — 284 284 Impact of subsidiary equity transactions — — — — 1,984 — — ( 1,984 ) — Issuance - subsidiary common stock - Settlement APA-RDx - Installment Payment — — — — — — — 713 713 Issuance - vendor service agreement — — 100,000 — 600 — — 147 747 Issuance - subsidiary preferred stock (Series A) — — — — — — — 13,625 13,625 Stock-based compensation - PAVmed Inc. — — — — 3,266 — — — 3,266 Stock-based compensation - subsidiaries — — — — 876 — — 5,029 5,905 Treasury stock — — 12,589 — ( 348 ) — 348 — — Net Loss — — — — — ( 50,139 ) — ( 11,716 ) ( 61,855 ) Balance - September 30, 2023 1,279,601 $ 2,916 7,980,131 $ 8 $ 232,346 $ ( 278,529 ) $ — $ 27,431 $ ( 15,828 ) Balance 1,279,601 $ 2,916 7,980,131 $ 8 $ 232,346 $ ( 278,529 ) $ — $ 27,431 $ ( 15,828 ) 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) 2024 2023 Nine Months Ended September 30, 2024 2023 Cash flows from operating activities Net income (loss) - before noncontrolling interest (“NCI”) $ 27,285 $ ( 61,855 ) Adjustments to reconcile net income (loss) - before NCI to net cash used in operating activities Depreciation and amortization expense 1,129 2,207 Stock-based compensation 5,716 9,171 Gain on sale of intellectual property — ( 1,000 ) Gain on deconsolidation of subsidiary ( 72,287 ) — Change in fair value - equity method investment ( 407 ) — APA-RDx: Issue common stock of subsidiary - termination payment — 713 Amortization of common stock payment for vendor service agreement 448 625 Change in fair value - Senior Secured Convertible Notes 2,488 5,772 Loss on issue - Senior Secured Convertible Note — 1,111 Debt extinguishment loss - Senior Secured Convertible Note 2,535 3,032 Change in fair value - derivative liability — 291 Non-cash lease expense 8 304 Changes in operating assets and liabilities: Accounts receivable 45 ( 18 ) Prepaid expenses, deposits and current and other assets 579 ( 1,757 ) Accounts payable ( 249 ) ( 538 ) Accrued expenses and other current liabilities ( 938 ) 1,780 Net cash flows used in operating activities ( 33,648 ) ( 40,162 ) Cash flows from investing activities Purchase of equipment ( 51 ) ( 59 ) Decrease in cash due to deconsolidation of subsidiary ( 16,479 ) — Proceeds from sale of intellectual property to Lucid Diagnostics Inc. 350 — Proceeds from sale of intellectual property — 1,000 Net cash flows provided by (used in) investing activities ( 16,180 ) 941 Cash flows from financing activities Proceeds – issue of preferred stock - subsidiary 29,798 13,625 Proceeds – issue of Senior Secured Convertible Note — 10,000 Payment – Senior Secured Convertible Note – acceleration floor payments ( 531 ) — Proceeds – issue of common stock - At-The-Market Facility 1,268 1,166 Proceeds – subsidiary common stock - Committed Equity Facility and At-The-Market Facility — 284 Proceeds – issue common stock – Employee Stock Purchase Plan 62 259 Proceeds – subsidiary common stock – Employee Stock Purchase Plan 353 551 Proceeds – exercise of stock options issued under equity plan of subsidiary 4 — Net cash flows provided by financing activities 30,954 25,885 Net increase (decrease) in cash ( 18,874 ) ( 13,336 ) Cash, beginning of period 19,639 39,744 Cash, end of period $ 765 $ 26,408 See accompanying notes to the unaudited condensed consolidated financial statements. 7 PAVMED INC. and SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.) Note 1 — The Company Description of the Business PAVmed is structured to be a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies. Led by a team of highly skilled personnel with a track record of bringing innovative products to market, PAVmed is focused on innovating, developing, acquiring, and commercializing novel products that target unmet medical needs with large addressable market opportunities. Leveraging our corporate structure—a parent company that will establish distinct subsidiaries for each financed asset—we have the flexibility to raise capital at the PAVmed level to fund product development, or to structure financing directly into each subsidiary in a manner tailored to the applicable product, the latter of which is our current strategy given prevailing market conditions. Our current focus is multi-fold. We continue to pursue commercial expansion and execution of EsoGuard, which is the flagship product of our subsidiary, Lucid Diagnostics Inc. (Nasdaq: LUCD) (“Lucid”). In addition, through a separate majority-owned subsidiary, Veris Health (“Veris”), we are focused in the immediate term on entering into strategic partnership opportunities with leading academic oncology systems to expand access to the Veris Platform, while concurrently developing an implantable physiological monitor, designed to be implanted alongside a chemotherapy port, which will interface with the Veris Platform. In terms of other existing products and technologies, we have adopted an incubator-type platform where we are looking to obtain financing on a product-by-product basis as necessary to advance each asset to a meaningful inflection point along its path to commercialization. Finally, as resources permit, we will continue to explore external innovations that fulfill our project selection criteria without limiting ourselves to any target sector, specialty or condition. Note 2 — Liquidity and Going Concern The Company’s management is required to assess the Company’s ability to continue as a going concern for the one year period following the date of the financial statements being issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet its financial obligations as they become due within one year after the date the financial statements are issued. 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 generated $ 1.0 million and $ 3.0 million of revenues for the three and nine month periods ended September 30, 2024, respectively, however the Company expects to continue to experience recurring losses and to generate negative cash flows from operating activities in the near future. The Company incurred a net income attributable to PAVmed Inc. common stockholders of approximately $ 30.6 million and had net cash flows used in operating activities of approximately $ 33.6 million for the nine month period ended September 30, 2024. As of September 30, 2024, the Company had negative working capital of approximately $ 35.4 million, with such working capital inclusive of the Senior Secured Convertible Notes classified as a current liability of an aggregate of approximately $ 32.1 million and approximately $ 0.8 million of cash. The Company’s ability to continue operations 12 months beyond the issuance of the financial statements, will depend upon its ability to control its operating costs within the limits of the amounts collected from its management service contracts with its non-consolidated subsidiaries, to substantially increase its revenues from the Veris Cancer Care platform, and to raise additional capital through various potential sources including equity or debt financings or refinancing or restructuring existing debt obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are issued. 8 Note 3 — 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, 2023 as filed with the SEC on March 25, 2024, except as otherwise noted herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PAVmed and those of its wholly owned subsidiaries and variable interest entities 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”). All intercompany transactions and balances have been eliminated in consolidation. The Company has a controlling financial interest in Veris Health Inc., with the corresponding noncontrolling interest included as a separate component of consolidated stockholders’ equity (deficit), including the recognition in the unaudited condensed consolidated statement of operations of a net loss attributable to the noncontrolling interest based on the respective minority-interest equity ownership of each subsidiary. As of September 10, 2024, PAVmed ceased to have a controlling financial interest in Lucid Diagnostics and therefore PAVmed’s consolidated results of operations include Lucid Diagnostics’ results of operations only through that date. The deconsolidation of Lucid Diagnostics has resulted in a gain recognized in PAVmed’s statement of operations for the periods ended September 30, 2024. Moving forward, PAVmed will account for its investment in Lucid Diagnostics using the equity method and the fair value option. See below and Note 4, Equity Method Investment for a discussion on the impact of the deconsolidation of Lucid Diagnostics. See Note 15, Noncontrolling Interest , for a discussion of each of the 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, 2023 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 unaudited condensed consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2024 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, 2023 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 25, 2024. 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. Cash The Company maintains its cash at a major financial institution with high credit quality. At times, the balance of its cash deposits may exceed federally insured limits. The Company has not experienced losses on deposits with commercial banks and financial institutions which exceed federally insured limits. Included in the Company’s cash as of September 30, 2024 and December 31, 2023 is $ 299 related to a restricted deposit account for a standby letter of credit associated with our corporate headquarters which has a lease maturity date in 2030. 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 unaudited condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these unaudited condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards, intangible assets and common stock purchase warrants. Other significant estimates include the estimated incremental borrowing rate, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. Additionally, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. 9 Note 3 — Summary of Significant Accounting Policies - continued 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 was primarily generated by Lucid’s laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services were 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. 10 Note 3 — Summary of Significant Accounting Policies - continued Equity Method Investments Businesses that are not consolidated, but over which PAVmed exercises significant influence, are accounted for under the equity method of accounting. The determination as to whether or not PAVmed exercises significant influence with respect to a company depends on an evaluation of several factors, including, among others, representation on the company’s board of directors and equity ownership level, which is generally between a 20 % and a 50 % interest in the voting securities of an equity method business, as well as voting rights associated with PAVmed’s holdings in common stock in that company. PAVmed accounts for Lucid Diagnostics as an equity method investment beginning on September 10, 2024, and the period ended September 30, 2024. 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”, through September 10, 2024, the date of Lucid’s deconsolidation from PAVmed’s results of operations, 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 (through September 10, 2024, Lucid’s deconsolidation date) the Lucid March 2023 Senior Convertible Note, including the component related to accrued interest, is presented in a single line item within other income (expense) in the accompanying unaudited condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note or (through September 10, 2024, Lucid’s deconsolidation date) 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. From and after September 10, 2024, the date of Lucid’s deconsolidation from PAVmed’s results of operation, the Company’s investment in Lucid is treated as an equity method investment accounted for using the fair value option. Shares of Lucid Diagnostics common stock have a readily determinable fair value classified as Level 1, in which the fair value is determined based upon quoted market prices in an active market. Recent Accounting Standards Updates Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the standard to have a significant impact on its unaudited condensed consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company is currently evaluating the impact this update will have on its unaudited condensed consolidated financial statements and disclosures, however the Company does not expect the standard to have a significant impact. 11 Note 3 — Summary of Significant Accounting Policies - continued In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This update modifies the disclosure or presentation requirements of a variety of topics in the Accounting Standards Codification to conform with certain SEC amendments in Release No. 33-10532, Disclosure Update and Simplification. The amendments in this update should be applied prospectively, and the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or S-K becomes effective. However, if the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company is currently evaluating the impact this update will have on its unaudited condensed consolidated financial statements and disclosures. Note 4 — Equity Method Investment On September 10, 2024, following preferred equity transactions completed by Lucid earlier in 2024 and the termination of voting proxies entered into between PAVmed and certain shareholders of Lucid, PAVmed’s voting interest in the Company was reduced to less than 50.0 %, resulting in the loss of a controlling financial interest. However, PAVmed retains the ability to exercise significant influence over Lucid. As a result, the Company deconsolidated Lucid. The following table reflects the net assets of Lucid at the time of deconsolidation: Schedule of Deconsolidation of Net Assets Assets: Current assets: Cash $ 16,479 Prepaid expenses, deposits, and other current assets 3,474 Total current assets 19,953 Fixed assets, net 964 Operating lease right-of-use assets 2,871 Intangible assets, net 877 Other assets 379 Total assets 25,044 Liabilities: Current liabilities: Accounts payable 1,069 Accrued expenses and other current liabilities 1,674 Operating lease liabilities, current portion 865 Senior Secured Convertible Notes - at fair value 10,268 Total current liabilities 13,876 Operating lease liabilities, less current portion 2,011 Total liabilities 15,887 Net Assets of Lucid Diagnostics at September 10, 2024 $ 9,157 Upon deconsolidation, the Company owned 31,302,444 shares of Lucid Diagnostics common stock, which was valued at $ 25.1 million, resulting in a gain on deconsolidation of $ 72.3 million in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024. The Company recorded the following: Schedule of Gain on Deconsolidation Investment in former Consolidated Subsidiary (Fair Value of Lucid common stock) $ 25,105 Add: Noncontrolling interest - Lucid 56,339 Less: Net Assets of Former Consolidated Subsidiary - Lucid ( 9,157 ) Gain on Deconsolidation of Lucid $ 72,287 After the Company’s deconsolidation of Lucid, the Company accounts for its investment in Lucid as an equity method investment with the election of the fair value option. Due to the Company’s continuing involvement and significant influence over operating and financial policies, Lucid is considered a related party of the Company. 12 Note 4 — Equity Method Investment - continued The following unaudited summarized financial information related to Lucid accounted for under the equity method of accounting as of September 30, 2024. This aggregate information has been compiled from the financial statements of those business. Schedule of Aggregate Information From the Financial Statements September 30, 2024 Cash $ 14,489 Other current assets 2,335 Non-current assets 5,774 Total assets 22,598 Current liabilities 14,249 Non-current liabilities 2,011 Shareholders’ deficit 6,338 Total liabilities and stockholders’ deficit $ 22,598 Three months ended September 30, 2024 July 1, 2024 - September 10, 2024 September 11, 2024 - September 30, 2024 Total Revenue $ 942 $ 230 $ 1,172 Net income (loss) $ ( 9,039 ) $ ( 3,332 ) $ ( 12,371 ) Nine months ended September 30, 2024 January 1, 2024 - September 10, 2024 September 11, 2024 - September 30, 2024 Total Revenue $ 2,919 $ 230 $ 3,149 Net income (loss) $ ( 38,152 ) $ ( 3,332 ) $ ( 41,484 ) *Lucid was consolidated and included in PAVmed’s consolidated results for the period of January 1, 2024 through September 10, 2024. The amounts from September 11, 2024 through September 30, 2024 were not included in PAVmed’s consolidated results. At September 10, 2024 and September 30, 2024, the fair value of the Company’s investment in Lucid was $ 25.1 million and $ 25.5 million, respectively, with the company recognizing an unrealized gain on its investment in Lucid of $ 0.4 million in the accompanying condensed consolidated statements of operations for three and nine month periods ended September 30, 2024. The fair value of common shares held by the Company was determined using the closing price of Lucid’s common stock per share on September 10, 2024 and September 30, 2024 of $ 0.802 and $ 0.815 , respectively. At September 10, 2024 and September 30, 2024, PAVmed held approximately 40 % of Lucid’s common stock voting interest. Lucid - Management Services Agreement Lucid’s daily operations are also managed in part by personnel employed by the Company, for which the Company records management fee income, referred to as the “MSA Fee”, according to the provisions of a Management Services Agreement (“MSA”) with Lucid. The MSA does not have a termination date, but may be terminated by Lucid. The MSA Fee is charged on a monthly basis and is subject-to periodic adjustment corresponding with changes in the services provided by the Company’s personnel to Lucid, with any such change in the MSA Fee being subject to approval of the boards of directors of each of the Company and Lucid. The respective companies’ boards of directors approved an amendment to the MSA to increase the MSA Fee to $ 833 per month, effective January 1, 2024. In August 2024, the respective companies’ boards of directors approved the Company to enter into a ninth amendment to the MSA. Under this amendment, the monthly fee due to the Company from Lucid was increased from $ 833 to $ 1,050 , effective July 1, 2024. During the period of September 11, 2024 through September 30, 2024, MSA fee income was $ 700 . Transfer of Intellectual Property to Lucid On September 27, 2024, the Company entered into an Assignment of Patent Rights with PAVmed, pursuant to which PAVmed assigned certain patent rights to the Company related to the EsoCheck device. In consideration of the assignment the Company agreed to pay PAVmed a $ 350 assignment fee. 13 Note 5 — Revenue from Contracts with Customers Revenue Recognized In the three and nine month periods ended September 30, 2024, the Company recognized total revenue of $ 996 and $ 2,985 , 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 and nine month periods ended September 30, 2023 was $ 791 and $ 1,403 , respectively, primarily resulting from the delivery of patient EsoGuard test results. 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 month periods ended September 30, 2024, the cost of revenue was $ 1,381 and $ 4,792 , respectively, primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the three and nine month periods ended September 30, 2023 was $ 1,779 and $ 4,809 , respectively, primarily related to costs for our laboratory operations and EsoCheck device supplies. 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, 2024 December 31, 2023 Advanced payments to service providers and suppliers $ 181 $ 739 Prepaid insurance 420 848 Deposits 480 2,672 Veris Box supplies 262 261 Total prepaid expenses, deposits and other current assets $ 1,343 $ 4,520 14 Note 7 — Leases The Company’s future lease payments as of September 30, 2024, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows: Schedule of Future Minimum Lease Payments for Operating Leases 2024 (remainder of year) $ 174 2025 708 2026 724 2027 594 2028 471 Thereafter 848 Total lease payments $ 3,519 Less: imputed interest ( 640 ) Present value of lease liabilities $ 2,879 Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows: Schedule of Supplemental Balance Sheet Information Related to Cash and Non-cash Activities with Leases 2024 2023 Nine Months Ended September 30, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,407 $ 1,080 Non-cash investing and financing activities Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 2,728 Weighted-average remaining lease term - operating leases (in years) 5.25 6.68 Weighted-average discount rate - operating leases 7.875 % 7.875 % As of September 30, 2024 and December 31, 2023, the Company’s right-of-use assets from operating leases were $ 2,618 and $ 4,267 , respectively, which are reported in operating lease right-of-use assets in the unaudited condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the Company had outstanding operating lease obligations of $ 2,879 and $ 4,525 , respectively, of which $ 499 and $ 1,565 , respectively, are reported in operating lease liabilities, current portion and $ 2,380 and $ 2,960 , 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. Following the deconsolidation of Lucid, the Company had removed right-of-use assets and operating lease liabilities related to Lucid. See Note 4, Equity Method Investment , for additional information on the Lucid deconsolidation. 15 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, 2024 December 31, 2023 Defensive asset 60 months $ — $ 2,105 Laboratory licenses and certifications and laboratory information management software 24 months — 3,200 Other 1 year 70 70 Total Intangible assets 70 5,375 Less Accumulated Amortization ( 70 ) ( 3,951 ) Intangible Assets, net $ — $ 1,424 Amortization expense of the intangible assets discussed above was $ 82 and $ 505 for the three month periods ended September 30, 2024 and 2023, respectively, and $ 559 and $ 1,516 for the nine month periods ended September 30, 2024 and 2023, respectively, and is included in amortization of acquired intangible assets in the accompanying unaudited condensed consolidated statements of operations. Following the deconsolidation of Lucid, the Company had an intangible assets, net balance of $ 0 , and no estimated future amortization expense. See Note 4, Equity Method Investment , for additional information on the Lucid deconsolidation. 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. 16 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 Assets and 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, 2024 Assets: Investment in Lucid Diagnostics, Inc common stock $ 25,511 $ — $ — $ 25,511 Total assets at fair value $ 25,511 $ — $ — $ 25,511 Liabilities: Senior Secured Convertible Note - April 2022 — — 19,850 19,850 Senior Secured Convertible Note - September 2022 — — 12,200 12,200 Total liabilities at fair value $ — $ — $ 32,050 $ 32,050 Level-1 Inputs Level-2 Inputs Level-3 Inputs Total December 31, 2023 Liabilities: Senior Secured Convertible Note - April 2022 $ — $ — $ 19,000 $ 19,000 Senior Secured Convertible Note - September 2022 — — 11,250 11,250 Lucid Senior Secured Convertible Note - March 2023 — — 13,950 13,950 Total liabilities at fair value $ — $ — $ 44,200 $ 44,200 1 There were no transfers between the respective Levels during the nine months ended September 30, 2024. 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”). From and after September 10, 2024, the date of Lucid’s deconsolidation from PAVmed’s result of operation, the Company’s investment in Lucid has been accounted for as an equity method investment. For the periods prior to the deconsolidation, Lucid’s convertible note is presented in PAVmed’s balance sheets and 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. 17 Note 10 — Financial Instruments Fair Value Measurements - continued The estimated fair value of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as of September 30, 2024 and the estimated fair value of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note as of December 31, 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, 2024 September 2022 Senior Convertible Note: September 30, 2024 Fair Value $ 19,850 $ 12,200 Face value principal payable $ 17,602 $ 7,627 Required rate of return 9.000 % 8.800 % Conversion Price $ 75.00 $ 75.00 Value of common stock $ 1.23 $ 1.23 Expected term (years) 0.51 0.94 Volatility 160.00 % 160.00 % Risk free rate 4.28 % 3.95 % Dividend yield — % — % April 2022 Senior Convertible Note: December 31, 2023 September 2022 Senior Convertible Note: December 31, 2023 Lucid March 2023 Senior Convertible Note: December 31, 2023 Fair Value $ 19,000 $ 11,250 $ 13,950 Face value principal payable $ 17,602 $ 9,062 $ 11,019 Required rate of return 10.00 % - 10.50 % 10.00 % - 10.20 % 10.00 % Conversion Price $ 75.00 $ 75.00 $ 5.00 Value of common stock $ 4.12 $ 4.12 $ 1.41 Expected term (years) 0.26 - 1.26 0.69 - 1.69 1.22 Volatility 85.00 % 85.00 % 60.00 % Risk free rate 4.54 % - 5.25 % 4.31 % - 4.96 % 4.56 % Dividend yield — % — % — % The estimated fair values recognized utilized PAVmed’s and Lucid’s 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, as compared to the floor price on conversions, 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. 18 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, 2025 7.875 % $ 75.00 $ 17,602 $ 19,850 September 2022 Senior Convertible Note September 8, 2025 7.875 % $ 75.00 7,627 12,200 Balance as of September 30, 2024 $ 25,229 $ 32,050 Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value April 2022 Senior Convertible Note April 4, 2025 7.875 % $ 75.00 $ 17,602 $ 19,000 September 2022 Senior Convertible Note September 8, 2025 7.875 % $ 75.00 9,062 11,250 Lucid March 2023 Senior Convertible Note March 21, 2025 7.875 % $ 5.00 11,019 13,950 Balance as of December 31, 2023 $ 37,683 $ 44,200 The changes in the fair value of debt during the three and nine month periods ended September 30, 2024 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, 2024 $ 19,200 $ 13,600 $ 11,200 $ 44,000 $ — Face value principal – issue date Fair value adjustment – issue date Installment repayments – common stock — ( 455 ) ( 797 ) ( 1,252 ) — Non-installment payments – common stock — ( 55 ) ( 135 ) ( 190 ) — Deconsolidation of Lucid Diagnostics — — ( 10,268 ) ( 10,268 ) — Change in fair value 650 ( 890 ) — ( 240 ) 240 Fair Value at September 30, 2024 $ 19,850 $ 12,200 $ — $ 32,050 - Other Income (Expense) - Change in fair value – three month period ended September 30, 2024 $ 240 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, 2023 $ 19,000 $ 11,250 $ 13,950 $ 44,200 $ — Installment repayments – common stock — ( 1,435 ) ( 2,005 ) ( 3,440 ) — Non-installment payments – common stock — ( 143 ) ( 787 ) ( 930 ) — Deconsolidation of Lucid Diagnostics — — ( 10,268 ) ( 10,268 ) — Change in fair value 850 2,528 ( 890 ) 2,488 ( 2,488 ) Fair Value at September 30, 2024 $ 19,850 $ 12,200 $ — $ 32,050 - Other Income (Expense) - Change in fair value – nine month period ended September 30, 2024 $ ( 2,488 ) 19 Note 11 — Debt - continued The changes in the fair value of debt during the three and nine month periods ended September 30, 2023 is as follows: 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 $ — 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 month period 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 of Period $ 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 of Period $ 19,400 $ 11,100 $ 14,490 $ 44,990 - Other Income (Expense) - Change in fair value – nine month period ended September 30, 2023 $ ( 5,772 ) 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 $ 75.00 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 , which maturity date the investor agreed to extend by one year, to April 4, 2025 . 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 $ 75.00 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 , which maturity date the investor agreed to extend by one year, to September 8, 2025. The September 2022 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election. 20 Note 11 — Debt - continued The Company agreed to reduce temporarily, and the Investor consented to reducing temporarily, the contractual conversion price under the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note to equal to 82.5 % of the two lowest VWAPs during the last 10 trading days preceding the date of conversion, subject to a conversion floor price of $ 0.40 , during the period from June 30, 2024 through September 3, 2024; provided that the aggregate amount of conversions under the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note during such period may not exceed 1 million shares. 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 September 1, 2024 through November 11, 2024, the Company was not in compliance with the Financial Tests. As of November 11, 2024, the Investor agreed to waive any such non-compliance during such time period and thereafter through December 31, 2024. In consideration of a prior covenant waiver and maturity extension agreed to in March 2024, the Company agreed to pay the holder of the notes $ 2,000 in cash (or in such other form as may be mutually agreed in writing). The covenant waiver and maturity extension fee was recognized as debt modification expense on the Company’s unaudited condensed consolidated statement of operations, and is currently included in accrued expenses and other current liabilities on the Company’s unaudited condensed consolidated balance sheets as of September 30, 2024. The April 2022 Senior Convertible Note and September 2022 Senior Convertible Note installment payments may be made in shares of PAVmed common stock at a conversion price that is the lower of the contractual conversion price and 82.5 % of the two lowest VWAPs during the last 10 trading days preceding the date of conversion, subject to a conversion price floor of $ 2.70 . The notes are also subject to certain provisions that may require redemption upon the occurrence of certain events, including an event of default, a change of control, or certain equity issuances. In the three and nine month periods ended September 30, 2024, approximately $ 455 and $ 1,435 , respectively, of principal repayments along with approximately $ 55 and $ 143 , respectively, of interest expense thereon, were settled through the issuance of 509,942 and 1,084,366 , respectively, shares of common stock of the Company, with such shares having a fair value of approximately $ 907 and $ 2,002 , respectively, (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). In addition, during the three and nine month periods ended September 30, 2024, the Company agreed to pay $ 652 and $ 1,059 , respectively, in cash related to acceleration floor payments on these notes related to the conversion price being below the floor price, which is included in debt extinguishment loss on the Company’s unaudited condensed consolidated statements of operations. As of September 30, 2024, approximately $ 652 of acceleration floor payments owed to the holder are included in accrued expenses and other current liabilities on the Company’s unaudited condensed consolidated balance sheets. The conversions and floor acceleration payments resulted in debt extinguishment losses of $ 1,050 and $ 1,501 in the three and nine month periods ended September 30, 2024, respectively. Lucid Diagnostics - Senior Secured Convertible Note Following the deconsolidation of Lucid, the Lucid March 2023 Senior Convertible Note is no longer reflected in the Company’s unaudited condensed consolidated balance sheets. See Note 4, Equity Method Investment , for additional information on the deconsolidation of Lucid. During the period of January 1, 2024 through September 10, 2024, the date of Lucid’s deconsolidation, approximately $ 2,005 of principal repayments along with approximately $ 787 of interest expense thereon, were settled through the issuance of 4,172,002 shares of common stock of Lucid, with such shares having a fair value of approximately $ 3,801 (with such fair value measured as the respective conversion date quoted closing price of the common stock of Lucid). The conversions resulted in debt extinguishment losses of $ 328 in the period July 1, 2024 through September 10, 2024. The conversions resulted in debt extinguishment losses of $ 1,009 in the period of January 1, 2024 through September 10, 2024. During the three and nine month periods ended September 30, 2024, the Company recognized debt extinguishment losses in total of approximately $ 1,403 and $ 2,535 , respectively, in connection with the Company or Lucid (as applicable) issuing shares of its common stock for principal repayments on convertible debt mentioned above. During the three and nine month periods ended September 30, 2023, the Company recognized debt extinguishment losses in total of approximately $ 1,764 and $ 3,032 , respectively. See Note 10, Financial Instruments Fair Value Measurements , for a further discussion of fair value assumptions. 21 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 1,835,970 shares of common stock of PAVmed are reserved for issuance under the PAVmed 2014 Equity Plan, with 79,321 shares available for grant as of September 30, 2024. The share reservation is not diminished by a total of 66,720 PAVmed stock options and restricted stock awards granted outside the PAVmed 2014 Equity Plan as of September 30, 2024. In January 2024, the number of shares available for grant was increased by 432,452 in accordance with the evergreen provisions of the plan. 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, 2023 1,192,458 $ 26.18 7.3 $ — Granted (1) 79,500 $ 2.28 Exercised — $ — Forfeited ( 38,851 ) $ 13.47 Outstanding stock options at September 30, 2024 (3) 1,233,107 $ 25.04 5.9 $ — Vested and exercisable stock options at September 30, 2024 956,977 $ 30.27 5.1 $ — (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, 2024 and December 31, 2023 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 60,054 stock options granted outside the PAVmed 2014 Equity Plan, as of September 30, 2024 and December 31, 2023. On February 22, 2024, the Company granted 59,500 stock options under the PAVmed Inc 2014 Equity Plan with a weighted average exercise price of $ 1.85 . Each such option will vest one-third after one year then ratably over the next eight quarters. In addition, on February 22, 2024, a total of 390,000 restricted stock awards were granted to the Board of Directors under the PAVmed 2014 Equity Plan, with such restricted stock awards having an aggregate fair value of approximately $ 0.7 million, which was measured using the respective grant date quoted closing price per share of PAVmed common stock, with the 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 vesting of the restricted stock awards vest ratably on an annual basis over a three year period with the initial annual vesting date of November 30, 2024. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. 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, 2023 70,527 $ 38.77 Granted 390,000 1.85 Vested ( 135,080 ) 2.00 Forfeited — — Unvested restricted stock awards as of September 30, 2024 325,447 $ 9.79 22 Note 12 — Stock-Based Compensation - continued Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics 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. Please note that following the deconsolidation of Lucid, the Lucid Diagnostics 2018 Long-Term Equity Plan is no longer reflected in the Company’s unaudited condensed consolidated statements of operations. Lucid continues to be responsible for administering its equity plan. See Note 4, Equity Method Investment , for additional information on the deconsolidation of Lucid Diagnostics. 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, 2023 5,504,383 $ 2.00 8.5 $ 765 Granted (1) 3,604,000 $ 1.22 Exercised ( 3,333 ) $ 1.31 Forfeited ( 417,501 ) $ 1.63 Outstanding stock options at September 10, 2024 (3) 8,687,549 $ 1.69 8.3 $ 191 Vested and exercisable stock options at September 10, 2024 3,084,682 $ 2.25 7.1 $ 191 (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 10, 2024 and December 31, 2023 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 523,300 stock options granted outside the Lucid Diagnostics 2018 Equity Plan, as of September 10, 2024 and December 31, 2023. On February 22, 2024, Lucid granted 2,895,000 stock options under the Lucid Diagnostics 2018 Equity Plan with a weighted average exercise price of $ 1.25 . Each option will 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, 2023 2,337,440 $ 8.99 Granted 1,600,000 1.03 Vested ( 26,912 ) 4.56 Forfeited ( 13,088 ) 4.56 Unvested restricted stock awards as of September 10, 2024 3,897,440 $ 5.77 In May 2024, a total of 1,600,000 restricted stock awards were granted to management under the Lucid Diagnostics 2018 Equity Plan, with such restricted stock awards having an aggregate fair value of approximately $ 1.5 million, which was measured using the respective grant date quoted closing price per share of Lucid Diagnostics common stock, with the 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 vesting of the restricted stock awards vest on a single vest date of May 20, 2026. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. 23 Note 12 — Stock-Based Compensation - continued Consolidated Stock-Based Compensation Expense The consolidated stock-based compensation expense recognized by each of PAVmed and (through September 10, 2024, the date of PAVmed’s deconsolidation of Lucid) 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 2024 2023 2024 2023 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cost of revenue $ 32 $ 32 $ 112 $ 86 Sales and marketing expenses 292 403 1,082 1,302 General and administrative expenses 1,426 1,499 3,717 6,761 Research and development expenses 181 311 805 1,022 Total stock-based compensation expense $ 1,931 $ 2,245 $ 5,716 $ 9,171 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 (through September 10, 2024, the date of PAVmed’s deconsolidation of Lucid) inclusive of each of: stock options granted under the PAVmed 2014 Equity Plan to the three physician inventors of the intellectual property underlying the Amended CWRU License Agreement; 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 (through September 10, 2024, the date of PAVmed’s deconsolidation of Lucid) 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 2024 2023 2024 2023 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Lucid Diagnostics 2018 Equity Plan – cost of revenue $ 24 $ 16 $ 81 $ 44 Lucid Diagnostics 2018 Equity Plan – sales and marketing 252 228 849 697 Lucid Diagnostics 2018 Equity Plan – general and administrative 548 721 1,484 4,069 Lucid Diagnostics 2018 Equity Plan – research and development 98 67 356 204 PAVmed 2014 Equity Plan - cost of revenue 9 10 30 26 PAVmed 2014 Equity Plan - sales and marketing 18 106 136 359 PAVmed 2014 Equity Plan - general and administrative 1 7 5 170 PAVmed 2014 Equity Plan - research and development 5 97 148 290 Total stock-based compensation expense – recognized by Lucid Diagnostics $ 955 $ 1,252 $ 3,089 $ 5,859 Total stock-based compensation expense $ 955 $ 1,252 $ 3,089 $ 5,859 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 the PAVmed 2014 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 $ 1,377 1.5 Restricted Stock Awards $ 397 2.2 24 Note 12 — Stock-Based Compensation - continued 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 $ 1.47 per share and $ 5.25 per share during the nine month periods ended September 30, 2024 and 2023, 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, 2024 2023 Expected term of stock options (in years) 5.8 5.7 Expected stock price volatility 90 % 88 % Risk free interest rate 4.3 % 3.7 % Expected dividend yield — % — % 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 $ 0.79 per share and $ 0.88 per share during the nine month periods ended September 30, 2024 (through September 10, 2024, the date of PAVmed’s consolidation of Lucid) and 2023, 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, 2024 2023 Expected term of stock options (in years) 5.7 5.6 Expected stock price volatility 73 % 75 % Risk free interest rate 4.3 % 3.7 % Expected dividend yield — % — % PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”) A total of 34,332 shares and 38,216 shares of common stock of the Company were purchased for proceeds of approximately $ 62 and $ 182 , on March 31, 2024 and 2023, respectively, under the PAVmed ESPP. A total of 20,267 shares of common stock of the Company were purchased for proceeds of approximately $ 76 on September 30, 2023 under the PAVmed ESPP. The March 31, 2023 purchase was partially settled through the redeployment of 12,590 shares of treasury stock. The PAVmed ESPP has a total reserve of 300,001 shares of common stock of PAVmed of which 139,863 shares are available for issue as of September 30, 2024. In January 2024, the number of shares available-for-issue was increased by 166,667 in accordance with the evergreen provisions of the plan. Effective September 18, 2024, PAVmed’s compensation committee temporarily suspended any participation in the PAVmed ESPP. Accordingly, no shares of common stock of the Company have been purchased under the PAVmed ESPP since March 31, 2024. Lucid Diagnostics Inc. Employee Stock Purchase Plan (“Lucid ESPP”) A total of 511,884 shares and 231,987 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 353 and $ 276 on March 31, 2024 and 2023, respectively, under the Lucid ESPP. A total 276,213 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 275 on September 30, 2023 under the Lucid ESPP. 25 Note 13 — Preferred Stock As of September 30, 2024 and December 31, 2023, there were 1,385,149 and 1,305,213 shares of PAVmed Series B Convertible Preferred Stock, classified in permanent equity, issued and outstanding, respectively. PAVmed Series B Convertible Preferred Stock Dividends The Series B Convertible Preferred Stock is issued pursuant to the PAVmed Inc. Certificate of Designation of Preferences, Rights, and Limitations of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock Certificate of Designation”), has a par value of $ 0.001 per share, no voting rights, a stated value of $ 3.00 per share, and was immediately convertible upon its issuance. At the holders’ election, fifteen shares of Series B Convertible Preferred Stock are currently convertible into one share of common stock of the Company, subject to further adjustment for the effect of future stock dividends, stock splits or similar events affecting the Company’s common stock. The Series B Convertible Preferred Stock shall not be redeemed for cash and under no circumstances shall the Company be required to net cash settle the Series B Convertible Preferred Stock. 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. PAVmed 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 $ 83 and $ 244 of such dividends earned in the three and nine month periods ended September 30, 2024, respectively; and $ 77 and $ 226 of such dividends earned in the three and nine month periods ended September 30, 2023, respectively. PAVmed Series B Convertible Preferred Stock Dividends Declared During the nine months ended September 30, 2024, the Company’s board of directors declared an aggregate of approximately $ 239 of Series B Convertible Preferred Stock dividends, inclusive of $ 78 earned as of December 31, 2023; and $ 80 earned as of March 31, 2024; and $ 81 earned as of June 30, 2024, with such dividends settled by the issue of an aggregate 79,936 additional shares of Series B Convertible Preferred Stock, inclusive of 26,123 shares issued with respect to the dividends earned as of December 31, 2023; and 26,640 shares issued with respect to the dividends earned as of March 31, 2024; and 27,173 shares issued with respect to the dividends earned as of June 30, 2024. During the nine months ended September 30, 2023, the Company’s board of directors declared an aggregate of approximately $ 221 of Series B Convertible Preferred Stock dividends, 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. Subsequent to September 30, 2024, in November 2024, the Company’s board of directors declared a PAVmed Series B Convertible Preferred Stock dividend, earned as of September 30, 2024, of $ 83 , to be settled by the issue of 27,716 additional shares of Series B Convertible Preferred Stock. The PAVmed 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 unaudited 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. 26 Note 14 — Common Stock and Common Stock Purchase Warrants Common Stock In February 2023, the Company distributed a proxy statement for a special meeting of shareholders that was held on March 31, 2023 (the “Special Meeting”), at which the Company sought approval of an amendment to the Company’s Certificate of Incorporation, to effect, (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. On March 31, 2023, the shareholders approved the above 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. On November 28, 2023 the Company’s board of directors, unanimously authorized management to effect the reverse split at the ratio of 1-for-15 . The reverse stock split became effective on December 7, 2023. At the effective date, every 15 shares of the Company’s common stock that were issued and outstanding were automatically combined into one issued and outstanding share, without any change in par value of such shares. No fractional shares were issued in connection with the reverse stock split. Instead, each fractional share remaining after completion of the reverse stock split that was less than a whole share was rounded up to one whole share. The reverse stock split also correspondingly affected all outstanding PAVmed equity awards and outstanding convertible securities. On March 7, 2024, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that, for the prior 30 consecutive business days (through March 6, 2024), the market value of the Company’s listed securities had been below the minimum of $35 million required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2). The Company was provided 180 calendar days, or until September 3, 2024, to regain compliance with the rule. The Company did not regain compliance with the rule during the allotted time period. Accordingly, on September 10, 2024, the Company received a staff determination letter from the Nasdaq Listing Qualifications Department, stating that unless the Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”) to appeal the staff determination, the Company’s securities would be subject to suspension and delisting. The Company timely requested a hearing before the Panel, which was held on October 29, 2024. On November 8, 2024, the Panel granted the Company an extension, until January 31, 2025, to regain compliance with the Nasdaq continued listing standards. During the extension granted by the Panel, the Company’s common stock and Series Z warrants will continue to trade uninterrupted under the symbol “PAVM” and “PAVMZ”, respectively. During the nine months ended September 30, 2024 a total of 34,332 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, 2024, 574,424 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 $ 980 face value principal repayments, as discussed in Note 11, Debt . In the nine months ended September 30, 2024, the Company sold 627,302 shares through their at-the-market equity facility for net proceeds of approximately $ 977 , after payment of 3 % commissions. In the nine months ended September 30, 2024, the Company issued 200,809 shares of common stock to vendors in exchange for $ 200 of agreed upon services, which is included in general and administrative operating expenses on the Company’s unaudited condensed consolidated statement of operations. PAVmed Distribution of Lucid Diagnostics Common Stock to Shareholders On February 15, 2024, the Company distributed by special dividend to the Company stockholders 3,331,747 shares of Lucid Diagnostics common stock held by the Company. On such date, each PAVmed shareholder as of the January 15, 2024 record date received a stock dividend of approximately 38 shares of Lucid common stock for every 100 shares of PAVmed common stock they held as of such date. The shares distributed were approximately equal to the number of shares of common stock that Lucid issued to PAVmed on or about January 26, 2024 in satisfaction of certain intercompany obligations due to Lucid from PAVmed. The Company’s distribution of Lucid common stock to PAVmed stockholders, constituted an “Extraordinary Dividend” as defined in the Warrant Agreement. Accordingly, as a result of the distribution, pursuant to Section 4.3 of the Warrant Agreement, the Warrant Price has been decreased by $ 0.52 (the fair market value of 0.37709668 of a share of Lucid Diagnostics’ common stock on the distribution date) to $ 23.48 per share. Common Stock Purchase Warrants As of September 30, 2024 and December 31, 2023, Series Z Warrants outstanding totaled 11,937,450 representing the right to purchase 795,830 shares of the Company’s common stock. The Series Z Warrants are now exercisable to purchase one whole share of common stock of the Company at an exercise price of $ 23.48 ($ 24.00 post reverse-split, decreased by $ 0.52 due to distribution of Lucid common stock to PAVmed stockholders, discussed further above). There were no Series Z Warrants exercised during the nine months ended September 30, 2024. 27 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 September 30, 2024 NCI – equity - December 31, 2023 $ 29,813 Net loss attributable to NCI ( 11,075 ) Impact of subsidiary equity transactions ( 4,414 ) Lucid Diagnostics proceeds from issuance of preferred stock Series A-1 5,670 Lucid Diagnostics exchange of preferred stock Series A and Series A-1 ( 24,294 ) Lucid Diagnostics issuance through exchange - Series B and Series B-1 31,790 Lucid Diagnostics issuance through sale - Series B and Series B-1 24,129 Lucid Diagnostics deemed dividend on preferred stock ( 7,496 ) Lucid Diagnostics issuance of common stock for settlement of vendor service agreement 401 Lucid Diagnostics 2018 Equity Plan stock option exercise 4 Lucid Diagnostics Employee Stock Purchase Plan Purchase 353 Conversion of Lucid Diagnostics common stock for Senior Secured Convertible Debt 3,801 Stock-based compensation expense - Lucid Diagnostics 2018 Equity Plan 2,771 Stock-based compensation expense - Veris Health 2021 Equity Plan 368 Deconsolidation of Lucid ( 56,339 ) NCI – equity - September 30, 2024 $ ( 4,518 ) The consolidated NCI presented above is with respect to the Company’s consolidated subsidiaries as a component of consolidated total stockholders’ equity as of September 30, 2024 and December 31, 2023; 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 subsidiaries. Lucid Diagnostics — Deconsolidation As of September 30, 2024, there were 51,597,718 shares of common stock of Lucid Diagnostics issued and outstanding, of which, PAVmed held 31,302,444 shares. On September 10, 2024, following preferred equity transactions completed by Lucid earlier in 2024 and the termination of voting proxies entered into between PAVmed and certain shareholders of Lucid, PAVmed’s voting interest in the Company was reduced to less than 50.0%, resulting in the loss of a controlling financial interest. However, PAVmed retains the ability to exercise significant influence over Lucid. Upon deconsolidation, the Company’s ownership of 31,302,444 shares of Lucid Diagnostics common stock was valued at $25.1 million, which resulted in a gain on deconsolidation of $72.3 million in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024. Lucid Diagnostics — Intercompany Obligation Settlement; Special Distribution On January 26, 2024 PAVmed elected to receive payment of $ 4,675 of fees and reimbursements due from Lucid, through the issuance of 3,331,771 shares of Lucid Diagnostics common stock. On February 15, 2024, the Company distributed by special dividend to the Company stockholders, as of the record date noted above, 3,331,747 shares of Lucid Diagnostics common stock held by the Company. Lucid Diagnostics — Convertible Preferred Stock Offerings 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. 28 Note 15 — Noncontrolling Interest - continued On March 13, 2024, Lucid issued an additional 5,670 shares of Lucid Series A-1 Preferred Stock, for aggregate gross proceeds of $ 5.67 million. On March 13, 2024, Lucid issued 44,285 shares of newly designated Lucid Series B Convertible Preferred Stock (the “Lucid Series B Preferred Stock”). The terms of the Lucid Series B Preferred Stock are substantially identical to the terms of the Lucid Series A Preferred Stock and the Lucid Series A-1 Preferred Stock, except that the Lucid Series B Preferred Stock has a conversion price of $ 1.2444 , and the holders of the Lucid Series B Preferred Stock vote with the common stock on an as-converted basis (subject to any applicable ownership limitations). On the same day, Lucid issued an additional 5,670 shares of Lucid Series A-1 Preferred Stock, for aggregate gross proceeds of $ 5.67 million (all of which shares were immediately exchanged for shares of Lucid Series B Preferred Stock). The aggregate gross proceeds from the sale of shares in such offering were $ 18.1 million. As a result of 100 % of the then-outstanding shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged for shares of Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange, no shares of Lucid Series A Preferred Stock or Lucid Series A-1 Preferred Stock remain outstanding. On May 6, 2024, Lucid issued approximately 11,634 shares of newly designated Lucid Series B-1 Convertible Preferred Stock (the “Lucid Series B-1 Preferred Stock”). The terms of the Lucid Series B-1 Preferred Stock are substantially identical to the terms of the Lucid Series B Preferred Stock, except that the Lucid Series B-1 Preferred Stock has a conversion price of $ 0.7228 . The aggregate gross proceeds from the sale of shares in such offering were $ 11.6 million. Lucid Diagnostics — Deemed Dividend on Series A and Series A-1 Convertible Preferred Stock Exchange Offer The fair value of the consideration given in the form of the issue of 31,790 shares of Lucid Series B Convertible Preferred Stock, with such fair value recognized as the carrying value of such issued shares of Lucid Series B Convertible Preferred Stock, as compared to the carrying value of the extinguished Lucid Series A and Lucid Series A-1 Convertible Preferred Stock (carrying value of $ 24,294 ), resulting in an excess of fair value of $ 7.5 million recognized as a deemed dividend charged to accumulated deficit in the unaudited condensed consolidated balance sheet on March 13, 2024, with such deemed dividend included as a component of net loss attributable to common stockholders, summarized as follows: Schedule of Net Loss Attributable to Common Stockholders Lucid Series B Convertible Preferred Stock Issuance and Series A/A-1 Exchange Offer March 13, 2024 Fair Value - 31,790 shares of Lucid Series B Preferred Stock issued $ 31,790 Fair Value - 31,790 shares of Lucid Series B Preferred Stock issued in exchange for Lucid Series A and Lucid Series A-1 Preferred Stock $ 31,790 Less: Carrying value related to Lucid Series A and Lucid Series A-1 Preferred Stock Exchanged for Lucid Series B Preferred Stock (of 24,295 shares) ( 24,294 ) Deemed Dividend Charged to Accumulated Deficit $ 7,496 29 Note 16 — Net Income (Loss) Per Share The Net income (loss) per share - attributable to PAVmed Inc. - basic and diluted and Net income (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 2024 2023 2024 2023 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Numerator Net income (loss) - before noncontrolling interest $ 60,711 $ ( 21,750 ) $ 27,285 $ ( 61,855 ) Net income (loss) attributable to noncontrolling interest 3,688 4,079 11,075 11,716 Net income (loss) - as reported, attributable to PAVmed Inc. $ 64,399 $ ( 17,671 ) $ 38,360 $ ( 50,139 ) Series B Convertible Preferred Stock dividends – earned $ ( 83 ) $ ( 77 ) $ ( 244 ) $ ( 226 ) Deemed dividend on Subsidiary Preferred Stock attributable to the noncontrolling interests $ — $ — $ ( 7,496 ) $ — Net income (loss) attributable to PAVmed Inc. common stockholders used in basic EPS calculation $ 64,316 $ ( 17,748 ) $ 30,620 $ ( 50,365 ) Fair Value Adjustment for diluted EPS calculation $ ( 240 ) $ — $ 3,378 $ — Net income (loss) attributable to PAVmed Inc. common stockholders used in dilutive EPS calculation $ 64,076 $ ( 17,748 ) $ 33,998 $ ( 50,365 ) Denominator Weighted average common shares outstanding, basic 10,005,379 7,462,751 9,286,999 6,967,764 Weighted average common shares outstanding, diluted 44,475,638 7,462,751 43,069,449 6,967,764 Net income (loss) per share ( 1) Net income (loss) per share attributable to PAVmed Inc. common stockholders, basic (1) $ 6.43 $ ( 2.38 ) $ 3.30 $ ( 7.23 ) Net income (loss) per share attributable to PAVmed Inc. common stockholders, diluted (1) $ 1.44 $ ( 2.38 ) $ 0.79 $ ( 7.23 ) (1) - Convertible preferred stock and restricted stock awards would potentially be considered a participating security under the two-class method of calculating net income (loss) per share. For periods where losses are presented, such holders are not contractually obligated to share in the losses, there is no impact on the Company’s net income (loss) per share calculation for the periods indicated. 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 years 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 nine month periods ended September 30, 2024 and 2023 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 the three and nine month periods ended September 30, 2023, 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 2024 2023 September 30, 2024 2023 Stock options 1,233,107 1,138,632 Restricted stock awards — 70,528 Series Z Warrants 795,830 795,830 Series B Convertible Preferred Stock — 85,307 Total 2,028,937 2,090,297 The total stock options and restricted stock awards are inclusive of 60,054 and 33,391 stock options as of September 30, 2024 and 2023, respectively, granted outside the PAVmed 2014 Equity Plan. 30