PAVmed Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on such evaluation, our principal executive officer and principal financial officer concluded our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) were effective as of such date to provide reasonable assurance the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as such term is defined in Exchange Act Rules 13(a)-15(f). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S. Our internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; ● provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the U.S., and our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and; ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets could have a material effect on the financial statements. Due to its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system contains self-monitoring mechanisms, so actions will be taken to correct deficiencies as they are identified. Our management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded our system of internal control over financial reporting was effective as of December 31, 2024. This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC to permit us to provide only management’s report in this Form 10-K. Changes to Internal Controls Over Financial Reporting There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. Item 9B. Other Information During the fiscal quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation S-K). In March 2025, the Company and the lead investor in the February 2025 financing completed by the Company and Veris entered into an agreement, pursuant to which the lead investor agreed that it would, with respect to the election of the Company’s directors, vote its shares of the Company’s common stock (including those exercisable in respect of their pre-funded warrants) in accordance with the recommendations of the Company’s board of directors. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 55 PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item 10 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2024. Item 11. Executive Compensation The information required by this Item 11 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2024. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item 12 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2024. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item 13 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2024. Item 14. Principal Accounting Fees and Services The information required by this Item 14 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, 2024. 56 PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents filed as a part of the report: (1) The following financial statements: Report of Independent Registered Public Accounting Firm (PCAOB ID#688) Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Stockholders’ Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) The financial statement schedules: Schedules other than those listed above are omitted for the reason they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable. (3) The following exhibits: Incorporation by Reference Exhibit No. Description Form Exhibit No. Date 2.1 Asset Purchase Agreement, dated as of February 25, 2022, by and among LucidDx Labs Inc., Lucid Diagnostics Inc. and ResearchDx, Inc. 8-K (LUCD) 2.1 3/3/22 3.1.1 Certificate of Incorporation S-1 3.1 4/22/15 3.1.2 Certificate of Amendment to Certificate of Incorporation S-1 3.2 4/22/15 3.1.3 Certificate of Amendment to Certificate of Incorporation, dated October 1, 2018 8-K 3.1 10/2/18 3.1.4 Certificate of Amendment to Certificate of Incorporation, dated June 26, 2019 8-K 3.1 6/27/19 3.1.5 Certificate of Amendment to Certificate of Incorporation, dated July 24, 2020 8-K 3.1 7/27/20 3.1.6 Certificate of Amendment to Certificate of Incorporation, dated June 21, 2022 8-K 3.1 6/22/22 3.1.7 Certificate of Amendment to Certificate of Incorporation, dated January 15, 2025 8-K 3.1 1/15/25 3.1.8 Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock 8-K/A 3.1 4/20/18 3.1.9 Form of Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock 8-K 4.1 1/21/25 3.2 Amended and Restated Bylaws 8-K 3.1 1/15/21 4.1 Description of Registrant’s Securities * 4.2 Specimen Common Stock Certificate S-1/A 4.2 9/29/15 4.6 Specimen Series Z Warrant Certificate 8-K 4.1 4/5/18 4.7 Amended and Restated Series Z Warrant Agreement, dated as of June 8, 2018, by and between PAVmed Inc. and Continental Stock Transfer & Trust Company, as Warrant Agent 8-K 10.1 6/8/18 4.8 Form of PAVmed Senior Secured Convertible Note 8-K 4.1 4/4/22 4.9 Form of Lucid Diagnostics 2024 Convertible Note 8-K (LUCD) 4.1 11/29/24 10.1 Patent Option Agreement S-1 10.1 4/22/15 10.2.1 Form of Letter Agreement with HCFP Capital Partners III LLC S-1 10.4.1 4/22/15 10.2.2 Form of Letter Agreement with Pavilion Venture Partners LLC S-1 10.4.2 4/22/15 10.3.1 Letter agreement regarding corporate opportunities executed by Lishan Aklog, M.D. S-1 10.5.1 4/22/15 10.3.2 Letter agreement regarding corporate opportunities executed by Michael Glennon S-1 10.5.2 4/22/15 10.4# Amended and Restated Employment Agreement between PAVmed Inc. and Lishan Aklog, M.D. 8-K 10.1 3/20/19 10.5# Amended and Restated Employment Agreement between PAVmed Inc. and Dennis M. McGrath 8-K 10.2 3/20/19 10.6# PAVmed Inc. Fifth Amended and Restated 2014 Long-Term Incentive Equity Plan DEF 14A Annex A 4/30/21 10.7# PAVmed Inc. Employee Stock Purchase Plan DEF 14A Annex B 4/30/21 10.8# Employment Agreement between PAVmed Inc. and Michael A. Gordon 10-K 10.9 3/14/23 10.9# Employment Agreement between PAVmed Inc. and Shaun M. O’Neil 8-K 10.1 2/24/22 57 Incorporation by Reference Exhibit No. Description Form Exhibit No. Date 10.10.1 Amended and Restated License Agreement, dated as of August 23, 2021, by and between Case Western Reserve University and Lucid Diagnostics Inc. S-1/A (LUCD) 10.2 10/1/21 10.10.2† First Amendment to Amended and Restated License Agreement, dated as of February 15, 2024, by and between Case Western Reserve University and Lucid Diagnostics Inc. 10-K (LUCD) 10.2.2 3/24/25 10.10.3† Second Amendment to Amended and Restated License Agreement, dated as of November 7, 2024, by and between Case Western Reserve University and Lucid Diagnostics Inc. 10-K (LUCD) 10.2.3 3/24/25 10.11 Form of Stock Option Agreement 10-K 10.12 3/14/23 10.12 Form of Indemnification Agreement 10-K 10.13 3/14/23 10.13 Controlled Equity Offering SM , dated as of December 21, 2021, by and between Cantor Fitzgerald & Co. and PAVmed Inc. S-3 1.2 12/21/21 10.14.1 Form of Securities Purchase Agreement (Senior Secured Convertible Note) 8-K 10.1 4/4/22 10.14.2 Form of Security Agreement (Senior Secured Convertible Note) 8-K 10.2 4/4/22 10.15.1 Form of Exchange Agreement (Series C Exchange) 8-K 10.1 11/21/24 10.15.2 Form of Securities Purchase Agreement (Series C Exchange) 8-K 10.2 11/21/24 10.16.1 Common Stock Purchase Agreement, dated as of March 28, 2022, by and between CF Principal Investments LLC and Lucid Diagnostics Inc. 8-K (LUCD) 10.1 4/1/22 10.16.2 Registration Rights Agreement, dated as of March 28, 2022, by and between CF Principal Investments LLC and Lucid Diagnostics Inc. 8-K (LUCD) 10.2 4/1/22 10.17 Controlled Equity Offering SM , dated as of November 23, 2022, by and between Cantor Fitzgerald & Co. and Lucid Diagnostics Inc. 8-K (LUCD) 1.2 11/25/22 10.18.1‡ Form of Securities Purchase Agreement (Lucid 2024 Convertible Notes) 8-K (LUCD) 10.1 11/29/24 10.18.2 Form of Registration Rights Agreement (Lucid 2024 Convertible Notes) 8-K (LUCD) 10.2 11/29/24 10.18.3 Form of Guaranty (Lucid 2024 Convertible Notes) 8-K (LUCD) 10.3 11/29/24 10.8.4‡ Form of Security Agreement (Lucid 2024 Convertible Notes) 8-K (LUCD) 10.4 11/29/24 10.19.1 Management Services Agreement, dated as of May 12, 2018, by and between PAVmed Inc. and Lucid Diagnostics Inc. S-1/A (LUCD) 10.4.1 10/7/21 10.9.2 Eighth Amendment to Management Services Agreement, dated as of March 22, 2024, by and between PAVmed Inc. and Lucid Diagnostics Inc. 10-K (LUCD) 10.4.9 3/25/24 10.9.3 Ninth Amendment to Management Services Agreement, dated as of August 6, 2024, by and between PAVmed Inc. and Lucid Diagnostics Inc. 10-Q (LUCD) 10.2 8/12/24 14.1 Form of Code of Ethics 10-K 14.1 3/14/23 19.1 Insider Trading Policy * 21.1 List of Subsidiaries * 23.1 Consent of Marcum LLP * 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 31.2 Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * 32.2 Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * 97.1 Form of Compensation Clawback Policy 10-K 97.1 3/25/24 101.INS XBRL Instance Document * 101.SCH XBRL Taxonomy Extension Schema * 101.CAL XBRL Taxonomy Extension Calculation Linkbase * 101.DEF XBRL Taxonomy Extension Definition Linkbase * 101.LAB XBRL Taxonomy Extension Label Linkbase * 101.PRE XBRL Taxonomy Extension Presentation Linkbase * * Filed herewith # Management contract or compensatory plan or arrangement. † Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. ‡ Certain exhibits and schedules have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The registrant hereby undertakes to furnish a copy of any omitted exhibit or schedule upon request by the Securities and Exchange Commission. LUCD Lucid Diagnostics Inc. Item 16. Form 10-K Summary None 58 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PAVmed Inc. March 24, 2025 By: /s/ Dennis M. McGrath Dennis M. McGrath President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes both Lishan Aklog, M.D. and Dennis M. McGrath or either of them acting in the absence of the others, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the United States Securities and Exchange Commission. Signature Title Date /s/ Lishan Aklog, M.D. Chairman of the Board of Directors March 24, 2025 Lishan Aklog, M.D. Chief Executive Officer (Principal Executive Officer) /s/ Dennis M. McGrath President March 24, 2025 Dennis M. McGrath Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Michael J. Glennon Vice Chairman March 24, 2025 Michael J. Glennon Director /s/ Debra J. White Director March 24, 2025 Debra J. White /s/ Ronald M. Sparks Director March 24, 2025 Ronald M. Sparks /s/ Timothy Baxter Director March 24, 2025 Timothy Baxter /s/ Sundeep Agrawal Director March 24, 2025 Sundeep Agrawal 59 PAVMED INC. and SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm (PCAOB ID 688 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-5 Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2024 F-6 Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2023 F-7 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-8 Notes to Consolidated Financial Statements F-9 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of PAVmed Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of PAVmed Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant operating losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) Valuation of Convertible Notes Critical Audit Matter Description As described in Notes 12 and 13 to the consolidated financial statements, the Company’s aggregate principal balance of the Senior Secured Convertible Notes amounted to $25.2 million as of December 31, 2024. The Senior Secured Convertible Notes contain conversion and redemption features. The Company elected to account for the Senior Secured Convertible Notes under the fair value option in accordance with ASC 825. The fair value of the Senior Secured Convertible Notes was $29.1 million as of December 31, 2024. The Senior Secured Convertible Note of the Company’s subsidiary, Lucid Diagnostics Inc., was $10.3 million as of September 10, 2024, the date of deconsolidation. We identified the valuation of convertible notes as a critical audit matter as auditing the Company’s fair value of the Senior Secured Convertible Notes was complex and involved a high degree of subjectivity because the Company used a complex valuation methodology that incorporated significant management assumptions including discount rate, expected volatility, installment payment conversion price, and probability weighting of the company optional redemption and hold to maturity scenarios. Also, this matter caused us to use increased effort including involvement of professionals with specialized skill and knowledge. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the valuation of convertible notes included the following, among others: ● We obtained an understanding of the design of the Company’s controls over the valuation of the convertible notes, including controls over management’s review of the valuation model and the significant assumptions used in determining the fair value of the convertible notes. ● With assistance of our valuation specialists, we audited the fair value of the Senior Secured Convertible Notes, valuation methodology and key assumptions used in determining the fair value of the Senior Secured Convertible Notes by: a. Evaluating the appropriateness of the valuation model and techniques used in determining the fair value; b. Assessing whether significant valuation assumption inputs, including discount rate and expected volatility are consistent with those that would be used by market participants through the testing of source information, checking the mathematical accuracy of the calculation, and developing independent estimates for certain inputs and comparing to those selected by management, where applicable; assessing the reasonableness of the installment payment conversion price and probability weighting of the company optional redemption and hold to maturity scenarios by assessing the historical practice and reviewing subsequent events; and c. Recalculating fair value of the convertible notes for reasonableness. ● We tested the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2019. New York, NY March 24, 2025 F- 3 PAVMED INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and per share data) December 31, 2024 December 31, 2023 Assets: Current assets: Cash $ 1,185 $ 19,639 Accounts receivable 18 61 Inventory — 278 Prepaid expenses, deposits, and other current assets 961 4,520 Total current assets 2,164 24,498 Fixed assets, net 151 1,783 Operating lease right-of-use assets 2,500 4,267 Intangible assets, net — 1,424 Equity method investment - at fair value 25,637 — Other assets 208 1,147 Total assets $ 30,660 $ 33,119 Liabilities, Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 657 $ 1,786 Accrued expenses and other current liabilities 5,176 6,626 Operating lease liabilities, current portion 513 1,565 Senior Secured Convertible Notes - at fair value 29,100 44,200 Total current liabilities 35,446 54,177 Operating lease liabilities, less current portion 2,247 2,960 Total liabilities 37,693 57,137 Commitments and contingencies (Note 11) - - 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 1,412,865 at December 31, 2024 and 1,305,213 shares at December 31, 2023 3,316 2,993 Common stock, $ 0.001 par value. Authorized, 250,000,000 shares (Note 16); 11,198,977 and 8,578,505 shares outstanding as of December 31, 2024 and December 31, 2023, respectively 11 9 Additional paid-in capital 249,143 237,600 Accumulated deficit ( 254,965 ) ( 294,433 ) Total PAVmed Inc. Stockholders’ Equity (Deficit) ( 2,495 ) ( 53,831 ) Noncontrolling interests ( 4,538 ) 29,813 Total Stockholders’ Equity (Deficit) ( 7,033 ) ( 24,018 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 30,660 $ 33,119 See accompanying notes to the consolidated financial statements. F- 4 PAVMED INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except number of shares and per share data) 2024 2023 Years Ended December 31, 2024 2023 Revenue $ 2,995 $ 2,452 Operating expenses: Cost of revenue 4,840 6,420 Sales and marketing 11,627 17,583 General and administrative 24,524 30,947 Amortization of acquired intangible assets 559 2,021 Research and development 5,932 14,276 Total operating expenses 47,482 71,247 Operating loss ( 44,487 ) ( 68,795 ) Other income (expense): Interest income 254 505 Interest expense ( 45 ) ( 589 ) Gain on deconsolidation of subsidiary 72,287 — Change in fair value - equity method investment 532 — Change in fair value - Senior Secured Convertible Notes 462 ( 6,026 ) Loss on issue and offering costs - Senior Secured Convertible Note — ( 1,186 ) Debt extinguishments loss - Senior Secured Convertible Notes ( 2,535 ) ( 3,782 ) Debt modification expense ( 2,000 ) — Change in fair value - derivative liability — ( 390 ) Management fee income 3,850 — Grant income 109 — Gain on sale of intellectual property — 1,000 Other income (expense), net 72,914 ( 10,468 ) Income (loss) before provision for income tax 28,427 ( 79,263 ) Provision for income taxes — — Net income (loss) before noncontrolling interests 28,427 ( 79,263 ) Net loss attributable to the noncontrolling interests 11,364 15,088 Net income (loss) attributable to PAVmed Inc. 39,791 ( 64,175 ) Less: Deemed dividend on Series Z warrant modification — ( 1,791 ) Less: Series B Convertible Preferred Stock dividends earned ( 329 ) ( 304 ) Less: Deemed dividend on Subsidiary Preferred Stock attributable to the noncontrolling interests ( 7,496 ) — Net income (loss) attributable to PAVmed Inc. common stockholders $ 31,966 $ ( 66,270 ) Per share information: Net income (loss) per share attributable to PAVmed Inc. common stockholders – basic $ 3.30 $ ( 9.16 ) Net income (loss) per share attributable to PAVmed Inc. common stockholders – diluted $ 0.50 $ ( 9.16 ) Weighted average common shares outstanding, basic 9,672,199 7,231,546 Weighted average common shares outstanding, diluted 65,291,623 7,231,546 See accompanying notes to the consolidated financial statements. F- 5 PAVMED INC. and SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the YEAR ENDED December 31, 2024 (in thousands, except number of shares and per share data) Shares Amount Shares Amount Capital Deficit Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Non controlling Shares Amount Shares Amount Capital Deficit Interest Total Balance - December 31, 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 107,652 323 — — — ( 323 ) - — — Issue common stock - PAVM ATM Facility — — 1,032,298 1 1,307 — - — 1,308 Vest - restricted stock awards — — 136,096 — — — - — — Conversions - Senior Secured Convertible Note — — 1,084,366 1 2,019 — - — 2,020 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 — — 333,380 — 350 — - 401 751 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. — — — — 2,681 — - — 2,681 Stock-based compensation - subsidiaries — — — — 360 — - 3,408 3,768 Transfer of intellectual property to Lucid Diagnostics Inc — — — — 350 — - — 350 Deconsolidation of subsidiary — — — — — — - ( 56,339 ) ( 56,339 ) Net income (loss) — — — — — 39,791 - ( 11,364 ) 28,427 Balance - December 31, 2024 1,412,865 $ 3,316 11,198,977 $ 11 $ 249,143 $ ( 254,965 ) - $ ( 4,538 ) $ ( 7,033 ) See accompanying notes to the consolidated financial statements. F- 6 PAVMED INC. and SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the YEAR ENDED December 31, 2023 (in thousands, except number of shares and per share data) Shares Amount Shares Amount Capital Deficit Stock Interest Total PAVmed Inc. Stockholders’ Equity (Deficit) Series B Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Treasury Non controlling Shares Amount Shares Amount Capital Deficit Stock Interest Total Balance - 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 99,454 298 — — — ( 298 ) — — — Issue common stock - PAVM ATM Facility — — 321,288 1 1,823 — — — 1,824 Vest - restricted stock awards — — 6,666 — — — — — — Conversions - Senior Secured Convertible Note — — 1,745,824 2 10,000 — — — 10,002 Conversions - subsidiary common stock - Senior Secured Convertible Note — — — — — — — 167 167 Purchase - Employee Stock Purchase Plan — — 45,893 — 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 — — — — 1,983 — — ( 1,983 ) — Issuance - subsidiary common stock - Settlement APA-RDx - Installment Payment — — — — — — — 713 713 Issuance - vendor service agreement — — 100,000 — 601 — — 147 748 Issuance - subsidiary preferred stock (Series A) — — — — — — — 18,625 18,625 Issuance of shares related to reverse stock split — — 45,541 — — — — — — Incremental value from Z Warrant modification — — — — 1,791 ( 1,791 ) — — — Stock-based compensation - PAVmed Inc. — — — — 4,255 — — — 4,255 Stock-based compensation - subsidiaries — — — — 1,102 — — 5,782 6,884 Treasury stock — — 12,590 — ( 348 ) — 348 — — Net Loss — — — — — ( 64,175 ) — ( 15,088 ) ( 79,263 ) Net income (loss) — — — — — ( 64,175 ) — ( 15,088 ) ( 79,263 ) Balance - December 31, 2023 1,305,213 $ 2,993 8,578,505 $ 9 $ 237,600 $ ( 294,433 ) $ — $ 29,813 $ ( 24,018 ) Balance 1,305,213 $ 2,993 8,578,505 $ 9 $ 237,600 $ ( 294,433 ) $ — $ 29,813 $ ( 24,018 ) See accompanying notes to the consolidated financial statements. F- 7 PAVMED INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except number of shares and per share data) 2024 2023 Years Ended December 31, 2024 2023 Cash flows from operating activities Net income (loss) - before noncontrolling interest (“NCI”) $ 28,427 $ ( 79,263 ) Adjustments to reconcile net income (loss) - before NCI to net cash used in operating activities Depreciation and amortization expense 1,198 2,932 Stock-based compensation 6,449 11,139 Gain on sale of intellectual property — ( 1,000 ) Gain on deconsolidation of subsidiary ( 72,287 ) — Change in fair value - equity method investment ( 532 ) — APA-RDx: Issue common stock of subsidiary - termination payment — 713 Amortization of common stock payment for vendor service agreement 598 625 Change in fair value - Senior Secured Convertible Notes ( 462 ) 6,026 Loss on issue - Senior Secured Convertible Note — 1,111 Debt extinguishment loss - Senior Secured Convertible Note 2,535 3,782 Non-cash lease expense 8 308 Changes in operating assets and liabilities: Accounts receivable 43 ( 44 ) Prepaid expenses, deposits and current and other assets 832 ( 246 ) Accounts payable ( 59 ) ( 918 ) Accrued expenses and other current liabilities ( 304 ) 2,799 Net cash flows used in operating activities ( 33,554 ) ( 52,036 ) Cash flows from investing activities Purchase of equipment ( 55 ) ( 242 ) 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 ( 16,184 ) 758 Cash flows from financing activities Proceeds – issue of preferred stock - subsidiary 29,798 18,625 Proceeds – issue of Senior Secured Convertible Note — 10,000 Payment – Senior Secured Convertible Note – acceleration floor payments ( 531 ) ( 79 ) Proceeds – issue of common stock - At-The-Market Facility 1,598 1,533 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 31,284 31,173 Net increase (decrease) in cash ( 18,454 ) ( 20,105 ) Cash, beginning of period 19,639 39,744 Cash, end of period $ 1,185 $ 19,639 See accompanying notes to the consolidated financial statements. F- 8 PAVMED INC. and SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.) Note 1 — The Company Description of the Business PAVmed Inc. (“PAVmed” or the “Company”) 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 support the commercial expansion and execution of EsoGuard, which is the flagship product of our subsidiary Lucid Diagnostics Inc. (Nasdaq: LUCD) (“Lucid” or “Lucid Diagnostics”), of which we remain the shareholder with the largest voting interest. In addition, through a separate majority-owned subsidiary, Veris Health (“Veris” or “Veris Health”), we are focused in the immediate term on entering into strategic partnership opportunities with leading academic oncology systems to expand access to the Veris Cancer Care Platform, while concurrently developing an implantable physiological monitor, designed to be implanted alongside a chemotherapy port, which will interface with the Veris Cancer Care 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 $ 3.0 million of revenue for the year ended December 31, 2024, 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 $ 32.0 million and had net cash flows used in operating activities of approximately $ 33.6 million for the year ended December 31, 2024. As of December 31, 2024, the Company had negative working capital of approximately $ 33.3 million, with such working capital inclusive of the Senior Secured Convertible Notes classified as a current liability of an aggregate of approximately $ 29.1 million and approximately $ 1.2 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 consolidated financial statements are issued. F- 9 Note 3 — Summary of Significant Accounting Policies Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company 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 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 period ended December 31, 2024. From September 10, 2024, PAVmed has elected the fair value option to account for its equity method investment in Lucid Diagnostics. See below and Note 4, Equity Method Investment for a discussion on the impact of the deconsolidation of Lucid Diagnostics. See Note 17, 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. All amounts in the accompanying consolidated financial statements and these notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts. Reverse Stock Split 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. All authorized, issued and outstanding stock and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect this reverse stock split for all prior periods presented. Use of Estimates In preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and the determination of corresponding carrying value reserve, if any, and liabilities and the disclosure of contingent losses, as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these 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. 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 December 31, 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. F- 10 Note 3 — Summary of Significant Accounting Policies - continued Offering Costs Offering costs consist of certain legal, accounting, and other advisory fees incurred related to the Company’s efforts to raise debt and equity capital. Offering costs in connection with equity financing are recognized as either an offset against the financing proceeds to extent the underlying security is equity classified or a current period expense to extent the underlying security is liability classified or for which the fair value option is elected. Offering costs, lender fees, and warrants issued in connection with debt financing, to the extent the fair value option is not elected, are recognized as debt discount, which reduces the reported carrying value of the debt, with the debt discount amortized as interest expense, generally over the contractual term of the debt agreement, to result in a constant rate of interest. Offering costs associated with in-process capital financing are accounted for as deferred offering costs. 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 through the date of Lucid’s deconsolidation from PAVmed’s results of operations as of September 10, 2024, was primarily generated by Lucid’s laboratory testing services utilizing its EsoGuard Esophageal DNA tests. (As a result of the deconsolidation, however, such revenue will no longer be included in the Company’s consolidated revenue.) The services are completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers , the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The key aspects considered by the Company in determining recognized revenue during the period covered by the financial statements herein (during which revenue generated by Lucid during the pre-deconsolidation period that met this criteria is included in our results of operations) 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. F- 11 Note 3 — Summary of Significant Accounting Policies - continued Inventory The Company carries test supply inventories to support our laboratory activities. The inventories are carried at the lower of weighted average cost and net realizable value and expensed through cost of sales as the supplies are used. Fixed Assets Fixed assets are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Additions and improvements are capitalized, including direct and indirect costs incurred to validate equipment and bring to working conditions. The costs for maintenance and repairs are expensed as incurred. Leases The Company adopted FASB ASC Topic 842, Leases , (“ASC 842”) effective December 31, 2021. All significant lease agreements and contractual agreements with embedded lease agreements are accounted for under the provisions of ASC 842, wherein, if the contractual arrangement: involves the use of a distinct identified asset; provides for the right to substantially all the economic benefits from the use of the asset throughout the contractual period; and provides for the right to direct the use of the asset. A lease agreement is accounted for as either a finance lease or an operating lease. Under both a finance lease and an operating lease, the Company recognizes as of the lease commencement date a lease right-of-use (“ROU”) asset and a corresponding lease payment liability. A lease ROU asset represents the Company’s right to use an underlying asset for the lease term, and the lease liability represents its contractual obligation to make lease payments. The lease ROU asset is measured at the lease commencement date as the present value of the future lease payments plus initial direct costs incurred. The Company recognizes lease expense of the amortization of the lease ROU asset for an operating lease on a straight-line basis over the lease term; and for financing leases on a straight-line basis unless another basis is more representative of the pattern of economic benefit. The operating ROU asset also includes any lease incentives received for improvements to leased property, when the improvements are lessee-owned. For improvements to leased property that are lessor-owned, the Company includes amounts the Company incurred for the improvements as ROU assets which are amortized on a straight-line basis over the life of the lease. The lease liability is measured at the lease commencement date with the discount rate generally based on the Company’s incremental borrowing rate (to the extent the lease implicit rate is not known nor determinable), with interest expense recognized using the interest method for financing leases. Certain leases may include options to extend or terminate the agreement. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement. As well, an option to terminate is considered unless it is reasonably certain the Company will not exercise the option. The Company elected the practical expedient to not recognize a lease ROU asset and lease payment liability for leases with a term of twelve months or less (“short-term leases”), resulting in the aggregate lease payments being recognized on a straight line basis over the lease term. The Company’s leases with a commencement date prior to January 1, 2022 were short-term leases and therefore did not require recording a ROU asset or lease liability at December 31, 2021. Additionally, the Company elected the practical expedient to not separate lease and non-lease components. Intangible Assets Purchased intangible assets are recorded at cost and depreciated using the straight-line method over the assets’ estimated useful life. See Note 9, Intangible Assets, net , for further information with respect to purchased intangible assets. Impairment - Long Lived Assets The Company reviews its long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value which is generally an expected present value cash flow technique. The assessment and determination of the existence of an impairment indicator comprises measurable operating performance criteria as well as qualitative factors deemed relevant and appropriate to such evaluation. F- 12 Note 3 — Summary of Significant Accounting Policies - continued Stock-Based Compensation Stock-based awards are made to members of the board of directors of the Company, the Company’s employees and nonemployees, under each of the PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan. The Company accounts for stock-based compensation in accordance with the provisions of FASB ASC Topic 718, Stock Compensation (“ASC 718”). The grant date estimated fair value of the stock-based award is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective stock-based award, with such straight-line recognition adjusted, as applicable, so the cumulative expense recognized is at least equal to or greater than the estimated fair value of the vested portion of the respective stock-based award as of the reporting date. The Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan, which requires the Company to make certain weighted average valuation estimates and assumptions for stock-based awards, principally as follows: ● With respect to the PAVmed 2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of PAVmed Inc. common stock over the period commensurate with the expected term with respect to stock options granted to the board of directors and employees in the years ended December 31, 2024 and 2023; ● With respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of Lucid Diagnostics common stock and the volatilities of similar entities within the medical device industry over the period commensurate with the expected term with respect to stock options granted to employees in the years ended December 31, 2024 and 2023; ● The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period commensurate with either the expected term or the remaining contractual term, as applicable, of the stock option; and, ● The expected dividend yield is based on annual dividends of $ 0.00 as there have not been dividends paid to-date, and there is no plan to pay dividends for the foreseeable future. The price per share of PAVmed Inc. common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the PAVmed 2014 Equity Plan is its quoted closing price per share. The price per share of Lucid Diagnostics common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan is its quoted closing price per share. Financial Instruments Fair Value Measurements FASB ASC Topic 820, Fair Value Measurement , (ASC 820) defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a transaction measurement date. The ASC 820 three-tier fair value hierarchy prioritizes the inputs used in the valuation methodologies, as follows: Level 1 Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets which are not active, or other inputs observable or can be corroborated by observable market data. Level 3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. F- 13 Note 3 — Summary of Significant Accounting Policies - continued The Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments potentially qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, D erivatives and Hedging (ASC 815). The accounting for warrants issued to purchase shares of common stock of the Company is based on the specific terms of the respective warrant agreement, and are generally classified as equity, but may be classified as a derivative liability if the warrant agreement provides required or potential full or partial cash settlement. A warrant classified as a derivative liability, or a bifurcated embedded conversion or settlement option classified as a derivative liability, is initially measured at its issue-date fair value, with such fair value subsequently adjusted at each reporting period, with the resulting fair value adjustment recognized as other income or expense. If upon the occurrence of an event resulting in the warrant liability or the embedded derivative liability being subsequently classified as equity, or the exercise of the warrant or the conversion option, the fair value of the derivative liability will be adjusted on such date-of-occurrence, with such date-of-occurrence fair value adjustment recognized as other income or expense, and then the derivative liability will be derecognized at such date-of-occurrence fair value. The recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation models, including the Company’s common stock price, and certain Level 3 inputs, including, the assumptions regarding the estimated volatility in the value of the Company’s common stock price; the Company’s dividend yield; the likelihood and timing of future dilutive transactions, as applicable, along with the risk-free rates based on U.S. Treasury security yields. Changes in these assumptions can materially affect the estimated fair values. As of December 31, 2024 and 2023, the carrying values of cash, and accounts payable, approximate their respective fair value due to the short-term nature of these financial instruments. 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 has elected the fair value option to account for its equity method investment, Lucid Diagnostics, beginning on September 10, 2024 through the period ended December 31, 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 are presented in a single line item within other income (expense) in the accompanying 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). F- 14 Note 3 — Summary of Significant Accounting Policies - continued See Note 12, Financial Instruments Fair Value Measurements , with respect to the FVO election; and Note 13, 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. Financial Instruments - Derivatives The Company evaluates its financial instruments to determine if the financial instrument itself or if any embedded components of a financial instrument potentially qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging (ASC 815). The accounting for warrants issued to purchase shares of common stock of the Company is based on the specific terms of the respective warrant agreement, and are generally classified as equity, but may be classified as a derivative liability if the warrant agreement provides required or potential full or partial cash settlement. A warrant classified as a derivative liability, or a bifurcated embedded conversion or settlement option classified as a derivative liability, is initially measured at its issue-date fair value, with such fair value subsequently adjusted at each reporting period, with the resulting fair value adjustment recognized as other income or expense. If upon the occurrence of an event resulting in the warrant liability or the embedded derivative liability being subsequently classified as equity, or the exercise of the warrant or the conversion option, the fair value of the derivative liability will be adjusted on such date-of-occurrence, with such date-of-occurrence fair value adjustment recognized as other income or expense, and then the derivative liability will be derecognized at such date-of-occurrence fair value. Research and Development Expenses Research and development expenses are recognized as incurred and include the salary and stock-based compensation of employees engaged in product research and development activities, and the costs related to the Company’s various contract research service providers, suppliers, engineering studies, supplies, and outsourced testing and consulting fees, as well as depreciation expense and rental costs for equipment used in research and development activities, and fees incurred for access to certain facilities of contract research service providers. Patent Costs and Purchased Patent License Rights Patent related costs in connection with filing and prosecuting patent applications and patents filed by the Company are expensed as incurred and are included in the line item captioned “general and administrative expenses” in the accompanying consolidated statements of operations. Patent fee reimbursement expense incurred under the patent license agreement agreements are included in the line item captioned “general and administrative” expenses in the accompanying consolidated statements of operations. The Company has entered into agreements with third parties to acquire technologies for potential commercial development. Such agreements generally require an initial payment by the Company when the contract is executed. The purchase of patent license rights for use in research and development activities, including product development, are expensed as incurred and are classified as research and development expense. Additionally, the Company may be obligated to make future royalty payments in the event the Company commercializes the technology and achieves a certain sales volume, which is included in cost of revenues in the accompanying consolidated statements of operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 730, “Research and Development”, (“ASC 730”), expenditures for research and development, including upfront licensing fees and milestone payments associated with products not yet been approved by the United States Food and Drug Administration (“FDA”), are charged to research and development expense as incurred. Future contract milestone and /or royalty payments will be recognized as expense when achievement of the milestone is determined to be probable and the amount of the corresponding milestone can be objectively estimated. Income Taxes The Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes, (ASC 740). Current tax liabilities or receivables are recognized for estimated income tax payable and/or refundable for the current year. Deferred tax assets and deferred tax liabilities are recognized for estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, along with net operating loss and tax credit carryforwards. Deferred tax assets and deferred tax liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Changes in deferred tax assets and deferred tax liabilities are recorded in the provision for income taxes. Under ASC 740, a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. As a result of the evaluation of the positive and negative evidence bearing upon the estimated realizability of net deferred tax assets, and based on a history of operating losses, it is more-likely-than-not the deferred tax assets will not be realized, and therefore a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, has been recognized as a charge to income tax expense as of December 31, 2024 and 2023. F- 15 Note 3 — Summary of Significant Accounting Policies - continued The Company recognizes the benefit of an uncertain tax position it has taken or expects to take on its income tax return if such a position is more-likely-than-not to be sustained upon examination by the taxing authorities, with the tax benefit recognized being the largest amount having a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2024, the Company does no t have any unrecognized tax benefits resulting from uncertain tax positions. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. There were no amounts accrued for penalties or interest as of December 31, 2024 and December 31, 2023 or recognized during the years ended December 31, 2024 and 2023. The Company is not aware of any issues under review to potentially result in significant payments, accruals, or material deviations from its position. Earnings Per Share Earnings per share is computed by dividing each respective net income or net loss by the number of “basic weighted average common shares outstanding” and “diluted weighted average shares outstanding” for the reporting period indicated. The basic weighted-average shares common shares outstanding are computed on a weighted average based on the number of days the shares of common stock of the Company are issued and outstanding during the respective reporting period indicated. The diluted weighted average common shares outstanding are the sum of the basic weighted-average common shares outstanding plus the number of common stock equivalents’ incremental shares on an if-converted basis, computed using the treasury stock method, computed on a weighted average based on the number of days the incremental shares would potentially be issued and outstanding during the periods indicated, if dilutive. The Company’s common stock equivalents include convertible preferred stock, convertible debt, common stock purchase warrants, and stock options and unvested restricted stock awards granted under the PAVmed Inc. 2024 Long-Term Incentive Equity Plan. Notwithstanding, as the Company has a net loss for the reporting period ended December 31, 2023, only the basic weighted average common shares outstanding are used to compute the basic and diluted net loss per share attributable to PAVmed Inc. common stockholders, for the reporting period ended December 31, 2023. The Series B Convertible Preferred Stock dividends earned as of the each of the respective periods are included in the calculation of basic and diluted net loss attributable to PAVmed Inc. common stockholders for each respective period presented. Further, the Series B Convertible Preferred Stock has the right to receive common stock dividends. As such, the Series B Convertible Preferred Stock would potentially be considered participating securities under the two-class method of calculating net loss per share. Recently Adopted Accounting Pronouncements 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 was adopted by the Company effective December 31, 2024, on a retrospective basis. The adoption of the ASU did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures. Refer to Note 20, Segment Information for further information on the Company’s reportable segment. Recent Accounting Standards Updates Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update enhances financial statement disclosures by requiring public business entities to disclose specified information about certain costs and expenses including the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each relevant expense caption. The update also requires disclosure of certain amounts that are already required to be disclosed under current GAAP, disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this update may be applied either prospectively or retrospectively and are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements. 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 consolidated financial statements. 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 consolidated financial statements and disclosures. F- 16 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 were valued at $ 25.1 million, resulting in a gain on deconsolidation of $ 72.3 million in the accompanying consolidated statements of operations for the year ended December 31, 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. F- 17 Note 4 — Equity Method Investment - continued The following presents summarized financial information related to Lucid accounted for under the equity method as of December 31, 2024. This aggregate information has been compiled from the financial statements of Lucid. Schedule of Aggregate Information From the Financial Statements December 31, 2024 Cash $ 22,358 Other current assets 2,790 Non-current assets 5,567 Total assets 30,715 Current liabilities 23,524 Non-current liabilities 1,800 Shareholders’ deficit 5,391 Total liabilities and stockholders’ deficit $ 30,715 Year ended December 31, 2024 January 1, 2024 - September 10, 2024 September 11, 2024 - December 31, 2024 Total Revenue $ 2,919 $ 1,427 $ 4,346 Net income (loss) $ ( 38,152 ) $ ( 14,873 ) $ ( 53,025 ) *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 December 31, 2024 were not included in PAVmed’s consolidated results. At September 10, 2024 and December 31, 2024, the fair value of the Company’s investment in Lucid was $ 25.1 million and $ 25.6 million, respectively, with the company recognizing an unrealized gain on its investment in Lucid of $ 0.5 million in the accompanying consolidated statements of operations for the year ended December 31, 2024. The fair value of shares of Lucid’s common stock held by the Company was determined using the closing price of Lucid’s common stock per share on September 10, 2024 and December 31, 2024 of $ 0.802 and $ 0.819 , respectively. At September 10, 2024 and December 31, 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 following the deconsolidation of Lucid from the Company’s results of operations, i.e., from September 11, 2024 through December 31, 2024, MSA fee income was $ 3,850 . 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. F- 18 Note 5 — Revenue from Contracts with Customers Revenue Recognized In the year ended December 31, 2024, the Company recognized total revenue of $ 2,995 , 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 year ended December 31, 2023 was $ 2,452 , 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 year ended December 31, 2024, the cost of revenue was $ 4,840 , primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the year ended December 31, 2023 was $ 6,420 , 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 December 31, 2024 December 31, 2023 Advanced payments to service providers and suppliers $ 115 $ 739 Prepaid insurance 233 848 Deposits 347 2,672 Veris Box supplies 266 261 Total prepaid expenses, deposits and other current assets $ 961 $ 4,520 Note 7 — Fixed Assets Fixed assets, less accumulated depreciation, consisted of the following as of: Schedule of Fixed Assets Estimated Useful Life December 31, 2024 December 31, 2023 Computer and office equipment 2 - 5 years $ 600 $ 835 Laboratory equipment 3 - 7 years 553 2,255 Furniture and fixtures 3 - 5 years 248 394 Leasehold improvements - (1) 1 2 Assets under construction n/a 2 16 Total Fixed Assets 1,404 3,502 Less Accumulated Depreciation ( 1,253 ) ( 1,719 ) Total Fixed Assets, net $ 151 $ 1,783 (1) Lesser of remaining lease term or estimated useful life. Depreciation expense of $ 639 and $ 911 for the years ended December 31, 2024 and 2023, respectively, is included in general and administrative expenses in the accompanying consolidated statements of operations. F- 19 Note 8 — Leases The components of lease expense were as follows: Schedule of Lease Expense Years Ended December 31, 2024 2023 Operating lease cost $ 1,520 $ 1,871 Short-term lease cost 53 89 Variable lease cost 102 113 Total lease cost $ 1,675 $ 2,073 The Company’s future lease payments as of December 31, 2024, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s consolidated balance sheets are as follows: Schedule of Future Minimum Lease Payments for Operating Leases 2025 $ 708 2026 724 2027 594 2028 471 2029 481 Thereafter 367 Total lease payments $ 3,345 Less: imputed interest ( 585 ) Present value of lease liabilities $ 2,760 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 Years Ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,537 $ 1,563 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) 5.03 4.62 Weighted-average discount rate - operating leases 7.875 % 7.875 % As of December 31, 2024 and December 31, 2023, the Company’s right-of-use assets from operating leases were $ 2,500 and $ 4,267 , respectively, which are reported in operating lease right-of-use assets in the consolidated balance sheets. As of December 31, 2024 and December 31, 2023, the Company had outstanding operating lease obligations of $ 2,760 and $ 4,525 , respectively, of which $ 513 and $ 1,565 , respectively, are reported in operating lease liabilities, current portion and $ 2,247 and $ 2,960 , respectively, are reported in operating lease liabilities less current portion in the Company’s 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. F- 20 Note 9 — Intangible Assets, net Intangible assets, less accumulated amortization, consisted of the following as of: Schedule of Intangible Assets, Less Accumulated Amortization Estimated Useful Life December 31, 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 $ 559 and $ 2,021 for the years ended December 31, 2024 and 2023, respectively, and is included in amortization of acquired intangible assets in the accompanying consolidated statements of operations. Following the deconsolidation of Lucid, the Company had a net balance of $ 0 of intangible assets with no future amortization expense. See Note 4, Equity Method Investment , for additional information on the Lucid deconsolidation. Note 10 — Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following items as of: Schedule of Accrued Expenses and Other Current Liabilities December 31, 2024 December 31, 2023 Compensation and Employee Benefits $ 1,151 $ 2,507 CWRU Amended License Agreement - Royalty fee — 96 Operating expenses 1,011 3,246 Debt modification fee and payments to debt holder 2,652 — Other current liabilities 362 777 Total accrued expenses and other current liabilities $ 5,176 $ 6,626 The “Compensation and Employee Benefits” includes: discretionary bonus payments to employees; unused employee vacation time; and employee payroll deductions related to the PAVmed Inc. Employee Stock Purchase Plan (“PAVmed Inc. ESPP”). See Note 14, Stock-Based Compensation , for additional information on the PAVmed Inc. ESPP. F- 21 Note 11 — 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. Note 12 — 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 December 31, 2024 Assets: Investment in Lucid Diagnostics, Inc common stock $ 25,637 $ — $ — $ 25,637 Total assets at fair value $ 25,637 $ — $ — $ 25,637 Liabilities: Senior Secured Convertible Note - April 2022 — — 20,300 20,300 Senior Secured Convertible Note - September 2022 — — 8,800 8,800 Total liabilities at fair value $ — $ — $ 29,100 $ 29,100 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 year ended December 31, 2024. As discussed in Note 13, 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 13, 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. F- 22 Note 12 — 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 December 31, 2024, the Lucid March 2023 Senior Convertible Note as of September 10, 2024 (the date of deconsolidation), 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: December 31, 2024 September 2022 Senior Convertible Note: December 31, 2024 Lucid March 2023 Senior Convertible Note: September 10, 2024 Fair Value $ 20,300 $ 8,800 $ 10,350 Face value principal payable $ 17,602 $ 7,627 $ 9,014 Required rate of return 9.100 % 8.900 % 9.70 % Conversion Price $ 75.00 $ 75.00 $ 5.00 Value of common stock $ 0.63 $ 0.63 $ 0.80 Expected term (years) 0.04 - 0.26 0.69 0.53 Volatility 160.00 % 160.00 % 60.00 % Risk free rate 4.27 % - 4.31 % 4.12 % 4.51 % 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, probability weighting on the likelihood as of December 31, 2024 of shareholder approval of then-pending exchange of the April 2022 Senior Convertible Note and a portion of the September 2022 Senior Convertible Note in exchange for shares of the Company’s Series C Preferred Stock (which exchange was approved and consummated in January 2025), probability weighting on the likelihood as of September 10, 2024 of the Lucid March 2023 Senior Convertible Note of Lucid exercising the Company’s optional redemption clause and a hold to maturity scenario (which Lucid elected to exercise the Company’s redemption option in November 2024), 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. F- 23 Note 13 — 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 $ 20,300 September 2022 Senior Convertible Note September 8, 2025 7.875 % $ 75.00 7,627 8,800 Balance as of December 31, 2024 $ 25,229 $ 29,100 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 year ended December 31, 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 - December 31, 2023 $ 19,000 $ 11,250 $ 13,950 $ 44,200 $ — Face value principal – issue date Fair value adjustment – issue date 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 1,300 ( 872 ) ( 890 ) ( 462 ) 462 Fair Value at December 31, 2024 $ 20,300 $ 8,800 $ — $ 29,100 - Other Income (Expense) - Change in fair value – year ended December 31, 2024 $ 462 The changes in the fair value of debt during the year ended December 31, 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 - 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 ) ( 2,188 ) ( 92 ) ( 6,175 ) — Non-installment payments – common stock ( 249 ) ( 114 ) ( 49 ) ( 412 ) — Change in fair value 1,144 1,902 2,191 5,237 ( 5,237 ) Fair Value at December 31, 2023 $ 19,000 $ 11,250 $ 13,950 $ 44,200 - Fair Value - Ending of Period $ 19,000 $ 11,250 $ 13,950 $ 44,200 - Other Income (Expense) - Change in fair value – year ended December 31, 2023 $ ( 6,026 ) F- 24 Note 13 — Debt - continued PAVmed - Senior Secured Convertible Notes The Company entered into a Securities Purchase Agreement (“SPA”) dated March 31, 2022, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein, the Company agreed to sell, and the Investor agreed to purchase an aggregate of $ 50.0 million face value principal of debt - comprised of: an initial issuance of $ 27.5 million face value principal; and up to an additional $ 22.5 million of face value principal (upon the satisfaction of certain conditions). The debt was issued in a registered direct offering under the Company’s effective shelf registration statement. Under the SPA, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior Convertible Note”, with such note having a $ 27.5 million face value principal, a 7.875 % annual stated interest rate, a contractual conversion price of $ 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. 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 consolidated statement of operations, and is currently included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets as of December 31, 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 year ended December 31, 2024, approximately $ 1,435 , of principal repayments along with approximately $ 143 , of interest expense thereon, were settled through the issuance of 1,084,366 , shares of common stock of the Company, with such shares having a fair value of approximately $ 2,020 , (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). In addition, during the year ended December 31, 2024, the Company agreed to pay $ 1,059 , 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 consolidated statements of operations. As of December 31, 2024, approximately $ 652 of acceleration floor payments owed to the holder are included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets. The conversions and floor acceleration payments resulted in debt extinguishment losses of $ 1,501 in the year ended December 31, 2024. On December 31, 2024, 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 December 31, 2024 through January 15, 2025; 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 3 million shares. F- 25 Note 13 — Debt - continued Subsequent to December 31, 2024, prior to the consummation of the exchange transaction contemplated by the Debt Exchange Agreement (as defined below) on January 17, 2025 as more fully discussed below, approximately $ 176 of principal repayments along with approximately $ 26 of interest expense thereon, was settled through the issuance of 401,303 shares of common stock of the Company, with such shares having a fair value of approximately $ 259 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). On November 15, 2024, the Company entered into an Exchange Agreement (the “Debt Exchange Agreement”) with the holder (the “Holder”) of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note. The Debt Exchange Agreement provided for the exchange of $ 22.3 million in principal amount of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note and interest thereon for 22,347 shares of Series C Convertible Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”), of the Company (the “Exchange”). The key terms of the Series C Convertible Preferred Stock can be found on Exhibit 4.1 to this Form 10-K. On January 17, 2025, after satisfaction of all conditions to closing the Exchange, the parties consummated the transaction on the terms described above. Following consummation of the Exchange, the April 2022 Senior Convertible Note was satisfied in full, and the outstanding principal balance of the remaining September 2022 Senior Convertible Note was approximately $ 6.6 million In connection with the consummation of the Exchange, the conversion price under the remaining September 2022 Convertible Note was reset to $ 1.068 , the maturity date of such note was extended to December 31, 2025 and the holder of such note waived compliance with the Financial Tests through December 31, 2025. 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 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 $ 1,009 in the period of January 1, 2024 through September 10, 2024. During the year ended December 31, 2024, the Company recognized debt extinguishment losses in total of approximately $ 2,535 , 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 year ended December 31, 2023, the Company recognized debt extinguishment losses in total of approximately $ 3,782 . See Note 12, Financial Instruments Fair Value Measurements , for a further discussion of fair value assumptions. F- 26 Note 14 — 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 247,109 shares available for grant as of December 31, 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 December 31, 2024. In January 2025, the number of shares available for grant was increased by 576,170 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, 2022 (4) 771,153 $ 40.70 7.4 $ — Granted (1) 576,975 $ 6.87 Exercised — $ — Forfeited ( 155,670 ) $ 26.51 Outstanding stock options at December 31, 2023 1,192,458 $ 26.18 7.3 $ — Granted (1) 80,500 $ 2.26 Exercised — $ — Forfeited ( 207,639 ) $ 20.37 Outstanding stock options at December 31, 2024 (3) 1,065,319 $ 25.50 6.5 $ — Vested and exercisable stock options at December 31, 2024 860,223 $ 30.13 6.1 $ — (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 December 31, 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 December 31, 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. In January 2025, the Company accepted from employees the voluntary forfeiture of approximately 494,202 of previously granted PAVmed stock options, each with an exercise price greater than $ 4.00 per share and collectively with a weighted average exercise price of $ 23.38 per share. None of the forfeitures were from officers or board members. F- 27 Note 14 — Stock-Based Compensation - continued 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 Outstanding restricted stock awards as of December 31, 2022 64,998 $ 45.76 Granted 12,195 $ 5.79 Vested ( 6,666 ) $ 46.50 Forfeited — $ — Unvested restricted stock awards as of December 31, 2023 70,527 $ 38.77 Granted 390,000 1.85 Vested ( 136,096 ) 2.03 Forfeited — — Unvested restricted stock awards as of December 31, 2024 324,431 $ 9.80 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. Following the deconsolidation of Lucid, the Lucid Diagnostics 2018 Long-Term Equity Plan is no longer reflected in the Company’s 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, 2022 2,565,377 $ 3.14 8.3 $ 428 Granted (1) 3,618,000 $ 1.32 Exercised — $ — Forfeited ( 678,994 ) $ 2.75 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 ( 437,501 ) $ 1.70 Outstanding stock options at September 10, 2024 (3) 8,667,549 $ 1.69 8.2 $ 191 Vested and exercisable stock options at September 10, 2024 3,071,767 $ 2.25 7.0 $ 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. F- 28 Note 14 — Stock-Based Compensation - continued Lucid Diagnostics Restricted Stock Awards Lucid Diagnostics restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan and restricted stock awards granted outside such plan are summarized as follows: Schedule of Restricted Stock Award Activity Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested restricted stock awards as of December 31, 2022 2,091,420 $ 11.44 Granted 550,000 1.29 Vested ( 303,980 ) 11.95 Forfeited — — 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. 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 Years Ended December 31, 2024 2023 Cost of revenue $ 112 $ 122 Sales and marketing expenses 1,100 1,715 General and administrative expenses 4,370 7,935 Research and development expenses 867 1,367 Total stock-based compensation expense $ 6,449 $ 11,139 F- 29 Note 14 — Stock-Based Compensation - continued Stock-Based Compensation Expense Recognized by Lucid Diagnostics As noted, the consolidated stock-based compensation expense presented above is inclusive of stock-based compensation expense recognized by Lucid Diagnostics (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 2024 2023 Years Ended December 31, 2024 2023 Lucid Diagnostics 2018 Equity Plan – cost of revenue $ 81 $ 63 Lucid Diagnostics 2018 Equity Plan – sales and marketing 849 948 Lucid Diagnostics 2018 Equity Plan – general and administrative 1,484 4,455 Lucid Diagnostics 2018 Equity Plan – research and development 356 296 PAVmed 2014 Equity Plan - cost of revenue 30 37 PAVmed 2014 Equity Plan - sales and marketing 136 463 PAVmed 2014 Equity Plan - general and administrative 5 173 PAVmed 2014 Equity Plan - research and development 148 387 Total stock-based compensation expense – recognized by Lucid Diagnostics $ 3,089 $ 6,822 Total stock-based compensation expense $ 3,089 $ 6,822 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 $ 921 1.3 Restricted Stock Awards $ 368 1.9 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 $ 1.46 per share and $ 4.90 per share during the years ended December 31, 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 Year Ended December 31, 2024 2023 Expected term of stock options (in years) 5.8 5.6 Expected stock price volatility 90 % 88 % Risk free interest rate 4.3 % 3.8 % Expected dividend yield — % — % F- 30 Note 14 — Stock-Based Compensation - continued Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 0.79 per share and $ 0.88 per share during the years ended December 31, 2024 (through September 10, 2024, the date of PAVmed’s deconsolidation 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 Year Ended December 31, 2024 2023 Expected term of stock options (in years) 5.7 5.6 Expected stock price volatility 73 % 74 % Risk free interest rate 4.3 % 3.9 % 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 December 31, 2024. In January 2025, 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. F- 31 Note 15 — Preferred Stock As of December 31, 2024 and December 31, 2023, there were 1,412,865 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 consolidated statement of operations, inclusive of $ 329 of such dividends earned in the year ended December 31, 2024; and $ 304 of such dividends earned in the year ended December 31, 2023. PAVmed Series B Convertible Preferred Stock Dividends Declared During the year ended December 31, 2024, the Company’s board of directors declared an aggregate of approximately $ 323 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2023; March 31, 2024; June 30, 2024; and September 30, 2024, which have been settled by the issue of an additional aggregate 107,652 shares of Series B Convertible Preferred Stock. During the year ended December 31, 2023, the Company’s board of directors declared an aggregate of approximately $ 298 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2022; March 31, 2023; June 30, 2023; and September 30, 2023, which have been settled by the issue of an additional aggregate 99,454 shares of Series B Convertible Preferred Stock. Subsequent to December 31, 2024, in January 2025, the Company’s board of directors declared a PAVmed Series B Convertible Preferred Stock dividend, earned as of December 31, 2024, of $ 85 , to be settled by the issue of 28,270 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 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. PAVmed Series C Convertible Preferred Stock Subsequent to December 31, 2024, on January 17, 2025, the Company issued 25,000 of Series C Convertible Preferred Stock. Each share of Series C Convertible Preferred Stock has a stated value of $ 1,000 , and entitles the holder thereof to a preferred dividend at a rate of 7.875 % per annum, payable quarterly in arrears. Dividends on each share of Series C Convertible Preferred Stock may be settled in shares of the Company’s common stock (subject to satisfaction of certain equity-related conditions) or by capitalizing the dividend by increasing the stated value of such share. Subsequent to December 31, 2024, the Company has issued 1,000,000 shares of our common stock in connection with the conversion of 400 shares of PAVmed Series C Convertible Preferred Stock. F- 32 Note 16 — 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. On February 14, 2025, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), stating that the Company had regained compliance with the Nasdaq continued listing standard under Nasdaq Listing Rule 5550(b)(1), which requires, among other things, that the Company maintain at least $2.5 million in stockholders’ equity. The Company achieved compliance through (1) the Exchange, which was consummated on January 17, 2025, (2) the issuance of shares of Series C Preferred Stock for an aggregate purchase price of $2.653 million, which was consummated on January 24, 2025, and (3) a reduction in operating expenses as a result of the Company’s completed deconsolidation of Lucid from its balance sheet, each of which transactions was previously disclosed. As a result, the Company met the terms of the Panel’s decision. Separately, on January 23, 2025, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30 consecutive business days (through January 22, 2025), the closing bid price of the Company’s common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). The notification letter stated that the Company would be afforded 180 calendar days (until July 22, 2025) to regain compliance. In order to regain compliance, the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days. The notification letter also stated that, in the event the Company does not regain compliance within the initial 180-day period, the Company may be eligible for an additional 180-day period. If the Company is not eligible for the additional 180-day period, or if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, the Nasdaq Listing Qualifications Department will provide notice after the end of the initial 180-day period that the Company’s securities will be subject to delisting. The Nasdaq notification has no effect at this time on the listing of the Company’s common stock or Series Z warrants, and the common stock and Series Z warrants will continue to trade uninterrupted under the symbol “PAVM” and “PAVMZ,” respectively. During the year ended December 31, 2024 a total of 34,332 shares of common stock of the Company were issued under the PAVmed ESPP. See Note 14, Stock-Based Compensation , for a discussion of each of the PAVmed 2014 Equity Plan and the PAVmed ESPP. In the year ended December 31, 2024, 1,084,366 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 $ 1,435 face value principal repayments, as discussed in Note 13, Debt . Subsequent to December 31, 2024, as of March 20, 2025, the Company issued 401,303 shares of common stock upon conversion of these notes, with such shares having a fair value of approximately $ 259 . F- 33 Note 16 — Common Stock and Common Stock Purchase Warrants - continued In the year ended December 31, 2024, the Company sold 1,032,298 shares through their at-the-market equity facility for net proceeds of approximately $ 1,308 , after payment of 3 % commissions. Subsequent to December 31, 2024, as of March 20, 2025, the Company sold 1,210,704 shares through its at-market equity facility for net proceeds of approximately $ 837 , after payment of 3 % commissions. In the year ended December 31, 2024, the Company issued 333,380 shares of common stock to vendors in exchange for $ 350 of agreed upon services, which is included in general and administrative operating expenses on the Company’s consolidated statement of operations. Subsequent to December 31, 2024, as of March 20, 2025, the Company issued 77,408 shares of common stock to vendors in exchange for $ 50 of agreed upon services. Subsequent to December 31, 2024, on February 18, 2025, the Company and Veris, entered into subscription agreements (each, a “Subscription Agreement”) with certain accredited investors (collectively, the “Investors”), pursuant to which the Company agreed to sell and the Investors agreed to purchase (the “Offering”) 2,574,350 shares of the Company’s common stock and pre-funded warrants to purchase 756,734 shares of the Company’s common stock (the “Pre-Funded Warrants”), at a purchase price of $ 0.7115 per share or warrant share (as applicable). In addition, Veris agreed to issue to each Investor approximately 0.2033 shares of Veris’ common stock for each share or warrant share (as applicable) purchased by such Investor, for an aggregate of 677,143 shares of Veris’ common stock. On February 21, 2025, the Company consummated the Offering, generating gross proceeds to the Company of $ 2.37 million. The proceeds of the offering will be used to resume development activities related to Veris’ implantable physiological monitor and for general working capital purposes. The Subscription Agreement contains customary representations, warranties, covenants and indemnities of the Company and the Investors, as well as a covenant by the Company to provide the Investors with protection against subsequent equity raises by the Company or Veris at a lower purchase price (solely to the extent the Investors continue to hold the shares issued in the Offering), with such protection to be effected through the issuance of additional shares of Veris’ common stock. In addition, the Company (i) agreed to solicit the affirmative vote of its stockholders by no later than its next meeting of stockholders, which will be held no later than June 30, 2025, for approval, for the purposes of the rules of The Nasdaq Stock Market LLC, of the issuance of all of the shares underlying the Pre-Funded Warrants, and to hold additional meetings quarterly thereafter to the extent such approval is not obtained, (ii) granted the Investors a 100% participation right in future offerings of equity securities of the Company or its majority-owned subsidiaries, subject to existing participation rights of the Company’s debt holder, and (iii) agreed not to incur, and not to permit its majority-owned subsidiaries to incur, any indebtedness until August 18, 2026, subject to certain exceptions. In accordance with the Subscription Agreement, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to file a registration statement covering the resale of the shares of the Company’s common stock issued in the Offering, including the shares underlying the Pre-Funded Warrants. The Pre-Funded Warrants become exercisable upon the receipt of the stockholder approval described above, expire on February 18, 2030, and have an exercise price of $ 0.001 per share, subject to adjustment as described below. The Pre-Funded Warrants may be exercised for cash, or on a cashless basis. In the event the Pre-Funded Warrants are exercised on a cashless basis, the holder will be entitled to receive a number of shares of the Company’s common stock equal to (x) the excess of the market value of the Company’s common stock over the exercise price, multiplied by (y) the number of shares as to which the Pre-Funded Warrant is being exercised, divided by (z) the market value of the Company’s common stock. The exercise price and number and type of securities or other property issuable on exercise of the Pre-Funded Warrants may be adjusted in certain circumstances, including in the event of a stock split or combination, stock dividend, or a recapitalization, reorganization, merger or similar transaction. In addition, a holder of the Pre-Funded Warrants will be entitled to participate in rights offerings or pro rata distributions by the Company. However, there will be no adjustment for issuances of shares of common stock at a price below the exercise price. Subsequent to December 31, 2024, in January 2025, the Company received shareholder approval to amend its certificate of incorporation, as amended, to increase the total number of shares of common stock the Company is authorized to issue by 200 million shares from 50 million shares to 250 million shares. An amendment effecting such change was filed with the Secretary of State of Delaware on January 15, 2025. F- 34 Note 16 — Common Stock and Common Stock Purchase Warrants - continued 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 December 31, 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 (previously $ 24.00 post reverse-split, decreased by $ 0.52 in connection with the special dividend distribution of Lucid common stock to PAVmed stockholders, discussed above). There were no Series Z Warrants exercised during the year ended December 31, 2024. Note 17 — 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 December 31, 2024 December 31, 2023 NCI – equity $ 29,813 $ 20,615 Net loss attributable to NCI ( 11,364 ) ( 15,088 ) Impact of subsidiary equity transactions ( 4,414 ) ( 1,983 ) Lucid Diagnostics proceeds from issuance of preferred stock Series A and A-1 5,670 18,625 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 proceeds from At-The-Market Facilities, net of deferred financing charges — 284 Lucid Diagnostics issuance of common stock for settlement of APA-RDx installment and termination payment — 713 Lucid Diagnostics issuance of common stock for settlement of vendor service agreement 401 147 Lucid Diagnostics 2018 Equity Plan stock option exercise 4 — Lucid Diagnostics Employee Stock Purchase Plan Purchase 353 551 Conversion of Lucid Diagnostics common stock for Senior Secured Convertible Debt 3,801 167 Stock-based compensation expense - Lucid Diagnostics 2018 Equity Plan 2,771 5,762 Stock-based compensation expense - Veris Health 2021 Equity Plan 637 20 Deconsolidation of Lucid ( 56,339 ) $ — NCI – equity $ ( 4,538 ) $ 29,813 The consolidated NCI presented above is with respect to the Company’s consolidated subsidiaries as a component of consolidated total stockholders’ equity as of December 31, 2024 and December 31, 2023; and the recognition of a net loss attributable to the NCI in the consolidated statement of operations for the periods beginning on the acquisition date of the respective subsidiaries. F- 35 Note 17 — Noncontrolling Interest - continued Lucid Diagnostics — Deconsolidation As of December 31, 2024, there were 63,071,950 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 consolidated statements of operations for the year ended December 31, 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. 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. F- 36 Note 17 — Noncontrolling Interest - continued 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 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 Veris Health As of December 31, 2024, there were 8,000,000 shares of common stock of Veris Health issued and outstanding, of which PAVmed holds an 80.44 % majority-interest ownership and PAVmed has a controlling financial interest, with the remaining 19.56 % minority-interest ownership held by an unrelated third-party. Accordingly, Veris Health is a consolidated majority-owned subsidiary of the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component of consolidated stockholders’ equity in the accompanying consolidated balance sheets. Note 18 — Income Taxes Income tax (benefit) expense for respective periods noted is as follows: Schedule of Income Tax (Benefit) Expense Years Ended December 31, 2024 2023 Current Federal, State and Local $ — $ — Deferred Federal ( 6,965 ) ( 16,789 ) State and Local ( 3,725 ) ( 19,323 ) Current and Deferred tax (benefit) expense ( 10,690 ) ( 36,112 ) Less: Valuation allowance reserve 10,690 36,112 Income tax expense (benefit) $ — $ — The reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as follows: Schedule of Effective Income Tax Rate Reconciliation Years Ended December 31, 2024 2023 U.S. federal statutory rate 21.0 % 21.0 % U.S. state and local income taxes, net of federal benefit ( 8.4 )% 6.1 % Permanent differences 4.8 % ( 2.7 )% Gain on deconsolidation of subsidiary ( 53.4 )% — % Tax credits ( 2.2 )% 2.2 % Revaluation of state deferred taxes ( 1.9 )% — % Federal deferred true-up 2.4 % 5.8 % State deferred true-up 0.1 % 13.2 % Valuation allowance 37.6 % ( 45.6 )% Effective tax rate — % — % F- 37 Note 18 — Income Taxes - continued The tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows: Schedule of Deferred Tax Assets and Liabilities Years Ended December 31, 2024 2023 Deferred Tax Assets Net operating loss $ 30,439 $ 67,786 Debt issue costs — 537 Stock-based compensation expense 4,131 12,304 Lease liabilities 741 1,266 Research and development expenditures 4,434 8,234 Research and development tax credit carryforwards 2,883 3,481 Accrued expenses 249 385 Section 195 deferred start-up costs 19 17 Depreciation & amortization $ — $ 800 Deferred tax assets $ 42,896 $ 94,810 Deferred Tax Liabilities Operating lease right-of-use assets ( 671 ) ( 1,194 ) Depreciation ( 59 ) — Unrealized Gains on Equity Method Investments ( 143 ) — Deferred Tax Liabilities $ ( 873 ) $ ( 1,194 ) Deferred tax assets, net of deferred tax liabilities 42,023 93,616 Less: valuation allowance ( 42,023 ) ( 93,616 ) Deferred tax assets, net after valuation allowance $ — $ — Deferred tax assets and deferred tax liabilities resulting from temporary differences are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted. As mentioned in Note 4, Equity Method Investment , on 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. Pursuant to ASC 810-10-40-5, the tax effects of the deconsolidation of Lucid Diagnostics’ are included in the gain on deconsolidation resulting in deferred tax expense of $ 62.3 million offset by a full valuation allowance of ($ 62.3 ) million, netting to zero. Lucid Diagnostics no longer qualifies to be included in PAVmed’s combined unitary state tax returns. As required by FASB ASC Topic 740, Income Taxes, (ASC 740), a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. Accordingly, the Company evaluated the positive and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, the deferred tax asset valuation allowance decreased by $ 51.6 million and increased by $ 36.1 million, respectively. For the year ended December 31, 2024, due to the deconsolidation of Lucid on September 10, 2024, changes to the valuation allowance reported a decrease of $ 62.3 million in the gain on deconsolidation of Lucid and an increase of ($ 10.7 ) million through current year operations, netting to a total change of $ 51.6 million. The Company has total estimated federal net operating loss (“NOL”) carryforward of approximately $ 144.9 million and $ 236.3 million as of December 31, 2024 and 2023, respectively, which is available to reduce future taxable income, of which approximately $ 13.8 million have statutory expiration dates commencing in 2037 , and approximately $ 131.1 million which do not have a statutory expiration date. The Company has not yet conducted a formal analysis and the NOL carryforward and general business credits may be subject-to limitation under U.S. Internal Revenue Code (“IRC”) Section 382 (provided there was a greater than 50% ownership change, as computed under such IRC Section 382). The State and Local NOL carryforwards of approximately $ 213.6 million have statutory expiration dates commencing in 2037. The Company has total estimated research and development (“R&D”) tax credit carryforward of approximately $ 2.9 million as of December 31, 2024 which are available to reduce future tax expense and have statutory expiration dates commencing in 2037. F- 38 Note 18 — Income Taxes - continued The Company files income tax returns in the United States in federal and applicable state and local jurisdictions. The Company’s tax filings for the years 2017 and thereafter each remain subject to examination by taxing authorities. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company has not recognized any penalties or interest related to its income tax provision. Note 19 — 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 Years Ended December 31, 2024 2023 Numerator Net income (loss) - before noncontrolling interest $ 28,427 $ ( 79,263 ) Net income (loss) attributable to noncontrolling interest 11,364 15,088 Net income (loss) - as reported, attributable to PAVmed Inc. $ 39,791 $ ( 64,175 ) Deemed dividend on Series Z warrant modification $ — $ ( 1,791 ) Series B Convertible Preferred Stock dividends – earned $ ( 329 ) $ ( 304 ) 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 $ 31,966 $ ( 66,270 ) Fair Value Adjustment for diluted EPS calculation $ 428 $ — Net income (loss) attributable to PAVmed Inc. common stockholders used in dilutive EPS calculation $ 32,394 $ ( 66,270 ) Denominator Weighted average common shares outstanding, basic 9,672,199 7,231,546 Weighted average common shares outstanding, diluted 65,291,623 7,231,546 Net income (loss) per share (1) Net income (loss) per share attributable to PAVmed Inc. common stockholders, basic (1) $ 3.30 $ ( 9.16 ) Net income (loss) per share attributable to PAVmed Inc. common stockholders, diluted (1) $ 0.50 $ ( 9.16 ) (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. F- 39 Note 19 — Net Income (Loss) Per Share - continued Basic weighted-average number of shares of common stock outstanding for the years ended December 31, 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 year ended December 31, 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 December 31, 2024 2023 Stock options 1,065,319 1,192,458 Restricted stock awards — 70,527 Series Z Warrants 795,830 795,830 Series B Convertible Preferred Stock — 87,015 Total 1,861,149 2,145,830 The total stock options are inclusive of 60,054 stock options as of both December 31, 2024 and 2023, granted outside the PAVmed 2014 Equity Plan. Note 20 — Segment Information PAVmed is structured to be a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies. 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 support the commercial expansion and execution of EsoGuard, which is the flagship product of our subsidiary Lucid, of which we remain the shareholder with the largest voting interest. In addition, through a separate majority-owned subsidiary, Veris Health we are focused in the immediate term on entering into strategic partnership opportunities with leading academic oncology systems to expand access to the Veris Cancer Care Platform, while concurrently developing an implantable physiological monitor, designed to be implanted alongside a chemotherapy port, which will interface with the Veris Cancer Care Platform. The Company manages the business activities on a consolidated basis and operates in one reportable segment. PAVmed’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM uses consolidated net income(loss) to assess segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (cost of revenues, sales and marketing, research and development, and general and administrative) at the consolidated level to manage the Company’s operations. The Company’s significant segment expenses and other segment items align with the financial statements line items presented in its the consolidated statements of operations. During the years ended December 31, 2024 and 2023 revenues resulting from the delivery of patient EsoGuard test results was concentrated in the United States. The measure of segment assets is reported on the balance sheet as total consolidated assets, and concentrated in the United States. F- 40