# PAVmed Inc.: Form 10-Q for the period ended Sep 30, 2024 - Company: [PAVmed Inc.](/companies/pavm.md) (CIK 1624326) - Form: 10-Q - Filed: 2024-11-14 - Accepted by EDGAR: Nov 14, 2024, 02:29 ET - Period: 2024-09-30 - Accession: 0001493152-24-045258 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1624326/000149315224045258/form10-q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1624326/000149315224045258/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-09-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2024-07-01 to 2024-09-30 | $996.0k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Revenue | 9 months, 2024-01-01 to 2024-09-30 | $3.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $1.4m | us-gaap:CostOfRevenue | | Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $4.8m | us-gaap:CostOfRevenue | | Research and development | 3 months, 2024-07-01 to 2024-09-30 | $1.5m | us-gaap:ResearchAndDevelopmentExpense | | Research and development | 9 months, 2024-01-01 to 2024-09-30 | $5.1m | us-gaap:ResearchAndDevelopmentExpense | | Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$11.6m | us-gaap:OperatingIncomeLoss | | Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$39.3m | us-gaap:OperatingIncomeLoss | | Net income | 3 months, 2024-07-01 to 2024-09-30 | $64.4m | us-gaap:NetIncomeLoss | | Net income | 9 months, 2024-01-01 to 2024-09-30 | $38.4m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $1.44 | us-gaap:EarningsPerShareDiluted | | Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.79 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $6.43 | us-gaap:EarningsPerShareBasic | | Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $3.30 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 44,475,638 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 43,069,449 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$33.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $51.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Cash and equivalents | at 2024-09-30 | $765.0k | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2024-09-30 | $2.1m | us-gaap:AssetsCurrent | | Total assets | at 2024-09-30 | $30.6m | us-gaap:Assets | | Current liabilities | at 2024-09-30 | $37.6m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2024-09-30 | $39.9m | us-gaap:Liabilities | | Shareholders' equity | at 2024-09-30 | −$4.9m | us-gaap:StockholdersEquity | | Shares outstanding | at 2024-09-30 | 10,985,841 shares | dei:EntityCommonStockSharesOutstanding | ## Management's discussion and analysis As filed, 62,855 characters. The following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations should be read together with our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, (i) “we”, “us”, and “our”, and the “Company” and “PAVmed” refer to PAVmed Inc. and its subsidiaries, including its subsidiary Lucid Diagnostics Inc. (“Lucid Diagnostics” or “Lucid”) and its majority-owned subsidiary Veris Health Inc. (“Veris Health” or “Veris”), (ii) “FDA” refers to the Food and Drug Administration, (iii) “510(k)” refers to a premarket notification, submitted to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) “CLIA” refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) “LDT” refers to a diagnostic test, defined by the FDA as “an IVD that is intended for clinical use and designed, manufactured and used within a single laboratory,” which is generally subject only to self-certification of analytical validity under the CMS CLIA program. ### FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from those expressed or implied in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.” Important factors that may affect our actual results include: - our limited operating history; - our financial performance, including our ability to generate revenue; - our ability to obtain regulatory approval for the commercialization of our products; - the risk that the FDA will cease to exercise enforcement discretion with respect to LDTs, like EsoGuard; - the ability of our products to achieve market acceptance; - our success in retaining or recruiting, or changes required in, our officers, key employees or directors; - our potential ability to obtain additional financing when and if needed; - our ability to protect our intellectual property; - our ability to complete strategic acquisitions; - our ability to manage growth and integrate acquired operations; - the potential liquidity and trading of our securities; - our regulatory and operational risks; - cybersecurity risks; - risks related to the COVID-19 pandemic and other health-related emergencies; and - our estimates regarding expenses, future revenue, capital requirements and needs for additional financing. In addition, our forward-looking statements do not reflect the potential impact of any future financings, acquisitions, mergers, dispositions, joint ventures or investments we may make. We may not actually achieve the results, plans, and/or objectives disclosed in our forward-looking statements, and the intended or expected developments and/or other events disclosed in our forward-looking statements may not actually occur, and accordingly you should not place undue reliance on our forward-looking statements. You should read this Form 10-Q and the documents we have filed as exhibits to this Form 10-Q and the Form 10-K completely and with the understanding our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. ### Overview PAVmed is 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 needs with large addressable market opportunities. Leveraging our corporate structure—a parent company that will establish distinct subsidiaries for each financed asset—we have the flexibility to raise capital at the PAVmed level to fund product development, or to structure financing directly into each subsidiary in a manner tailored to the applicable product, the latter of which is our current strategy given prevailing market conditions. Our current focus is multi-fold. We continue to pursue commercial expansion and execution of EsoGuard, which is the flagship product of our of our subsidiaries, Lucid Diagnostics (Nasdaq: LUCD). We also are continuing to advance the commercialization of the Veris Cancer Care Platform, which is the lead product of another of our subsidiaries, 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 Platform, while concurrently developing an implantable physiological monitor, designed to be implanted alongside a chemotherapy port, which will interface with the Veris Platform. In terms of other existing products and technologies, we have created 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. See *Part I, Item 1, “Business”,* in the Form 10-K for a more detailed summary of the medical device, diagnostics, and digital health sectors and our key products, including in particular EsoGuard and the Veris Platform, which are currently our two leading products. ### Recent Developments ### Business #### Changes to PAVmed Board Composition Effective as of September 10, 2024, James L. Cox, M.D., and Joan B. Harvey resigned from the Company’s board of directors. Neither Dr. Cox’s nor Ms. Harvey’s resignation was due to any disagreement with the Company on any matter relating to its operations, policies or practices. Also effective as of September 10, 2024, the Company’s board of directors appointed Sundeep Agrawal, M.D. as a Class B director. Prior to being appointed to the Company’s board of directors, Dr. Agrawal had entered into a strategic advisory agreement with the Company to provide certain M&A advisory services. Such agreement will remain in effect upon Dr. Agrawal joining the board. Pursuant to the agreement, Dr. Agrawal will receive a monthly consulting fee of $3,333. The agreement is terminable by the Company on 10 days’ written notice. Except for the foregoing, Dr. Agrawal has not engaged in any transactions with the Company that are required to be reported pursuant to Item 404(a) of Regulation S-K. #### Lucid American Journal of Gastroenterology Publication On November 7, 2024, Lucid announced that its manuscript for its multi-center ESOGUARD BE-1 study has been accepted for publication in The American Journal of Gastroenterology, the official journal of the American College of Gastroenterology (ACG). This is the fourth publication presenting clinical validation data for Lucid’s EsoGuard® Esophageal DNA Test, and the second to demonstrate its performance in an intended-use screening population. Consistent with previous studies, EsoGuard showed high sensitivity and negative predictive value in detecting esophageal precancer (Barrett’s Esophagus or BE). With the acceptance for publication of Lucid believes it now has a complete clinical evidence package to submit its data to the MolDX program and formally seek Medicare coverage. The prospective, multi-center study presented data from a cohort of patients who met ACG guideline criteria for esophageal precancer screening and underwent non-endoscopic EsoGuard testing followed by traditional upper endoscopy. EsoGuard sensitivity and negative predictive value for detecting BE were approximately 88% and 99%, respectively. Specificity and positive predictive value were approximately 81% and 30%, respectively. No serious adverse events were reported. #### Lucid IP Matters On October 15, 2024, the Company announced that Lucid received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for a patent application covering its proprietary method of using methylation of the cyclin-A1 (CCNA1) gene to help detect esophageal precancer and cancer, a key component of its EsoGuard® Esophageal DNA Test. EsoGuard utilizes next-generation sequencing (NGS) to assess DNA methylation at 31 sites on two genes, vimentin (VIM) and cyclin-A1 (CCNA1). Such methylation has been shown to be strongly associated with conditions along the spectrum from early esophageal precancer (non-dysplastic Barrett’s Esophagus or BE), to late precancer (dysplastic BE), to cancer (esophageal adenocarcinoma). Although VIM methylation had been previously associated with gastrointestinal neoplasias, the association of CCNA1 methylation with esophageal neoplasia is novel and appears to be more specific. #### Veris NIH Grant On October 10, 2024, the Company announced that Veris had been awarded a $1.8 million grant from the National Institute on Minority Health and Health Disparities (NIMHD), an institute of the National Institutes of Health (NIH). The two-year grant will fund research to optimize and validate the Veris Cancer Care Platform for the needs of medically underserved cancer patients, in partnership with an academic cancer center. The research project, “Bridging the Gap: Enhancing Cancer Care for Underserved Populations with the Veris Health Cancer Care Platform,” will focus on patients facing language barriers, limited access to technology, and socioeconomic disparities. #### Veris Cancer Care Platform On June 13, 2024, we announced that Veris and a National Cancer Institute-Designated Comprehensive Cancer Center launched a pilot program and has enrolled the first patients from such center in such program on the Veris Cancer Care Platform. #### 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, as discussed above. This distribution constituted an “Extraordinary Dividend” as defined in the warrant agreement that governs the Company’s Series Z Warrants. As a result, pursuant to the warrant agreement, the exercise price under the Series Z Warrants per full share of PAVmed common stock was automatically decreased by $0.52 (the fair market value of 0.37709668 of a share of Lucid Diagnostics’ common stock as of the date of the distribution) to $23.48 per share. #### Management Services Agreement/Payroll Benefits and Expense Reimbursement Agreement with Lucid Diagnostics On August 6, 2024, PAVmed and Lucid entered into a ninth amendment to the management services agreement between PAVmed and Lucid (“MSA”) to increase the monthly fee thereunder from $0.83 million per month to $1.05 million per month, effective as of July 1, 2024. On March 22, 2024, PAVmed and Lucid entered into an eighth amendment to MSA to increase the monthly fee thereunder from $0.75 million per month to $0.83 million per month, effective as of January 1, 2024. The amendment also reset the maximum number of shares issuable under the agreement to 19.99% of the shares outstanding as of the date of the amendment. On January 26, 2024, in accordance with the MSA and the payroll, benefits and expense reimbursement agreement between PAVmed and Lucid (“PBERA”), PAVmed elected to receive payment of approximately $4.7 million of fees and reimbursements accrued under the MSA and the PBERA through the issuance of 3,331,771 shares of Lucid’s common stock. #### Business - continued #### Incubator Program On March 21, 2024, the Company announced that it has launched a wholly owned incubator, PMX, to complete development and commercialization of existing portfolio technologies, including PortIO, EsoCure and CarpX. PMX and Hatch Medical, L.L.C. (“Hatch Medical”), a medical device incubator and technology brokerage firm, have executed a joint venture agreement to advance the technologies. Pursuant to the joint venture agreement, PAVmed will assign PortIO, EsoCure and CarpX to its wholly owned incubator, PMX. Starting with PortIO, the Company will seek to independently finance a separate subsidiary of the incubator to develop and commercialize each technology. Hatch Medical will provide strategic advisory and brokerage services to the subsidiary to advance the technology through key milestones and, subsequently, seek to engage a strategic partner to acquire, license or distribute the commercial product. The Company has an agreed upon term sheet for PortIO with a network of angel investors that is based on a pre-money valuation of PortIO of $42 million, and due diligence by the investors is ongoing, although there can be no assurance that such transaction will be consummated. #### FDA Enforcement Discretion In April 2024, FDA published the final rule under which FDA intends to phase out its general enforcement discretion approach for LDTs so that IVDs manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs (the proposed rule was published in October 2023). In the final rule, FDA has expanded the categories of LDTs that will be eligible for continued enforcement discretion, which include LDTs first marketed prior to May 6, 2024 and LDTs approved by New York State’s Clinical Laboratory Evaluation Program (NYS CLEP). As EsoGuard was marketed prior to the May 6, 2024, and is also NYS CLEP-approved, EsoGuard remains under continued enforcement discretion from FDA’s premarket review requirements and quality systems requirements (except for record-keeping). As such, there is no immediate impact from the final rule on EsoGuard’s regulatory strategy. ### Financing #### Extension to Regain Compliance with Nasdaq Listing Rules to January 31, 2025 On November 8, 2024, a Nasdaq Hearings Panel (the “Panel”) granted the Company an extension, until January 31, 2025, to regain compliance with the Nasdaq continued listing standards. As previously disclosed, 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 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. During the extension granted by the Panel, the Company’s common stock and Series Z warrants will continue to trade uninterrupted under the symbol “PAVM” and “PAVMZ”, respectively. #### Extension of Senior Convertible Notes; Waiver Effective as of March 12, 2024, the Company entered into an amendment and waiver (the “Note Amendment and Waiver”) with the holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note (each as defined in “*Liquidity and Capital Resources”* below). Pursuant to the Note Amendment and Waiver, the maturity date of the April 2022 Senior Convertible Note was extended to April 4, 2025 and the maturity date of the September 2022 Senior Convertible Note was extended to September 8, 2025, in each case subject to further extension in certain circumstances. The holder of the such note also waived, for the period commencing on December 1, 2023 and ending on August 31, 2024, the financial covenant contained in such notes requiring that the ratio of (a) the outstanding principal amount of the notes, 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, not exceed 30%, and that the Company’s market capitalization not be less than $75 million (the “Financial Tests”). In consideration of the Note Amendment and Waiver, the Company agreed to pay the holder of the notes $2.0 million in cash (or in such other form as may be mutually agreed in writing), which currently is included in accrued expenses and other current liabilities on the Company’s unaudited condensed consolidated balance sheets as of September 30, 2024. In addition, 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. See our accompanying unaudited condensed consolidated financial statements Note 11, *Debt*, for further discussion of the senior convertible notes. #### Lucid March 2023 Senior Convertible Note Refinancing On November 8, 2024, Lucid gave notice to the holder of the Lucid March 2023 Senior Convertible Note that it was exercising its right pursuant to such note to redeem the same for the redemption price specified in such note (the “Optional Redemption Price”). Pursuant to the terms of the Lucid March 2023 Senior Convertible Note, Lucid has not less than ten business days, and not more than twenty business days, from the date of the notice (the “Optional Redemption Notice Period”) to pay the Optional Redemption Price. To finance the payment of the Optional Redemption Price, Lucid has entered into a securities purchase agreement with certain accredited investors (the “Lucid 2024 Note Investors”). Under the agreement, subject to customary closing conditions, Lucid has agreed to issue, and each 2024 Note Investor has agreed to purchase, 12.0% senior secured convertible notes due 2029 (collectively, the “Lucid November 2024 Senior Convertible Notes”). As of the date hereof, the aggregate commitments of the Lucid 2024 Note Investors exceed the Optional Redemption Price. In connection with the purchase and sale of the Lucid 2024 Convertible Notes, Lucid will agree not to sell, transfer or dispose of, directly or indirectly, any shares of Lucid common stock for six months from the consummation of the offering, subject to certain limited exceptions, including in the event of a fundamental transaction involving Lucid. Lucid expects to complete the issuance of the Lucid November 2024 Senior Convertible Notes and the redemption of the Lucid March 2023 Senior Convertible Note on or prior to the end of the Optional Redemption Notice Period, although there can be no assurance that such issuance and redemption will be completed during such period, if at all. #### Financing - continued #### Lucid Diagnostics - Preferred Stock Offerings On March 13, 2024, Lucid entered into subscription agreements (each, a “Lucid Series B Subscription Agreement”) and exchange agreements (each, a “Lucid Series B Exchange Agreement”) with certain accredited investors (collectively, the “Lucid Series B Investors”), which agreements provided for (i) the sale to the Lucid Series B Investors of 12,495 shares of Lucid’s newly designated Series B Convertible Preferred Stock, par value $0.001 per share (the “Lucid Series B Preferred Stock”), at a purchase price of $1,000 per share, and (ii) the exchange by the Lucid Series B Investors of 13,625 shares of Lucid’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Lucid Series A Preferred Stock”), and 10,670 shares of Lucid’s Series A-1 Convertible Preferred Stock, par value $0.001 per share (the “Lucid Series A-1 Preferred Stock”), held by them for 31,790 shares of Lucid Series B Preferred Stock (collectively, the “Lucid Series B Offering and Exchange”). Prior to the execution of the Lucid Series B Subscription Agreements and the Lucid Series B Exchange Agreements, Lucid entered into subscription agreements with certain of the Lucid Series B Investors providing for the sale to such investors of 5,670 shares of Lucid Series A-1 Preferred Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed to exchange for shares of Lucid Series B Preferred Stock pursuant to the Lucid Series B Exchange Agreements (and are included in the 10,670 shares of Lucid Series A-1 Preferred Stock set forth above). Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444. The terms of the Lucid Series B 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 B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date. The holders of the Lucid Series B Preferred Stock also will be entitled to dividends equal, on an as-if-converted to shares of Lucid common stock basis, to and in the same form as dividends actually paid on shares of Lucid common stock when, as, and if such dividends are paid on shares of Lucid common stock. The Lucid Series B Preferred Stock is a voting security. The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions). 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. #### PAVmed - ATM Facility In December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity Offering Agreement between us and Cantor Fitzgerald & Co. (“Cantor”). In March 2023, the “at-the-market offering” became subject to General Instruction I.B.6 of Form S-3, which limits sales of our securities under this instruction in any 12-month period to one-third of the aggregate market value of our public float (unless our public float rises to $75 million or more, in which case the instruction will cease to apply). As a result of this limitation and our then-current public float, in May 2023, we amended our “at-the-market offering” to cover up to $18 million of our common stock. In the nine month period ended September 30, 2024, the Company sold 627,302 shares through its at-the-market equity facility for net proceeds of approximately $1.0 million, after payment of 3% commissions. As of September 30, 2024, the Company had approximately $15.1 million remaining under the PAVmed ATM Facility. ### Results of Operations ### Overview ### Revenue The Company recognized revenue primarily resulting from the delivery of patient EsoGuard test results when the Company considered the collection of such consideration to be probable to the extent that it is unconstrained. ### Cost of revenue Cost of revenues recognized primarily from the delivery of patient EsoGuard test results includes costs related to EsoCheck device usage, shipment of test collection kits, royalties and the cost of services to process tests and provide results to physicians. We have incurred expenses for tests in the period in which the activities occur, therefore, gross margin as a percentage of revenue has varied from quarter to quarter due to costs being incurred in one period that relate to revenues recognized in a later period. We expect that gross margin for our services will fluctuate based on the commercialization efforts of our majority-owned subsidiaries. ### Sales and marketing expenses Sales and marketing expenses consist primarily of salaries and related costs for employees engaged in sales, sales support and marketing activities, as well as advertising and promotion expenses. We anticipate our sales and marketing expenses to decrease in the future compared to historical periods due to the deconsolidation of Lucid, as the sales and marketing operations for the Lucid EsoGuard test is no longer recorded within the Company’s operating results. ### General and administrative expenses General and administrative expenses consist primarily of salaries and related costs for personnel, travel expenses, facility-related costs, professional fees for accounting, tax, audit and legal services, salaries and related costs for employees involved in third-party payor reimbursement contract negotiations and consulting fees and other expenses associated with obtaining and maintaining patents within our intellectual property portfolio. We anticipate our general and administrative expenses will decrease in the future compared to historical periods due to the deconsolidation of Lucid as the general and administrative expenses, including third-party payor reimbursement costs, incurred by Lucid will no longer be recorded within the Company’s operating results. In the future, general and administrative expenses will include those expenses related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related services, insurance premiums and investor relations costs associated with maintaining compliance as a public company for PAVmed and its majority-owned subsidiaries. ### Research and development expenses Research and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred for the development of our products, including: - consulting costs for engineering design and development; - salary and benefit costs associated with our medical research personnel and engineering personnel; - costs associated with regulatory filings; - patent license fees; - cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; - product design engineering studies; and - expenses for facilities maintained solely for research and development purposes. The reported research and development activities, including our clinical trials, were focused principally on the acceleration of EsoGuard and Veris Cancer Care Platform commercialization. In the future, the research and development activities will focus on the Veris Cancer Care Platform, the PMX incubator program and other products in our pipeline as well as applicable new technologies, as resources permit. ### Other Income and Expense, net Other income and expense, net, consists principally of changes in fair value of our convertible notes and losses on extinguishment of debt upon repayment of such convertible notes. ### Presentation of Dollar Amounts All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars in millions, except for share and per share amounts. ### The three months ended September 30, 2024 as compared to three months ended September 30, 2023 ### Revenue In the three months ended September 30, 2024, revenue was $1.0 million as compared to $0.8 million for the corresponding period in the prior year. The $0.2 million increase principally relates to the increase in volume of our EsoGuard Esophageal DNA Tests performed in our own CLIA laboratory for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Tests. ### Cost of revenue In the three months ended September 30, 2024, cost of revenue costs were approximately $1.4 million, as compared to $1.8 million for the corresponding period in the prior year. The net decrease of $0.4 million was primarily related to: - approximately $0.4 million decrease in manufacturing costs associated with the EsoCheck devices and EsoGuard Esophageal DNA Tests. ### Sales and marketing expenses In the three months ended September 30, 2024, sales and marketing costs were approximately $2.9 million as compared to $4.0 million for the corresponding period in the prior year. The net decrease of $1.1 million was principally related to: - approximately $1.0 million decrease in compensation related costs; and - approximately $0.1 million decrease in stock based compensation costs. ### General and administrative expenses In the three months ended September 30, 2024, general and administrative costs were approximately $6.6 million as compared to $6.9 million for the corresponding period in the prior year. The net decrease of $0.3 million was principally related to: - approximately $0.2 million decrease in third-party professional fees and legal expenses; and - approximately $0.1 million decrease in stock based compensation costs. ### Research and development expenses In the three months ended September 30, 2024, research and development costs were approximately $1.5 million as compared to $3.2 million for the corresponding period in the prior year. The net decrease of $1.7 million was principally related to: - approximately $1.1 million decrease in development costs, particularly in clinical trial activities and outside professional and consulting fees; - approximately $0.3 million decrease in compensation and stock based compensation from RSA and stock option grants to Lucid and PAVmed employees and non-employees; - approximately $0.2 million decrease in third party consulting costs related to research and development activities; and - approximately $0.1 million decrease in developmental milestones paid to third parties. ### Amortization of Acquired Intangible Assets The amortization of acquired intangible assets was approximately $0.1 million in the three months ended September 30, 2024, as compared to $0.5 million for the corresponding period in the prior year. The decrease of $0.4 million in the current period was due to certain acquired intangible assets being fully amortized in February 2024. ### Other Income and Expense **Results of Operations** - continued #### The three months ended September 30, 2024 as compared to the three months ended September 30, 2023 - continued ### Other Income and Expense #### Change in fair value of convertible debt In the three months ended September 30, 2024, the change in the fair value of our convertible notes was approximately $0.2 million of income, related to the April 2022 Senior Convertible Note (as defined in “*Liquidity and Capital Resources”* below), the September 2022 Senior Convertible Note (as defined in “*Liquidity and Capital Resources”* below), and the Lucid March 2023 Senior Convertible Note (as defined in “*Liquidity and Capital Resources”* below). The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting period date. The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates. #### Loss on Debt Extinguishment In the three months ended September 30, 2024, a debt extinguishment loss in the aggregate of approximately $1.4 million was recognized in connection with our April 2022 Senior Convertible Note, September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note as discussed below. - In the three months ended September 30, 2024, approximately $0.5 million of principal repayments, along with less than $0.1 million of interest expense thereon, were settled through the issuance of 509,942 shares of common stock of the Company, with such shares having a fair value of approximately $0.9 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). In addition, the Company agreed to pay $0.7 million in cash related to acceleration floor payments on these notes related to the conversion price being below the floor, recorded as debt extinguishment loss. The conversions and floor acceleration payments resulted in a debt extinguishment loss of $1.1 million in the three months ended September 30, 2024. - During the period of July 1, 2024 through September 10, 2024, the date of PAVmed’s deconsolidation, approximately $0.8 million of principal repayments along with approximately $0.1 million of interest expense thereon, were settled through the issuance of 1,510,821 shares of Lucid common stock, with such shares having a fair value of approximately $1.3 million (with such fair value measured as the quoted closing price of the common stock of Lucid on the respective conversion date). The conversions resulted in a debt extinguishment loss of $0.3 million in the period July 1, 2024 through September 10, 2024. In comparison, in the three months ended September 30, 2023, a debt extinguishment loss in the aggregate of approximately $1.8 million was recognized in connection with our April 2022 Senior Convertible Note as discussed below. - In the three months ended September 30, 2023, approximately $2.2 million of principal repayments, along with less than $0.1 million of interest expense thereon, were settled through the issuance of 723,998 shares of common stock of the Company, with such shares having a fair value of approximately $4.0 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). The conversions resulted in a debt extinguishment loss of $1.8 million in the three months ended September 30, 2023. See Note 11*, Debt*, to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note. #### Gain on Deconsolidation of Lucid As of September 30, 2024, there were 51,597,718 shares of common stock of Lucid Diagnostics issued and outstanding, of which, the Company held 31,302,444 shares. On September 10, 2024, as a result of certain changes in the composition of the Company’s board of directors as described above, in combination with the Company ceasing to have control over a majority of the voting power of Lucid, the Company was considered to cease to have control over Lucid for the purposes of U.S. GAAP, even though it continues to own, and has not disposed any of its, 31,302,444 shares of common stock of Lucid. However, PAVmed retained the ability to exercise significant influence over Lucid. Upon deconsolidation, the Company’s ownership of 31,302,444 shares of Lucid Diagnostics, Inc common stock was valued at $25.1 million, which resulted in a gain on deconsolidation of $72.3 million in the accompanying unaudited condensed consolidated statements of operations for the three months ended September 30, 2024. #### Change in fair value of Equity Method Investment At September 10, 2024 and September 30, 2024, the fair value of the Company’s investment in Lucid was $25.1 million and $25.5 million, respectively, with the company recognizing an unrealized gain on its investment in Lucid of $0.4 million in the accompanying condensed consolidated statements of operations for three month period ended September 30, 2024. The fair value of common shares held by the Company was determined using the closing price of Lucid’s common stock per share on September 10, 2024 and September 30, 2024 of $0.802 and $0.815, respectively. **Results of Operations** - continued ### The nine months ended September 30, 2024 as compared to nine months ended September 30, 2023 ### Revenue In the nine months ended September 30, 2024, revenue was $3.0 million as compared to $1.4 million for the corresponding period in the prior year. The $1.6 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Tests. ### Cost of revenue In the nine months ended September 30, 2024, cost of revenue remained relatively level, at approximately $4.8 million, as compared to the corresponding period in the prior year. ### Sales and marketing expenses In the nine months ended September 30, 2024, sales and marketing costs were approximately $11.5 million as compared to $12.9 million for the corresponding period in the prior year. The net decrease of $1.4 million was principally related to: - approximately $1.2 million decrease in compensation related costs, including stock-based compensation; and - approximately $0.2 million decrease in third party sales and marketing costs. ### General and administrative expenses In the nine months ended September 30, 2024, general and administrative costs were approximately $20.3 million as compared to $23.9 million for the corresponding period in the prior year. The net decrease of $3.6 million was principally related to: - approximately $3.1 million decrease in stock-based compensation, related to decreases at both PAVmed and Lucid; and - approximately $0.5 million decrease in third-party professional fees, expenses related to related to the termination of the management services agreement with our former laboratory provider, and expenses for finance and legal services. ### Research and development expenses In the nine months ended September 30, 2024, research and development costs were approximately $5.1 million as compared to $10.7 million for the corresponding period in the prior year. The net decrease of $5.6 million was principally related to: - approximately $4.4 million decrease in development costs, particularly in clinical trials activities and outside professional and consulting fees; and - approximately $1.2 million decrease in compensation related costs and stock-based compensation. ### Amortization of Acquired Intangible Assets The amortization of acquired intangible assets was approximately $0.6 million in the nine months ended September 30, 2024, as compared to $1.5 million for the corresponding period in the prior year. The decrease of $1.1 million in the current period was due to certain acquired intangible assets being fully amortized in February 2024. ### Other Income and Expense #### Change in fair value of convertible debt In the nine months ended September 30, 2024 and September 30, 2023, the change in the fair value of our convertible notes was approximately $2.5 million and $5.8 million of expense, respectively, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note. The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting period date. The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates. #### Loss on Issue and Offering Costs - Senior Secured Convertible Note In the nine months ended September 30, 2023, in connection with the issue of the Lucid March 2023 Senior Convertible Note, we recognized a total of approximately $1.2 million of lender fees and offering costs. The Company did not incur lender fees and offering costs in the nine months ended September 30, 2024. **Results of Operations** - continued #### The nine months ended September 30, 2024 as compared to nine months ended September 30, 2023 - continued #### Other Income and Expense - continued #### Loss on Debt Extinguishment In the nine months ended September 30, 2024, a debt extinguishment loss in the aggregate of approximately $2.5 million was recognized in connection with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below. - In the nine months ended September 30, 2024, approximately $1.4 million of principal repayments along with $0.1 million 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 $2.0 million (with such fair value measured as the quoted closing price of the common stock of the Company on the respective conversion date). In addition, the Company agreed to pay $1.1 million in cash related to acceleration floor payments on these notes related to the conversion price being below the floor, recorded as debt extinguishment loss. The conversions and cash paid resulted in a debt extinguishment loss of $1.5 million in the nine months ended September 30, 2024. - During the period of January 1, 2024 through September 10, 2024, the date of PAVmed’s deconsolidation of Lucid, approximately $2.0 million of principal repayments along with approximately $0.8 million of interest expense thereon, were settled through the issuance of 4,172,002 shares of Lucid common stock, with such shares having a fair value of approximately $3.8 million (with such fair value measured as the quoted closing price of the common stock of Lucid on the respective conversion date). The conversions resulted in a debt extinguishment loss of $1.0 million in the period of January 1, 2024 through September 10, 2024. In comparison, in the nine months ended September 30, 2023, a debt extinguishment loss in the aggregate of approximately $3.0 million was recognized in connection with our April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as discussed below. - In the nine months ended September 30, 2023, approximately $5.1 million of principal repayments along with $0.3 million of interest expense thereon, were settled through the issuance of 1,358,896 shares of common stock of the Company, with such shares having a fair value of approximately $8.4 million (with such fair value measured as the quoted closing price of the common stock of the Company on the respective conversion date). The conversions resulted in a debt extinguishment loss of $3.0 million in the nine months ended September 30, 2023. See Note 11*, Debt*, to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note. #### Gain on Deconsolidation of Lucid As of September 30, 2024, there were 51,597,718 shares of common stock of Lucid Diagnostics issued and outstanding, of which, the Company held 31,302,444 shares. On September 10, 2024, as a result of changes in the composition of the Company’s board of directors described above, in combination with the Company ceasing to have control over a majority of the voting power of Lucid, the Company was considered to cease to have control over Lucid for the purposes of U.S. GAAP, even though it continues to own, and has not disposed any of its, 31,302,444 shares of common stock of Lucid. However, PAVmed retained the ability to exercise significant influence over Lucid. As a result, the Company deconsolidated Lucid. Upon deconsolidation, the Company’s ownership of 31,302,444 shares of Lucid Diagnostics common stock was valued at $25.1 million, which resulted in a gain on deconsolidation of $72.3 million in the accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2024. #### Change in fair value of Equity Method Investment At September 10, 2024 and September 30, 2024, the fair value of the Company’s investment in Lucid was $25.1 million and $25.5 million, respectively, with the company recognizing an unrealized gain on its investment in Lucid of $0.4 million in the accompanying condensed consolidated statements of operations for nine month period ended September 30, 2024. The fair value of common shares held by the Company was determined using the closing price of Lucid’s common stock per share on September 10, 2024 and September 30, 2024 of $0.802 and $0.815, respectively. #### 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 Preferred Stock, with such fair value recognized as the carrying value of such issued shares of Lucid Series B Preferred Stock, as compared to the carrying value of the extinguished Lucid Series A and Series A-1 Preferred Stock (carrying value of $24.3 million), resulting in an excess of fair value of $7.5 million recognized as a deemed dividend charged to accumulated deficit in the unaudited condensed consolidated balance sheet on March 13, 2024, with such deemed dividend included as a component of net loss attributable to common stockholders, summarized as follows: | 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 in exchange for Lucid Series A and Lucid Series A-1 Preferred Stock | $31,790 | | Less: Carrying value related to Series A and Series A-1 Preferred Stock Exchanged for Series B Preferred Stock (of 24,295 shares) | (24,294) | | Deemed Dividend Charged to Accumulated Deficit | $7,496 | 39 ### Liquidity and Capital Resources Our current financing strategy is to obtain capital directly into Lucid, Veris and other subsidiaries to fund any product development or other related activities, although we retain the flexibility to raise capital at the PAVmed level. There are no assurances, however, we will be able to obtain an adequate level of financial resources required for the short-term or long-term commercialization and development of our products and services. We have financed our operations principally through the public and private issuances of our common stock, preferred stock, common stock purchase warrants, and debt, both at the PAVmed level and, in the case of Lucid, at the subsidiary level. We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic and medical device companies that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing R&D and clinical trials. We experienced net income before noncontrolling interests of approximately $27.3 million and used approximately $33.6 million of cash in operations for the nine months ended September 30, 2024. Financing activities provided $31.0 million of cash during the nine months ended September 30, 2024. We ended the quarter with cash on-hand of $0.8 million as of September 30, 2024. We expect to continue to experience recurring losses and negative cash flows from operations, and will continue to fund our operations with debt and/or equity financing transactions, including current obligations on the Company’s existing convertible debt which in accordance with management’s plans may include conversions to equity and refinancing our existing debt obligations to extend the maturity date. The Company’s ability to continue operations 12 months beyond the issuance of the financial statements will depend upon generating substantial revenue that is conditioned on obtaining positive third-party reimbursement coverage for its EsoGuard Esophageal DNA Test from both government and private health insurance providers, increasing revenue through contracting directly with self-insured employers, and on its ability to raise additional capital through various potential sources including equity and/or debt financings or refinancing existing debt obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are issued. #### Issue of Shares of Our Common Stock #### During the nine months ended September 30, 2024 - We issued 34,332 shares of our common stock for proceeds of approximately $0.1 million under the PAVmed Employee Stock Purchase Plan (“ESPP”). For more information about the ESPP, see Note 12, *Stock-Based Compensation,* to the Financial Statements. - We issued 627,302 shares of our common stock for net proceeds of approximately $1.0 million, after payment of 3% commissions, through our at-the-market equity facility with Cantor. See below for more information. - We issued 1,084,366 shares of our common stock in satisfaction of approximately $1.4 million of principal repayments along with $0.1 million of interest expense thereon under the April 2022 Senior Convertible Note and September 2022 Senior Convertible Note. #### Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022 Effective as of March 31, 2022, we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor, pursuant to which we agreed to sell, and the investor agreed to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes. On April 4, 2022, we completed an initial closing under the SPA, in which we sold to the investor a Senior Secured Convertible Note with a face value principal of $27.5 million (the “April 2022 Senior Convertible Note”). The April 2022 Senior Secured Convertible Note had an initial 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 or otherwise paid in shares of our common stock as described in Note 11, *Debt.* On September 8, 2022, we completed an additional closing under the SPA, in which we sold to the investor an additional Senior Secured Convertible Note with a face value principal of $11.25 million (the “September 2022 Senior Convertible Note”). The September 2022 Senior Secured Convertible Note had an initial 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 or otherwise paid in shares of our common stock as described in Note 11, *Debt.* Under the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the SPA, we are subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. We also are subject to financial covenants requiring that (i) the amount of our available cash equal or exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days, not exceed 30% (the “Debt to Market Cap Ratio Test”), and (iii) that our market capitalization shall 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. Based on the waiver, as of September 30, 2024, the Company was in compliance with the Financial Tests. In addition, based on the waiver, the Company presently is in compliance with the Financial Tests. **Liquidity and Capital Resources** - continued See Note 11*, Debt*, to the Financial Statements for additional information about the SPA, the April 2022 Senior Convertible Note, and the September 2022 Senior Convertible Note. #### Lucid Diagnostics - Preferred Stock Offerings On March 13, 2024, Lucid entered into Lucid Series B Subscription Agreements and Lucid Series B Exchange Agreements with the Lucid Series B Investors, which agreements provided for (i) the sale to the Lucid Series B Investors of 12,495 shares of newly designated Lucid Series B Preferred Stock, at a purchase price of $1,000 per share, and (ii) the exchange by the Lucid Series B Investors of 13,625 shares of Lucid Series A Preferred Stock, and 10,670 shares of Lucid Series A-1 Preferred Stock held by them for 31,790 shares of Lucid Series B Preferred Stock. Prior to the execution of the Lucid Series B Subscription Agreements and the Lucid Series B Exchange Agreements, Lucid entered into subscription agreements with certain of the Lucid Series B Investors providing for the sale to such investors of 5,670 shares of Lucid Series A-1 Preferred Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed to exchange for shares of Lucid Series B Preferred Stock pursuant to the Lucid Series B Exchange Agreements (and are included in the 10,670 shares of Lucid Series A-1 Preferred Stock set forth above). Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444. The terms of the Lucid Series B 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 B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date. The holders of the Lucid Series B Preferred Stock also will be entitled to dividends equal, on an as-if-converted to shares of Lucid common stock basis, to and in the same form as dividends actually paid on shares of the Lucid common stock when, as, and if such dividends are paid on shares of the Lucid common stock. The Lucid Series B Preferred Stock is a voting security. The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions). 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 Preferred Stock. The terms of the Lucid Series B-1 Preferred Stock are substantially identical to the terms of the Lucid Series B Preferred Stock, except that the Lucid Series B-1 Preferred Stock has a conversion price of $0.7228. The aggregate gross proceeds from the sale of shares in such offering were $11.6 million. #### Lucid Diagnostics - Securities Purchase Agreement - March 13, 2023 - Senior Secured Convertible Note - March 21, 2023 Effective as of March 13, 2023, Lucid Diagnostics entered into a Securities Purchase Agreement (the “Lucid SPA”) with an accredited institutional investor, pursuant to which Lucid Diagnostics agreed to sell, and the investor agreed to purchase a Senior Convertible Note (the “Lucid March 2023 Senior Convertible Note”) with a face value principal of $11.1 million. Lucid Diagnostics issued the Lucid March 2023 Senior Convertible Note on March 21, 2023 pursuant to the Lucid SPA. Under the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. Under the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is also subject to financial covenants requiring that (i) the amount of its available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid late charges, as of the last day of any fiscal quarter commencing with September 30, 2023, to (b) Lucid Diagnostics’ average market capitalization over the prior ten trading days, not exceed 30%, and (iii) that Lucid Diagnostics’ market capitalization shall at no time be less than $30 million (the “Lucid Financial Tests”). As of September 30, 2024, Lucid Diagnostics was in compliance with the Lucid Financial Tests. In addition, Lucid Diagnostics presently is in compliance with the Lucid Financial Tests. **Liquidity and Capital Resources** - continued On November 8, 2024, Lucid gave notice to the holder of the March 2023 Senior Convertible Note that it was exercising its right pursuant to such note to redeem the same for the Optional Redemption Price specified in such note. To finance the payment of the Optional Redemption Price, Lucid has entered into a securities purchase agreement with the 2024 Note Investors. Under the agreement, subject to customary closing conditions, Lucid has agreed to issue, and each 2024 Note Investor has agreed to purchase he November 2024 Senior Convertible Notes, which are 12.0% senior secured convertible notes due 2029. As of the date hereof, the aggregate commitments of the 2024 Note Investors exceed the Lucid Optional Redemption Price. #### PAVmed Inc. ATM Facility In December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity Offering Agreement between us and Cantor. In the nine months ended September 30, 2024, the Company sold 627,302 shares through its at-the-market equity facility for net proceeds of approximately $1.0 million, after payment of 3% commissions. **Liquidity and Capital Resources** - continued #### Lucid Diagnostics Inc. - Committed Equity Facility and ATM Facility In March 2022, Lucid Diagnostics entered into a committed equity facility with a Cantor affiliate. Cumulatively, a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of September 30, 2024. In November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor. Cumulatively, a total of 230,068 shares of Lucid Diagnostics’ common stock were issued through its at-the-market equity facility for net proceeds of approximately $0.3 million, after payment of 3% commissions, as of September 30, 2024. ### Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reporting in our unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgements. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies are as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 25, 2024. There have been no material changes to our critical accounting policies and estimates in the nine months ended September 30, 2024. ## Market risk As filed, 256 characters. The information set forth in Part I, Item 2 under the caption “*Liquidity and Capital Resources — Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022”* is incorporated herein by reference. ## Controls and procedures As filed, 1,533 characters. ### 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 September 30, 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. ### Changes to Internal Controls Over Financial Reporting There has been no change in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Filed Nov 14, 2024. Source: SEC EDGAR, the filing index for accession 0001493152-24-045258. Last ingested by Listed: Oct 24, 2026, 15:14 ET. No prices; not investment advice.