UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2025

 

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File Number: 001-37685

 

PAVMED INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		47-1214177
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

 

360 Madison Avenue 25th Floor New York, NY		10017
(Address of Principal Executive Offices)		(Zip Code)

 

(917) 813-1828

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each Class		Trading Symbol(s)		Name of each Exchange on which Registered
Common Stock, $0.001 par value per share		PAVM		The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of  “large accelerated filer”, “accelerated filer” , “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer	☐	Accelerated filed	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(c) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of March 31, 2025 and May 12, 2025, there were 17,093,034 and 17,618,034 shares, respectively, of the registrant’s Common Stock, par value $0.001 per share, issued and outstanding (with such number of shares inclusive of shares of common stock underlying unvested restricted stock awards granted under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan as of such date).

 

 

 

TABLE OF CONTENTS

 

		Page
	Part I - Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2025 and December 31, 2024	1
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2025 and 2024	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three months ended March 31, 2025 and 2024	3
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2025 and 2024	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 4.	Controls and Procedures	41
	Part II - Other Information
Item 1.	Legal Proceedings	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
	Signature	43
	Exhibit Index	44

 

 

Part I - Financial Information

 

Item 1. Financial Statements

 

PAVMED INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except number of shares and per share data - unaudited)

 

		March 31, 2025				December 31, 2024
Assets:
Current assets:
Cash		$	2,700			$	1,185
Accounts receivable			9				18
Prepaid expenses, deposits, and other current assets			929				961
Total current assets			3,638				2,164
Fixed assets, net			114				151
Operating lease right-of-use assets			2,379				2,500
Equity method investment - at fair value			46,641				25,637
Other assets			51				208
Total assets		$	52,823			$	30,660
Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable		$	369			$	657
Accrued expenses and other current liabilities			2,284				5,176
Operating lease liabilities, current portion			528				513
Senior Secured Convertible Notes - at fair value			6,600				29,100
Total current liabilities			9,781				35,446
Operating lease liabilities, less current portion			2,110				2,247
Total liabilities			11,891				37,693
Commitments and contingencies (Note 8)			-				-
Mezzanine Equity
Preferred stock, $0.001 par value. Authorized, 20,000,000 shares; Series C Convertible Preferred Stock, stated value $1,016 at March 31, 2025, and issued and outstanding of 1,969 shares at March 31, 2025 and no shares issued and outstanding as of December 31, 2024			2,000				—
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value. Authorized, 20,000,000 shares; Series B Convertible Preferred Stock, par value $0.001, issued and outstanding of 1,441,135 shares at March 31, 2025 and 1,412,865 shares at December 31, 2024			3,400				3,316
Preferred stock, $0.001 par value. Authorized, 20,000,000 shares; Series C Convertible Preferred Stock, stated value $1,016 at March 31, 2025, and issued and outstanding of 22,511 shares at March 31, 2025 and no shares issued and outstanding as of December 31, 2024			22,878				—
Preferred stock, value			22,878				—
Common stock, $0.001 par value. Authorized, 250,000,000 shares (Note 13); 16,769,619 and 11,198,977 shares outstanding as of March 31, 2025 and December 31, 2024, respectively			17				11
Additional paid-in capital			255,967				249,143
Accumulated deficit			(237,268	)			(254,965	)
Total PAVmed Inc. Stockholders’ Equity (Deficit)			44,994				(2,495	)
Noncontrolling interests			(6,062	)			(4,538	)
Total Stockholders’ Equity (Deficit)			38,932				(7,033	)
Total Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit)		$	52,823			$	30,660

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

PAVMED INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except number of shares and per share data - unaudited)

 

		2025				2024
		Three Months Ended March 31,
		2025				2024
Revenue		$	8			$	1,010
Operating expenses:
Cost of revenue			36				1,744
Sales and marketing			247				4,311
General and administrative			4,384				6,678
Amortization of acquired intangible assets			—				372
Research and development			787				1,941
Total operating expenses			5,454				15,046
Operating loss			(5,446	)			(14,036	)
Other income (expense):
Interest income			8				72
Interest expense			(4	)			(16	)
Change in fair value - equity method investment			21,004				—
Change in fair value - Senior Secured Convertible Notes			(49	)			(2,163	)
Debt extinguishments loss - Senior Secured Convertible Notes			(58	)			(369	)
Debt modification expense			—				(2,000	)
Management fee income			3,150				—
Grant income			18				—
Other income (expense), net			24,069				(4,476	)
Income (loss) before provision for income tax			18,623				(18,512	)
Provision for income taxes			—				—
Net income (loss) before noncontrolling interests			18,623				(18,512	)
Net loss attributable to the noncontrolling interests			345				3,300
Net income (loss) attributable to PAVmed Inc.			18,968				(15,212	)
Less: Series B Convertible Preferred Stock dividends earned			(86	)			(80	)
Less: Series C Convertible Preferred Stock dividends earned			(398	)			—
Less: Deemed dividend on Series C Convertible Preferred Stock			(789	)			—
Less: Deemed dividend on Subsidiary Preferred Stock attributable to the noncontrolling interests			—				(7,496	)
Net income (loss) attributable to PAVmed Inc. common stockholders		$	17,695			$	(22,788	)
Per share information:
Net income (loss) per share attributable to PAVmed Inc. common stockholders – basic		$	1.28			$	(2.62	)
Net income (loss) per share attributable to PAVmed Inc. common stockholders – diluted		$	0.34			$	(2.62	)
Weighted average common shares outstanding, basic			13,876,165				8,694,904
Weighted average common shares outstanding, diluted			52,496,401				8,694,904

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

PAVMED INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

for the THREE MONTHS ENDED March 31, 2025

(in thousands, except number of shares and per share data - unaudited)

 

										Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Total
		Mezzanine Equity								PAVmed Inc. Stockholders’ Equity (Deficit)
		Series C Convertible Preferred Stock								Series B Convertible Preferred Stock								Series C Convertible Preferred Stock								Common Stock								Additional Paid-In				Accumulated				Non controlling
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Total
Balance - December 31, 2024			—			$	—				1,412,865			$	3,316				—			$	—				11,198,977			$	11			$	249,143			$	(254,965	)		$	(4,538	)		$	(7,033	)
Dividends declared - Series B Convertible Preferred Stock			—				—				28,270				84				—				—				—				—				—				(84	)			—				—
Issue common stock - PAVM ATM Facility			—				—				—				—				—				—				1,216,565				1				840				—				—				841
Vest - restricted stock awards			—				—				—				—				—				—				1,016				—				—				—				—				—
Conversions - Senior Secured Convertible Note			—				—				—				—				—				—				401,303				1				259				—				—				260
Impact of subsidiary equity transactions			—				—				—				—				—				—				—				—				2,420				—				(2,420	)			—
Issuance - vendor service agreement			—				—				—				—				—				—				77,408				—				50				—				—				50
Issuance - common stock private placement offering with pre-funded warrants and Veris Health common stock issuance, net of issuance costs			—				—				—				—				—				—				2,574,350				3				1,419				—				948				2,370
Issuance through debt exchange - Series C Convertible Preferred Stock, net of financing fees			—				—				—				—				22,347				22,347				—				—				(109	)			—				—				22,238
Issuance through unsecured debt obligation cancellation - Series C Convertible Preferred Stock			—				—				—				—				2,653				2,653				—				—				—				—				—				2,653
Conversions - Series C Convertible Preferred Stock			—				—				—				—				(520	)			(520	)			1,300,000				1				519				—				—				—
Initial reclassification of Series C Convertible Preferred Stock from permanent equity to Mezzanine Equity due to partial redemption feature			2,000				2,000				—				—				(2,000	)			(2,000	)			—				—				—				—				—				(2,000	)
Reclassification of Series C Convertible Preferred Stock to permanent equity from Mezzanine Equity due to increase in stated value due to dividend capitalization			(31	)			—				—				—				31				—				—				—				—				—				—				—
Dividends earned - Series C Convertible Preferred Stock			—				—				—				—				—				398				—				—				—				(398	)			—				—
Deemed dividend on Series C Convertible Preferred Stock			—				—				—				—				—				—				—				—				789				(789	)			—				—
Stock-based compensation - PAVmed Inc.			—				—				—				—				—				—				—				—				637				—				—				637
Stock-based compensation - subsidiaries			—				—				—				—				—				—				—				—				—				—				293				293
Deconsolidation of subsidiary			—				—				—				—				—				—				—				—				—				—				—				—
Net income (loss)			—				—				—				—				—				—				—				—				—				18,968				(345	)			18,623
Balance - March 31, 2025			1,969			$	2,000				1,441,135			$	3,400				22,511			$	22,878				16,769,619			$	17			$	255,967			$	(237,268	)		$	(6,062	)		$	38,932

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

PAVMED INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

for the THREE MONTHS ENDED March 31, 2024

(in thousands, except number of shares and per share data - unaudited)

 

		Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Total
		PAVmed Inc. Stockholders’ Equity (Deficit)
		Series B Convertible Preferred Stock								Common Stock								Additional Paid-In				Accumulated				Non controlling
		Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Total
Balance - December 31, 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	)
Dividends declared - Series B Convertible Preferred Stock			26,123				78				—				—				—				(78	)			—				—
Issue common stock - PAVM ATM Facility			—				—				133,299				—				495				—				—				495
Conversions - Senior Secured Convertible Note			—				—				112,461				—				307				—				—				307
Conversions - subsidiary common stock - Senior Secured Convertible Note			—				—				—				—				—				—				687				687
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			—				—				—				—				(1,734	)			—				1,734				—
Issuance - subsidiary preferred stock (Series A-1)			—				—				—				—				—				—				5,670				5,670
Exchange - subsidiary preferred stock (Series A and Series A-1)			—				—				—				—				—				—				(24,295	)			(24,295	)
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)			—				—				—				—				—				—				12,495				12,495
Subsidiary deemed dividends on preferred stock attributable to noncontrolling interests			—				—				—				—				—				—				(7,495	)			(7,495	)
Stock-based compensation - PAVmed Inc.			—				—				—				—				934				—				—				934
Stock-based compensation - subsidiaries			—				—				—				—				199				—				749				948
Net Loss			—				—				—				—				—				(15,212	)			(3,300	)			(18,512	)
Net income (loss)			—				—				—				—				—				(15,212	)			(3,300	)			(18,512	)
Balance - March 31, 2024			1,331,336			$	3,071				8,858,597			$	9			$	237,863			$	(309,723	)		$	48,205			$	(20,575	)
Balance			1,331,336			$	3,071				8,858,597			$	9			$	237,863			$	(309,723	)		$	48,205			$	(20,575	)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

PAVMED INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except number of shares and per share data - unaudited)

 

		2025				2024
		Three Months Ended March 31,
		2025				2024
Cash flows from operating activities
Net income (loss) - before noncontrolling interest (“NCI”)		$	18,623			$	(18,512	)
Adjustments to reconcile net income (loss) - before NCI to net cash used in operating activities
Depreciation and amortization expense			43				586
Stock-based compensation			930				1,882
Change in fair value - equity method investment			(21,004	)			—
Amortization of common stock payment for vendor service agreement			50				23
Change in fair value - Senior Secured Convertible Notes			49				2,163
Debt extinguishment loss - Senior Secured Convertible Note			58				369
Non-cash lease expense			(2	)			2
Changes in operating assets and liabilities:
Accounts receivable			8				(6	)
Prepaid expenses, deposits and current and other assets			190				531
Accounts payable			(286	)			(301	)
Accrued expenses and other current liabilities			(240	)			154
Net cash flows used in operating activities			(1,581	)			(13,109	)
Cash flows from investing activities
Purchase of equipment			(6	)			(42	)
Net cash flows used in investing activities			(6	)			(42	)
Cash flows from financing activities
Proceeds – issue of preferred stock - subsidiary			—				18,165
Proceeds – issue of common stock and pre-funded warrants			2,370				—
Payment – financing costs – debt exchange			(109	)			—
Payment – Senior Secured Convertible Note – acceleration floor payments			—				(322	)
Proceeds – issue of common stock - At-The-Market Facility			841				786
Proceeds – issue common stock – Employee Stock Purchase Plan			—				62
Proceeds – subsidiary common stock – Employee Stock Purchase Plan			—				353
Proceeds – exercise of stock options issued under equity plan of subsidiary			—				4
Net cash flows provided by financing activities			3,102				19,048
Net increase (decrease) in cash			1,515				5,897
Cash, beginning of period			1,185				19,639
Cash, end of period		$	2,700			$	25,536

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

PAVMED INC.

and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.)

 

Note 1 — The Company

 

Description of the Business

 

PAVmed 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 less than $0.1 million of revenue for the three months ended March 31, 2025, and the Company expects to continue to experience recurring losses and to generate negative cash flows from operating activities in the near future.

 

The Company realized net income attributable to PAVmed common stockholders of approximately $17.7 million and had net cash flows used in operating activities of approximately $1.6 million for the three months ended March 31, 2025. As of March 31, 2025, the Company had negative working capital of approximately $6.1 million, with such working capital inclusive of the Senior Secured Convertible Notes classified as a current liability of an aggregate of approximately $6.6 million and approximately $2.7 million of cash.

 

The Company’s ability to continue operations 12 months beyond the issuance of the financial statements, will depend upon its ability to control its operating costs within the limits of the amounts collected from its management service contracts with its non-consolidated subsidiaries, to substantially increase its revenues from the Veris Cancer Care platform, and to raise additional capital through various potential sources including equity or debt financings or refinancing or restructuring existing debt obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are issued.

 

 

Note 3 — Summary of Significant Accounting Policies

 

Significant Accounting Policies

 

The Company’s significant accounting policies are as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 24, 2025, except as otherwise noted herein below.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of PAVmed and those of its wholly owned subsidiaries and majority-owned subsidiaries entities have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”). All intercompany transactions and balances have been eliminated in consolidation. The Company has a controlling financial interest in Veris Health Inc., with the corresponding noncontrolling interest included as a separate component of consolidated stockholders’ equity (deficit), including the recognition in the unaudited condensed consolidated statement of operations of a net loss attributable to the noncontrolling interest based on the respective minority-interest equity ownership of each subsidiary. As of September 10, 2024, PAVmed ceased to have a controlling financial interest in Lucid Diagnostics and therefore PAVmed’s consolidated results of operations include Lucid Diagnostics’ results of operations only through that date. PAVmed accounts for its investment in Lucid Diagnostics using the equity method and the fair value option. See below and Note 4, Equity Method Investment for a discussion on the impact of the deconsolidation of Lucid Diagnostics. See Note 14, Noncontrolling Interest, for a discussion of each of the subsidiaries noted above. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions.

 

As permitted under SEC rules, certain footnotes or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2024 has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair statement of the Company’s unaudited condensed consolidated financial information.

 

The unaudited condensed consolidated results of operations for the three months ended March 31, 2025 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2025 or for any other interim period or for any other future periods. The accompanying unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 24, 2025.

 

All amounts in the accompanying unaudited condensed consolidated financial statements and the notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts.

 

Cash

 

The Company maintains its cash at a major financial institution with high credit quality. At times, the balance of its cash deposits may exceed federally insured limits. The Company has not experienced losses on deposits with commercial banks and financial institutions which exceed federally insured limits.

 

Included in the Company’s cash as of March 31, 2025 and December 31, 2024 is $299 related to a restricted deposit account for a standby letter of credit associated with our corporate headquarters which has a lease maturity date in 2030.

 

Use of Estimates

 

In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and the determination of corresponding carrying value reserve, if any, and liabilities and the disclosure of contingent losses, as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these unaudited condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards, 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.

 

 

Note 3 — Summary of Significant Accounting Policies - continued

 

Revenue Recognition

 

Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics’ operations from the Company’s, the Company’s revenue was primarily generated by Lucid’s laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services were completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. Presently, the Company’s revenue is primarily derived from the Veris Cancer Care Platform and contracts with hospitals and cancer care centers. Similarly, ASC 606 five-step principles are equally applicable in determining recognized revenues for the period.

 

The key aspects considered by the Company include the following:

 

Contracts—The Company’s customer is primarily the patient, a hospital, or cancer care center, 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. Patient 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.

 

 

Note 3 — Summary of Significant Accounting Policies - continued

 

Equity Method Investments

 

Businesses that are not consolidated, but over which PAVmed exercises significant influence, are accounted for under the equity method of accounting. The determination as to whether or not PAVmed exercises significant influence with respect to a company depends on an evaluation of several factors, including, among others, representation on the company’s board of directors and equity ownership level, which is generally between a 20% and a 50% interest in the voting securities of an equity method business, as well as voting rights associated with PAVmed’s holdings in common stock in that company. PAVmed accounts for Lucid Diagnostics as an equity method investment beginning on September 10, 2024, and through the period ended March 31, 2025.

 

Fair Value Option (“FVO”) Election

 

Under a Securities Purchase Agreement dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior Convertible Note”, and a Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September 2022 Senior Convertible Note”, which are accounted under the “fair value option election” as discussed below.

 

Under a Securities Purchase Agreement dated March 13, 2023, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid March 2023 Senior Convertible Note”, which is accounted under the “fair value option election”, through September 10, 2024, the date of Lucid’s deconsolidation from PAVmed’s results of operations, as discussed below.

 

Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging, (“ASC 815”), a financial instrument containing embedded features and/or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date.

 

Alternatively, FASB ASC Topic 825, Financial Instruments, (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and (through September 10, 2024, Lucid’s deconsolidation date) the Lucid March 2023 Senior Convertible Note, including the component related to accrued interest, is presented in a single line item within other income (expense) in the accompanying unaudited condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note or (through September 10, 2024, Lucid’s deconsolidation date) the Lucid March 2023 Senior Convertible Note).

 

See Note 9, Financial Instruments Fair Value Measurements, with respect to the FVO election; and Note 10, 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.

 

Recently Adopted Accounting Pronouncements

 

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 guidance was adopted by the Company effective January 1, 2025, on a prospective basis. The Company does not expect the standard to have a significant impact on its consolidated financial statements in the 2025 Annual Report on Form 10-K.

 

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 unaudited condensed 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 unaudited condensed consolidated financial statements and disclosures.

 

 

Note 4 — Equity Method Investment

 

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.

 

The following presents summarized financial information related to Lucid accounted for under the equity method as of March 31, 2025. This aggregate information has been compiled from the financial statements of Lucid.

 Schedule of Aggregate Information From the Financial Statements

		March 31, 2025
Cash		$	25,238
Other current assets			2,299
Non-current assets			5,258
Total assets			32,795
Current liabilities			36,569
Non-current liabilities			1,603
Shareholders’ deficit			(5,377	)
Total liabilities and stockholders’ deficit		$	32,795

 

		Three Months ended March 31, 2025
Revenue		$	828
Net income (loss)		$	(36,018	)

 

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 March 31, 2025 and December 31, 2024, the fair value of the Company’s investment in Lucid was $46.6 million and $25.6 million, respectively, with the Company recognizing an unrealized gain on its investment in Lucid of $21.0 million in the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2025. 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 March 31, 2025 and December 31, 2024 of $1.49 and $0.819, respectively. At March 31, 2025 and December 31, 2024, PAVmed held approximately 31% and 40%, respectively 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. During the three months ended March 31, 2025, the MSA fee income was $3,150.

 

In connection with the Exchange, the September 2022 Senior Convertible Note was amended to provide that MSA Fees will be paid in cash, and that the Company will be required to set aside 50% of such payments received after January 31, 2025, unless certain conditions are met (the “MSA Reserve Requirement”). As of February 18, 2025, the Company and the holder entered into a waiver, pursuant to which, among other things, the holder agreed to waive the MSA Reserve Requirement through March 31, 2025.

 

 

Note 5 — Revenue from Contracts with Customers

 

Revenue Recognized

 

The Company recognized less than $0.1 million in each of the three months ended March 31, 2025 and 2024, in each case from subscription revenue derived from its Veris Health Cancer Care Platform. In addition, the Company’s revenue for the three months ended March 31, 2024 was $1,010, 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.

 

Cost of Revenue

 

Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics from PAVmed’s consolidated results, 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. Presently, cost of revenues of $36 are principally from amounts incurred in the delivery of patient services including web hosting costs, patient devices, and compensation costs.

 

The Company recognized less than $0.1 million in each of the three months ended March 31, 2025 and 2024, in each case from costs associated subscription revenue. The Company’s cost of revenue for the three months ended March 31, 2024 was $1,744, 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

		March 31, 2025				December 31, 2024
Advanced payments to service providers and suppliers		$	211			$	115
Prepaid insurance			110				233
Deposits			345				347
Veris Box supplies			263				266
Total prepaid expenses, deposits and other current assets		$	929			$	961

 

Note 7 — Leases

 

The Company’s future lease payments as of March 31, 2025, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows:

 Schedule of Future Minimum Lease Payments for Operating Leases 

2025 (remainder of year)		$	534
2026			724
2027			594
2028			471
2029			481
Thereafter			367
Total lease payments		$	3,171
Less: imputed interest			(533	)
Present value of lease liabilities		$	2,638

 

 

Note 7 — Leases - continued

 

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 

		2025				2024
		Three Months Ended March 31,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	175			$	476
Non-cash investing and financing activities
Right-of-use assets obtained in exchange for new operating lease liabilities		$	—			$	22
Weighted-average remaining lease term - operating leases (in years)			4.82				4.60
Weighted-average discount rate - operating leases			7.875	%			7.875	%

 

As of March 31, 2025 and December 31, 2024, the Company’s right-of-use assets from operating leases were $2,379 and $2,500, respectively, which are reported in operating lease right-of-use assets in the unaudited condensed consolidated balance sheets. As of March 31, 2025 and December 31, 2024, the Company had outstanding operating lease obligations of $2,638 and $2,760, respectively, of which $528 and $513, respectively, are reported in operating lease liabilities, current portion and $2,110 and $2,247, respectively, are reported in operating lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the financing terms the Company would likely receive on the open market.

 

Note 8 — 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 9 — 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 Using1
		Level-1 Inputs				Level-2 Inputs				Level-3 Inputs				Total
March 31, 2025
Assets:
Investment in Lucid Diagnostics, Inc common stock		$	46,641			$	—			$	—			$	46,641
Total assets at fair value		$	46,641			$	—			$	—			$	46,641
Liabilities:
Senior Secured Convertible Note - September 2022			—				—				6,600				6,600
Total liabilities at fair value		$	—			$	—			$	6,600			$	6,600

 

		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

 

1

There were no transfers between the respective Levels during the period ended March 31, 2025.

 

As discussed in Note 10, 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 10, 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 results 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.

 

 

Note 9 — Financial Instruments Fair Value Measurements - continued

 

The estimated fair value of the September 2022 Senior Convertible Note as of March 31, 2025 and the estimated fair value of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as of December 31, 2024, 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 

		September 2022 Senior Convertible Note: March 31, 2025
Fair Value		$	6,600
Face value principal payable		$	6,579
Required rate of return			9.500	%
Conversion Price		$	1.07
Value of common stock		$	0.72
Expected term (years)			0.75
Volatility			110.00	%
Risk free rate			4.05	%
Dividend yield			—	%

 

		April 2022 Senior Convertible Note: December 31, 2024				September 2022 Senior Convertible Note: December 31, 2024
Fair Value		$	20,300			$	8,800
Face value principal payable		$	17,602			$	7,627
Required rate of return			9.100	%			8.900	%
Conversion Price		$	75.00			$	75.00
Value of common stock		$	0.63			$	0.63
Expected term (years)			0.04 - 0.26				0.69
Volatility			160.00	%			160.00	%
Risk free rate			4.27% - 4.31%				4.12	%
Dividend yield			—	%			—	%

 

The estimated fair values recognized utilized PAVmed’s common stock price, 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 the then-pending exchange of the April 2022 Senior Convertible Note and a portion of the September 2022 Senior Convertible Note for shares of the Company’s Series C Preferred Stock (which exchange was approved and consummated in January 2025), 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.

 

 

Note 10 — 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
September 2022 Senior Convertible Note		December 31, 2025			7.875	%		$	1.068				6,579				6,600
Balance as of March 31, 2025												$	6,579			$	6,600

 

		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

 

The changes in the fair value of debt during the three months ended March 31, 2025 is as follows:

 Schedule of Changes in Fair Value of Debt 

		April 2022 Senior Convertible Note				September 2022 Senior Convertible Note				Sum of Balance Sheet Fair Value Components				Other Income (expense)
Fair Value - December 31, 2024		$	20,300			$	8,800			$	29,100			$	—
Face value principal – issue date
Fair value adjustment – issue date
Installment repayments – common stock			—				(176	)			(176	)			—
Non-installment payments – common stock			—				(26	)			(26	)			—
Principal paydown through exchange			(17,602	)			(871	)			(18,473	)			—
Non-installment payment through exchange			(2,772	)			(1,102	)			(3,874	)			—
Change in fair value			74				(25	)			49				(49	)
Fair Value at March 31, 2025		$	—			$	6,600			$	6,600				—
Other Income (Expense) - Change in fair value – three months ended March 31, 2025														$	(49	)

 

The changes in the fair value of debt during the three months ended March 31, 2024 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, 2023		$	19,000			$	11,250			$	13,950			$	44,200			$	—
Fair Value - Beginning of Period		$	19,000			$	11,250			$	13,950			$	44,200			$	—
Installment repayments – common stock			—				(280	)			(83	)			(363	)			—
Non-installment payments – common stock			—				(24	)			(436	)			(460	)			—
Change in fair value			(200	)			2,654				(291	)			2,163				(2,163	)
Fair Value at March 31, 2024		$	18,800			$	13,600			$	13,140			$	45,540				—
Fair Value - Ending of Period		$	18,800			$	13,600			$	13,140			$	45,540				—
Other Income (Expense) - Change in fair value – three months ended March 31, 2024																		$	(2,163	)

 

 

Note 10 — Debt - continued

 

PAVmed - Senior Secured Convertible Notes

 

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. On November 15, 2024, the Company entered into an Exchange Agreement (the “Debt Exchange Agreement”) with the holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note (as defined below). As described below, the April 2022 Senior Convertible Note was satisfied in full in connection with the consummation in January 2025 of the transactions contemplated by the Debt Exchange Agreement.

 

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 (which conversion price, in connection with the Exchange, was reduced to $1.068 per share as of January 17, 2025) 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 has been extended to December 31, 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 1, 2024, the Investor agreed to waive any such non-compliance during such time period and thereafter through December 31, 2024, which period the Investor agreed to extend, as of January 17, 2025 in connection with the consummation of the Exchange, through December 31, 2025.

 

The April 2022 Senior Convertible Note (until its satisfaction in full in connection with the Exchange) 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 (which floor price, in connection with the Exchange, was reduced to $0.2136 per share as of January 17, 2025). 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. As of March 31, 2025, there were no further installment payments due under the September 2022 Convertible Note.

 

In the three months ended March 31, 2025, approximately $176, of principal repayments along with approximately $26 of interest expense thereon, were settled through the issuance of 401,303, shares of common stock of the Company, with such shares having a fair value of approximately $260, (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). The conversions resulted in debt extinguishment losses of $58 in the three months ended March 31, 2025.

 

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 at such price could not exceed 3 million shares.

 

 

Note 10 — Debt - continued

 

Debt Exchange Agreement

 

On November 15, 2024, the Company entered into the Debt Exchange Agreement with 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.

 

On November 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series C Securities Purchase Agreement”) with the Holder. The Series C Securities Purchase Agreement provided for the purchase of 2,653 shares of Series C Preferred Stock at a price of $1,000 per share, with the purchase price to be satisfied through the cancellation of $2.6 million of certain unsecured debt obligations owed by the Company to the Holder (the “Purchase”). On January 24, 2025, after satisfaction of all conditions to closing, the parties consummated the Purchase.

 

On January 17, 2025, the parties consummated the transactions contemplated by the Debt Exchange Agreement. Following consummation of the transactions contemplated by the Debt Exchange Agreement, 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.

 

Under the Debt Exchange Agreement discussed above, effective as of consummation on the Exchange as of January 17, 2025, the Company also agreed to certain amendments and modifications to the September 2022 Convertible Note, including, without limitation, that the conversion price thereunder was reset to $1.068; that the maturity date was extended to December 31, 2025; that any change of control or disposition by the Company of its shares of Lucid common stock would require the prior written consent of the Required Holders (as defined in the September 2022 Convertible Note); certain other terms and conditions regarding payments under the MSA and the application of the same (including that all MSA payments from Lucid must be made in cash); that the Company waives its right to redeem the September 2022 Convertible Note so long as any shares of Series C Preferred Stock are outstanding; that the Holder waives, until December 31, 2025, the financial covenants under the September 2022 Convertible Note requiring that (i) the amount of the Company’s available cash equal or exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the September 2022 Convertible Note, 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 (iii) that the Company’s market capitalization shall at no time be less than $75 million; and that so long as any shares of Series C Preferred Stock remain outstanding, the Holder will be entitled to exchange all, or any portion, of the September 2022 Convertible Note (including any interest that would accrue thereon through the maturity date thereof) into shares of Lucid common stock held by the Company, at an exchange price per share of Lucid common stock equal to $0.85 per share (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events), subject to certain beneficial ownership limitations.

 

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.

 

During the three months ended March 31, 2025, the Company recognized debt extinguishment losses in total of approximately $58, in connection with the Company issuing shares of its common stock for principal repayments on convertible debt mentioned above. During the three months ended March 31, 2024, the Company recognized debt extinguishment losses in total of approximately $369, in connection with the Company or Lucid (as applicable) issuing shares of its common stock for principal repayments on convertible debt mentioned above.

 

See Note 9, Financial Instruments Fair Value Measurements, for a further discussion of fair value assumptions.

 

 

Note 11 — 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 2,412,140 shares of common stock of PAVmed are reserved for issuance under the PAVmed 2014 Equity Plan, with 1,314,633 shares available for grant as of March 31, 2025. The share reservation is not diminished by a total of 61,146 PAVmed stock options and restricted stock awards granted outside the PAVmed 2014 Equity Plan as of March 31, 2025. 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, 2024			1,065,319			$	25.50				6.5			$	341
Granted(1)			—			$	—
Exercised			—			$	—
Forfeited			(496,928	)		$	23.28
Outstanding stock options at March 31, 2025(3)			568,391			$	27.45				5.6			$	—
Vested and exercisable stock options at March 31, 2025			495,463			$	30.83				5.2			$	—

 

(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 March 31, 2025 and December 31, 2024 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 54,480 and 60,054 stock options granted outside the PAVmed 2014 Equity Plan, as of March 31, 2025 and December 31, 2024, respectively.

 

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.

 

 

Note 11 — 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
Unvested restricted stock awards as of December 31, 2024			324,431			$	9.80
Granted			—				—
Vested			(1,016	)			5.79
Forfeited			—				—
Unvested restricted stock awards as of March 31, 2025			323,415			$	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 unaudited condensed consolidated statements of operations. Lucid continues to be responsible for administering its equity plan. See Note 4, Equity Method Investment, for additional information on the deconsolidation of Lucid Diagnostics.

 

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

		2025				2024
		Three Months Ended March 31,
		2025				2024
Cost of revenue		$	—			$	36
Sales and marketing expenses			45				403
General and administrative expenses			796				1,078
Research and development expenses			89				365
Total stock-based compensation expense		$	930			$	1,882

 

 

Note 11 — 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

		Three Months Ended March 31,
		2024
Lucid Diagnostics 2018 Equity Plan – cost of revenue		$	25
Lucid Diagnostics 2018 Equity Plan – sales and marketing			271
Lucid Diagnostics 2018 Equity Plan – general and administrative			328
Lucid Diagnostics 2018 Equity Plan – research and development			120
PAVmed 2014 Equity Plan - cost of revenue			11
PAVmed 2014 Equity Plan - sales and marketing			79
PAVmed 2014 Equity Plan - general and administrative			2
PAVmed 2014 Equity Plan - research and development			97
Total stock-based compensation expense – recognized by Lucid Diagnostics		$	933
Total stock-based compensation expense		$	933

 

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		$	241				1.3
Restricted Stock Awards		$	319				1.7

 

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 during the three months ended March 31, 2024 calculated using the following weighted average Black-Scholes valuation model assumptions below. The Company did not grant any stock options under the PAVmed 2014 Equity Plan during the three months ended March 31, 2025.

 Schedule of Fair Values of Stock Options Granted Using Black-scholes Valuation Model Assumptions

		Three Months Ended March 31,
		2024
Expected term of stock options (in years)			5.8
Expected stock price volatility			90	%
Risk free interest rate			4.3	%
Expected dividend yield			—	%

 

 

Note 11 — 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 $0.84 per share during the three months ended March 31, 2024 (through September 10, 2024, the date of PAVmed’s deconsolidation of Lucid), 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

		Three Months Ended March 31,
		2024
Expected term of stock options (in years)			5.6
Expected stock price volatility			74	%
Risk free interest rate			3.9	%
Expected dividend yield			—	%

 

PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”)

 

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.

 

A total of 34,332 shares of common stock of the Company were purchased for proceeds of approximately $62 on March 31, 2024, under the PAVmed ESPP. The PAVmed ESPP has a total reserve of 466,668 shares of common stock of PAVmed of which 306,530 shares are available for issue as of March 31, 2025. In January 2025, the number of shares available-for-issue was increased by 166,667 in accordance with the evergreen provisions of the plan.

 

 

Note 12 — Preferred Stock

 

As of March 31, 2025 and December 31, 2024, there were 1,441,135 and 1,412,865 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 $86 of such dividends earned in the three months ended March 31, 2025; and $79 of such dividends earned in the three months ended March 31, 2024.

 

PAVmed Series B Convertible Preferred Stock Dividends Declared

 

During the three months ended March 31, 2025, the Company’s board of directors declared an aggregate of approximately $85 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2024, with such dividends settled by the issue of an additional aggregate 28,270 shares of Series B Convertible Preferred Stock.

 

During the three months ended March 31, 2024, the Company’s board of directors declared an aggregate of approximately $78 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2023, with such dividends settled by the issue of an additional aggregate 26,123 shares of Series B Convertible Preferred Stock.

 

Subsequent to March 31, 2025, on May 5, 2025, the Company’s board of directors declared a PAVmed Series B Convertible Preferred Stock dividend, earned as of March 31, 2025, of $86, to be settled by the issue of 28,834 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

 

The Series C Preferred Stock is issued pursuant to the PAVmed Inc. Certificate of Designation of Preferences, Rights, and Limitations of Series C Convertible Preferred Stock (“Series C Convertible Preferred Stock Certificate of Designation”) and has a par value of $0.001 per share. Each share of Series C Preferred Stock has a stated value of $1,000 (plus the amount of any dividends thereon that are capitalized), and entitles the holder thereof to a preferred dividend at a rate of 7.875% per annum, payable quarterly in arrears. The Series C Preferred Stock is entitled to vote with the holders of shares of Common Stock, voting together as one class, on all matters in which the holders of the preferred shares are permitted to vote with the class of shares of Common Stock pursuant to applicable law, on an as-converted basis (subject to certain limitations, including the beneficial ownership limitation described below).

 

The Series C Preferred Stock is pari passu with the Series B Convertible Preferred Stock, and is senior to all of the Company’s other equity securities.

 

 

Note 12 — Preferred Stock - continued

 

Upon liquidation, a holder of Series C Preferred Stock will be entitled to receive in cash out of the assets of the Company, before any amount would be paid to the holders of any of shares of the Company’s common stock, but pari passu with the holders of any Series B Preferred Stock then outstanding, an amount per share equal to the greater of (A) the sum of (i) 110% of the stated value (plus any accrued and unpaid dividends or other amounts then payable thereon) of such share of Series C Preferred Stock then outstanding and (ii) a ratable portion of 100% of the stated value (plus any accrued and unpaid dividends or other amounts then payable thereon) of the Series B Preferred Stock then outstanding and (B) the amount per share such holder would receive if such holder converted such share of Series C Preferred Stock into the Company’s common stock immediately prior to the date of such payment.

 

Each share of Series C Preferred Stock, plus accrued and unpaid dividends thereon, is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock at an initial fixed conversion price of $1.068 per share, subject to certain adjustments.

 

At any time following the occurrence of a Triggering Event (as defined below), a holder of shares of the Series C Preferred Stock has the right to elect to convert shares of Series C Preferred Stock into the Company’s common stock at an alternate conversion price equal to the lower of: (i) the fixed conversion price then in effect, and (ii) the lowest of (A) 80% of the VWAP of the Company’s common stock as of the trading day immediately preceding the delivery or deemed delivery of the applicable notice of conversion, (B) 80% of the VWAP of the Company’s common stock as of the trading day of the delivery or deemed delivery of the applicable notice of conversion, and (C) 80% of the average VWAP of the Company’s common stock for each of the two trading days with the lowest VWAP of the Company’s common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the delivery or deemed delivery of the applicable notice of conversion, but in the case of clause (ii), not less than $0.2136 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) (such price, the “Alternate Conversion Price”). The term “Triggering Event” includes events that would constitute an event of default under the September 2022 Senior Convertible Note, in addition to the failure of the Company to complete a Qualified Company Optional Redemption (as defined below) by March 31, 2025 (the “QCOR Triggering Event”). The principal consequence of a Triggering Event (other than a bankruptcy-related Triggering Event) is to give the holder the right to elect an alternate conversion as described above. In addition, the occurrence of a Triggering Event (other than a QCOR Triggering Event) will result in an increase to the dividend rate and limit the Company’s right to redeem the Series C Preferred Stock. A Triggering Event (other than a bankruptcy-related Triggering Event) will not otherwise accelerate any financial or other obligation on the part of the Company in respect of the Series C Preferred Stock.

 

If the Company grants, issues or sells (or enters into any agreement to grant, issue or sell) or is deemed to have granted, issued or sold, any shares of common stock, for consideration per share less than the fixed conversion price then in effect, then immediately after such issuance, the fixed conversion price shall be reduced to an amount equal to such lower price.

 

The Company has the right to redeem all, but not less than all, of the shares of Series C Preferred Stock at a redemption price equal to 132.5% of the aggregate stated value of the Series C Preferred Stock plus all accrued and unpaid dividends and other amounts then payable thereon. The Company also has an additional one-time right to redeem a portion of the shares of Series C Preferred Stock with an aggregate stated value of at least $5 million at the same redemption price (a “Qualified Company Optional Redemption”).

 

 

Note 12 — Preferred Stock - continued

 

Upon a Change of Control (as defined in the Series C Convertible Preferred Stock Certificate of Designation), a holder of the Series C Preferred Stock has the right to require the Company to redeem all, or any portion, of the holder’s shares of Series C Preferred Stock at a price equal to 132.5% of the stated value of the Series C Preferred Stock (plus any accrued and unpaid dividends or other amounts then payable thereon) or, if greater, an amount determined pursuant to the Series C Convertible Preferred Stock Certificate of Designation based on the then-current market price or the consideration payable in the Change of Control transaction, whichever is higher.

 

A holder may not convert any of the shares of Series C Preferred Stock, to the extent that, after giving effect to such conversion, such holder (together with certain of its affiliates and other related parties) would beneficially own in excess of 9.99% of the shares of the Company’s common stock outstanding immediately after giving effect to such conversion (the “Maximum Percentage”). The Holder may from time to time increase or decrease the Maximum Percentage; provided that in no event could the Maximum Percentage exceed 9.99%, provided, further, that any such increase would not be effective until the 61st day after delivery of a notice to the Company of such increase.

 

The Company and its subsidiaries (other than Lucid) are subject to certain customary affirmative and negative covenants regarding the rank of the Series C Preferred Stock, 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, transactions with affiliates and the ability to complete stock splits, among other customary matters. The Company also is subject to a financial covenant requiring that it maintain its cash flow on a break-even basis.

 

On February 18, 2025, the Company and the holder of the Series C Preferred Stock entered into a waiver agreement (the “Q1 2025 Waiver”), pursuant to which, among other things, the holder granted certain waivers related to the Series C Preferred Stock, including waivers necessary to permit the Company and Veris to consummate the Offering (as described in Note 13, Common Stock and Common Stock Purchase Warrants). In consideration of such waivers, the Company agreed to reduce temporarily, and the holder of the Series C Preferred Stock consented to reducing temporarily, the contractual conversion price under the Series C Preferred Stock to $0.40, during the period through March 31, 2025; provided that the aggregate amount of conversions under the Series C Preferred Stock at such conversion price during such period did not exceed 1 million shares (the “Q1 2025 Conversion Price Reduction”). In addition, pursuant to the Q1 2025 Waiver, the Company granted the holder of the Series C Preferred Stock the right, exercisable through March 31, 2025, to elect to exchange up to $2.0 million of Series C Preferred Stock for an equivalent increase in the principal amount of the September 2022 Senior Convertible Note (although no exchanges elections were made under this provision during the waiver period) (the “Q1 2025 Exchange Right”).

 

On March 18, 2025, the Company and the holder of the Series C Preferred Stock agreed to modify the terms of the Q1 2025 Conversion Price Reduction by increasing the maximum number of shares that could be converted at the reduced conversion price of $0.40 through March 31, 2025 from 1 million to 2 million (the “Q1 2025 Conversion Price Reduction Adjustment”).

 

The Company recognized the incremental value associated with the Q1 2025 Conversion Price Reduction as a deemed dividend charge of $434 and as an increase of net loss available to common stockholders on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2025. The incremental value associated with the Series C Preferred Stock modification was determined using Monte Carlo simulation models based on the adjusted conversion price of $0.40 for the value of 1 million shares of the Company’s common stock when converted from the Series C Preferred Stock with the following assumptions: required rate of return of 14.5%, dividend yield of 0%, volatility of 40%, and a risk-free rate of 4.30%, compared to the fair value of the 1 million shares converted of the Company’s common stock on the date immediately preceding the modification with a $1.068 conversion price, utilizing the following assumptions: required rate of return of 14.5%, dividend yield of 0%, volatility of 40%, and a risk-free rate of 4.30%.

 

The Company also recognized incremental value associated with the Q1 2025 Conversion Price Reduction Adjustment as an additional deemed dividend charge of $355 and as an increase of net loss available to common stockholders on the unaudited condensed consolidated statements of operations in the three months ended March 31, 2025. The incremental value associated with this adjustment was determined using Monte Carlo simulation models using the adjusted conversion price of $0.40 for the value of the additional 1 million shares of the Company’s common stock when converted from the Series C Preferred Stock with the following assumptions: required rate of return of 14.5%, dividend yield of 0%, volatility of 40%, and a risk-free rate of 3.98%, compared to the fair value of the additional 1 million shares converted of the Company’s common stock on the date immediately preceding the modification with a $1.068 conversion price, utilizing the following assumptions: required rate of return of 14.5%, dividend yield of 0%, volatility of 40%, and a risk-free rate of 3.98%.

 

The Q1 2025 Exchange Right granted pursuant to the Q1 2025 Waiver provided the holder with a substantive redemption feature outside of the Company’s control during the waiver period. As a result, the affected Series C Preferred Stock no longer met the criteria for classification as permanent equity. Accordingly, the Company reclassified $2.0 million of Series C Preferred Stock from permanent equity to mezzanine equity on the unaudited condensed consolidated balance sheet as of March 31, 2025.

 

On March 31, 2025, the Company elected to capitalize the Series C Preferred Stock dividend earned as of March 31, 2025 of $398, and as a result, the stated value of the Series C Preferred Stock was adjusted from $1,000 to $1,016.

 

In the three months ended March 31, 2025, the Company has issued 1,300,000 shares of our common stock in connection with the conversion of 520 shares of Series C Preferred Stock. Subsequent to March 31, 2025, as of May 12, 2025, the Company has issued 450,000 shares of our common stock in connection with the conversion of 180 shares of Series C Preferred Stock.

 

Subsequent to March 31, 2025, on April 21, 2025, the Company and the holder of the Series C Preferred Stock entered into another waiver agreement (the “Q2 2025 Waiver”), pursuant to which the holder granted certain waivers related to the Series C Preferred Stock, including the waiver of any QCOR Triggering Event through the earlier of June 30, 2025 and the date on which the holder can no longer convert the Series C Preferred Stock at $0.40. In consideration of such waivers, the Company agreed to reduce temporarily, and the holder of the Series C Preferred Stock consented to reducing temporarily, the contractual conversion price under the Series C Preferred Stock to $0.40, during the period through June 30, 2025; provided that the aggregate amount of conversions under the Series C Preferred Stock at such conversion price during such period did not exceed 1 million shares (the “Q2 2025 Conversion Price Reduction”). In addition, pursuant to the Q2 2025 Waiver, the Company granted the holder of the Series C Preferred Stock the right, exercisable through June 30, 2025, to elect to exchange up to $2.0 million of Series C Preferred Stock for an equivalent increase in the principal amount of the September 2022 Senior Convertible Note (although no exchanges elections were made under this provision during through the date hereof). On May 14, 2025, the Company and the holder of the Series C Preferred Stock agreed to increase the maximum number of shares that could be converted at the reduced conversion price of $0.40 through June 30, 2025 from 1 million to 2 million.

 

 

Note 13 — Common Stock and Common Stock Purchase Warrants

 

Common Stock

 

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.

 

In the three months ended March 31, 2025, 401,303 shares of the Company’s common stock were issued upon conversion, at the election of the holder, of the September 2022 Senior Convertible Note, for $176 face value principal repayments, as discussed in Note 10, Debt.

 

In the three months ended March 31, 2025, the Company sold 1,216,565 shares through their at-the-market equity facility for net proceeds of approximately $841, after payment of 3% commissions.

 

 

Note 13 — Common Stock and Common Stock Purchase Warrants - continued

 

In the three months ended March 31, 2025, the Company issued 77,408 shares of common stock to vendors in exchange for $50 of agreed upon services, which is included in general and administrative operating expenses on the Company’s unaudited condensed consolidated statement of operations.

 

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 Pre-Funded Warrants are classified as equity in accordance as they are indexed to the Company’s own stock and meet the criteria for equity classification. The proceeds received were recorded in additional paid-in capital with no subsequent remeasurement.

 

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 a share 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 a share 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.

 

Common Stock Purchase Warrants

 

As of March 31, 2025 and December 31, 2024, 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 three months ended March 31, 2025. On April 30, 2025, the Series Z Warrants contractually expired without further exercised amounts.

 

 

Note 14 — 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

		March 31, 2025
NCI – equity - December 31, 2024		$	(4,538	)
Net loss attributable to NCI			(345	)
Impact of subsidiary equity transactions			(2,420	)
Veris Offering			948
Stock-based compensation expense - Veris Health 2021 Equity Plan			293
NCI – equity – March 31, 2025		$	(6,062	)

 

The consolidated NCI presented above is with respect to the Company’s consolidated subsidiaries as a component of consolidated total stockholders’ equity as of March 31, 2025 and December 31, 2024; and the recognition of a net loss attributable to the NCI in the unaudited condensed consolidated statement of operations for the periods beginning on the acquisition date of the respective subsidiaries.

 

Lucid Diagnostics — Deconsolidation

 

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 of March 31, 2025, continues to hold 31,302,444 shares of common stock of Lucid Diagnostics.

 

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.

 

Veris Health

 

As of March 31, 2025, there were 8,677,143 shares of common stock of Veris Health issued and outstanding, of which PAVmed holds an 73.69% majority-interest ownership and PAVmed has a controlling financial interest, with the remaining 26.31% minority-interest ownership held by an unrelated third-party. Accordingly, Veris Health is a consolidated majority-owned subsidiary of the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component of consolidated stockholders’ equity in the accompanying unaudited condensed consolidated balance sheets.

 

 

Note 15 — 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

		2025				2024
		Three Months Ended March 31,
		2025				2024
Numerator
Net income (loss) - before noncontrolling interest		$	18,623			$	(18,512	)
Net income (loss) attributable to noncontrolling interest			345				3,300
Net income (loss) - as reported, attributable to PAVmed Inc.		$	18,968			$	(15,212	)
Series B Convertible Preferred Stock dividends – earned		$	(86	)		$	(80	)
Series C Convertible Preferred Stock dividends - earned		$	(398	)		$	—
Deemed dividend on Series C Convertible Preferred Stock		$	(789	)		$	—
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		$	17,695			$	(22,788	)
Fair Value Adjustment for diluted EPS calculation		$	—			$	—
Net income (loss) attributable to PAVmed Inc. common stockholders used in dilutive EPS calculation		$	17,695			$	(22,788	)
Denominator
Weighted average common shares outstanding, basic			13,876,165				8,694,904
Add: Restricted stock awards			324,420				—
Add: PAVM Pre-Funded Warrants			353,143				—
Add: Senior Convertible Note			18,694,889				—
Add: Series B Convertible Preferred Stock			94,212				—
Add: Series C Convertible Preferred Stock			19,153,572				—
Weighted average common shares outstanding, diluted			52,496,401				8,694,904
Net income (loss) per share (1)
Net income (loss) per share attributable to PAVmed Inc. common stockholders, basic (1)		$	1.28			$	(2.62	)
Net income (loss) per share attributable to PAVmed Inc. common stockholders, diluted (1)		$	0.34			$	(2.62	)

 

(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 periods noted, are included in the calculation of basic and diluted net loss attributable to PAVmed common stockholders for each respective period presented. Notwithstanding, the Series B Convertible Preferred Stock dividends are recognized as a dividend payable only upon the dividend being declared payable by the Company’s board of directors.

 

 

Note 15 — Net Income (Loss) Per Share - continued

 

Basic weighted-average number of shares of common stock outstanding for the three months ended March 31, 2025 and 2024 include the shares of the Company issued and outstanding during such periods, each on a weighted average basis. The basic weighted average number of shares of common stock outstanding excludes common stock equivalent incremental shares, while diluted weighted average number of shares outstanding includes such incremental shares. However, as the Company was in a loss position for the three months ended March 31, 2024, 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

		2025				2024
		March 31,
		2025				2024
Stock options			568,391				1,243,933
Restricted stock awards			—				460,527
Series Z Warrants			795,830				795,830
Series B Convertible Preferred Stock			—				88,756
Total			1,364,221				2,589,046

 

The total stock options are inclusive of 54,480 and 60,054 stock options as of March 31, 2025 and 2024, respectively, granted outside the PAVmed 2014 Equity Plan.

 

Note 16 — 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 three months ended March 31, 2025 and 2024 revenues resulting from subscription revenue or patient laboratory 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.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

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, 2024 (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 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 Quarterly Report on 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 support commercial expansion and execution of EsoGuard, which is the flagship product of our subsidiary, Lucid Diagnostics, of which we remain the shareholder with the largest voting interest. In addition, through a separate majority-owned subsidiary, Veris Health, we offer the Veris Cancer Care Platform. 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.

 

Recent Developments

 

Business

 

EsoGuard Medicare Coverage

 

In November 2024, Lucid submitted to MolDx its complete clinical evidence package in support of a request for reconsideration of the non-coverage language in the LCD to secure Medicare coverage for EsoGuard. The EsoGuard clinical evidence package included six new peer-reviewed publications: three clinical validation studies (two in the intended use population, one case control), two clinical utility studies, and one analytical validation study. The current LCD provides clear coverage criteria consistent with the American College of Gastroenterology (ACG) guidelines for esophageal precancer testing. The package was submitted as part of a request for reconsideration of the non-coverage language in the LCD to secure Medicare coverage for EsoGuard.

 

NCCN Clinical Practice Guidelines Update

 

In March 2025, Lucid announced that a recent update to the National Comprehensive Cancer Network® (NCCN) Clinical Practice Guidelines in Oncology (NCCN Guidelines®) focused on Esophageal and Esophagogastric Junction Cancers (Version 1.2025) has added a new section on BE screening. The NCCN Guidelines® now reference professional society guidelines on BE screening, including the most recent ACG clinical guideline discussed above, which recommends non-endoscopic biomarker testing, such as EsoGuard performed on samples collected with EsoCheck, as an acceptable alternative to invasive upper endoscopy to detect esophageal precancer.

 

 

Recent Developments - continued

 

Business - continued

 

Clinical Study Publications

 

On March 18, 2025, Lucid announced that its ENVET-BE clinical utility study has been accepted for publication in Gastroenterology & Hepatology—the fifth peer-reviewed publication of clinical utility data for Lucid’s EsoGuard® Esophageal DNA Test, and the second to present findings from a real-world screening population. The manuscript, entitled “Enhancing the Diagnostic Yield of EGD for Diagnosis of Barrett’s Esophagus Through Methylated DNA Biomarker Triage,” demonstrates that confirmatory upper endoscopy (EGD) performed in EsoGuard-positive patients had a substantially higher diagnostic yield for detecting esophageal precancer (Barrett’s Esophagus or BE) than the expected yield of screening EGD alone in at-risk patients. The ENVET-BE study reviewed real-world data from a cohort of 199 EsoGuard-positive patients who completed confirmatory EGD. The overall positive diagnostic yield for BE was 2.4-fold higher than the expected yield of screening EGD alone, based on disease prevalence within an at-risk population. The yield was nearly three-fold higher in patients meeting American College of Gastroenterology (ACG) screening criteria.

 

Highmark Reimbursement Approval

 

On March 13, 2025, Lucid announced that Highmark Blue Cross Blue Shield, an independent licensee of the Blue Cross and Blue Shield Association, has issued a positive coverage policy for non-invasive screening of esophageal precancer and cancer in New York state. The new policy will cover EsoGuard in patients who meet established criteria for esophageal precancer testing consistent with professional society guidelines.

 

CWRU NIH Grant Related to EsoGuard and EsoCheck

 

On February 27, 2025, Lucid announced that principal investigators from CWRU and University Hospitals (“UH”), were awarded an $8 million National Institutes of Health (NIH) R01 grant to conduct a five-year clinical study designed to evaluate esophageal precancer detection using EsoCheck and EsoGuard among at-risk individuals without symptoms of chronic gastroesophageal reflux disease (“GERD”). The study, “A Clinical Trial of Cancer Prevention by Biomarker Based Detections of Barrett’s Esophagus and Its Progression,” aims to evaluate the effectiveness of EsoCheck and EsoGuard in detecting esophageal precancer (Barrett’s Esophagus or BE) to prevent esophageal cancer (EAC) within a non-GERD at-risk population. To accomplish this aim, 800 patients without GERD symptoms who meet the American Gastroenterological Association’s (AGA) risk criteria for screening will be recruited across five participating research centers: University Hospitals, University of Colorado, Johns Hopkins University, University of North Carolina, and Cleveland Clinic.

 

Financing

 

PAVmed ATM

 

On April 17, 2025, the Company entered into a Sales Agreement (the “Sales Agreement”) with Maxim Group LLC, as sales agent (“Maxim”), pursuant to which the Company may offer and sell, from time to time through or to Maxim, shares of its common stock. Under the Sales Agreement, the Company may not issue or sell through Maxim a dollar amount of shares that would exceed $2,880,000 of shares. The Company will pay Maxim a commission of 3.0% of the aggregate gross sales prices of the shares. The Company intends to use the net proceeds from any such sales for working capital and general corporate purposes.

 

This facility replaces the “at the market” facility PAVmed previously maintained with Cantor (which facility was on substantially similar terms).

 

PAVmed/Veris Common Stock Offering

 

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.

 

 

Recent Developments - continued

 

Financing - continued

 

Lucid Diagnostics — Confidentially Marketed Public Offering

 

On April 11, 2025, Lucid closed on the sale of 14,375,000 shares of its common stock, pursuant to its previously announced offering of shares of common stock at a price of $1.20 per share (the “Lucid CMPO”)

 

The net proceeds from the Lucid CMPO, after deducting the underwriting discount and other expenses of the Lucid CMPO, were approximately $16.1 million. Lucid intends to use the net proceeds from the Lucid CMPO for working capital and general corporate purposes.

 

Lucid Diagnostics — Registered Direct Offering

 

On March 5, 2025, Lucid closed on the sale of 13,939,331 shares of its common stock, pursuant to its previously announced offering of shares of common stock at a price of $1.10 per share (the “Lucid RDO”).

 

The net proceeds of the Lucid RDO, after deducting the estimated placement agent’s fees and other expenses of the Lucid RDO, were approximately $14.9 million. Lucid intends to use the net proceeds from the Lucid RDO for working capital and other general corporate purposes.

 

In connection with the Lucid RDO, Lucid suspended its “at the market offering” program. In November 2022, Lucid entered into a Controlled Equity Offering℠ Sales Agreement (the “Lucid Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”). Pursuant to the Sales Agreement, from time to time, Lucid may offer and sell shares of its common stock to or through Cantor, acting as sales agent or principal. Sales of Lucid’s common stock by Cantor, if any, under the Sales Agreement may be made by any method permitted by law and deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act (the “Lucid ATM Offering”). Lucid filed a prospectus supplement dated December 6, 2022 (the “Lucid ATM Prospectus Supplement”), for the offer and sale of shares of its common stock having an aggregate offering price of up to $6.5 million in the Lucid ATM Offering. Effective as of March 4, 2025, Lucid terminated the Lucid ATM Prospectus Supplement. Lucid will not make any sales of common stock in the Lucid ATM Offering unless and until a new prospectus or prospectus supplement is filed. Other than the termination of the Lucid ATM Prospectus Supplement, the Lucid Sales Agreement remains in full force and effect.

 

Lucid Diagnostics — Debt Refinancing

 

On November 22, 2024, Lucid closed on the sale of $21.975 million in principal amount of 12.0% Senior Secured Convertible Notes due 2029 (collectively, the “Lucid 2024 Convertible Notes”), in a private placement, to certain accredited investors. Lucid realized gross proceeds of $21.95 million and, after giving effect to the repayment in full of the Lucid March 2023 Senior Convertible Note, net proceeds of $18.3 million from the sale of the Lucid 2024 Convertible Notes.

 

 

Results of Operations

 

Overview

 

Revenue

 

The Company recognized revenue from subscription revenue derived from its Veris Health Cancer Care Platform. Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics from PAVmed’s consolidated results, 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

 

Until September 10, 2024, the date of deconsolidation of Lucid Diagnostics from PAVmed’s consolidated results, the 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 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 going forward, the expenses associated with the sales and marketing operations for the Lucid EsoGuard test will no longer be 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 going forward, 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 submission of regulatory filings;
	●	cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; and
	●	product design engineering studies.

 

The reported research and development activities, including our clinical trials, were focused principally on the acceleration of EsoGuard and Veris Cancer Care Platform commercialization. Due to the deconsolidation of Lucid, going forward, the expenses in respect of the Company’s research and development activities will include those associated with research and development activities related to 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.

 

 

Results of Operations - continued

 

The three months ended March 31, 2025 as compared to three months ended March 31, 2024

 

Revenue

 

In the three months ended March 31, 2025, revenue was less than $0.1 million as compared to $1.0 million for the corresponding period in the prior year. The $1.0 million decrease principally relates to the revenue from Lucid’s EsoGuard Esophageal DNA Tests not being included in our operating results for the three months ended March 31, 2025 as compared to the prior year, during which all three months of Lucid’s operating results were so included.

 

Cost of revenue

 

In the three months ended March 31, 2025, cost of revenue was less than $0.1 million as compared $1.7 million for the corresponding period in the prior year. The net decrease of $1.7 million was principally related to Lucid’s results not being included in our operating results for the three months ended March 31, 2025 as compared to the prior year, during which all three months of Lucid’s operating results were so included.

 

Sales and marketing expenses

 

In the three months ended March 31, 2025, sales and marketing costs were approximately $0.2 million as compared to $4.3 million for the corresponding period in the prior year. The net decrease of $4.1 million was principally related to Lucid’s results not being included in our operating results for the three months ended March 31, 2025 as compared to the prior year, during which all three months of Lucid’s operating results were so included.

 

General and administrative expenses

 

In the three months ended March 31, 2025, general and administrative costs were approximately $4.4 million as compared to $6.7 million for the corresponding period in the prior year. The net decrease of $2.3 million was principally related to Lucid’s results not being included in our operating results for the three months ended March 31, 2025 as compared to the prior year, during which all three months of Lucid’s operating results were so included.

 

Research and development expenses

 

In the three months ended March 31, 2025, research and development costs were approximately $0.8 million as compared to $1.9 million for the corresponding period in the prior year. The net decrease of $1.1 million was principally related to Lucid’s results not being included in our operating results for the three months ended March 31, 2025 as compared to the prior year, during which all three months of Lucid’s operating results were so included.

 

Amortization of Acquired Intangible Assets

 

The amortization of acquired intangible assets was zero in the three months ended March 31, 2025, as compared to $0.4 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

 

Change in fair value of convertible debt

 

In the three months ended March 31, 2025 and March 31, 2024, the change in the fair value of our convertible notes was less than $0.1 million and $2.2 million of expense, respectively, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and (for the three months ended March 31, 2024 only) 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 applicable reporting period date. The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates.

 

 

Results of Operations - continued

 

The three months ended March 31, 2025 as compared to three months ended March 31, 2024 - continued

 

Other Income and Expense - continued

 

Loss on Debt Extinguishment

 

In the three months ended March 31, 2025, a debt extinguishment loss in the aggregate of less than $0.1 million was recognized in connection with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below.

 

●

In the three months ended March 31, 2025, approximately $0.2 million of principal repayments along with less than $0.1 million of interest expense thereon, were settled through the issuance of 401,303 shares of common stock of the Company, with such shares having a fair value of approximately $0.3 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 less than $0.1 million in the three months ended March 31, 2025.

 

In comparison, in the three months ended March 31, 2024, a debt extinguishment loss in the aggregate of approximately $0.4 million was recognized in connection with our April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as discussed below.

 

●

In the three months ended March 31, 2024, approximately $0.3 million of principal repayments along with less than $0.1 million of interest expense thereon, were settled through the issuance of 112,461 shares of common stock of the Company, with such shares having a fair value of approximately $0.3 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 $0.2 million in cash related to acceleration floor payments on these notes related to the conversion price being below the conversion floor price specified in the notes, recorded as debt extinguishment loss. The conversions and cash paid resulted in a debt extinguishment loss of $0.2 million in the three months ended March 31, 2024.

 

See Note 10, 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.

 

Change in fair value of Equity Method Investment

 

At March 31, 2025, the fair value of the Company’s investment in Lucid was $46.6 million, with the company recognizing an unrealized gain on its investment in Lucid of $21.0 million in the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2025. The fair value of common shares of Lucid held by the Company was determined using the closing price of Lucid’s common stock per share on March 31, 2025 of $1.49.

 

Deemed Dividend on Lucid 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:

 

Lucid Series B Convertible Preferred Stock Issuance and Lucid 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 Lucid Series A and 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

 

 

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 $18.6 million and used approximately $1.6 million of cash in operations for the three months ended March 31, 2025. Financing activities provided $3.1 million of cash during the three months ended March 31, 2025. We ended the quarter with cash on-hand of $2.7 million as of March 31, 2025. 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. The Company’s ability to continue operations 12 months beyond the issuance of the financial statements, will depend upon its ability to control its operating costs within the limits of the amounts collected from its management service contracts with its non-consolidated subsidiaries, to substantially increase its revenues from the Veris Cancer Care platform, and to raise additional capital through various potential sources including equity or debt financings or refinancing or restructuring existing debt obligations. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are issued.

 

Issue of Shares of Our Common Stock

 

During the three months ended March 31, 2025

 

	●	We issued 1,216,565 shares of our common stock for net proceeds of approximately $0.8 million, after payment of 3% commissions, through our at-the-market equity facility with Cantor. (which has since been replaced by a similar facility with Maxim Group LLC). See below for more information.
	●	We issued 401,303 shares of our common stock in satisfaction of approximately $0.2 million of principal repayments along with less than $0.1 million of interest expense thereon under the September 2022 Senior Convertible Note.
	●	We issued 1,300,000 shares of our common stock as a result of conversions of $0.5 million of shares of our Series C Preferred Stock.
	●	We issued 2,574,350 shares of our common stock and pre-funded warrants to purchase 756,734 shares of our common stock, in combination with the issuance of 677,143 shares of Veris, for gross proceeds of approximately $2.37 million.
	●	We issued 77,408 shares of our common stock to vendors in exchange for less than $0.1 million of agreed upon services, which is included in general and administrative operating expenses on the Company’s unaudited condensed consolidated statement of operations.

 

Senior Convertible Notes

 

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 was satisfied in full in connection with the Exchange.

 

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 has been now extended to December 31, 2025. The September 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 10, Debt.

 

 

Liquidity and Capital Resources - continued

 

Under the April 2022 Senior Convertible Note (until it was satisfied in full on January 17, 2025 upon consummation of the Exchange), 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”). The holder of the September 2022 Senior Convertible Note agreed, effective as of the consummation of the Exchange, to waive any non-compliance with the Financial Tests through December 31, 2025. Based on that separate waiver, as of March 31, 2025, the Company was in compliance with the Financial Tests.

 

See Note 10, Debt, to the Financial Statements for additional information about the SPA, the April 2022 Senior Convertible Note, and the September 2022 Senior Convertible Note. See also Note 4, Equity Method Investment, to the Financial Statements for additional information about the September 2022 Senior Convertible Note as it relates to the MSA.

 

PAVmed Inc. ATM Facility

 

In the three months ended March 31, 2025, the Company sold 1,216,565 shares through its at-the-market equity facility for net proceeds of approximately $0.8 million, after payment of 3% commissions.

 

On April 17, 2025, the Company entered into a Sales Agreement (the “Sales Agreement”) with Maxim Group LLC, as sales agent (“Maxim”), pursuant to which the Company may offer and sell, from time to time through or to Maxim, shares of its common stock. Under the Sales Agreement, the Company may not issue or sell through Maxim a dollar amount of shares that would exceed $2,880,000 of shares. The Company will pay Maxim a commission of 3.0% of the aggregate gross sales prices of the shares. The Company intends to use the net proceeds from any such sales for working capital and general corporate purposes.

 

This facility replaces the “at the market” facility PAVmed previously maintained with Cantor (which facility was on substantially similar terms).

 

Series C Convertible Preferred Stock

 

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 (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 Preferred Stock. On January 17, 2025, after satisfaction of all conditions to closing, the parties consummated the Exchange.

 

On November 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series C Securities Purchase Agreement”) with the Holder. The Series C Securities Purchase Agreement provided for the purchase of 2,653 shares of Series C Preferred Stock at a price of $1,000 per share, with the purchase price to be satisfied through the cancellation of $2.6 million of certain unsecured debt obligations owed by the Company to the Holder (the “Purchase”). On January 24, 2025, after satisfaction of all conditions to closing, the parties consummated the Purchase.

 

 

Liquidity and Capital Resources - continued

 

The Series C Preferred Stock was issued pursuant to the PAVmed Inc. Certificate of Designation of Preferences, Rights, and Limitations of Series C Convertible Preferred Stock (“Series C Convertible Preferred Stock Certificate of Designation”) and has a par value of $0.001 per share. Each share of Series C Preferred Stock has a stated value of $1,000 (plus the amount of any dividends thereon that are capitalized), and entitles the holder thereof to a preferred dividend at a rate of 7.875% per annum, payable quarterly in arrears. The Series C Preferred Stock is entitled to vote with the holders of shares of Common Stock, voting together as one class, on all matters in which the holders of the preferred shares are permitted to vote with the class of shares of Common Stock pursuant to applicable law, on an as-converted basis (subject to certain limitations, including the beneficial ownership limitation described below).

 

The Series C Preferred Stock is pari passu with the Series B Convertible Preferred Stock, and is senior to all of the Company’s other equity securities. Upon liquidation, a holder of Series C Preferred Stock will be entitled to receive in cash out of the assets of the Company, before any amount would be paid to the holders of any of shares of the Company’s common stock, but pari passu with the holders of any Series B Preferred Stock then outstanding, an amount per share equal to the greater of (A) the sum of (i) 110% of the stated value (plus any accrued and unpaid dividends or other amounts then payable thereon) of such share of Series C Preferred Stock then outstanding and (ii) a ratable portion of 100% of the stated value (plus any accrued and unpaid dividends or other amounts then payable thereon) of the Series B Preferred Stock then outstanding and (B) the amount per share such holder would receive if such holder converted such share of Series C Preferred Stock into the Company’s common stock immediately prior to the date of such payment.

 

Each share of Series C Preferred Stock, plus accrued and unpaid dividends thereon, is convertible at any time, in whole or in part, at the holder’s option, into shares of the Company’s common stock at an initial fixed conversion price of $1.068 per share, subject to certain adjustments. On February 18, 2025, the Company agreed to reduce temporarily, and the holder of the Series C Preferred Stock consented to reducing temporarily, the contractual conversion price under the Series C Preferred Stock to $0.40, during the period through March 31, 2025; provided that the aggregate amount of conversions under the Series C Preferred Stock at such conversion price during such period does not exceed 1 million shares. Such reduction was agreed to in connection with certain waivers granted by the holder of the Series C Preferred Stock, including waivers necessary to permit the Company and Veris to consummate the Offering (as described in Note 13, Common Stock and Common Stock Purchase Warrants).

 

At any time following the occurrence of a Triggering Event (as defined below), a holder of shares of the Series C Preferred Stock has the right to elect to convert shares of Series C Preferred Stock into the Company’s common stock at an alternate conversion price equal to the lower of: (i) the fixed conversion price then in effect, and (ii) the lowest of (A) 80% of the VWAP of the Company’s common stock as of the trading day immediately preceding the delivery or deemed delivery of the applicable notice of conversion, (B) 80% of the VWAP of the Company’s common stock as of the trading day of the delivery or deemed delivery of the applicable notice of conversion, and (C) 80% of the average VWAP of the Company’s common stock for each of the two trading days with the lowest VWAP of the Company’s common stock during the ten consecutive trading day period ending and including the trading day immediately prior to the delivery or deemed delivery of the applicable notice of conversion, but in the case of clause (ii), not less than $0.2136 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) (such price, the “Alternate Conversion Price”). The term “Triggering Event” includes events that would constitute an event of default under the September 2022 Senior Convertible Note, in addition to the failure of the Company to complete a Qualified Company Optional Redemption (as defined below) by March 31, 2025 (the “QCOR Triggering Event”). The principal consequence of a Triggering Event (other than a bankruptcy-related Triggering Event) is to give the holder the right to elect an alternate conversion as described above. In addition, the occurrence of a Triggering Event (other than a QCOR Triggering Event) will result in an increase to the dividend rate and limit the Company’s right to redeem the Series C Preferred Stock. A Triggering Event (other than a bankruptcy-related Triggering Event) will not otherwise accelerate any financial or other obligation on the part of the Company in respect of the Series C Preferred Stock.

 

If the Company grants, issues or sells (or enters into any agreement to grant, issue or sell) or is deemed to have granted, issued or sold, any shares of common stock, for consideration per share less than the fixed conversion price then in effect, then immediately after such issuance, the fixed conversion price shall be reduced to an amount equal to such lower price.

 

The Company has the right to redeem all, but not less than all, of the shares of Series C Preferred Stock at a redemption price equal to 132.5% of the aggregate stated value of the Series C Preferred Stock plus all accrued and unpaid dividends and other amounts then payable thereon. The Company also has an additional one-time right to redeem a portion of the shares of Series C Preferred Stock with an aggregate stated value of at least $5 million at the same redemption price (a “Qualified Company Optional Redemption”).

 

 

Liquidity and Capital Resources - continued

 

Upon a Change of Control (as defined in the Series C Convertible Preferred Stock Certificate of Designation), a holder of the Series C Preferred Stock has the right to require the Company to redeem all, or any portion, of the holder’s shares of Series C Preferred Stock at a price equal to 132.5% of the stated value of the Series C Preferred Stock (plus any accrued and unpaid dividends or other amounts then payable thereon) or, if greater, an amount determined pursuant to the Series C Convertible Preferred Stock Certificate of Designation based on the then-current market price or the consideration payable in the Change of Control transaction, whichever is higher.

 

A holder may not convert any of the shares of Series C Preferred Stock, to the extent that, after giving effect to such conversion, such holder (together with certain of its affiliates and other related parties) would beneficially own in excess of 9.99% of the shares of the Company’s common stock outstanding immediately after giving effect to such conversion (the “Maximum Percentage”). The Holder may from time to time increase or decrease the Maximum Percentage; provided that in no event could the Maximum Percentage exceed 9.99%, provided, further, that any such increase would not be effective until the 61st day after delivery of a notice to the Company of such increase.

 

The Company and its subsidiaries (other than Lucid) are subject to certain customary affirmative and negative covenants regarding the rank of the Series C Preferred Stock, 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, transactions with affiliates and the ability to complete stock splits, among other customary matters. The Company also is subject to a financial covenant requiring that it maintain its cash flow on a break-even basis.

 

See Note 12, Preferred Stock, to the Financial Statements for additional information about the Series C Preferred Stock.

 

PAVmed/Veris Common Stock Offering

 

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 a share 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 a share 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.

 

 

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 estimates are as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 24, 2025. There have been no material changes to our critical accounting estimates in the three months ended March 31, 2025.

 

Item 4. 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 March 31, 2025. 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 March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

Part II - Other Information

 

Item 1. Legal Proceedings

 

In the ordinary course of the Company’s business, particularly as it begins commercialization of its products, the Company may be subject to 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.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On March 11, 2025, the Company approved the issuance of 75,000 shares of the Company’s common stock to an investor relations firm it had engaged, in consideration of services to be rendered thereby. The offer and sale of these shares of common stock is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering.

 

Except as discussed above and as previously disclosed in our current reports on Form 8-K filed prior to the date of this Form 10-Q and in Note 12, Preferred Stock, to our accompanying unaudited condensed consolidated financial statements, we did not sell any unregistered securities or repurchase any of our securities during the three months ended March 31, 2025. The offers and sales disclosed in Note 12, Preferred Stock, to our accompanying unaudited condensed consolidated financial statements were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act, as transactions not involving public offerings.

 

See Part I, Item 2 under the caption “Liquidity and Capital Resources” for a description of limitations on the payment of dividends.

 

Item 3. Defaults Upon Senior Securities

 

The information set forth in Part I, Item 2 under the caption “Liquidity and Capital Resources — Senior Secured Convertible Notes,” relating to the waiver of the Company’s default under the Financial Tests set forth in the September 2022 Senior Convertible Note, is incorporated herein by reference.

 

Item 5. Other Information

 

During the fiscal quarter ended March 31, 2025, 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).

 

Item 6. Exhibits

 

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth in the “Exhibit Index” below.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	PAVmed Inc.
May 14, 2025	By:	/s/ Dennis M McGrath
		Dennis M McGrath
		President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

 

EXHIBIT INDEX

 

				Incorporation by Reference
Exhibit No.		Description		Form		Exhibit No.		Date
3.1.1		Certificate of Incorporation		S-1		3.1		4/22/2015
3.1.2		Certificate of Amendment to Certificate of Incorporation		S-1		3.2		4/22/2015
3.1.3		Certificate of Amendment to Certificate of Incorporation, dated October 1, 2018		8-K		3.1		10/2/2018
3.1.4		Certificate of Amendment to Certificate of Incorporation, dated June 26, 2019		8-K		3.1		6/27/2019
3.1.5		Certificate of Amendment to Certificate of Incorporation, dated July 24, 2020		8-K		3.1		7/27/2020
3.1.6		Certificate of Amendment to Certificate of Incorporation, dated June 21, 2022		8-K		3.1		6/22/2022
3.1.7		Certificate of Amendment to Certificate of Incorporation, dated January 15, 2025		8-K		3.1		1/15/2025
3.1.8		Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock		8-K/A		3.1		4/20/2018
3.1.9		Form of Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock		8-K		4.1		1/21/2025
10.1		Pre-Funded Warrants, dated February 21, 2025.		*
10.2		Registration Rights Agreement, dated February 21, 2025.		*
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.		*
101.INS		Inline XBRL Instance Document		*
101.CAL		Inline XBRL Taxonomy Extension Schema		*
101.DEF		Inline XBRL Taxonomy Extension Calculation Linkbase		*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase		*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase		*
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)		*