UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of | (IRS Employer | |
| Incorporation or Organization) | Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
| Title of each Class | Trading Symbol(s) | Name of each Exchange on which Registered | ||
| The Stock Market LLC | ||||
| The 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.
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).
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 | ☐ |
| ☒ | 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 ☐
As of May 11, 2023, there were shares 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
| i |
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, 2023 | December 31, 2022 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses, deposits, and other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities, Preferred Stock and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Senior Secured Convertible Notes - at fair value | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, less current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $par value. Authorized, shares; Series B Convertible Preferred Stock, par value $, issued and outstanding at March 31, 2023 and shares at December 31, 2022 | ||||||||
| Common stock, $ par value. Authorized, shares; and shares outstanding as of March 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock | ( | ) | ||||||
| Total PAVmed Inc. Stockholders’ Equity | ( | ) | ( | ) | ||||
| Noncontrolling interests | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 1 |
PAVMED INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except number of shares and per share data - unaudited)
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| Cost of revenue | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Amortization of acquired intangible assets | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Change in fair value - Senior Secured Convertible Notes | ( | ) | ||||||
| Loss on issue and offering costs - Senior Secured Convertible Note | ( | ) | ||||||
| Debt extinguishments loss - Senior Secured Convertible Notes | ( | ) | ||||||
| Gain on sale of intellectual property | ||||||||
| Other income (expense), net | ( | ) | ||||||
| Loss before provision for income tax | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss before noncontrolling interests | ( | ) | ( | ) | ||||
| Net loss attributable to the noncontrolling interests | ||||||||
| Net loss attributable to PAVmed Inc. | ( | ) | ( | ) | ||||
| Less: Series B Convertible Preferred Stock dividends earned | ( | ) | ( | ) | ||||
| Net loss attributable to PAVmed Inc. common stockholders | $ | ( | ) | $ | ( | ) | ||
| Per share information: | ||||||||
| Net loss per share attributable to PAVmed Inc. - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Net loss per share attributable to PAVmed Inc. common stockholders – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding, basic and diluted | ||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 2 |
PAVMED INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for the THREE MONTHS ENDED March 31, 2023
(in thousands, except number of shares and per share data - unaudited)
| PAVmed Inc. Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
| Series B Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Treasury | Non controlling | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Interest | Total | ||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Dividends declared - Series B Convertible Preferred Stock | — | ( | ) | |||||||||||||||||||||||||||||||||
| Issue common stock - PAVM ATM Facility | — | |||||||||||||||||||||||||||||||||||
| Vest - restricted stock awards | — | |||||||||||||||||||||||||||||||||||
| Conversions - Senior Secured Convertible Note | — | |||||||||||||||||||||||||||||||||||
| Purchase - Employee Stock Purchase Plan | — | |||||||||||||||||||||||||||||||||||
| Purchase - majority-owned subsidiary common stock - Employee Stock Purchase Plan | — | — | ||||||||||||||||||||||||||||||||||
| Issuance - majority-owned subsidiary common stock - At-The-Market Facility, net of financing charges | — | — | ||||||||||||||||||||||||||||||||||
| Impact of subsidiary equity transactions | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance - majority-owned subsidiary common stock - Settlement APA-RDx - Termination Payment | — | — | ||||||||||||||||||||||||||||||||||
| Issuance - majority-owned subsidiary preferred stock | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation - PAVmed Inc. | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation - majority-owned subsidiaries | — | — | ||||||||||||||||||||||||||||||||||
| Treasury stock | — | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance - March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 3 |
PAVMED INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for the THREE MONTHS ENDED March 31, 2022
(in thousands, except number of shares and per share data - unaudited)
| PAVmed Inc. Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||
| Series B Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Treasury | Non controlling | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Stock | Interest | Total | ||||||||||||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Dividends declared - Series B Convertible Preferred Stock | — | ( | ) | |||||||||||||||||||||||||||||||||
| Vest - restricted stock awards | — | |||||||||||||||||||||||||||||||||||
| Exercise - Series Z warrants | — | |||||||||||||||||||||||||||||||||||
| Exercise - stock options | — | |||||||||||||||||||||||||||||||||||
| Exercise - stock options of majority-owned subsidiary | — | — | ||||||||||||||||||||||||||||||||||
| Purchase - Employee Stock Purchase Plan | — | |||||||||||||||||||||||||||||||||||
| Impact of subsidiary equity transactions | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Stock-based compensation - PAVmed Inc. | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation - majority-owned subsidiaries | — | — | ||||||||||||||||||||||||||||||||||
| Treasury stock | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance - March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 4 |
PAVMED INC.
and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except number of shares and per share data - unaudited)
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss - before noncontrolling interest (“NCI”) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss - before NCI to net cash used in operating activities | ||||||||
| Depreciation and amortization expense | ||||||||
| Stock-based compensation | ||||||||
| Gain on sale of intellectual property | ( | ) | ||||||
| APA-RDx: Issue common stock of majority-owned subsidiary - settle termination payment | ||||||||
| Change in fair value - Senior Secured Convertible Notes | ||||||||
| Loss on issue and offering costs - Senior Secured Convertible Note | ||||||||
| Debt extinguishment loss - Senior Secured Convertible Note | ||||||||
| Non-cash lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses, deposits and current and other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of intellectual property | ||||||||
| Net cash flows used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds – issue of preferred stock - majority-owned subsidiary | ||||||||
| Proceeds – issue of Senior Secured Convertible Note, net of offering costs | ||||||||
| Proceeds – issue of common stock - At-The-Market Facility | ||||||||
| Proceeds – majority-owned subsidiary common stock - At-The-Market Facility | ||||||||
| Proceeds – exercise of stock options | ||||||||
| Proceeds – issue common stock – Employee Stock Purchase Plan | ||||||||
| Proceeds – majority-owned subsidiary common stock – Employee Stock Purchase Plan | ||||||||
| Purchase Treasury Stock – payment of employee payroll tax obligation in connection with stock-based compensation | ( | ) | ||||||
| Net cash flows provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 5 |
PAVMED INC.
and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.)
Note 1 — The Company
Description of the Business
PAVmed Inc. and Subsidiaries, referred to herein as “PAVmed” or the “Company,” is comprised of PAVmed Inc. and its wholly-owned subsidiary and its majority-owned subsidiaries, inclusive of Lucid Diagnostics Inc. (“Lucid Diagnostics” or “Lucid”) and Veris Health Inc. (“Veris Health” or “Veris”).
PAVmed is a diversified commercial-stage medical technology company operating in the medical device, diagnostics, and digital health sectors, including through its majority-owned subsidiaries Lucid Diagnostics, a commercial-stage cancer prevention diagnostics company, and Veris Health, a private digital health company focused on enhanced personalized cancer care. The Company’s current central focus is on the commercialization of Lucid’s EsoGuard assay and Veris Health’s Veris Cancer Care Platform. As resources permit, we will continue to explore internal and external innovations that fulfill our project selection criteria without limiting ourselves to any target specialty or condition.
The Company has financed its operations principally through public and private issuances of its common stock, preferred stock, common stock purchase warrants, and debt. The Company is subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing research and development activities and conducting clinical trials. The Company expects to continue to experience recurring losses from operations and will continue to fund its operations with debt and equity financing transactions. Notwithstanding, however, with the cash on-hand as of the date hereof and other debt and equity committed sources of financing, the Company expects to be able to fund its operations for one year from the date of the issue of the Company’s consolidated financial statements included herein in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2023.
Note 2 — Summary of Significant Accounting Policies
Significant Accounting Policies
The Company’s significant accounting policies are as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 14, 2023, except as otherwise noted herein below.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of PAVmed and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company holds a majority-ownership interest and has controlling financial interest in each of: Lucid Diagnostics and Veris Health, with the corresponding noncontrolling interest included as a separate component of consolidated stockholders’ equity (deficit), including the recognition in the unaudited condensed consolidated statement of operations of a net loss attributable to the noncontrolling interest based on the respective minority-interest equity ownership of each majority-owned subsidiary. See Note 15, Noncontrolling Interest, for a discussion of each of the majority-owned subsidiaries noted above. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions.
As permitted under SEC rules, certain footnotes or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2022 has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair presentation of the Company’s unaudited condensed consolidated financial information.
| 6 |
Note 2 — Summary of Significant Accounting Policies - continued
The consolidated results of operations for the three months ended March 31, 2023 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2023 or for any other interim period or for any other future periods. The accompanying unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023.
All amounts in the accompanying unaudited condensed consolidated financial statements and these notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts.
Use of Estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and the determination of corresponding carrying value reserve, if any, and liabilities and the disclosure of contingent losses, as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these unaudited condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards, intangible assets and common stock purchase warrants. Other significant estimates include the estimated incremental borrowing rate, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. Additionally, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates.
Revenue Recognition
Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. The Company’s revenue is primarily generated by its laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services are completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The key aspects considered by the Company include the following:
Contracts—The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company establishes a contract with a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and a patient specimen has been returned to the laboratory for testing. Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable reimbursement contracts established between the Company and payers. However, when a patient is considered self-pay, the Company requires payment from the patient prior to the commencement of the Company’s performance obligations. The Company’s consideration can be deemed variable or fixed depending on the structure of specific payer contracts, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained.
Performance obligations—A performance obligation is a promise in a contract to transfer a distinct good or service (or a bundle of goods or services) to the customer. The Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the release of a patient’s test result to the ordering healthcare provider. The Company elects the practical expedient related to the disclosure of unsatisfied performance obligations, as the duration of time between providing testing supplies, the receipt of a sample, and the release of a test result to the ordering healthcare provider is far less than one year.
| 7 |
Note 2 — Summary of Significant Accounting Policies - continued
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.
Fair Value Option (“FVO”) Election
Under a Securities Purchase Agreement dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior Convertible Note”, and a Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September 2022 Senior Convertible Note”, which are accounted under the “fair value option election” as discussed below.
Under a Securities Purchase Agreement dated March 13, 2023, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid March 2023 Senior Convertible Note”, which is accounted under the “fair value option election” as discussed below.
Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging, (“ASC 815”), a financial instrument containing embedded features and/or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date.
Alternatively, FASB ASC Topic 825, Financial Instruments, (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note are presented in a single line item within other income (expense) in the accompanying unaudited condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note or the Lucid March 2023 Senior Convertible Note).
See Note 10, Financial Instruments Fair Value Measurements, with respect to the FVO election; and Note 11, Debt, for a discussion of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note.
Reclassifications
Certain prior-year amounts have been reclassified to conform to the current year presentation, which includes presenting costs of revenue within operating expenses on the statements of operations, in the unaudited condensed consolidated financial statements and accompanying notes to the unaudited condensed consolidated financial statements. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The guidance was adopted by the Company on January 1, 2023. The adoption of the ASU did not have an impact on the Company’s unaudited condensed consolidated financial statements.
| 8 |
Note 3 — Revenue from Contracts with Customers
EsoGuard Commercialization Agreement
The Company, through its majority-owned subsidiary, Lucid Diagnostics, entered into the EsoGuard Commercialization Agreement, dated August 1, 2021, with its former commercial laboratory service provider, ResearchDx Inc. (“RDx”), an unrelated third-party. The EsoGuard Commercialization Agreement was on a month-to-month basis, and was terminated on February 25, 2022 upon the execution of an asset purchase agreement (“APA”) dated February 25, 2022, between LucidDx Labs Inc. (a wholly-owned subsidiary of Lucid Diagnostics) and RDx, with such agreement further discussed in Note 5, Asset Purchase Agreement and Management Services Agreement.
Revenue Recognized
In
the three months ended March 31, 2023 and March 31, 2022, the Company recognized total revenue of $
Cost of Revenue
The cost of revenues principally includes the costs related to the Company’s laboratory operations (excluding estimated costs associated with research activities), the costs related to the EsoCheck cell collection device, cell sample mailing kits and license royalties.
In
the three months ended March 31, 2023, the cost of revenue was $
Note 4 — Related Party Transactions
Case Western Reserve University and Physician Inventors - Amended CWRU License Agreement
Case Western Reserve University (“CWRU”) and each of the three physician inventors (“Physician Inventors”) of the intellectual property licensed under the amended and restated patent license agreement with CWRU, dated August 23, 2021 (the “Amended CWRU License Agreement”), each hold a minority equity ownership interest in Lucid Diagnostics Inc. The expenses incurred with respect to the Amended CWRU License Agreement and the three Physician Inventors, as classified in the accompanying unaudited condensed consolidated statement of operations for the periods indicated are summarized as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cost of Revenue | ||||||||
| CWRU – Royalty Fees | $ | $ | ||||||
| General and Administrative Expense | ||||||||
| Research and Development Expense | ||||||||
| Amended CWRU – License Agreement - reimbursement of patent legal fees | ||||||||
| Fees - Physician Inventors’ consulting agreements | ||||||||
| Sponsored research agreement | ||||||||
| Total Related Party Expenses | $ | $ | ||||||
| 9 |
Note 4 — Related Party Transactions - continued
See Note 12, Stock-Based Compensation, for information regarding each of the “PAVmed Inc. 2014 Long-Term Incentive Equity Plan” and the separate “Lucid Diagnostics Inc 2018 Long-Term Incentive Equity Plan”; and Note 15, Noncontrolling Interest, for a discussion of Lucid Diagnostics Inc. and the corresponding noncontrolling interests.
Other Related Party Transactions
Effective
June 2021, Veris Health entered into a consulting agreement with Andrew Thoreson, M.D. which provides for compensation on a contractual
rate per hour for consulting services provided. Dr. Thoreson holds a partial ownership interest in the legal entity which holds a minority
interest in Veris Health. Veris Health recognized general and administrative expense of $
Note 5 — Asset Purchase Agreement and Management Services Agreement
Asset Purchase Agreement and Management Services Agreement - ResearchDx Inc.
LucidDx Labs, a wholly-owned subsidiary of Lucid Diagnostics, entered into an asset purchase agreement (“APA”) dated February 25, 2022, with ResearchDx, Inc. (“RDx”), an unrelated third-party (“APA-RDx”). Under the APA-RDx, LucidDx Labs acquired certain assets from RDx which were combined with LucidDx Labs purchased and leased property and equipment to establish a Company-owned Commercial Lab Improvements Act (“CLIA”) certified, College of American Pathologists (“CAP”) accredited commercial clinical laboratory capable of performing the EsoGuard® Esophageal DNA assay, inclusive of DNA extraction, next generation sequencing (“NGS”) and specimen storage. Prior to February 25, 2022, RDx provided such laboratory services at its owned CLIA-certified, CAP-accredited clinical laboratory. In connection with the execution and delivery of the APA-RDx, LucidDx Labs and RDx entered into a separate management services agreement (“MSA-RDx”), dated and effective February 25, 2022, pursuant to which RDx provided certain testing and related services for the Laboratory.
The
total purchase price consideration payable under the APA-RDx is a face value of $
Termination of Management Services Agreement and Modification of Other Payment Obligations - ResearchDx Inc
On February 14, 2023, Lucid Diagnostics and LucidDx Labs entered into an agreement (the “MSA Termination Agreement”) with RDx, pursuant to which the parties mutually agreed to terminate the MSA-RDx without cause. The termination was effective as February 10, 2023. Until the termination of the management service agreement with RDx, RDx had continued to provide certain testing and related services for the Laboratory in accordance with the terms of the MSA-RDx.
The
MSA Termination Agreement reduces the remaining amounts of the earnout payments and management fees due under the APA-RDx and the MSA-RDx to $
| 10 |
Note 6 — Prepaid Expenses, Deposits, and Other Current Assets
Prepaid expenses and other current assets consisted of the following as of:
| March 31, 2023 | December 31, 2022 | |||||||
| Advanced payments to service providers and suppliers | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Deposits | ||||||||
| EsoCheck cell collection supplies | ||||||||
| EsoGuard mailer supplies | ||||||||
| Veris Box supplies | ||||||||
| Total prepaid expenses, deposits and other current assets | $ | $ | ||||||
Note 7 — Leases
During the three months ended March 31, 2023, the Company entered into additional lease agreements that have commenced and are classified as operating leases and short-term leases, including for each of: principal corporate offices and additional Lucid Test Centers.
The Company’s future lease payments as of March 31, 2023, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows:
| 2023 (remainder of year) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total lease payments | $ | |||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ |
Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term - operating leases (in years) | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
As
of March 31, 2023 and December 31, 2022, the Company’s right-of-use assets from operating leases were $
In
September 2022, the Company entered into a lease agreement for its principal corporate offices, in New York, New York.
| 11 |
Note 8 — Intangible Assets, net
Intangible assets, less accumulated amortization, consisted of the following as of:
| Estimated Useful Life | March 31, 2023 | December 31, 2022 | ||||||||
| Defensive asset | $ | $ | ||||||||
| Laboratory licenses and certifications and laboratory information management software | ||||||||||
| Other | ||||||||||
| Total Intangible assets | ||||||||||
| Less Accumulated Amortization | ( | ) | ( | ) | ||||||
| Intangible Assets, net | $ | $ | ||||||||
The
defensive technology intangible asset was recognized upon its acquisition of CapNostics, an unrelated third-party, for total purchase
consideration paid on the October 5, 2021 acquisition date of approximately $
The intangible assets recognized under the APA-RDx are the laboratory licenses and certifications, inclusive of a CLIA certification, CAP accreditation, and clinical laboratory licenses for five (5) U.S. States transfer to the Company from RDx, and a laboratory information management software perpetual-use royalty-free license granted under the APA-RDx, with such intangible asset having a useful life of twenty-four months commencing on the APA-RDx February 25, 2022 transaction date.
Amortization
expense of the intangible assets discussed above was $
| 2023 (remainder of year) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total | $ |
Note 9 — Commitment and Contingencies
Other Matters
In the ordinary course of PAVmed business, particularly as it begins commercialization of its products, the Company may be subject to certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from time to time. The Company does not believe it is currently a party to any pending legal proceedings. 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.
| 12 |
Note 10 — Financial Instruments Fair Value Measurements
Recurring Fair Value Measurements
The fair value hierarchy table for the periods indicated is as follows:
Fair Value Measurement on a Recurring Basis at Reporting Date Using1 | ||||||||||||||||
| Level-1 Inputs | Level-2 Inputs | Level-3 Inputs | Total | |||||||||||||
| March 31, 2023 | ||||||||||||||||
| Senior Secured Convertible Note - April 2022 | $ | $ | $ | $ | ||||||||||||
| Senior Secured Convertible Note - September 2022 | ||||||||||||||||
| Lucid Senior Secured Convertible Note - March 2023 | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
| Level-1 Inputs | Level-2 Inputs | Level-3 Inputs | Total | |||||||||||||
| December 31, 2022 | ||||||||||||||||
| Senior Secured Convertible Note - April 2022 | $ | $ | $ | $ | ||||||||||||
| Senior Secured Convertible Note - September 2022 | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
1 There were no transfers between the respective Levels during the period ended March 31, 2023.
As
discussed in Note 11, Debt, the Company issued Senior Secured Convertible Notes dated April 4, 2022 and September 8, 2022, with
an initial $
As
discussed in Note 11, Debt, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023, with an initial $
The estimated fair value of the financial instruments classified within the Level 3 category was determined using both observable inputs and unobservable inputs. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
The estimated fair value of the Lucid March 2023 Senior Convertible Note as of each of March 21, 2023 and March 31, 2023, and the estimated fair value of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as of March 31, 2023, were computed using a Monte Carlo simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate-of-return, using the following assumptions:
| April 2022 Senior Convertible Note: March 31, 2023 | September 2022 Senior Convertible Note: March 31, 2023 | Lucid March 2023 Senior Convertible Note: March 21, 2023 | Lucid March 2023 Senior Convertible Note: March 31, 2023 | |||||||||||||
| Fair Value | $ | $ | $ | $ | ||||||||||||
| Face value principal payable | $ | $ | $ | $ | ||||||||||||
| Required rate of return | % | % | % | % | ||||||||||||
| Conversion Price | $ | $ | $ | $ | ||||||||||||
| Value of common stock | $ | $ | $ | $ | ||||||||||||
| Expected term (years) | ||||||||||||||||
| Volatility | % | % | % | % | ||||||||||||
| Risk free rate | % | % | % | % | ||||||||||||
| Dividend yield | % | % | % | % | ||||||||||||
| 13 |
Note 10 — Financial Instruments Fair Value Measurements - continued
The estimated fair values reported utilized the Company’s and Lucid’s common stock prices along with certain Level 3 inputs (as discussed in the table 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 Company’s and Lucid’s common stock prices, the Company’s and Lucid’s dividend yields, the risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s and Lucid’s common stock prices. Changes in these assumptions can materially affect the estimated fair values.
Note 11 — Debt
The fair value and face value principal outstanding of the Senior Convertible Notes as of the dates indicated are as follows:
| Contractual Maturity Date | Stated Interest Rate | Conversion Price per Share | Face Value Principal Outstanding | Fair Value | ||||||||||||||
| April 2022 Senior Convertible Note | % | $ | $ | $ | ||||||||||||||
| September 2022 Senior Convertible Note | % | $ | $ | $ | ||||||||||||||
| Lucid March 2023 Senior Convertible Note | % | $ | $ | $ | ||||||||||||||
| Balance as of March 31, 2023 | $ | $ | ||||||||||||||||
| Contractual Maturity Date | Stated Interest Rate | Conversion Price per Share | Face Value Principal Outstanding | Fair Value | ||||||||||||||
| April 2022 Senior Convertible Note | % | $ | $ | $ | ||||||||||||||
| September 2022 Senior Convertible Note | % | $ | $ | $ | ||||||||||||||
| Balance as of December 31, 2022 | $ | $ | ||||||||||||||||
The changes in the fair value of debt during the three months ended March 31, 2023 is as follows:
| April 2022 Senior Convertible Note | September 2022 Senior Convertible Note | Lucid March 2023 Senior Convertible Note | Sum of Balance Sheet Fair Value Components | Other Income (expense) | ||||||||||||||||
| Fair Value - December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Face value principal – issue date | ||||||||||||||||||||
| Fair value adjustment – issue date | ( | ) | ||||||||||||||||||
| Installment repayments – common stock | ( | ) | ( | ) | ||||||||||||||||
| Non-installment payments – common stock | ( | ) | ( | ) | ||||||||||||||||
| Change in fair value | ( | ) | ||||||||||||||||||
| Fair Value at March 31, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Other Income (Expense) - Change in fair value – three months ended March 31, 2023 | $ | ( | ) | |||||||||||||||||
PAVmed - Senior Secured Convertible Notes
The
Company entered into a Securities Purchase Agreement (“SPA”) dated March 31, 2022, with an accredited institutional investor
(“Investor”, “Lender”, and /or “Holder”), wherein, the Company agreed to sell, and the Investor agreed
to purchase an aggregate of $
Under
the SPA, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior
Convertible Note”, with such note having a $
| 14 |
Note 11 — Debt - continued
Under
the same SPA, the Company issued an additional Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September
2022 Senior Convertible Note”, with such note having a $
In
the three months ended March 31, 2023, approximately $
Lucid Diagnostics - Senior Secured Convertible Notes
Lucid
Diagnostics entered into a Securities Purchase Agreement (“Lucid SPA”) dated March 13, 2023, with an accredited institutional
investor (“Investor”, “Lender”, and /or “Holder”), wherein, Lucid agreed to sell, and the Investor
agreed to purchase an aggregate of $
Under
the SPA dated March 13, 2023, Lucid issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid
March 2023 Senior Convertible Note”, with such note having a $
The
Lucid March 2023 Senior Convertible Note proceeds were $
During
the period from March 21, 2023 to September 20, 2023, Lucid is required to pay interest expense only (on the $
Commencing
September 21, 2023, and then on each of the successive first and tenth trading day of each month thereafter through to and including
March 14, 2025 (each referred to as an “Installment Date”); and on the
In addition to the Installment Amount repayments, the Holder may elect to accelerate the conversion of future Installment Amount repayments, and interest thereon, subject to certain restrictions, as defined, utilizing the then current conversion price of the most recent Installment Date conversion price.
The payment of all amounts due and payable under this senior convertible note is guaranteed by Lucid’s subsidiaries; and the obligations under this senior convertible note are secured by all of the assets of Lucid and its subsidiaries.
Lucid is subject to certain customary affirmative and negative covenants regarding the rank of the note, along with the incurrence of further indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.
Lucid
is subject to financial covenants requiring:
During
the three months ended March 31, 2023, the Company recognized debt extinguishment losses of approximately $
See Note 10, Financial Instruments Fair Value Measurements, for a further discussion of fair value assumptions.
Note 12 — Stock-Based Compensation
PAVmed Inc. 2014 Long-Term Incentive Equity Plan
The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed 2014 Equity Plan”) is designed to enable PAVmed to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of PAVmed. The types of awards that may be granted under the PAVmed 2014 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the PAVmed board of directors.
A total of shares of common stock of PAVmed are reserved for issuance under the PAVmed 2014 Equity Plan, with shares available for grant as of March 31, 2023. The share reservation is not diminished by a total of PAVmed Inc. stock options and restricted stock awards granted outside the PAVmed 2014 Equity Plan as of March 31, 2023. In January 2023, the number of shares available for grant was increased by in accordance with the evergreen provisions of the plan.
| 15 |
Note 12 — Stock-Based Compensation - continued
PAVmed Stock Options
| Number of Stock Options | Weighted Average Exercise Price | Remaining Contractual Term (Years) | Intrinsic Value(2) | |||||||||||||
| Outstanding stock options at December 31, 2022 | $ | $ | ||||||||||||||
| Granted(1) | $ | |||||||||||||||
| Exercised | $ | |||||||||||||||
| Forfeited | ( | ) | $ | |||||||||||||
| Outstanding stock options at March 31, 2023(3) | $ | $ | ||||||||||||||
| Vested and exercisable stock options at March 31, 2023 | $ | $ | ||||||||||||||
| (1) | |
| (2) | |
| (3) |
PAVmed Restricted Stock Awards
| Number of Restricted Stock Awards | Weighted Average Grant Date Fair Value | |||||||
| Unvested restricted stock awards as of December 31, 2022(1) | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Unvested restricted stock awards as of March 31, 2023 | $ | |||||||
| (1) |
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 board of directors.
A total of shares of common stock of Lucid Diagnostics are reserved for issuance under the Lucid Diagnostics 2018 Equity Plan, with shares available for grant as of March 31, 2023. The share reservation is not diminished by a total of stock options and restricted stock awards granted outside the Lucid Diagnostics 2018 Equity Plan, as of March 31, 2023. In January 2023, the number of shares available for grant was increased by in accordance with the evergreen provisions of the plan.
| 16 |
Note 12 — Stock-Based Compensation - continued
Lucid Diagnostics Stock Options
| Number of Stock Options | Weighted Average Exercise Price | Remaining Contractual Term (Years) | Intrinsic Value(2) | |||||||||||||
| Outstanding stock options at December 31, 2022 | $ | $ | ||||||||||||||
| Granted(1) | $ | |||||||||||||||
| Exercised | $ | |||||||||||||||
| Forfeited | ( | ) | $ | |||||||||||||
| Outstanding stock options at March 31, 2023(3) | $ | $ | ||||||||||||||
| Vested and exercisable stock options at March 31, 2023 | $ | $ | ||||||||||||||
| (1) | |
| (2) | |
| (3) |
Lucid Diagnostics Restricted Stock Awards
| Number of Restricted Stock Awards | Weighted Average Grant Date Fair Value | |||||||
| Unvested restricted stock awards as of December 31, 2022(1) | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Unvested restricted stock awards as of March 31, 2023 | $ | |||||||
| (1) |
| 17 |
Note 12 — Stock-Based Compensation - continued
Consolidated Stock-Based Compensation Expense
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cost of revenue | $ | $ | ||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
Stock-Based Compensation Expense Recognized by Lucid Diagnostics
As noted, the consolidated stock-based compensation expense presented above is inclusive of stock-based compensation expense recognized by Lucid Diagnostics, inclusive of each of: stock options granted under the PAVmed 2014 Equity Plan to the three physician inventors of the intellectual property underlying the CWRU License Agreement (“Physician Inventors”) (as discussed above in Note 4, Related Party Transactions); and stock options and restricted stock awards granted to employees of PAVmed and non-employee consultants under the Lucid Diagnostics 2018 Equity Plan. The stock-based compensation expense recognized by Lucid Diagnostics for both the PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan, with respect to stock options and restricted stock awards as discussed above, for the periods indicated, was as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Lucid Diagnostics 2018 Equity Plan – cost of revenue | $ | $ | ||||||
| Lucid Diagnostics 2018 Equity Plan – sales and marketing expenses | ||||||||
| Lucid Diagnostics 2018 Equity Plan – general and administrative expenses | ||||||||
| Lucid Diagnostics 2018 Equity Plan – research and development expenses | ||||||||
| PAVmed 2014 Equity Plan - cost of revenue | ||||||||
| PAVmed 2014 Equity Plan - sales and marketing expenses | ||||||||
| PAVmed 2014 Equity Plan - general and administrative expenses | ||||||||
| PAVmed 2014 Equity Plan - research and development expenses | ||||||||
| Total stock-based compensation expense – recognized by Lucid Diagnostics | $ | $ | ||||||
| 18 |
Note 12 — Stock-Based Compensation - continued
| Unrecognized Expense | Weighted Average Remaining Service Period (Years) | |||||||
| PAVmed 2014 Equity Plan | ||||||||
| Stock Options | $ | |||||||
| Restricted Stock Awards | $ | |||||||
| Lucid Diagnostics 2018 Equity Plan | ||||||||
| Stock Options | $ | |||||||
| Restricted Stock Awards | $ | |||||||
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 $ per share and $ per share during the periods ended March 31, 2023 and 2022, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Expected term of stock options (in years) | ||||||||
| Expected stock price volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Expected dividend yield | % | % | ||||||
Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ per share and $ per share during the periods ended March 31, 2023 and 2022, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Expected term of stock options (in years) | ||||||||
| Expected stock price volatility | % | % | ||||||
| Risk free interest rate | % | % | ||||||
| Expected dividend yield | % | % | ||||||
PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”)
A
total of shares and shares of common stock of the Company were purchased for proceeds of approximately $
Lucid Diagnostics Inc. Employee Stock Purchase Plan (“Lucid ESPP”)
A
total of shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $
| 19 |
Note 13 — Preferred Stock
As of March 31, 2023 and December 31, 2022, there were and shares of PAVmed Series B Convertible Preferred Stock (classified in permanent equity) issued and outstanding, respectively.
Series B Convertible Preferred Stock Dividends
The
PAVmed Series B Convertible Preferred Stock dividends are
Series B Convertible Preferred Stock Dividends Earned
The
Series B Convertible Preferred Stock dividends earned are included in the calculation of basic and diluted net loss attributable to PAVmed
common stockholders for each of the respective corresponding periods presented in the accompanying unaudited condensed consolidated statement
of operations, inclusive of approximately $
Series B Convertible Preferred Stock Dividends Declared
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. In this regard, in the three months ended March 31, 2023, the Company’s board-of-directors
declared Series B Convertible Preferred Stock dividends of $
In
the three months ended March 31, 2022, the Company’s board-of-directors declared Series B Convertible Preferred Stock dividends
of $
Subsequent
to March 31, 2023, in May 2023, the Company’s board of directors declared a Series B Convertible Preferred Stock dividend
earned as of March 31, 2023 and payable as of April 1, 2023, of approximately $
| 20 |
Note 14 — Common Stock and Common Stock Purchase Warrants
Common Stock
On
December 29, 2022,