NOTES
TO UNAUDITED 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 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”),
Veris Health Inc. (“Veris Health” or “VERIS”), and Solys Diagnostics Inc. (“Solys Diagnostics”
or “SOLYS”).
The
Company is organized to advance a broad pipeline of innovative medical technologies from concept to commercialization, employing a business
model focused on capital efficiency and speed to market. The Company’s activities have focused on advancing the lead products towards
regulatory approval and commercialization, protecting its intellectual property, and building its corporate infrastructure and management
team.
The
ability of the Company to generate revenue depends upon the Company’s ability to successfully advance the commercialization of
EsoGuard and CarpX while also completing the development and the necessary regulatory approvals of its other products and services.
Although
the Company’s current operational activities are principally focused on the commercialization of EsoGuard and CarpX its development
activities are focused on pursuing FDA approval and clearance of other lead products in our product portfolio pipeline, including EsoGuard
IVD, PortIO, NextFlo, EsoCure and digital health technologies acquired by the Company’s majority-owned subsidiary Veris Health
Inc.
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 unaudited condensed consolidated financial statements, as included herein in this Quarterly
Report on Form 10-Q for the period ended March 31, 2022.
Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates
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, 2021 as filed with the SEC on April 6, 2022, except as otherwise noted herein below.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities
and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries.
All significant intercompany transactions and balances have been eliminated in consolidation. The Company holds a majority-ownership
interest and has controlling financial interest in each of: Lucid Diagnostics Inc., Veris Health Inc., and Solys Diagnostics 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 majority-owned subsidiary. See Note 16, 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.
All
amounts in the accompanying consolidated financial statements and these notes thereto are presented in thousands of dollars, if not otherwise
noted as being presented in millions of dollars, except for shares and per share amounts.
Contingent
Consideration
Contingent
Consideration relates to the potential payment for an acquisition that is contingent upon the achievement of the acquired business meeting
certain milestones. The Company records contingent consideration at fair value at the date of acquisition based on the consideration
expected to be transferred. For potential payments related to milestone achievements, the Company estimated the
fair value based on the probability of achievement of such milestones. The assumptions utilized in the calculation of the acquisition
date fair value include probability of success and the discount rates. Contingent consideration involves certain assumptions requiring
significant judgment and actual results may differ from assumed and estimated amounts. Contingent consideration is remeasured each reporting
period, and subsequent changes in fair value, including accretion for the passage of time, are recognized within other income (expense),
net in the Company’s unaudited condensed consolidated statements of operations.
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, inclusive of acquired intangible assets and the determination of corresponding
carrying value reserve, if any, and liabilities and the disclosure of contingent losses, as of the date of the consolidated financial
statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these consolidated
financial statements include those related to the estimated fair value of stock-based equity awards, contingent consideration
and common stock purchase warrants. Other significant estimates include 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.
Recent
Accounting Standards Updates Adopted
Effective
December 31, 2021, the Company adopted FASB ASC Topic 842, Leases, (“ASC 842”). ASC 842 established a right-of-use (“ROU”)
model requiring a lessee to recognize a ROU asset and a lease liability for all leases with terms greater-than 12 months. Leases are
classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.
The Company’s adoption of ASC 842 did not have an effect on the Company’s consolidated financial statements. See Note 8,
Leases.
Note
3 — Patent License Agreement - Case Western Reserve University
The Company has a patent
license agreement with Case Western Reserve University (“CWRU”) which provides for each of patent fees reimbursement payments,
milestone payments and royalty payments - each as discussed below. For further details of this agreement, see Note 3 of the Company’s
Consolidated Financial Statements in the Company’s Form 10-K for the year ended December 31, 2021.
Lucid
Diagnostics Inc. is responsible for reimbursement of certain CWRU billed patent fees. See Note 5, Related Party Transactions,
for patent fee reimbursement payments paid to CWRU in the periods ended March 31, 2022 and 2021.
The CWRU License Agreement contained
milestones for which a $75
research and development expense was recognized and paid with respect to the achievement of the regulatory milestone related
to FDA clearance of EsoCheck. The CWRU License Agreement was amended effective February 12, 2021 such that a regulatory milestone related
to FDA PMA submission of a licensed product (“PMA Milestone”) is included in the Amended CWRU License Agreement, and is the
sole remaining unachieved milestone, for which a $200
milestone payment would be payable to CWRU upon its achievement.
Under
the Amended CWRU License Agreement, the Company is required to pay a royalty fee to CWRU with respect to the “Licensed Products”
(as defined in the CWRU License Agreement) of a percentage of “Net Sales”, as defined in the Amended CWRU License Agreement,
as follows: 5.0% of Net Sales up to $100.0
million per year; and 8.0%
of Net Sales of $100.0
million or greater per year, with such amounts
subject-to a minimum annual royalty fee. The Company recorded a royalty expense of $10 for the three months ended March 31, 2022
Note
4 — Revenue from Contracts with Customers
Revenue
is recognized when the satisfaction of the performance obligation occurs, which is when the delivery of product and /or the provision
of service is rendered, and is measured as the amount of estimated consideration expected to be realized. In the period ended March 31,
2022, the Company recognized revenue under the EsoGuard Commercialization Agreement, dated August 1, 2021, as discussed below.
EsoGuard
Commercialization Agreement
The
Company, through its majority-owned subsidiary, Lucid Diagnostics Inc., entered into the EsoGuard Commercialization Agreement, dated
August 1, 2021, with its Commercial Laboratory Improvements Act (“CLIA”) certified commercial laboratory service provider,
ResearchDx Inc. (“RDx”), an unrelated third-party. The EsoGuard Commercialization Agreement is on a month-to-month basis,
and may be terminated by either party thereto, with or without cause, upon forty-five (45) days prior written notice.
On
February 25, 2022, the EsoGuard Commercialization Agreement was terminated in conjunction with the execution of an Asset Purchase Agreement
between LucidDx Labs Inc., a wholly-owned subsidiary of Lucid Diagnostics Inc. and RDx, as such agreement is further discussed in Note
6, Acquisitions.
Revenue
Recognized
In
the period ended March 31, 2022, the Company recognized total revenue of $189, which represents the minimum fixed monthly fee of $100
to be paid by RDx for the delivery of services under the EsoGuard Commercialization Agreement for the period from the agreement inception
date of August 1, 2021 and prorated to February 25, 2022. The monthly fee was deemed to be collectible for such period as RDx has timely
paid the applicable respective monthly fee.
Cost
of Revenue
The
cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement for the period ended
March 31, 2022 totaled $369, inclusive of employee related costs of employees engaged in the delivery of the administration to patients
of the EsoCheck cell sample collection procedure, EsoCheck devices and EsoGuard mailers (cell sample shipping costs) distributed to medical
practitioners’ locations and the Lucid Test Centers; Lucid Test Centers operating expenses, including rent expense and supplies;
and royalty fees incurred under the Amended CWRU License Agreement.
Note
5 — Related Party Transactions
Case
Western Reserve University and Physician Inventors - CWRU License Agreement
Case
Western Reserve University (“CWRU”) and each of the three physician inventors of the intellectual property licensed under
the CWRU License Agreement (“Physician Inventors”) each hold equity ownership minority interests in Lucid Diagnostics Inc.
The expenses incurred with respect to the CWRU License Agreement and the three Physician Inventors, as classified in the accompanying
consolidated statement of operations for the periods indicated are summarized as follows:
Schedule of Incurred Expenses of Minority Shareholders
| |
2022 | | |
2021 | |
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Cost
of Revenue | |
| | |
| |
CWRU
– Royalty Fee | |
$ | 9 | | |
$ | — | |
| |
| | | |
| | |
General
and Administrative Expense | |
| | | |
| | |
Stock-based
compensation expense – Physician Inventors’ restricted stock awards | |
| 272 | | |
| 91 | |
| |
| | | |
| | |
Research
and Development Expense | |
| | | |
| | |
CWRU
License Agreement - reimbursement of patent legal fees | |
| — | | |
| — | |
Fees
- Physician Inventors’ consulting agreements | |
| 8 | | |
| 13 | |
Sponsored
research agreement | |
| 3 | | |
| — | |
Stock-based
compensation expense – Physician Inventors’ stock options | |
| 46 | | |
| 6 | |
Total
Related Party Expenses | |
$ | 338 | | |
$ | 110 | |
Lucid
Diagnostics Inc. entered into consulting agreements with each of the three Physician Inventors, with each such consulting agreement providing
for compensation on a contractual rate per hour for consulting services provided, and an expiration date of May 12, 2024, upon the agreements’
renewal effective May 12, 2021. Additionally, as discussed below, each of the Physician Inventors have been granted stock options under
the PAVmed Inc. 2014 Long-Term Incentive Equity Plan, and stock options and restricted stock awards under the Lucid Diagnostics Inc.
2018 Long-Term Incentive Equity Plan.
Under
each of their respective (initial) consulting agreements with Lucid Diagnostics Inc., the three Physician Inventors were each granted
25,000 stock options under the PAVmed Inc. 2014 Equity Plan, with a grant date of May 12, 2018, an exercise price of $1.59 per share
of common stock of PAVmed Inc., vesting ratably on a quarterly basis commencing June 30, 2018 and ending March 31, 2021, and a contractual
period of ten years from the date of grant. As of March 31, 2021, such stock options were fully vested and exercisable. Each of the Physician
Inventors were granted 50,000 stock options under the PAVmed Inc. 2014 Equity Plan, with a grant date of June 21, 2021, an exercise price
of $6.41 per share of common stock of PAVmed Inc., vesting ratably on a quarterly basis commencing June 30, 2021 and ending March 31,
2024, and a contractual period of ten years from the date of grant.
On
March 1, 2021, restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan to each of the three Physician
Inventors, with such restricted stock awards having a single vesting date of March 1, 2023, with the fair value of such restricted stock
awards recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate
with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed.
See
Note 13, 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 16, Noncontrolling
Interest, for a discussion of Lucid Diagnostics Inc. and the corresponding noncontrolling interests.
Note
5 — Related Party Transactions - continued
Other
Related Party Transactions
Lucid
Diagnostics Inc. previously entered into a consulting agreement with Stanley N. Lapidus, effective June 2020 with such consulting agreement
providing for compensation on a contractual rate per hour for consulting services provided. In July 2021, Mr. Lapidus was appointed as
Vice Chairman of the Board of Directors of Lucid Diagnostics Inc. Lucid Diagnostics Inc. recognized general and administrative expense
of $6
in the period ended March 31, 2021 in connection with the consulting agreement.
Veris
Health Inc. entered into a consulting agreement with Andrew Thoreson, M.D. effective June 2021 with such consulting agreement providing
for compensation on a contractual rate per hour for consulting services provided. Veris Health Inc. recognized general and administrative
expense of $25 in the period ended March 31, 2022 in connection with the consulting agreement.
Note
6 — Acquisitions
Asset Purchase Agreement - ResearchDx
Inc.
On February 25, 2022, LucidDx
Labs, Inc., entered into an asset purchase agreement (“APA”) with ResearchDx, Inc. (“RDx”), an unrelated third-party
- “RDx APA”. Under the RDx APA, LucidDx Labs Inc. acquired certain assets from RDx to be combined with LucidDx Labs Inc.
purchased and leased property and equipment to establish a Company-owned CLIA certified, 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 consummation of the RDx APA, RDx provided such laboratory services at its owned CLIA-certified, CAP-accredited
laboratory.
As of March 31, 2022, the
Company’s preliminary analysis is that the RDx APA transaction is a business combination, resulting in the recognition and measurement
of a preliminary purchase consideration in accordance with the valuation methodology described in Note 2, Summary of Significant Accounting
Policies and Recent Accounting Standards Updates.
Under
the terms of the RDx APA, LucidDx Labs Inc. will pay RDx an aggregate purchase price of up to $6.2
million for the acquired assets. The total
of $6.2
million is comprised of non-contingent purchase
consideration of $1.0
million (included in “Accrued expenses
and other liabilities” on the accompanying unaudited condensed consolidated balance sheets, as of March 31, 2022), and contingent
purchase consideration of a total of $5.2
million face value, with such contingent
purchase consideration having a preliminary $4,714
initial estimated fair value as of the
transaction date. The preliminary $5,714 purchase consideration (inclusive of both the non-contingent and contingent purchase consideration
discussed above) is unallocated as of March 31, 2022, and as such is included in intangible assets in the accompanying unaudited consolidated
balance sheet. The preliminary estimated fair value of the contingent purchase price consideration and the identification and estimated
fair value of acquired assets are subject-to further revision.
Concurrent with the RDx APA,
LucidDx Labs Inc. and RDx also entered into a management services agreement (“RDx MSA”), with a term of three years, and
a total of approximately $1.8 million payable in equal quarterly payments.
Pro
Forma Information
The
RDx acquisition impact for purposes of pro forma financial disclosures would have primarily impacted the Company’s EsoGuard Commercialization
Agreement with RDx. The impact is reflected in the table below:
Schedule
Of Business Acquisition Pro Forma Information
| |
| | | |
| | |
| |
Three Months Ended March 31, | |
| |
2022 | | |
2021 | |
Revenue | |
| | |
| |
As reported | |
$ | 189 | | |
$ | — | |
Pro forma | |
$ | — | | |
$ | — | |
Net Loss | |
| | | |
| | |
As reported | |
$ | (16,940 | ) | |
$ | (9,506 | ) |
Pro forma | |
$ | (17,129 | ) | |
$ | (9,506 | ) |
Basic and diluted net loss per share | |
| | | |
| | |
As reported | |
$ | (0.20 | ) | |
$ | (0.13 | ) |
Pro forma | |
$ | (0.20 | ) | |
$ | (0.13 | ) |
Note
7 — Prepaid Expenses, Deposits, and Other Current Assets
Current
Assets
Prepaid
expenses and other current assets consisted of the following as of:
Schedule of Prepaid Expenses and Other Current Assets
| |
March
31, 2022 | | |
December
31, 2021 | |
Advanced
payments to service providers and suppliers | |
$ | 651 | | |
$ | 808 | |
Prepaid
insurance | |
| 1,174 | | |
| 1,856 | |
Deposits | |
| 2,973 | | |
| 1,989 | |
Deferred
financing charges | |
| 1,014 | | |
| — | |
EsoCheck
cell collection supplies | |
| 266 | | |
| 434 | |
EsoGuard
mailer supplies | |
| 65 | | |
| 59 | |
CarpX
devices | |
| 33 | | |
| 33 | |
Total
prepaid expenses, deposits and other current assets | |
$ | 6,176 | | |
$ | 5,179 | |
Note
8 — Leases
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
| |
2022 | | |
2021 | |
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Cash
paid for amounts included in the measurement of lease liabilities | |
| | |
| |
Operating
cash flows from operating leases | |
$ | 224 | | |
$ | — | |
Non-cash
investing and financing activities | |
| | | |
| | |
Right-of-use
assets obtained in exchange for new operating lease liabilities | |
$ | 3,151 | | |
$ | — | |
Weighted-average
remaining lease term - operating leases (in years) | |
| 3.32 | | |
| — | |
Weighted-average
discount rate - operating leases | |
| 7.875 | % | |
| — | % |
As
of March 31, 2022, the Company’s right-of-use assets from operating leases are $2,951, which are reporting in right-of-use assets
- operating leases in the unaudited condensed consolidated balance sheets. As of March 31, 2022, the Company has outstanding operating
lease obligations of $2,981, of which $873 is reported in operating lease liabilities, current portion and $2,108 is reporting in operating
lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. The Company did not have
operating leases as of December 31, 2021. 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.
The
Company executed lease agreements for: office space in Horsham, Pennsylvania, which commenced May 1, 2022; and a new light manufacturing
facility in Riverton, Utah, with expected commencement of October 2022.
Note
9 — Intangible Assets
Intangible
assets, less accumulated amortization, consisted of the following as of:
Schedule
of Intangible Assets
| |
Estimated
Useful Life | |
March
31, 2022 | | |
December
31, 2021 | |
Defensive
asset | |
5
years | |
$ | 2,105 | | |
$ | 2,105 | |
Other | |
1
year | |
| 70 | | |
| 70 | |
Identified finite intangible assets | |
| |
| 2,175 | | |
| 2,175 | |
Unallocated purchase consideration1 | |
| |
| 5,714 | | |
| — | |
Total
Intangible asset | |
| |
| 7,889 | | |
| 2,175 | |
Less
Accumulated Amortization | |
| |
| (269 | ) | |
| (146 | ) |
Total
Intangible Assets, net | |
| |
$ | 7,620 | | |
$ | 2,029 | |
(1) | See
Note 6, Acquisitions - Asset Purchase Agreement - Research Dx Inc., for a discussion
of the “unallocated purchase consideration” recognized as an intangible asset
as of March 31, 2022, as presented in the table above. |
Amortization
expense of the acquired intangible assets discussed above was $123
for the period ended March 31, 2022 (there was
no such amortization expense for the prior period ended March 31, 2021), and is included in general and administrative expenses in the
accompanying consolidated statements of operations. As of March 31, 2022, the estimated future amortization expense associated with the
Company’s identified finite-lived intangible assets (except for the unallocated purchase consideration included in total
intangible asset presented above) for each of the five succeeding fiscal years is as follows:
Schedule
of Estimated Amortization Expense for Intangible Assets
| |
| | |
2022
(remainder of year) | |
$ | 327 | |
2023 | |
| 421 | |
2024 | |
| 421 | |
2025 | |
| 421 | |
2026 | |
| 316 | |
Thereafter | |
| — | |
Total | |
$ | 1,906 | |
Note
10 — Commitment and Contingencies
Legal
Proceedings
On
November 2, 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint in
the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws at the
Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have been approved
were not so approved (including matters relating to the increase in the size of the 2014 Equity Plan and the ESPP). The relief sought
under the complaint includes certain corrective actions by the Company, but did not seek any specific monetary damages. The Company did
not believe it was clear the prior approval of these matters was invalid or otherwise ineffective. However, to avoid any uncertainty
and the expense of further litigation, on January 5, 2021, the Company’s Board of Directors determined it would be advisable and
in the best interests of the Company and its stockholders to re-submit these proposals to the Company’s stockholders for ratification
and/or approval. In this regard, the Company held a special meeting of stockholders on March 4, 2021, at which such matters were ratified
and approved. The parties have reached agreement on a proposed Settlement Term Sheet Agreement, dated January 28, 2021, to settle the
complaint, the terms of which do not contemplate payment of monetary damages to the putative class in the proceeding. The settlement
of the complaint is pending approval by the Court. The settlement hearing before the Court is scheduled for November 3, 2022.
On
December 23, 2020, Benchmark Investments, Inc. filed a complaint against the Company in the U.S. District Court of the Southern District
of New York alleging the registered direct offerings of shares of common stock of the Company completed in December 2020 were in violation
of provisions set forth in an engagement letter between the Company and Kingswood Capital Markets, a “division” of Benchmark
Investments, Inc. On December 16, 2021, the court granted PAVmed’s motion to dismiss the case for lack of subject matter jurisdiction.
On February 7, 2022, Benchmark Investments LLC, which claimed to be affiliated with Benchmark Investments, Inc., filed a new complaint
in the Supreme Court of the State of New York, New York County, asserting claims similar to those in the federal action, and adding to
its allegations that financings conducted by the Company in January 2021 and February 2021 also violated the Company’s engagement
letter with Kingswood Capital Markets. The Company disagrees with the allegations set forth in the complaint and intends to vigorously
contest the complaint.
In
the ordinary course of our 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. Except as otherwise noted herein, the Company does not believe it is currently a party to any other 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.
Note
11 — Financial Instruments Fair Value Measurements
Recurring
Fair Value Measurements
The
fair value hierarchy table for the reporting dates noted is as follows:
Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis
| |
| Fair
Value Measurement on a Recurring Basis at Reporting
Date
Using(1) |
| |
| Level-1
Inputs | | |
| Level-2
Inputs | | |
| Level-3
Inputs | | |
| Total | |
March
31, 2022 | |
| | | |
| | | |
| | | |
| | |
Contingent
consideration payable | |
$ | — | | |
$ | — | | |
$ | 4,887 | | |
$ | 4,887 | |
Totals | |
$ | — | | |
$ | — | | |
$ | 4,887 | | |
$ | 4,887 | |
(1) |
As noted above, as presented in the fair value hierarchy table,
Level-1 represents quoted prices in active markets for identical items, Level-2 represents significant other observable inputs, and Level-3
represents significant unobservable inputs. There were no transfers between the respective Levels during the period ended March 31, 2022. |
Fair
value measurements of contingent consideration
The
Company recorded $4.9
million, which is the fair value, of contingent consideration
related to the RDx acquisition. The Company is required to make contingent consideration payments of up to $5.2
million related to the RDx APA agreement. The
contingent agreement is based on achieving milestones to obtain certain certifications and licensing rights. The Company estimated
the fair value on a probability based model that assessed achievement of such milestones. The model used present
value factors, that applied probability ranges of 94-99%, a discount rate of 7.875% and achievement times ranging from one month to six
months to achieve the respective milestones.
The
final settlement of contingent consideration liabilities for the acquisition could vary from current estimates based on
the actual results of the financial measures described above. This liability is considered to be a Level 3 financial liability that is
re-measured each reporting period. The change in fair value of contingent consideration for these acquisitions is included in other income
(expense), net.
The
following table presents a reconciliation of the liability measured at fair value on a recurring basis using significant unobservable
inputs (Level 3):
Schedule
of Reconciliation of Liability Measured at Fair Value on a Recurring Basis
| |
March
31, 2022 | |
Fair
value of contingent consideration at the date of acquisition | |
$ | 4,714 | |
Payments | |
| — | |
Change
in fair value of contingent consideration | |
| 173 | |
Contingent
consideration payable | |
$ | 4,887 | |
As
of December 31, 2021 there were no fair value measurements.
See
Note 12, Debt for convertible notes the Company has entered into subsequent to March 31, 2022.
Note
12 — Debt
Subsequent
to March 31, 2022, on April 4, 2022, the Company entered into a Senior Secured Convertible Note in the amount of $27.5
million, pursuant to a Securities Purchase
Agreement (“SPA”) with an accredited institutional investor. Under the SPA, the Company agreed to sell, and the investor
agreed to purchase, up to an additional $22.5 in additional initial principal amount of Senior Secured Convertible Notes (for an aggregate
of $50.0 million in initial principal amount of Secured Promissory Notes) upon the satisfaction of certain conditions (as more fully
described below). The notes are being offered and sold in a registered direct offering under the Company’s effective shelf registration
statement (the “Offering”). The purchase price of the Secured Promissory Notes is $1,000 for each $1,100 in principal amount
of the notes, representing an original issue discount of $100 per $1,100 in principal amount of the notes. We herein refer to the Senior
Secured Convertible Notes issued from time to time under the SPA as March 2022 Notes.
Pursuant
to the SPA we completed an initial closing for the sale of $27.5
million in principal amount of March 2022 Notes,
of which the investor funded and the Company received cash proceeds of $24.9
million on April 5, 2022, after deduction of
lender fees. Subject
to certain conditions being met or waived, from time to time after such time that stockholder approval for an increase in our authorized
shares from 150 million to 250 million is obtained, but before March 31, 2024, one or more additional closings for up to the remaining
principal amount of March 2022 Notes may occur, upon five trading days’ notice by us to the investor. The aggregate principal amount
of March 2022 Notes that may be offered in the additional closings may not be more than $22.5 million.
The investor’s obligation to purchase the notes at each additional closing is subject to certain conditions set forth in the March
2022 SPA (including minimum price and volume thresholds, maximum ratio of debt to market capitalization, and minimum market capitalization),
which may be waived by the Required Holders (as defined in the March 2022 SPA). Under the March 2022 SPA, the investor will be required
to purchase March 2022 Notes in the additional closings if such conditions are met or waived. In addition, from and after March 31, 2023,
the investor may by written notice to us elect to require us to issue up to $22.5
million in initial principal amount of March
2022 Notes, so long as in doing so it would not cause the ratio of (a) the outstanding principal amount of the March 2022 Notes (including
the additional March 2022 Notes), accrued and unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization
over the prior ten trading days, to exceed 25%. If we fail to complete the sale of the additional March 2022 Notes contemplated
by any such written notice, or if the investor is unable to deliver any such notice prior to March 31, 2024 as a result of the limitation
described in the preceding sentence, then we will be obligated to pay a break-up fee to the investor at such time in an aggregate amount
equal to $1.35
million.
The
March 2022 Notes have a voluntary fixed conversion price of $5.00
per share, a stated interest rate of 7.875%
per annum, and a maturity of 24 months (subject to extension in certain circumstances). The March 2022 Notes will be secured by all our
existing and future assets (including those of our significant subsidiaries, other than Lucid and its subsidiaries), but including only
9.99%
of Lucid’s outstanding common stock held by us, pursuant to a security agreement by and between the Company and the investor.
We
will be subject to certain customary affirmative and negative covenants regarding the rank of the March 2022 Notes, 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 will be 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 March 2022 Notes, 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%, and (iii) that our market capitalization shall at no time be less than $75 million.
The March 2022 Notes include certain customary
events of default.
Note
13 — Stock-Based Compensation
PAVmed
Inc. 2014 Long-Term Incentive Equity Plan
The
PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed Inc. 2014 Equity Plan”) is designed to enable PAVmed Inc. to
offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of PAVmed Inc. The
types of awards that may be granted under the PAVmed Inc. 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 Inc.
board of directors.
A
total of 16,352,807 shares of common stock of PAVmed Inc. are reserved for issuance under the PAVmed Inc. 2014 Equity Plan, with 2,776,706
shares available for grant as of March 31, 2022. The share reservation is not diminished by a total of 600,854 PAVmed Inc. stock options
and restricted stock awards granted outside the PAVmed Inc. 2014 Equity Plan as of March 31, 2022.
PAVmed
Inc. 2014 Equity Plan - Stock Options
Stock
options issued and outstanding under the PAVmed Inc. 2014 Equity Plan and including PAVmed stock options granted outside the plan is
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, 2021 | |
| 8,720,198 | | |
$ | 3.39 | | |
| 6.8 | | |
$ | 3,516 | |
Granted(1) | |
| 3,109,350 | | |
$ | 1.67 | | |
| | | |
| | |
Exercised | |
| (237,499 | ) | |
$ | 1.02 | | |
| | | |
| | |
Forfeited | |
| (273,757 | ) | |
$ | 2.94 | | |
| | | |
| | |
Outstanding
stock options at March 31, 2022 | |
| 11,318,292 | | |
$ | 2.98 | | |
| 7.1 | | |
$ | 439 | |
Vested
and exercisable stock options at March 31, 2022 | |
| 6,519,615 | | |
$ | 3.08 | | |
| 5.4 | | |
$ | 428 | |
(1) | Stock
options granted under the PAVmed Inc. 2014 Equity Plan generally vest ratably over twelve
quarters, with the vesting commencing with the grant date quarter, 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 Inc.
common stock on each of March 31, 2022 and December 31, 2021 and the exercise price of the
underlying PAVmed Inc. stock options, to the extent such quoted price is greater than the
exercise price. |
PAVmed
Inc. 2014 Equity Plan - Restricted Stock Awards
A
summary of PAVmed Inc. 2014 Equity Plan restricted stock award activity is as follows:
Schedule of Restricted Stock Award Activity
| |
Number
of Stock Options | | |
Weighted
Average Grant Date Fair Value | |
Unvested
restricted stock awards as of December 31, 2021 | |
| 1,566,666 | | |
$ | 2.31 | |
Granted | |
| — | | |
| — | |
Vested | |
| (466,666 | ) | |
| 1.06 | |
Forfeited | |
| (150,000 | ) | |
| 2.04 | |
Unvested
restricted stock awards as of March 31, 2022 | |
| 950,000 | | |
$ | 2.97 | |
Note
13 — Stock-Based Compensation - continued
Lucid
Diagnostics Inc. 2018 Long-Term Incentive Equity Plan
The
Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc. 2018 Equity Plan”) is separate and apart
from the PAVmed Inc. 2014 Equity Plan discussed above. The Lucid Diagnostics Inc. 2018 Equity Plan is designed to enable Lucid Diagnostics
Inc. to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of Lucid
Diagnostics Inc. The types of awards that may be granted under the Lucid Diagnostics Inc. 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 Inc. board of directors.
A
total of 5,644,000 shares of common stock of Lucid Diagnostics Inc. are reserved for issuance under the Lucid Diagnostics Inc. 2018 Equity
Plan, with 733,541 shares available for grant as of March 31, 2022, with the share reservation not diminished by a total of 473,300 Lucid
Diagnostics Inc. stock options and restricted stock awards granted outside the Lucid Diagnostics Inc. 2018 Equity Plan.
Lucid
Diagnostics Inc. 2018 Equity Plan - Stock Options
Stock
options issued and outstanding under the Lucid Diagnostics Inc. 2018 Equity Plan and including Lucid Diagnostics options granted outside
the plan is as follows:
Schedule of Summarizes Information About Stock Options
| |
Number
of Stock Options | | |
Weighted
Average Exercise Price | | |
Remaining
Contractual Term (Years) | |
Outstanding
stock options at December 31, 2021 | |
| 1,419,242 | | |
$ | 0.73 | | |
| 7.0 | |
Granted(1) | |
| 1,760,000 | | |
$ | 4.16 | | |
| | |
Exercised | |
| (253,889 | ) | |
$ | 0.74 | | |
| | |
Forfeited | |
| (60,926 | ) | |
$ | 4.61 | | |
| | |
Outstanding
stock options at March 31, 2022 | |
| 2,864,427 | | |
$ | 2.75 | | |
| 6.9 | |
Vested
and exercisable stock options at March 31, 2022 | |
| 1,277,026 | | |
$ | 0.99 | | |
| 3.3 | |
(1)
| Stock
options granted under the Lucid Diagnostics Inc. 2018 Equity Plan generally vest ratably
over twelve quarters, with the vesting commencing with the grant date quarter, and have a
ten-year contractual term from date-of-grant. |
Lucid
Diagnostics Inc. 2018 Equity Plan – Restricted Stock Awards
A
summary of Lucid Diagnostics Inc. 2018 Equity Plan restricted stock award activity is 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, 2021 | |
| 1,890,740 | | |
$ | 12.94 | |
Granted | |
| 320,000 | | |
| 4.53 | |
Vested | |
| — | | |
| — | |
Forfeited | |
| — | | |
| — | |
Unvested restricted stock awards as of March 31, 2022 | |
| 2,210,740 | | |
$ | 11.07 | |
On
January 7, 2022, 320,000
restricted stock awards were granted under the
Lucid Diagnostics Inc 2018 Equity Plan, with such restricted stock awards having a single vesting date on January 7, 2025, and an aggregate
grant date fair value of approximately $1.4
million, measured as the grant date closing price
of Lucid Diagnostics Inc. common stock, with such aggregate estimated fair value recognized as stock-based compensation expense ratably
on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject
to forfeiture if the requisite service period is not completed.
Note
13 — Stock-Based Compensation - continued
Consolidated
Stock-Based Compensation Expense
The
consolidated stock-based compensation expense recognized by each of PAVmed Inc. and Lucid Diagnostics Inc. for both the PAVmed Inc. 2014
Equity Plan and the Lucid Diagnostics Inc. 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 Awards Granted
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Sales
and marketing expenses | |
$ | 625 | | |
$ | 202 | |
General
and administrative expenses | |
| 4,002 | | |
| 1,124 | |
Research
and development expenses | |
| 187 | | |
| 110 | |
Total
stock-based compensation expense | |
$ | 4,814 | | |
$ | 1,436 | |
Stock-Based
Compensation Expense Recognized by Lucid Diagnostics Inc.
As
noted, the consolidated stock-based compensation expense presented above is inclusive of stock-based compensation expense recognized
by Lucid Diagnostics Inc., inclusive of each of: stock options granted under the PAVmed Inc. 2014 Equity Plan to the three physician
inventors of the intellectual property underlying the CWRU License Agreement (“Physician Inventors”) (as discussed above
in Note 5, Related Party Transactions); and stock options and restricted stock awards granted to employees of PAVmed Inc. and
non-employee consultants under the Lucid Diagnostics Inc. 2018 Equity Plan.
The
stock-based compensation expense recognized by Lucid Diagnostics Inc. for both the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics
Inc. 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 Classified in Research and Development Expenses
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Lucid
Diagnostics Inc 2018 Equity Plan – sales and marketing expenses | |
$ | 265 | | |
$ | — | |
Lucid
Diagnostics Inc 2018 Equity Plan – general and administrative expenses | |
| 3,201 | | |
| 789 | |
Lucid
Diagnostics Inc 2018 Equity Plan – research and development expenses | |
| 71 | | |
| 13 | |
PAVmed
Inc 2014 Equity Plan - sales and marketing expenses | |
| 175 | | |
| — | |
PAVmed
Inc 2014 Equity Plan - general and administrative expenses | |
| 68 | | |
| — | |
PAVmed
Inc 2014 Equity Plan - research and development expenses | |
| 55 | | |
| 3 | |
Total
stock-based compensation expense – recognized by Lucid Diagnostics Inc | |
$ | 3,835 | | |
$ | 805 | |
Note
13 — Stock-Based Compensation - continued
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 each of the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity
Plan, as discussed above, is as follows:
Schedule of Unrecognized Compensation Expense
| |
Unrecognized
Expense | | |
Weighted
Average Remaining Service Period (Years) | |
PAVmed
Inc. 2014 Equity Plan | |
| | | |
| | |
Stock
Options | |
$ | 9,667 | | |
| 2.4 | |
Restricted
Stock Awards | |
$ | 1,796 | | |
| 1.4 | |
| |
| | | |
| | |
Lucid
Diagnostics Inc. 2018 Equity Plan | |
| | | |
| | |
Stock
Options | |
$ | 4,660 | | |
| 2.7 | |
Restricted
Stock Awards | |
$ | 14,080 | | |
| 1.3 | |
Stock-based
compensation expense recognized with respect to stock options granted under the PAVmed Inc. 2014 Equity Plan was based on a weighted
average estimated fair value of such stock options of $1.22 per share and $2.79 per share during the periods ended March 31, 2022 and
2021, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:
Schedule of Fair Values of Stock Options Granted Using Black-scholes Valuation Model Assumptions
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Expected
term of stock options (in years) | |
| 5.8 | | |
| 5.7 | |
Expected
stock price volatility | |
| 87.7 | % | |
| 75.0 | % |
Risk
free interest rate | |
| 1.8 | % | |
| 1.0 | % |
Expected
dividend yield | |
| — | % | |
| — | % |
Stock-based
compensation expense recognized with respect to stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan was based on
a weighted average estimated fair value of such stock options of $2.95 per share during the year ended March 31, 2022. There were no
stock-based awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan during the period ended March 31, 2021. The stock-based
compensation was 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, |
| |
2022 | |
Expected
term of stock options (in years) | |
| 5.6 | |
Expected
stock price volatility | |
| 85.7 | % |
Risk
free interest rate | |
| 1.7 | % |
Expected
dividend yield | |
| — | % |
Note
13 — Stock-Based Compensation - continued
PAVmed
Inc. Employee Stock Purchase Plan (“ESPP”)
A
total of 194,240
shares and 203,480
shares of common stock of the Company were purchased
for proceeds of approximately $217
and $304,
on March 31, 2022 and 2021, respectively under the PAVmed Inc Employee Stock Purchase Plan (“PAVmed Inc ESPP”). The
PAVmed Inc. ESPP has a total reservation of 3,010,690
shares of common stock of PAVmed Inc. of which
2,192,531
shares are available-for-issue as of March 31,
2022.
Lucid
Diagnostics, Inc Employee Stock Purchase Plan (“ESPP”)
The
Lucid Diagnostics Inc Employee Stock Purchase Plan (“Lucid Diagnostics Inc ESPP”), initial six-month stock purchase
period is April 1, 2022 to September 30, 2022. The Lucid Diagnostics Inc. ESPP share purchase dates are March 31 and September
30. The Lucid Diagnostics Inc. ESPP has a total reservation of 500,000
shares of common stock of Lucid Diagnostics
Inc. for which all shares are available-for-issue as of March 31, 2022.
Note
14 — Preferred Stock
As
of March 31, 2022 and 2021, there were 1,136,210 and 1,241,438 shares of Series B Convertible Preferred Stock (classified in permanent
equity) issued and outstanding, respectively.
The
Series B Convertible Preferred Stock dividends earned are included in the calculation of basic and diluted net loss attributable to PAVmed
Inc. common stockholders for each of the corresponding periods 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.
Subsequent
to March 31, 2022, in April 2022, the Company’s board-of-directors declared a Series B Convertible Preferred Stock dividend earned
as of March 31, 2022 and payable as of April 1, 2022, of approximately $68,
which will be settled by the issue of an additional
22,740
shares of Series B Convertible Preferred
Stock (with such dividend not recognized as a dividend payable as of March 31, 2022, as the Company’s board of directors had not
declared such dividends payable as of such date).
Note
15 — Common Stock and Common Stock Purchase Warrants
Common
Stock
During
the period ended March 31, 2022, 237,499
shares of common stock of the Company were issued
upon exercise of stock options for cash of approximately $241.
See Note 13, Stock-Based Compensation, for a discussion of the PAVmed Inc. 2014 Equity Plan. During the period
ended, the PAVmed Inc. Employee Stock Purchase Plan purchased 194,240
shares of common stock of the Company. See Note
13, Stock-Based Compensation, for a discussion of the PAVmed Inc. Employee Stock Purchase Plan.
Common
Stock Purchase Warrants
The
common stock purchase warrants (classified in permanent equity) outstanding as of the dates indicated are as follows:
Schedule of Outstanding Warrants to Purchase Common Stock
| |
Common
Stock Purchase Warrants Issued and Outstanding | | |
|
| |
March
31, 2022 | | |
Weighted
Average Exercise Price / Share | | |
December
31, 2021 | | |
Weighted
Average Exercise Price / Share | | |
Expiration
Date |
Series
Z Warrants | |
| 11,937,450 | | |
$ | 1.60 | | |
| 11,937,455 | | |
$ | 1.60 | | |
April
2024 |
Series
W Warrants | |
| — | | |
$ | — | | |
| 377,873 | | |
$ | 5.00 | | |
January
2022 |
Total | |
| 11,937,450 | | |
$ | 1.60 | | |
| 12,315,328 | | |
$ | 1.68 | | |
|
During
the period ended March 31, 2022, a total of 5 Series Z Warrants were exercised for cash at $1.60 per share, resulting in the issue of
the same number of shares of common stock of the Company.
The
remaining 377,873
Series W Warrants expired unexercised as of January
29, 2022.
Note
16 — 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, 2022 | | |
December
31, 2021 | |
NCI
– equity (deficit) – beginning of period | |
$ | 17,752 | | |
$ | (2,369 | ) |
Investment
in Veris Health Inc. | |
| — | | |
| 6 | |
Net
loss attributable to NCI | |
| (2,761 | ) | |
| (5,779 | ) |
Impact
of subsidiary equity transactions | |
| 87 | | |
| 16,760 | |
Lucid
Diagnostics Inc. 2018 Equity Plan stock option exercise | |
| 187 | | |
| — | |
Stock-based
compensation expense - Lucid Diagnostics Inc. 2018 Equity Plan | |
| 3,537 | | |
| 9,134 | |
NCI
– equity (deficit) – end of period | |
$ | 18,802 | | |
$ | 17,752 | |
Note
16 — Noncontrolling Interest - continued
The
consolidated NCI presented above is with respect to the Company’s consolidated majority-owned subsidiaries, inclusive of:
Lucid Diagnostics Inc., Veris Health Inc. and Solys Diagnostics Inc., as a component of consolidated total
stockholders’ equity as of March 31, 2022 and December 31, 2021; and the recognition of a net loss attributable to the
NCI in the unaudited condensed consolidated statement of operations with respect to Lucid Diagnostics Inc. and Solys Diagnostics
Inc. for the three months ended March 31, 2022 and 2021; and with respect to Veris Health Inc. for the three
months ended March 31, 2022 (as the Veris Health Inc inception date was May 28, 2021).
Lucid
Diagnostics Inc.
As
of March 31, 2022, there were 35,171,796
shares of common stock of Lucid Diagnostics
Inc. issued and outstanding, of which, PAVmed Inc. holds 27,927,190
shares, representing a majority ownership
equity interest and a controlling financial interest in Lucid Diagnostics Inc., and accordingly, Lucid Diagnostics Inc. is a consolidated
majority-owned subsidiary of PAVmed Inc.
On
March 28, 2022, Lucid Diagnostics Inc. entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).
Under the terms of the committed equity facility, Cantor has committed to purchase up to $50 million of Lucid Diagnostics Inc. common
stock from time to time at the request of Lucid Diagnostics Inc.
In
connection with the execution of the agreement for the committed equity facility, Lucid Diagnostics Inc. agreed to pay Cantor $1.0 million
as consideration for its irrevocable commitment to purchase the shares upon the terms and subject to the satisfaction of the conditions
set forth in such agreement. In addition, pursuant to the agreement, Lucid Diagnostics agreed to reimburse Cantor for certain of its
expenses. Lucid Diagnostics Inc. also entered into a registration rights agreement with Cantor. Lucid Diagnostics Inc. has the right
to terminate the agreement at any time after initial satisfaction of the conditions to Cantor’s obligation to purchase shares under
the facility, at no cost or penalty, upon three trading days’ prior written notice.
Veris
Health Inc.
As
of March 31, 2022, there were 8,000,000
shares of common stock of Veris Health Inc. issued
and outstanding, of which PAVmed Inc. holds an 80.44%
majority-interest ownership and has a controlling financial interest, with the remaining 19.56%
minority-interest ownership held by an unrelated third-party. Accordingly, Veris Health Inc. 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 unaudited condensed consolidated balance sheet as of March 31, 2022 along with the recognition of a net loss attributable
to the NCI in the unaudited condensed consolidated statement of operations for the period of May 28, 2021 to December 31, 2021, upon
its formation and contemporaneous acquisition of Oncodisc Inc.
Solys
Diagnostics Inc.
As
of each of March 31, 2022 and December 31, 2021, there were 9,189,190 shares of common stock of Solys Diagnostics Inc. issued and outstanding,
of which PAVmed Inc. holds a 90.3235% majority-interest ownership and has a controlling financial interest, with the remaining 9.6765%
minority-interest ownership held by unrelated third parties.
Note
17 — Net Loss Per Share
The
respective “Net loss per share - attributable to PAVmed Inc. - basic and diluted” and “Net loss per share - attributable
to PAVmed Inc. common stockholders - basic and diluted” - for the periods indicated - is as follows:
Schedule of Comparison of Basic and Fully Diluted Net Loss Per Share
| |
2022 | | |
2021 | |
| |
Three
Months Ended March 31, | |
| |
2022 | | |
2021 | |
Numerator | |
| | | |
| | |
Net
loss - before noncontrolling interest | |
$ | (19,633 | ) | |
$ | (10,110 | ) |
Net
loss attributable to noncontrolling interest | |
| 2,761 | | |
| 679 | |
Net
loss - as reported, attributable to PAVmed Inc. | |
$ | (16,872 | ) | |
$ | (9,431 | ) |
| |
| | | |
| | |
Series
B Convertible Preferred Stock dividends – earned | |
$ | (68 | ) | |
$ | (75 | ) |
| |
| | | |
| | |
Net
loss attributable to PAVmed Inc. common stockholders | |
$ | (16,940 | ) | |
$ | (9,506 | ) |
| |
| | | |
| | |
Denominator | |
| | | |
| | |
Weighted
average common shares outstanding, basic and diluted | |
| 86,336,427 | | |
| 73,954,126 | |
| |
| | | |
| | |
Loss
per share | |
| | | |
| | |
Basic
and diluted | |
| | | |
| | |
Net
loss - as reported, attributable to PAVmed Inc. | |
$ | (0.20 | ) | |
$ | (0.13 | ) |
Net
loss attributable to PAVmed Inc. common stockholders | |
$ | (0.20 | ) | |
$ | (0.13 | ) |
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 the each of the respective periods noted, are included in the calculation
of basic and diluted net loss attributable to PAVmed Inc. common stockholders for each respective period presented. Notwithstanding,
the Series B Convertible Preferred Stock dividends are recognized as a dividend payable only upon the dividend being declared payable
by the Company’s board of directors.
Basic
weighted-average number of shares of common stock outstanding for the periods ended March 31, 2022 and 2021 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 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 all periods presented, 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
| |
2022 | | |
2021 | |
| |
March
31, | |
| |
2022 | | |
2021 | |
Stock options and restricted stock awards | |
| 12,368,292 | | |
| 8,539,362 | |
Series
Z Warrants | |
| 11,937,450 | | |
| 15,954,722 | |
Series
W Warrants | |
| — | | |
| 381,818 | |
Series
B Convertible Preferred Stock | |
| 1,136,210 | | |
| 1,241,438 | |
Total | |
| 25,441,952 | | |
| 26,117,340 | |
The total stock options and restricted stock awards are inclusive of 500,854 stock options as of March 31, 2022 and
2021; and 100,000 restricted stock awards as of March 31, 2022, granted outside the PAVmed Inc. 2014 Equity Plan.