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What changed in PAVmed Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PAVmed Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+479 added−429 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-14)

Top changes in PAVmed Inc.'s 2023 10-K

479 paragraphs added · 429 removed · 270 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

108 edited+59 added−62 removed114 unchanged
Biggest changeIn February 2023, the Company distributed a proxy statement for a special meeting of shareholders to be held on March 31, 2023 (the “Special Meeting”), at which the Company will be seeking approval of an amendment to the Company’s Certificate of Incorporation, to effect, at any time prior to the one-year anniversary date of the Special Meeting, (i) a reverse split of the Company’s outstanding shares of common stock at a specific ratio, ranging from 1-for-5 to 1-for-15, to be determined by the board of directors of the Company in its sole discretion, and (ii) an associated reduction in the number of shares of common stock the Company is authorized to issue, from 250,000,000 shares to 50,000,000 shares.
Biggest changeReverse Stock Split On December 7, 2023, the Company implemented a 1-for-15 reverse stock split of its common stock and reduced its authorized shares from 250,000,000 to 50,000,000, each in accordance with shareholder approval granted at a March 31, 2023 special meeting of the Company’s stockholders. The Company filed an amended Certificate of Incorporation reflecting the reduction in authorized shares.
Commercialization Our EsoGuard commercialization efforts span multiple channels including targeting primary care physicians and GI physicians, who have generally embraced our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance and, potentially, treatment with endoscopic esophageal ablation.
Commercialization Our EsoGuard commercialization efforts span multiple channels including targeting primary care and GI physicians, who have generally embraced our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance and, potentially, treatment with endoscopic esophageal ablation.
Oncodisc was founded in 2018 experienced physician entrepreneurs, James Mitchell, M.D., who joined Veris Health as its full-time Chief Medical Officer, and Andrew Thoreson, M.D., who serves as a Veris Health consultant. They previously co-founded Redsmith, Inc., an interventional catheter company whose technology was acquired by C.R. Bard Inc., now BD Inc. (NYSE: BDX).
Oncodisc was founded in 2018 by experienced physician entrepreneurs, James Mitchell, M.D., who joined Veris Health as its full-time Chief Medical Officer, and Andrew Thoreson, M.D., who serves as a Veris Health consultant. They previously co-founded Redsmith, Inc., an interventional catheter company whose technology was acquired by C.R. Bard Inc., now BD Inc. (NYSE: BDX).
Before and after approval or clearance in the United States, our products are subject to extensive regulation by the FDA under the FDCA and/or the Public Health Service Act, as well as by other regulatory bodies.
Regulation FDA Regulation Before and after approval or clearance in the United States, our products are subject to extensive regulation by the FDA under the FDCA and/or the Public Health Service Act, as well as by other regulatory bodies.
In general, the higher the classification, the greater the time and cost to obtain approval to market. There are no “standardized” requirements for approval, even within each class. For example, the FDA could grant 510(k) status, but require a human clinical trial, a typical requirement of a PMA.
In general, the higher the classification, the greater the time and cost to obtain approval to market. There are no “standardized” requirements for approval, even within each class. For example, FDA could grant 510(k) status, but require a human clinical trial, a typical requirement of a PMA.
These include: ● the FDA Quality Systems Regulation (QSR), which governs, among other things, how manufacturers design, test manufacture, exercise quality control over, and document manufacturing of their products; ● labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and, ● the Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experience associated with use of the product.
These include: ● the FDA Quality Systems Regulation (QSR), which governs, among other things, how manufacturers design, test manufacture, exercise quality control over, and document manufacturing of their products; ● labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and, ● the Medical Device Reporting regulation, which requires reporting to FDA of certain adverse experience associated with use of the product.
Regulation In addition to FDA restrictions on marketing and promotion of drugs and devices, other federal and state laws restrict our business practices. These laws include, without limitation, anti-kickback and false claims laws, data privacy and security laws, as well as transparency laws regarding payments or other items of value provided to healthcare providers.
Healthcare Regulation In addition to FDA restrictions on marketing and promotion of drugs and devices, other federal and state laws restrict our business practices. These laws include, without limitation, anti-kickback and false claims laws, data privacy and security laws, as well as transparency laws regarding payments or other items of value provided to healthcare providers.
If Lucid’s CLIA-certified laboratory fails to meet any applicable requirements of CLIA or state law, that failure could adversely affect any future CMS consideration of its technologies, prevent their approval entirely, and/or interrupt the commercial sale of any products and services and otherwise cause Lucid to incur significant expense. 12 Other U.S.
If Lucid’s CLIA-certified laboratory fails to meet any applicable requirements of CLIA or state law, that failure could adversely affect any future CMS consideration of its technologies, prevent their approval entirely, and/or interrupt the commercial sale of any products and services and otherwise cause Lucid to incur significant expense. Other U.S.
To the extent any of our products are sold in a foreign country, we may be subject to similar foreign laws, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
A manufacturer’s failure to submit timely, accurately and completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of $1 million per year for “knowing failures.” Manufacturers that produces at least one product reimbursed by Medicare, Medicaid, or Children’s Health Insurance Program and (i) if the product is a drug or biological, and it requires a prescription (or physician’s authorization) to administer; or (ii) if the product is a device or medical supply, and it requires premarket approval or premarket notification by the FDA are required to comply with the Open Payments (commonly referred to as the Sunshine Act) filing requirements under CMS.
A manufacturer’s failure to submit timely, accurately and completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of $1 million per year for “knowing failures.” Manufacturers that produce at least one product reimbursed by Medicare, Medicaid, or Children’s Health Insurance Program and (i) if the product is a drug or biological, and it requires a prescription (or physician’s authorization) to administer; or (ii) if the product is a device or medical supply, and it requires premarket approval or premarket notification by the FDA are required to comply with the Open Payments (commonly referred to as the Sunshine Act) filing requirements under CMS.
When resources permit, we plan to conduct additional development work and animal testing of EsoCure to support a future FDA 510(k) submission. CarpX CarpX is a patented, single-use, disposable, minimally invasive surgical device for use in the treatment of carpal tunnel syndrome.
When resources permit, we plan to conduct additional development work and animal testing of EsoCure to support a future FDA 510(k) submission. 6 CarpX CarpX is a patented, single-use, disposable, minimally invasive surgical device for use in the treatment of carpal tunnel syndrome.
Clinical studies of investigational devices may not begin until an institutional review board (“IRB”) has approved the study. During any study, the sponsor must comply with the FDA’s IDE requirements. These requirements include investigator selection, trial monitoring, adverse event reporting, and record keeping.
Clinical studies of investigational devices may not begin until an institutional review board (“IRB”) has approved the study. 11 During any study, the sponsor must comply with the FDA’s IDE requirements. These requirements include investigator selection, trial monitoring, adverse event reporting, and record keeping.
The terms of the Lucid Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series A Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
Patent and Trademark Office in granting a patent, or patent term extension, which restores time lost due to regulatory delays. We intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify our position in the United States and internationally.
Patent and Trademark Office (“USPTO”) in granting a patent, or patent term extension, which restores time lost due to regulatory delays. We intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify our position in the United States and internationally.
PAVmed also has (directly or through its subsidiaries) proprietary rights to a range of trademarks, including, among others, PAVmed™, Lucid Diagnostics™, LUCID™, VERIS™, Oncodisc™, CarpX®, EsoCheck®, EsoGuard®, EsoCheck Cell Collection Device®, Collect + Protect®, EsoCure Esophageal Ablation Device™, NextFlo™, and PortIO™.
PAVmed also has (directly or through its subsidiaries) proprietary rights to a range of trademarks, including, among others, PAVmed™, Lucid Diagnostics™, LUCID™, VERIS™, Oncodisc™, CarpX®, EsoCheck®, EsoGuard®, EsoCheck Cell Collection Device®, Collect + Protect®, EsoCure Esophageal Ablation Device™, and PortIO™.
European Good Manufacturing Practices In the European Union, the manufacture of medical devices is subject to good manufacturing practice (GMP), as set forth in the relevant laws and guidelines of the European Union and its member states. Compliance with GMP is generally assessed by the competent regulatory authorities.
European Good Manufacturing Practices In the European Union, the manufacture of medical devices is subject to good manufacturing practice (“GMP”), as set forth in the relevant laws and guidelines of the European Union and its member states. Compliance with GMP is generally assessed by the competent regulatory authorities.
Several courts have interpreted the statute’s intent requirement to mean if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.
The time required to obtain clearance required by foreign countries may be longer or shorter than required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements.
The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements.
Accordingly, we believe EsoGuard’s total addressable U.S. market opportunity exceeds $60 billion based on an effective Medicare payment of $1,938 and the estimated 30 million U.S. patients recommended for screening by clinical practice guidelines. (In December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS process.
Accordingly, we believe EsoGuard’s total addressable U.S. market opportunity approximates $60 billion based on an effective Medicare payment of $1,938 and the estimated 30 million U.S. patients recommended for screening by clinical practice guidelines. (In December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS process.
Most of the necessary elements for such an early detection program are already well established—an at-risk population (at-risk GERD patients), a precancer (BE), and an intervention which can halt progression to EAC (endoscopic esophageal ablation). The only missing element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.
Most of the necessary elements for such an early detection program are already well established—an at-risk population (at-risk GERD patients), a precancer (BE), and an intervention which can halt progression to EAC (endoscopic esophageal ablation). Until recently, the only missing element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.
Given the large market for pre-cancer screening, we likely will face numerous competitors, some of which possess significantly greater financial and other resources and development capabilities than us. Our EsoGuard test faces competition from procedure-based detection technologies such as upper endoscopy, and other screening technologies such as multi-cancer early detection products.
Given the large market for pre-cancer testing, we likely will face numerous competitors, some of which possess significantly greater financial and other resources and development capabilities than us. Our EsoGuard test faces competition from procedure-based detection technologies such as upper endoscopy, and other testing technologies such as multi-cancer early detection products.
Our longer-term strategy is to secure a specific indication, based on published guidelines, for BE screening in certain at-risk populations using EsoGuard on samples collected with EsoCheck. This use of EsoGuard together with EsoCheck as a screening system must be cleared or approved by the FDA as an IVD device.
Our longer-term strategy is to secure a specific indication, based on published guidelines, for BE testing in certain at-risk populations using EsoGuard on samples collected with EsoCheck. This use of EsoGuard together with EsoCheck as a testing system must be cleared or approved by the FDA as an IVD device.
The content of our website is not incorporated by reference into this Annual Report on Form 10-K, nor in any other report or document we file or furnish with and /or submit to the SEC, and any reference to our website are intended to be inactive textual references only. 16
The content of our website is not incorporated by reference into this Annual Report on Form 10-K, nor in any other report or document we file or furnish with and /or submit to the SEC, and any reference to our website are intended to be inactive textual references only. 15
In December 2019, our CLIA-certified then-laboratory partner, completed documentation of EsoGuard analytical validity allowing us to commercialize it as a Laboratory Developed Test (LDT). In February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic (“IVD”) medical device.
In December 2019, our CLIA-certified then-laboratory partner, completed documentation of EsoGuard analytical validity allowing us to commercialize it as a LDT. In February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic (“IVD”) medical device.
Therefore, Veris CCP is not subject to the FDA’s regulatory requirements for devices. Veris Health is also developing an implantable cardiac monitor and is currently interacting with the FDA via pre-submission process, seeking agreement on regulatory strategy and required testing to seek clearance of the monitor.
Therefore, the Veris Platform is not subject to the FDA’s regulatory requirements for devices. Veris Health is also developing an implantable cardiac monitor and is currently interacting with the FDA via pre-submission process, seeking agreement on regulatory strategy and required testing to seek clearance of the monitor.
In 1997, the Food and Drug Administration Modernization Act (FDAMA) added the de novo classification pathway under section 513(f)(2) of the FD&C Act, establishing an alternate pathway to classify new devices into Class I or II that had automatically been placed in Class III after receiving a Not Substantially Equivalent (NSE) determination in response to a 510(k) submission.
In 1997, the Food and Drug Administration Modernization Act (FDAMA) added the de novo classification pathway under section 513(f)(2) of the FDCA, establishing an alternate pathway to classify new devices into Class I or II that had automatically been placed in Class III after receiving a Not Substantially Equivalent (NSE) determination in response to a 510(k) submission.
EAC is nearly always invasive at diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages. As discussed below under the heading “Clinical Guidelines for At-Risk Population”, the American Gastroenterology Association (“AGA”) recently significantly expanded the target population for esophageal precancer screening, recommending screening in at-risk patients without symptoms of GERD.
EAC is nearly always invasive at diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages. As discussed below under the heading “Clinical Guidelines for At-Risk Population”, in July 2022, the American Gastroenterology Association (“AGA”) significantly expanded the target population for esophageal precancer screening, recommending screening in at-risk patients without symptoms of GERD.
Alternatively, the shift away from fee-for-service agreements to capitated payment models may support the value of our products which can be shown to decrease resource utilization and lead to cost saving-for both payors and providers.
Alternatively, the shift away from fee-for-service agreements to capitated payment models may support the value of our products which can be shown to decrease resource utilization and lead to cost savings for both payors and providers.
We will continue to be subject to inspection by the FDA to determine our compliance with regulatory requirements.
We will continue to be subject to inspection by FDA to determine our compliance with regulatory requirements.
Clinical Guidelines for At-Risk Population The subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines, including the American College of Gastroenterology (ACG) BE Guidelines.
Clinical Guidelines for At-Risk Population The subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines, including the American College of Gastroenterology (“ACG”) BE Guidelines.
Esocure In connection with our efforts to expand our presence in the EAC diagnostic market, we are also developing the EsoCure Esophageal Ablation Device, with the intent to allow a clinician to treat dysplastic BE before it can progress to EAC, a highly lethal esophageal cancer, and to do so without the need for complex and expensive capital equipment.
Esocure In connection with our efforts to expand our presence in the EAC diagnostic market, we were developing the EsoCure Esophageal Ablation Device, with the intent to allow a clinician to treat dysplastic BE before it can progress to EAC, a highly lethal esophageal cancer, and to do so without the need for complex and expensive capital equipment.
During the approval or clearance process, the FDA typically inspects the records relating to the conduct of one or more investigational sites participating in the study supporting the application. Post-Approval Regulation of Medical Devices After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
During the approval or clearance process, the FDA typically inspects the records relating to the conduct of one or more investigational sites participating in the study supporting the application. Post-Approval Regulation of Medical Devices and Diagnostic Tests After a device is cleared or approved for marketing, numerous regulatory requirements continue to apply.
Laboratory Operations On February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc. (“LucidDx Labs”), acquired from RDx, certain licenses and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located in Lake Forest, CA.
Laboratory Operations On February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc. (“LucidDx Labs”), acquired from ResearchDx Inc. (“RDx”), certain licenses and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located in Lake Forest, CA.
In July 2022, the AGA published in their “Clinical Practice Update on New Technology and Innovation for Surveillance and Screening in Barrett’s Esophagus” updated clinical guidance that mirrors the same furnished by the ACG as described above, endorsing the use of non-endoscopic cell collection tools to screen for BE like our EsoCheck Cell Collection Device, which is cited in the update, as an acceptable alternative to endoscopy to directly address the need for noninvasive screening tools that are easy to administer, patient friendly, and cost-effective for the detection of BE.
In July 2022, the American Gastroenterology Association (“AGA”) published in their “Clinical Practice Update on New Technology and Innovation for Surveillance and Screening in Barrett’s Esophagus” updated clinical guidance that mirrors the same furnished by the ACG as described above, endorsing the use of non-endoscopic cell collection tools to screen for BE like our EsoCheck Cell Collection Device, which is cited in the update, as an acceptable alternative to endoscopy to directly address the need for noninvasive screening tools that are easy to administer, patient friendly, and cost-effective for the detection of BE.
European Union The European Union or EU will require a CE mark certification or approval in order to market our products in the various countries of the European Union or other countries outside the United States.
European Union The European Union (“EU”) will require a CE mark certification or approval in order to market our products in the various countries of the European Union or other countries outside the United States.
Environmental The cost of compliance with federal, state and local provisions related to the protection of the environment has had no material effect on our business. There were no material capital expenditures for environmental control facilities in the years ended December 31, 2022, 2021 and 2020.
Environmental The cost of compliance with federal, state and local provisions related to the protection of the environment has had no material effect on our business. There were no material capital expenditures for environmental control facilities in the years ended December 31, 2023 and 2022.
An ACG clinical guideline entitled “ Diagnosis and Management of Barrett’s Esophagus: An Updated ACG Guideline ,” the first such update since 2016, was published online last year in the American Journal of Gastroenterology. The clinical guideline reiterates the ACG’s long-standing recommendation for esophageal precancer screening in at-risk patients with GERD.
An ACG clinical guideline entitled “ Diagnosis and Management of Barrett’s Esophagus: An Updated ACG Guideline ,” the first such update since 2016, was published online in April 2022 in the American Journal of Gastroenterology. The clinical guideline reiterates the ACG’s long-standing recommendation for esophageal precancer screening in at-risk patients with GERD.
In 2012, section 513(f)(2) of the FD&C Act was amended by section 607 of the Food and Drug Administration Safety and Innovation Act (FDASIA), to provide a second option for de novo classification.
In 2012, section 513(f)(2) of the FDCA was amended by section 607 of the Food and Drug Administration Safety and Innovation Act (FDASIA), to provide a second option for de novo classification.
Market Opportunity In 2023, approximately 20,000 U.S. GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it. Over 80% of EAC patients will die within five years of diagnosis, making it the second most lethal cancer in the U.S.
GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it. Over 80% of EAC patients will die within five years of diagnosis, making it the second most lethal cancer in the U.S.
Oncodisc’s core technologies include the first intelligent implantable vascular access port with biologic sensors and wireless communication, combined with an oncologist-designed remote digital healthcare platform that provides patients and physicians with new tools to improve outcomes and optimize the delivery of cost-effective care through remote monitoring and data analytics.
Oncodisc’s core technologies include designs and patents that would be the foundation for the first intelligent implantable vascular access port with biologic sensors and wireless communication, combined with an oncologist-designed remote digital healthcare platform that provides patients and physicians with new tools to improve outcomes and optimize the delivery of cost-effective care through remote monitoring and data analytics.
In the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy: ● Class I: general controls, such as labeling and adherence to quality system regulations; ● Class II: special controls, pre-market notification (often referred to as a 510(k) application), specific controls such as performance standards, patient registries, post-market surveillance, additional controls such as labeling and adherence to quality system regulations; and ● Class III: special controls and approval of a PMA application.
In the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy: ● Class I: general controls, such as labeling and adherence to quality system regulations; ● Class II: special controls, pre-market notification (often referred to as a 510(k) application), specific controls such as performance standards, patient registries, post-market surveillance, additional controls such as labeling and adherence to quality system regulations; and ● Class III: special controls and approval of a de novo request or PMA application, likely with clinical data requirements.
We believe EsoGuard, used with EsoCheck, constitutes that missing element—the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent EAC deaths through early detection of esophageal precancer and cancer in patients with 3 or more risk factors.
We believe EsoGuard, used with EsoCheck, constitutes that missing element—the first and only commercially available diagnostic test capable of serving as a widespread testing tool with the goal of preventing EAC deaths through early detection of esophageal precancer and cancer in patients with 3 or more risk factors.
Since March 2022, we have conducted EsoGuard testing at our own laboratory with, until recently, the assistance of RDx, which had continued to provide certain testing and related services for the laboratory in accordance with the terms of a management services agreement (“MSA-RDx”), dated and effective February 25, 2022.
Since March 2022, we have conducted EsoGuard testing at our own laboratory with, until February 10, 2023, the assistance of RDx, which had continued to provide certain testing and related services for the laboratory in accordance with the terms of a management services agreement (“MSA RDx”).
No employees are covered by a collective bargaining agreement. We consider our relationship with our employees to be good. 15 Corporate Information We were incorporated in Delaware on June 26, 2014. Our corporate headquarters address is 360 Madison Avenue, 25th Floor, New York, NY 10017, and our main telephone number is (212) 949-4319.
No employees are covered by a collective bargaining agreement. We consider our relationship with our employees to be good. Corporate Information We were incorporated in Delaware on June 26, 2014. Our corporate headquarters address is 360 Madison Avenue, 25th Floor, New York, NY 10017, and our main telephone number is (917) 813-1828.
Each share of the Lucid Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.
Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444.
Employees Currently, as of March 9, 2023 we had 124 employees (all of whom were full-time employees), inclusive of our executive officers — our Chairman of the Board of Directors and Chief Executive Officer (“CEO”), our President and Chief Financial Officer (“CFO”), our Chief Operating Officer (“COO”), our Chief Medical Officer (“CMO”) and our General Counsel and Secretary (“General Counsel”).
Employees As of March 21, 2024 we had 107 employees (all of whom were full-time employees), inclusive of our executive officers — our Chairman of the Board of Directors and Chief Executive Officer (“CEO”), our President and Chief Financial Officer (“CFO”), our Chief Operating Officer (“COO”), our Chief Medical Officer (“CMO”) and our General Counsel and Secretary (“General Counsel”).
To assure sufficient testing capacity and geographic coverage, we have built our own network of Lucid Test Centers, staffed by Lucid-employed clinical personnel, where patients can undergo the EsoCheck procedure and have the sample sent for EsoGuard testing at Lucid’s CLIA-certified laboratory.
To assure sufficient testing capacity and geographic coverage, we have undertaken multiple ways for patients have access to our test. Initially, we built a limited network of our own physical Lucid Test Centers, staffed by Lucid-employed clinical personnel, where patients can undergo the EsoCheck procedure and have the sample sent for EsoGuard testing at Lucid’s CLIA-certified laboratory.
Certain states, such as California and Connecticut, also mandate implementation of commercial compliance programs, and other states, such as Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.
Certain states, also mandate implementation of commercial compliance programs, and other states impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.
In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.) 1 Unfortunately, for a variety of reasons, less than 10% of at-risk patients who are recommended for screening undergo traditional invasive upper gastrointestinal endoscopy (EGD).
As discussed below under the heading “Reimbursement and Market Access”, in October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.) 1 Unfortunately, for a variety of reasons, less than 10% of at-risk patients who are recommended for screening undergo traditional invasive upper gastrointestinal endoscopy (EGD).
Competition The U.S. market for cancer patient care is large. There are many existing competitors in the remote patient monitoring space, some of which possess significantly greater financial and other resources and development capabilities than us. Our Veris CCP faces competition from other digital care platforms providing many of the same features, including EHR integration and remote patient monitoring capabilities.
There are many existing competitors in the remote physiological monitoring space, some of which possess significantly greater financial and other resources and development capabilities than us. Our Veris Platform faces competition from other digital care platforms providing many of the same features, including EHR integration and remote patient monitoring capabilities.
The government may further prosecute, as a crime, conduct constituting a false claim under the False Claims Act. The False Claims Act prohibits the making or presenting of a claim to the government knowing such claim to be false, fictitious, or fraudulent and, unlike civil claims under the False Claims Act, requires proof of intent to submit a false claim.
The False Claims Act prohibits the making or presenting of a claim to the government knowing such claim to be false, fictitious, or fraudulent and, unlike civil claims under the False Claims Act, requires proof of intent to submit a false claim.
The EsoCheck patents, which are currently the last to expire, begin to expire in May 2035. 3 Regulatory In June 2019, we received FDA 510(k) clearance to market EsoCheck in the U.S. as a device indicated for use in the collection and retrieval of surface cells of the esophagus in adults followed by FDA 510(k) clearance in 2022, expanding the use of EsoCheck in adults and pediatric populations in the U.S.
Regulatory In June 2019, we received FDA 510(k) clearance to market EsoCheck in the U.S. as a device indicated for use in the collection and retrieval of surface cells of the esophagus in adults followed by FDA 510(k) clearance in 2022, expanding the use of EsoCheck in adults and pediatric populations in the U.S.
Other Laws Occupational Safety and Health In addition to its comprehensive regulation of health and safety in the workplace in general, the Occupational Safety and Health Administration has established extensive requirements aimed specifically at laboratories and other healthcare-related facilities.
Further inspections may occur over the life of the product. 14 Other Laws Occupational Safety and Health In addition to its comprehensive regulation of health and safety in the workplace in general, the Occupational Safety and Health Administration has established extensive requirements aimed specifically at laboratories and other healthcare-related facilities.
In addition to obtaining approval for each product, in many cases each device manufacturing facility must be audited on a periodic basis by the Notified Body. Further inspections may occur over the life of the product.
In addition to obtaining approval for each product, in many cases each device manufacturing facility must be audited on a periodic basis by the Notified Body.
On February 8, 2013, the Centers for Medicare & Medicaid Services, or CMS, released its final rule implementing section 6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes new annual reporting requirements on device manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their family members.
In any event, we have established a substantial regulatory and compliance infrastructure that is designed to ensure compliance with these regulations. 12 Physician Payment Sunshine Act On February 8, 2013, the Centers for Medicare & Medicaid Services, or CMS, released its final rule implementing section 6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes annual reporting requirements on device manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their family members.
(Nasdaq: LUCD) (“Lucid”), the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell Collection Device, constitutes the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent esophageal adenocarcinoma (“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal reflux disease (“GERD,” also commonly known as chronic heartburn, acid reflux or simply reflux) patients.
EsoGuard and EsoCheck We believe that the flagship product of our majority-owned subsidiary Lucid, the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell Collection Device, constitutes the first and only commercially available diagnostic test capable of serving as a widespread testing tool with the goal of preventing esophageal adenocarcinoma (“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal reflux disease (“GERD,” also commonly known as chronic heartburn, acid reflux or simply reflux) patients.
PortIO is a novel, implantable intraosseous vascular access device which does not require accessing the central venous system and does not have an indwelling intravascular component. It is designed to be highly resistant to occlusion and, we believe, may not require regular flushing.
PortIO is a novel, implantable intraosseous vascular access device which does not require accessing the central venous system and does not have an indwelling intravascular component. It is designed to be highly resistant to occlusion and, we believe, may not require regular flushing. It features simplified, near-percutaneous insertion and removal, without the need for surgical dissection or radiographic confirmation.
EsoGuard and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”). EsoGuard and EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly screening test for the early detection of adenocarcinoma of the esophagus (“EAC”) and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors to EAC in patients with chronic gastroesophageal reflux (“GERD”).
EsoGuard and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”). EsoGuard and EsoCheck have been developed to provide accurate, non-invasive, patient-friendly testing for the early detection of EAC and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors to EAC in patients with chronic GERD. Market Opportunity In 2023, approximately 20,000 U.S.
The customer support is currently managed internally, while partnering with Zendesk for customer service management. 5 Regulatory The Veris CCP software is considered a non-device Medical Device Data System (“MDDS”) that is excluded from the statutory definition of a medical device under the FDC Act and as confirmed in the FDA’s MDDS Guidance: Medical Device Data Systems, Medical Image Storage Devices, and Medical Image Communications Devices.
Regulatory The Veris Platform software is considered a non-device Medical Device Data System (“MDDS”) that is excluded from the statutory definition of a medical device under the FDC Act and as confirmed in the FDA’s MDDS Guidance: Medical Device Data Systems, Medical Image Storage Devices, and Medical Image Communications Devices.
These competitors may have greater name recognition than we do. Many of these competitors have obtained all desirable FDA or other regulatory approvals, and superior patent protection, for their products. Certain of our competitors have already commercialized their products, and others may commercialize their products in advance of our products.
Many of these competitors have obtained all desirable FDA or other regulatory approvals, and superior patent protection, for their products. Certain of our competitors have already commercialized their products, and others may commercialize their products in advance of our products. In addition, our competitors may make technical advances that render our products obsolete.
Most of our existing and potential competitors have substantially greater financial, marketing, sales, distribution, manufacturing and technological resources. We may be unable to compete effectively against our competitors either because their products and services are superior or more cost efficient, or because of they have access to greater resources than us.
We may be unable to compete effectively against our competitors either because their products and services are superior or more cost efficient, or because they have access to greater resources than us. These competitors may have greater name recognition than we do.
We are subject to comparable state laws, some of which apply to all payors regardless of source of payment, and do not contain identical exceptions to the Stark law. 14 International Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
International Regulation In order to market any of our products outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.
Technology Year EsoCheck May 2034 EsoGuard August 2024 Veris Health November 2038 EsoCure March 2036 CarpX November 2037 PortIO November 2035 Patent protection and other proprietary rights are thus essential to our business. Our policy is to aggressively file patent applications to protect our proprietary technologies including inventions and improvements to inventions.
For EsoGuard, families are pending that, when granted, will offer additional protections until at least 2037. Technology Year EsoCheck May 2034 EsoGuard August 2024 Veris Health November 2038 EsoCure March 2036 CarpX November 2037 PortIO November 2035 Our policy is to aggressively file patent applications to protect our proprietary technologies including inventions and improvements to inventions.
Several pharmaceutical, device and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved, and thus non-covered uses.
Several pharmaceutical, device and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
See “ EsoGuard and EsoCheck—Competition ” and “ Veris Cancer Care Platform—Competition ” above for a fuller discussion of the competitive environment for our key products, EsoCheck, EsoGuard and the Veris Cancer Care Platform. 10 Government Regulation Key U.S. Regulation FDA Regulation Generally, products we develop must be cleared by the FDA before they are marketed in the United States.
See “ EsoGuard and EsoCheck—Competition ” and “ Veris Cancer Care Platform—Competition ” above for a fuller discussion of the competitive environment for our key products, EsoCheck, EsoGuard and the Veris Cancer Care Platform. 10 Government Regulation Key U.S.
They could also initially assign a device Class III status but end up approving a device as a 510(k) device if certain requirements are met. The range of the number and expense of the various requirements is significant. The quickest and least expensive pathway would be 510(k) approval with just a review of existing data.
They could also initially assign a device Class III status but end up clearing a device as a 510(k) device or under a de novo classification pathway if certain requirements are met. The range of the number and expense of the various requirements is significant.
For example, Cytosponge is a small mesh sponge within a soluble gelatin capsule that dissolves in the stomach and then is pulled thru the targeted region brushing the lining of the esophagus and then later retrieved, although, unlike EsoCheck, it is unprotected from contamination.
For example, EndoSign, commercialized by Cyted, and much like Cytosponge and our own EsophaCap before it, is a small mesh sponge within a soluble gelatin capsule that needs to reside in the stomach and then is pulled thru the targeted region brushing the lining of the esophagus and then later retrieved, although, unlike EsoCheck, it is unprotected from sample contamination as the brush later passes regions of the upper esophagus and mouth.
In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. 13 Federal False Claims Act The False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
Federal False Claims Act The False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021. 2 A proposed Local Coverage Determination (“LCD”) DL39256, entitled “ Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia ” was published recently on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto GBA.
A final Local Coverage Determination (“LCD”) L39256, entitled “ Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia ” became effective in May 2023 on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto GBA.
These entities pay monthly fees for each patient on the platform, through which they are able to drive revenues from remote physiologic monitoring (and, in the future, device implantation) under existing CPT codes, as well as through the upcoming CMS Enhancing Oncology Model (EOM) bonuses and incentives.
These entities pay monthly fees for each patient on the platform, through which they are able to derive revenues from remote physiologic monitoring (and, in the future, device implantation) under existing CPT codes. Veris also plans to build a commercialization model around the oncology data it is collecting, as resources permit.
Competition The U.S. market for esophageal cancer (i.e., EAC) and pre-cancer (i.e., BE, with or without dysplasia) screening is large, consisting of more than 30 million at-risk individuals over the age of 50.
Clinical validation analysis demonstrated improved sensitivity and specificity for the detection of esophageal precancer, having demonstrated enhanced assay performance and lower costs in extensive validation studies. 4 Competition The U.S. market for esophageal cancer (i.e., EAC) and pre-cancer (i.e., BE, with or without dysplasia) testing is large, consisting of more than 30 million at-risk individuals over the age of 50.
Recently, however, the Company accelerated the development of internal resources necessary to operate the laboratory entirely on its own. Accordingly, Lucid’s subsidiary LucidDx Labs and RDx agreed terminate the MSA-RDx effective as of February 10, 2023, such that LucidDx Labs now operates the laboratory itself, which the Company believes will improve the efficiency of the performance of the EsoGuard assay.
LucidDx Labs and RDx agreed to terminate the MSA RDx effective as of February 10, 2023, such that LucidDx Labs now operates the laboratory itself, which the Company believes has improved the efficiency of the performance of the EsoGuard assay.
The notification letter stated that the Company would be afforded 180 calendar days (until June 27, 2023) to regain compliance. In order to regain compliance, the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days.
The notification letter stated that the Company would be afforded 180 calendar days (until September 3, 2024) to regain compliance. In order to regain compliance, the Company’s MVLS must close at $35 million or more for a minimum of ten consecutive business days.
We believe Veris Health’s offerings can help drive costs down and improve outcomes through providing care teams with better, more continuous data. Based on the aforementioned cancer prevalence in the U.S. and our current business model, we believe Veris Health’s total addressable U.S. market opportunity exceeds $2 billion.
Based on the aforementioned cancer prevalence in the U.S. and our current business model, we believe Veris Health’s total addressable U.S. market opportunity exceeds $2 billion.
We are also currently developing a groundbreaking implantable physiologic monitor containing biologic sensors capable of generating continuous data on key physiologic parameters known to predict adverse outcomes in cancer patients undergoing treatment. The implantable will seamlessly interact with the Veris CCP. These technologies are the subject of multiple patent applications and one issued patent.
We have also been developing a groundbreaking implantable physiologic monitor containing biologic sensors capable of generating continuous data on key physiologic parameters known to predict adverse outcomes in cancer patients undergoing treatment and as resources permit, we will resume further development activities for the implantable to bring it to market. The implantable will seamlessly interact with the Veris Platform.
Clinical utility studies are also important for general EsoGuard commercialization by facilitating physician understanding of test indications and potential benefit to the patients. We are currently seeking to accelerate our collection of clinical utility data through a range of trials that can be efficiently executed.
Clinical utility studies are also important for general EsoGuard commercialization by facilitating physician understanding of test indications and potential benefit to the patients.
Oncodisc received a National Science Foundation (“NSF”) Small Business Innovation Research (“SBIR”) grant award to support its early work and completed both the MedTech Innovator Accelerator and UCSF Rosenman Institute Accelerator programs.
Oncodisc received a National Science Foundation (“NSF”) Small Business Innovation Research (“SBIR”) grant award to support its early work and completed both the MedTech Innovator Accelerator and UCSF Rosenman Institute Accelerator programs. The Veris Platform is a digital cancer care platform with physiologic data collection, symptom reporting and telehealth functions, designed to improve personalized cancer care through remote patient monitoring.
PortIO Our PortIO implantable intraosseous vascular access device is being developed as a means for infusing fluids, medications and other substances directly into the bone marrow cavity and from there into the central venous circulation.
Although the incubator, PMX, may seek to expand its portfolio with internal or externally sourced technologies in the future, its initial assets, as noted, will include the following products: PortIO Our PortIO implantable intraosseous vascular access device is being developed as a means for infusing fluids, medications and other substances directly into the bone marrow cavity and from there into the central venous circulation.
The devices transmit clinical data to cancer care teams to detect early signs of common cancer-related complications, provide longitudinal trends of physiologic and clinical data, and offer data-driven risk management tools for precision oncology. Veris CCP integrates directly with practices’ and systems’ Electronic Health Record (“EHR”) systems, allowing care teams to easily view and interact with this data.
Cancer patients enrolled in the Veris Platform receive a VerisBox™ with Veris-branded Bluetooth enabled connected health care devices. The devices transmit clinical data to cancer care teams to detect early signs of common cancer-related complications, provide longitudinal trends of physiologic and clinical data, and offer data-driven risk management tools for precision oncology.
In connection with its formation, Veris Health acquired Oncodisc, a digital health company with groundbreaking tools to improve personalized cancer care through remote patient monitoring.
We may be unable to respond to such technical advances. Veris Platform Overview In May 2021, we formed Veris Health, a majority-owned subsidiary, focused on digital health technology. In connection with its formation, Veris Health acquired Oncodisc, a digital health company with groundbreaking tools to improve personalized cancer care through remote patient monitoring.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks are described more fully below and include, but are not limited to, risks relating to the following: Risks Related to Financial Position and Capital Resources ● We have incurred operating losses since our inception and may not be able to achieve profitability. ● Servicing our indebtedness may require a significant amount of cash, and the restrictive covenants contained in our indebtedness could adversely affect our business plan, liquidity, financial condition, and results of operations. ● The March 2023 Senior Convertible Note has not been issued, and it may not be issued, including if certain closing conditions to the issuance of such note are not satisfied. ● The accounting method for convertible debt securities that may be settled in cash, such as the Senior Convertible Notes, is the subject of recent changes that could have a material effect on our reported financial results.
Biggest changeThese risks are described more fully below and include, but are not limited to, risks relating to the following: Risks Related to Financial Position and Capital Resources ● We have incurred operating losses since our inception and may not be able to achieve profitability. ● We have concluded there is substantial doubt of our ability to continue as a going concern and our independent registered public accounting firm’s report on our financial statements contains an explanatory paragraph describing our ability to continue as a going concern. ● We have faced significant challenges raising capital under the current market conditions, and therefore are highly dependent on the ability of each of our subsidiaries to raise capital to fund its own and our operations. ● There can be no assurance that our common stock will continue to trade on the Nasdaq Capital Market or another national securities exchange. ● Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future which could reduce the equity interest of PAVmed in Lucid and might cause us to cease to control a majority of the voting stock of Lucid. ● Servicing our indebtedness may require a significant amount of cash, and the restrictive covenants contained in our indebtedness could adversely affect our business plan, liquidity, financial condition, and results of operations. ● The accounting method for convertible debt securities that may be settled in cash, such as the Senior Convertible Notes, could have a material effect on our reported financial results.
Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business. Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business.
Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business.
The market price for our common stock may be influenced by many factors, including the following: ● factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites and online forums), the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging and other trading factors 30 ● speculation in the press or investment community about our company or industry ● our ability to successfully commercialize, and realize revenues from sales of, any products we may develop; ● the performance, safety and side effects of any products we may develop; ● the success of competitive products or technologies; ● results of clinical studies of any products we may develop or those of our competitors; ● regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to any products we may develop; ● introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; ● actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms; ● variations in our financial results or those of companies that are perceived to be similar to us; ● the success of our efforts to acquire or in-license additional products or other products we may develop; ● developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; ● developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● the recruitment or departure of key personnel; ● changes in the structure of healthcare payment systems; ● market conditions in the medical device, pharmaceutical and biotechnology sectors; ● actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● general economic, industry and market conditions; and ● the other risks described in this “Risk Factors” section.
The market price for our common stock may be influenced by many factors, including the following: ● factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites and online forums), the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging and other trading factors; ● speculation in the press or investment community about our company or industry; ● our ability to successfully commercialize, and realize revenues from sales of, any products we may develop; ● the performance, safety and side effects of any products we may develop; ● the success of competitive products or technologies; ● results of clinical studies of any products we may develop or those of our competitors; ● regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to any products we may develop; ● introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; ● actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms; ● variations in our financial results or those of companies that are perceived to be similar to us; ● the success of our efforts to acquire or in-license additional products or other products we may develop; ● developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; ● developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; ● our ability or inability to raise additional capital and the terms on which we raise it; ● the recruitment or departure of key personnel; ● changes in the structure of healthcare payment systems; ● market conditions in the medical device, pharmaceutical and biotechnology sectors; ● actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally; ● trading volume of our common stock; ● sales of our common stock by us or our stockholders; ● general economic, industry and market conditions; and ● the other risks described in this “Risk Factors” section.
These factors include: ● challenges associated with cultural differences, languages and distance; ● differences in clinical practices, needs, products, modalities and preferences; ● longer payment cycles in some countries; ● credit risks of many kinds; ● legal and regulatory differences and restrictions; ● currency exchange fluctuations; ● foreign exchange controls that might prevent us from repatriating cash earned in certain countries; ● political and economic instability and export restrictions; ● variability in sterilization requirements for multi-usage surgical devices; ● potential adverse tax consequences; ● higher cost associated with doing business internationally; ● challenges in implementing educational programs required by our approach to doing business; ● negative economic developments in economies around the world and the instability of governments, including the threat of war, terrorist attacks, epidemic or civil unrest; ● adverse changes in laws and governmental policies, especially those affecting trade and investment; ● health epidemics and /or pandemics, such as the epidemics resulting from the Ebola virus, or the enterovirus, or the avian influenza virus, or the pandemic resulting from a novel strain of a coronavirus designated “Severe Acute Respiratory Syndrome Coronavirus 2” - or “SARS-CoV-2”, which may adversely affect our workforce as well as our local suppliers and customers; ● import or export licensing requirements imposed by governments; ● differing labor standards; ● differing levels of protection of intellectual property; ● the threat that our operations or property could be subject to nationalization and expropriation; ● varying practices of the regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate; and ● potentially burdensome taxation and changes in foreign tax.
These factors include: ● challenges associated with cultural differences, languages and distance; ● differences in clinical practices, needs, products, modalities and preferences; ● longer payment cycles in some countries; ● credit risks of many kinds; ● legal and regulatory differences and restrictions; ● currency exchange fluctuations; ● foreign exchange controls that might prevent us from repatriating cash earned in certain countries; ● political and economic instability and export restrictions; ● variability in sterilization requirements for multi-usage surgical devices; ● potential adverse tax consequences; ● higher cost associated with doing business internationally; ● challenges in implementing educational programs required by our approach to doing business; ● negative economic developments in economies around the world and the instability of governments, including the threat of war, terrorist attacks, epidemic or civil unrest; ● adverse changes in laws and governmental policies, especially those affecting trade and investment; ● health epidemics and /or pandemics, such as the COVID-19 pandemic, epidemics resulting from the Ebola virus, or the enterovirus, or the avian influenza virus, or the pandemic resulting from a novel strain of a coronavirus designated “Severe Acute Respiratory Syndrome Coronavirus 2” - or “SARS-CoV-2”, which may adversely affect our workforce as well as our local suppliers and customers; ● import or export licensing requirements imposed by governments; ● differing labor standards; ● differing levels of protection of intellectual property; ● the threat that our operations or property could be subject to nationalization and expropriation; ● varying practices of the regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate; and ● potentially burdensome taxation and changes in foreign tax.
In particular, they could: ● require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness; ● limit, among other things, our ability to borrow additional funds and otherwise raise additional capital, and our ability to conduct acquisitions, joint, ventures or similar arrangements, as a result of our obligations to make such payments and comply with the restrictive covenants in the indebtedness; ● limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; ● increase our vulnerability to general adverse economic and industry conditions; and ● place us at a competitive disadvantage compared to our competitors that have lower fixed costs.
In particular, they could: ● require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness; ● limit, among other things, our ability to borrow additional funds and otherwise raise additional capital, and our ability to conduct acquisitions, joint ventures or similar arrangements, as a result of our obligations to make such payments and comply with the restrictive covenants in the indebtedness; ● limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; 18 ● increase our vulnerability to general adverse economic and industry conditions; and ● place us at a competitive disadvantage compared to our competitors that have lower fixed costs.
Furthermore, the number of shares of common stock to be issued under the Senior Convertible Notes may be substantially greater than the estimate set forth in this paragraph, if we pay the interest and the installments of principal in shares of our common stock, because in such cases (and in certain other cases as described elsewhere in this Annual Report on Form 10-K) the number of shares issued will be determined based on the then current market price (but in any event not more than fixed conversion price per share or less than a floor price specified in the notes).
The number of shares of common stock to be issued under the Senior Convertible Notes may be substantially greater than the estimate set forth in this paragraph, if we pay the interest and the installments of principal in shares of our common stock, because in such cases (and in certain other cases as described elsewhere in this Annual Report on Form 10-K) the number of shares issued will be determined based on the then current market price (but in any event not more than fixed conversion price per share or less than a floor price specified in the notes).
This, in turn, could have an adverse impact on trading prices for our common stock, and could adversely affect our ability to access the capital markets. Under our management services agreement with Lucid Diagnostics, many of our personnel and other resources are devoted to ensuring Lucid Diagnostics complies with the above requirements applicable to public companies.
This, in turn, could have an adverse impact on trading prices for our common stock, and could adversely affect our ability to access the capital markets. 33 Under our management services agreement with Lucid Diagnostics, many of our personnel and other resources are devoted to ensuring Lucid Diagnostics complies with the above requirements applicable to public companies.
If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product we successfully develop. 22 Moreover, eligibility for reimbursement does not imply any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.
If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product we successfully develop. Moreover, eligibility for reimbursement does not imply any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product. Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. We face an inherent risk of product liability exposure related to the sale of any products we may develop.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product. 22 Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. We face an inherent risk of product liability exposure related to the sale of any products we may develop.
In addition, insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. 23 We may not be able to protect or enforce our intellectual property rights, which could impair our competitive position.
In addition, insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We may not be able to protect or enforce our intellectual property rights, which could impair our competitive position.
Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly. 28 The Company’s medical products may in the future be subject to product recalls that could harm its reputation, business and financial results.
Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly. The Company’s medical products may in the future be subject to product recalls that could harm its reputation, business and financial results.
In addition, any such off-label use of the Company’s products may increase the risk of injury to patients, and, in turn, the risk of product liability claims, and such claims are expensive to defend and could divert the Company’s management’s attention and result in substantial damage awards against the Company. 29 Risks Associated with Ownership of Our Common Stock We may issue shares of our common and /or preferred stock in the future which could reduce the equity interest of our stockholders and might cause a change in control of our ownership.
In addition, any such off-label use of the Company’s products may increase the risk of injury to patients, and, in turn, the risk of product liability claims, and such claims are expensive to defend and could divert the Company’s management’s attention and result in substantial damage awards against the Company. 30 Risks Associated with Ownership of Our Common Stock We may issue shares of our common and /or preferred stock in the future which could reduce the equity interest of our stockholders and might cause a change in control of our ownership.
As we only recently began to market our two products and services for sale, we have no basis to predict whether our current products and services (or potential future products and services) will achieve market acceptance.
As we only relatively recently began to market our two products and services for sale, we have no basis to predict whether our current products and services (or potential future products and services) will achieve market acceptance.
We may expend considerable funds and other resources on the development of new products without any guarantee these products will be successful.
We may expend considerable funds and other resources on the development of new and existing products without any guarantee these products will be successful.
Moreover, if these or any future facilities or our equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed. ● We may make investments in products we have not yet developed, and those investments may not be realized. ● Our products and services may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. ● Our products and services may cause serious adverse side effects or even death or have other properties that could delay or prevent their regulatory approval, limit the commercial desirability of an approved label or result in significant negative consequences following any marketing approval. ● Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. ● We may not be able to protect or enforce our intellectual property rights, which could impair our competitive position. ● We may be subject to intellectual property infringement claims by third parties which could be costly to defend, divert management’s attention and resources, and may result in liability. ● Competitors may violate our intellectual property rights, and we may bring litigation to protect and enforce our intellectual property rights, which may result in substantial expense and may divert our attention from implementing our business strategy. ● Our business may suffer if we are unable to manage our growth. ● Our officers may allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs.
Moreover, if these or any future facilities or our equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed. ● We may make investments in products we have not yet developed, and those investments may not be realized. ● We may not obtain the expected benefits of the incubator financing structure and may incur additional costs. ● Our products and services may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. ● Our products and services may cause serious adverse side effects or even death or have other properties that could delay or prevent their regulatory approval, limit the commercial desirability of an approved label or result in significant negative consequences following any marketing approval. ● Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. ● We may not be able to protect or enforce our intellectual property rights, which could impair our competitive position. ● We may be subject to intellectual property infringement claims by third parties which could be costly to defend, divert management’s attention and resources, and may result in liability. ● Competitors may violate our intellectual property rights, and we may bring litigation to protect and enforce our intellectual property rights, which may result in substantial expense and may divert our attention from implementing our business strategy. ● Our business may suffer if we are unable to manage our growth. ● Our officers may allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs.
We may be required to repay or redeem, or to pay interest on, the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note (collectively, the “Senior Convertible Notes”) or any future permitted indebtedness incurred by us or our subsidiaries, in cash.
We and our subsidiaries may be required to repay or redeem, or to pay interest on, the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the March 2023 Lucid Senior Convertible Note (collectively, the “Senior Convertible Notes”) or any future permitted indebtedness incurred by us or our subsidiaries, in cash.
Our certificate of incorporation authorizes the issuance of up to 250,000,000 shares of common stock, par value $.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per share.
Our certificate of incorporation authorizes the issuance of up to 50,000,000 shares of common stock, par value $.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per share.
Any claims of patent or other intellectual property infringement against us, even those without merit, could: ● increase the cost of our products; ● be expensive and/or time consuming to defend; ● result in our being required to pay significant damages to third parties; ● force us to cease making or selling products that incorporate the challenged intellectual property; ● require us to redesign, reengineer or rebrand our products and technologies; ● require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property on terms that may not be favorable or acceptable to us; ● require us to develop alternative non-infringing technology, which could require significant effort and expense; ● require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims; and, ● result in our customers or potential customers deferring or limiting their purchase or use of the affected products impacted by the claims until the claims are resolved.
In addition, we may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. 23 Any claims of patent or other intellectual property infringement against us, even those without merit, could: ● increase the cost of our products; ● be expensive and/or time consuming to defend; ● result in our being required to pay significant damages to third parties; ● force us to cease making or selling products that incorporate the challenged intellectual property; ● require us to redesign, reengineer or rebrand our products and technologies; ● require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property on terms that may not be favorable or acceptable to us; ● require us to develop alternative non-infringing technology, which could require significant effort and expense; ● require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims; and, ● result in our customers or potential customers deferring or limiting their purchase or use of the affected products impacted by the claims until the claims are resolved.
Even if any of the Company’s clinical trials are completed as planned, it cannot be certain that study results will support product candidate claims or that the FDA or foreign regulatory authorities will agree with our conclusions regarding them.
As the Company’s clinical trials are completed as planned, it cannot be certain that study results will support product candidate claims or that the FDA or foreign regulatory authorities will agree with our conclusions regarding them.
Risks Associated with Ownership of Our Common Stock ● We may issue shares of our common and /or preferred stock in the future which could reduce the equity interest of our stockholders and might cause a change in control of our ownership. ● Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future which could reduce the equity interest of PAVmed in Lucid and might cause us to cease to control a majority of the voting stock of Lucid. ● Our management and their affiliates control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. ● There can be no assurance that our common stock will continue to trade on the Nasdaq Capital Market or another national securities exchange. ● A robust public market for our common stock may not be sustained, which could affect your ability to sell our common stock or depress the market price of our common stock. ● Our stock price may be volatile, and purchasers of our securities could incur substantial losses. ● Our outstanding warrants and other convertible securities may have an adverse effect on the market price of our common stock. ● We do not intend to pay any dividends on our common stock at this time. ● We are subject to evolving corporate governance and public disclosure expectations and regulations that impact compliance costs and risks of noncompliance. ● We incur significant costs as a result of our and Lucid Diagnostics operating as a public company, and our management will be required to devote substantial time to compliance initiatives. ● If we experience material weaknesses in our internal control over financial reporting in the future, our business may be harmed. ● If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline. ● Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management. 18 Risks Related to Financial Position and Capital Resources We have incurred operating losses since our inception and may not be able to achieve profitability.
Risks Associated with Ownership of Our Common Stock ● We may issue shares of our common and /or preferred stock in the future which could reduce the equity interest of our stockholders and might cause a change in control of our ownership. ● Our management and their affiliates control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. ● A robust public market for our common stock may not be sustained, which could affect your ability to sell our common stock or depress the market price of our common stock. ● Our stock price may be volatile, and purchasers of our securities could incur substantial losses. ● Our outstanding warrants and other convertible securities may have an adverse effect on the market price of our common stock. ● We do not intend to pay any cash dividends on our common stock at this time. ● We have made distributions of shares of Lucid common stock to our shareholders in the past, but there is no assurance we will do so in the future. ● We are subject to evolving corporate governance and public disclosure expectations and regulations that impact compliance costs and risks of noncompliance. ● We incur significant costs as a result of our and Lucid Diagnostics operating as a public company, and our management will be required to devote substantial time to compliance initiatives. ● If we experience material weaknesses in our internal control over financial reporting in the future, our business may be harmed. ● If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline. ● Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management. 17 Risks Related to Financial Position and Capital Resources We have incurred operating losses since our inception and may not be able to achieve profitability.
Our expenses associated with maintaining our sales force may be disproportional compared to the revenues we may be able to generate on sales of our EsoGuard test and the Veris Cancer Care Platform or any future tests or other products, and in order to establish and maintain these capabilities may required our raising additional capital, which we may be unable to do.
Our expenses associated with maintaining our sales force may be disproportional compared to the revenues we may be able to generate on sales of our EsoGuard test and the Veris Cancer Care Platform or any future tests or other products. Establishing and maintaining these capabilities may require our raising additional capital, which we may be unable to do.
Risks Associated with Our Business We will need substantial additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, eliminate or abandon growth initiatives or product development programs. We intend to continue to make investments to support our business growth.
Risks Associated with Our Business We will need substantial additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, eliminate or abandon growth initiatives or product development programs. We intend to continue to try to raise capital through each of our subsidiaries to support our business growth.
For example, while the Company is currently in compliance with the financial covenants under the Senior Convertible Notes, from time to time since the date of issuance of such notes (including, in the case of the indebtedness to market capitalization ratio test under such notes, as of June 30, 2022 and December 31, 2022), the Company was not in compliance with certain financial covenants thereunder.
For example, while the Company is currently in compliance with the financial covenants under the Senior Convertible Notes it has issued, from time to time since the date of issuance of such notes (including, in the case of the indebtedness to market capitalization ratio test under such notes, as of December 31, 2023), the Company was not in compliance with certain financial covenants thereunder.
Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future which could reduce the equity interest of PAVmed in Lucid and might cause us to cease to control a majority of the voting stock of Lucid. As of the date hereof, our subsidiary Lucid has sold $13.625 million in shares of Series A Preferred Stock.
Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future which could reduce the equity interest of PAVmed in Lucid and might cause us to cease to control a majority of the voting stock of Lucid. As of the date hereof, our subsidiary Lucid has issued 44,285 shares of Lucid Series B Preferred Stock.
A future recall announcement could harm the Company’s reputation with customers and negatively affect its sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted. No recalls of the Company’s medical products have been reported to the FDA.
A future recall announcement could harm the Company’s reputation with customers and negatively affect its sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.
The stock market in general, and the market for life science companies, and medical device companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
Our stock price is likely to be volatile. The stock market in general, and the market for life science companies, and medical device companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
If the Company’s medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
No recalls of the Company’s medical products have been reported to the FDA. 29 If the Company’s medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.
Risks Relating to Regulatory Matters Any future products or services we may develop may not be approved for sale in the U.S. or in any other country.
Any future products or services we may develop may not be approved for sale in the U.S. or in any other country.
If we or a third party discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing. 27 Healthcare reform measures could hinder or prevent our products’ commercial success.
If we or a third party discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.
Because we have not generated any revenue or cash flow to date, we will require additional funds to: ● Continue our research and development; ● Pursue clinical trials; ● Commercialize our new products and services; ● Achieve market acceptance of our products and services; ● Establish and expand our sales, marketing, and distribution capabilities for our products and services; ● protect our intellectual property rights or defend, in litigation or otherwise, any claims we infringe third-party patents or other intellectual property rights; ● invest in businesses, products and technologies, although we currently have no commitments or agreements relating to do so. ● Otherwise fund our operations; If we do not have, or are not able to obtain, sufficient funds, we may have to delay product development initiatives or license to third parties the rights to commercialize products or technologies we would otherwise seek to market.
Because we have not generated substantial revenue or cash flow to date, unless we are able to generate substantial revenue in the near-term (which we do not anticipate being able to do), we will require additional funds to: ● Continue our research and development; ● Pursue clinical trials; ● Commercialize our new products and services; ● Achieve market acceptance of our products and services; ● Establish and expand our sales, marketing, and distribution capabilities for our products and services; ● Protect our intellectual property rights or defend, in litigation or otherwise, any claims we infringe third-party patents or other intellectual property rights; ● Invest in businesses, products and technologies, although we currently have no commitments or agreements relating to do so; ● Otherwise fund our operations.
If we are not successful in bringing one or more products to market, whether because we fail to address marketplace demand, fail to develop viable technologies or otherwise, we may not generate any revenues and our results of operations could be seriously harmed.
If we are not successful in bringing one or more products to market, whether because we fail to address marketplace demand, fail to develop viable technologies or otherwise, we may not generate any revenues and our results of operations could be seriously harmed. We may not obtain the expected benefits of the incubator financing structure and may incur additional costs.
We also may have to reduce marketing, customer support or other resources devoted to our products. The markets in which we operate are highly competitive, and we may not be able to effectively compete against other providers of medical devices, particularly those with greater resources. We face intense competition from companies with dominant market positions in the medical device industry.
We also may have to reduce marketing, customer support or other resources devoted to our products. 19 The markets in which we operate are highly competitive, and we may not be able to effectively compete against other providers of medical devices, particularly those with greater resources.
It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product candidate’s profile.
It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product candidate’s profile. Our principal ongoing clinical trials are those that relate to EsoGuard.
If the maximum amount of common stock underlying such securities were issued, the percentage of shares of Lucid common stock held by PAVmed would be reduced from approximately 72% to approximately 59%.
If the maximum amount of common stock underlying such securities were issued (including shares of Lucid common stock issued as a dividend thereon), the percentage of shares of Lucid common stock held by PAVmed would be reduced from approximately [●]% to approximately [●]%.
There likely will be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their full impact.
Healthcare reform measures could hinder or prevent our products’ commercial success. There likely will be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their full impact.
If we fail to effectively manage our growth, our ability to execute our business strategy could be impaired. Any unanticipated rapid growth of our business may place a strain on our management, operations and financial systems.
If we fail to effectively manage our growth, our ability to execute our business strategy could be impaired. Any unanticipated rapid growth of our business may place a strain on our management, operations and financial systems. We need to ensure our existing systems and controls are adequate to support our business and its anticipated growth.
Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally. 26 Even if we or any future collaboration partner were to successfully obtain a regulatory approval for any product we may develop, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
Even if we or any future collaboration partner were to successfully obtain a regulatory approval for any product we may develop, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.
In addition, delays or termination of our clinical trials may have an adverse impact on our ability to commercialize our product candidates. ● Even if we receive regulatory approval for any product we may develop, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements. ● Healthcare reform measures could hinder or prevent our products’ commercial success. ● If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. ● The Company’s medical products may in the future be subject to product recalls that could harm its reputation, business and financial results. ● If the Company’s medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. ● If the Company is found to be promoting the use of its devices for unapproved or “off-label” uses or engaging in other noncompliant activities, the Company may be subject to recalls, seizures, fines, penalties, injunctions, adverse publicity, prosecution, or other adverse actions, resulting in damage to its reputation and business.
In order to obtain approval, we may need to conduct clinical trials necessary to support a FDA 510(k) notice or PMA application will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. ● The results of the Company’s clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects. ● Even if we receive regulatory approval for any product we may develop, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements. ● Healthcare reform measures could hinder or prevent our products’ commercial success. ● If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. ● The Company’s medical products may in the future be subject to product recalls that could harm its reputation, business and financial results. ● If the Company’s medical products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. ● If the Company is found to be promoting the use of its devices for unapproved or “off-label” uses or engaging in other noncompliant activities, the Company may be subject to recalls, seizures, fines, penalties, injunctions, adverse publicity, prosecution, or other adverse actions, resulting in damage to its reputation and business.
As of March 9, 2023, we only have 672,190 shares available for issuance under our long-term incentive plan, which could limit our ability to attract and retain key personnel, until such amount is increased. An inability to attract and retain key personnel may impact our ability to continue and grow our operations.
We are limited in shares available for issuance under our long-term incentive plan, which could limit our ability to attract and retain key personnel, until such amount is increased. An inability to attract and retain key personnel may impact our ability to continue and grow our operations.
Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. Such increased costs and delays or failures could adversely affect our business, operating results and prospects.
Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial.
These guidelines, recommendations and quality metrics may shape payors’ coverage decisions and healthcare providers’ cancer screening procedures. There can be no assurance that we will be able to secure such recommendations or inclusion in healthcare guidelines and inclusion in quality measures. Any such failures could have a material impact on our ability to commercialize our products.
These guidelines, recommendations and quality metrics may shape payors’ coverage decisions and healthcare providers’ cancer screening procedures. There can be no assurance that we will be able to secure such recommendations or inclusion in healthcare guidelines and inclusion in quality measures.
While PAVmed would still retain a large ownership interest in Lucid in such event, it may cease to control the vote on matters requiring shareholder approval, including the election of Lucid’s board of directors. Our management and their affiliates control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
While PAVmed would still retain a large ownership interest in Lucid in such event, it may cease to control the vote on matters requiring shareholder approval, including the election of Lucid’s board of directors.
We or our third-party manufacturers may not have the manufacturing and processing capacity to meet the production requirements of clinical testing or consumer demand in a timely manner.
Any such failures could have a material impact on our ability to commercialize our products. 20 We or our third-party manufacturers may not have the manufacturing and processing capacity to meet the production requirements of clinical testing or consumer demand in a timely manner.
In many countries, the pricing review period begins after marketing approval is granted. In some foreign markets, pricing remains subject to continuing governmental control even after initial approval is granted.
In some foreign markets, pricing remains subject to continuing governmental control even after initial approval is granted.
As a result, a potential business opportunity may be presented by certain members of our board or management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in such a transaction.
As a result, a potential business opportunity may be presented by certain members of our board or management team to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in such a transaction. 24 Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business.
In addition, the number of shares issued under these notes may be substantially greater if we voluntarily lower the conversion price, which we are permitted to do pursuant to the terms thereof.
In addition, the number of shares issued under these notes may be substantially greater if we voluntarily lower the conversion price, which we are permitted to do pursuant to the terms thereof. The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline.
In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting. 32 Although our management determined that our internal control over financial reporting was effective as of December 31, 2022, we may experience material weaknesses in our internal control over financial reporting in the future.
In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting.
As of December 31, 2022, there were 94,510,537 shares of our common stock issued and outstanding, and, as of such date, we also had issued and outstanding: (i) stock options to purchase 11,568,655 shares of our common stock at a weighted average exercise price of $2.71 per share, with such total number inclusive of both stock options granted under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan (“PAVmed Inc. 2014 Equity Plan”);and 2,563,843 shares of our common stock reserved for issuance, but not subject to outstanding stock-based equity awards under the PAVmed Inc. 2014 Equity Plan; and 626,081 shares of our common stock reserved for issuance under the PAVmed Inc.
As of December 31, 2023, there were 8,578,505 shares of our common stock issued and outstanding, and, as of such date, we also had issued and outstanding: (i) stock options to purchase 1,192,458 shares of our common stock at a weighted average exercise price of $26.18 per share, with such total number inclusive of both stock options granted under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan (“PAVmed 2014 Equity Plan”); 77,518 shares of our common stock reserved for issuance, but not subject to outstanding stock-based equity awards under the PAVmed 2014 Equity Plan; and 7,528 shares of our common stock reserved for issuance under the PAVmed Inc.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of health care may adversely affect: ● our ability to set a price that we believe is fair for our products; ● our ability to generate revenue and achieve or maintain profitability; and ● the availability of capital.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of health care may adversely affect: ● our ability to set a price that we believe is fair for our products; ● our ability to generate revenue and achieve or maintain profitability; and ● the availability of capital. 28 Further, changes in regulatory requirements and guidance may occur, both in the United States and in foreign countries, and we may need to amend clinical study protocols to reflect these changes.
We or our third-party manufacturers may encounter difficulties with these processes at any time that could result in delays in clinical trials, regulatory submissions or the commercialization of products.
We or our third-party manufacturers may encounter difficulties with these processes at any time that could result in delays in clinical trials, regulatory submissions or the commercialization of products. Initially, we will not directly manufacture our products and will rely on third parties to do so for us.
Any claims that our products or processes infringe these rights, regardless of their merit or resolution, could be costly, time consuming and may divert the efforts and attention of our management and technical personnel. In addition, we may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation.
Any claims that our products or processes infringe these rights, regardless of their merit or resolution, could be costly, time consuming and may divert the efforts and attention of our management and technical personnel.
We may encounter difficulties retaining and managing the specialized workforce these activities require. We may seek to partner with others to assist us with any or all of these functions.
We may also encounter difficulties retaining and managing the specialized workforce our activities require. We may seek to partner with others to assist us with any or all of these functions, although we may be unable to find appropriate third parties with whom to enter into these arrangements.
We are unable to predict whether an active trading market for our common stock will be sustained. If an active market is not sustained for any reason, it may be difficult for you to sell your securities at the time you wish to sell them, at a price that is attractive to you, or at all.
If an active market is not sustained for any reason, it may be difficult for you to sell your securities at the time you wish to sell them, at a price that is attractive to you, or at all. 31 Our stock price may be volatile, and purchasers of our securities could incur substantial losses.
We need to ensure our existing systems and controls are adequate to support our business and its anticipated growth. 24 Our officers may allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest could have a negative impact on our operations.
Our officers may allocate their time to other businesses thereby potentially limiting the amount of time they devote to our affairs. This conflict of interest could have a negative impact on our operations.
Furthermore, our Board of Directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year.
Accordingly, these individuals would have considerable influence regarding the outcome of any transaction that requires stockholder approval. Furthermore, our Board of Directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year.
Additionally, we may be unable to find appropriate third parties with whom to enter into these arrangements. 20 If we are unable to deploy and maintain effective sales, marketing and medical affairs capabilities, we will have difficulty achieving market awareness and selling our tests and other products.
If we are unable to deploy and maintain effective sales, marketing and medical affairs capabilities, we will have difficulty achieving market awareness and selling our tests and other products.
The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline. 31 We do not intend to pay any dividends on our common stock at this time. We have not paid any cash dividends on our shares of common stock to date.
We do not intend to pay any cash dividends on our common stock at this time. We have not paid any cash dividends on our shares of common stock to date.
We expect our operating expenses will continue to increase as we continue to build our commercial infrastructure, develop, enhance and commercialize new products and incur additional operational and reporting costs associated with being a public company. As a result, we expect to continue to incur operating losses for the foreseeable future.
While we have taken steps to reduce operating expenses, we expect to continue to incur operating expenses in excess of our revenues as we continue to maintain our commercial infrastructure, develop, enhance and commercialize products and incur additional operational and reporting costs associated with being a public company.
Our products and services may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, thereby harming our business. The regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country. Some countries require approval of the sale price of a product before it can be marketed.
The regulations that govern marketing approvals, pricing and reimbursement for new products vary widely from country to country. Some countries require approval of the sale price of a product before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted.
Further, changes in regulatory requirements and guidance may occur, both in the United States and in foreign countries, and we may need to amend clinical study protocols to reflect these changes. Amendments may require us to resubmit our clinical study protocols to IRB’s for reexamination, which may impact the costs, timing or successful completion of a clinical study.
Amendments may require us to resubmit our clinical study protocols to IRB’s for reexamination, which may impact the costs, timing or successful completion of a clinical study.
This conflict of interest could have a negative impact on our operations. ● Our ability to be successful will be totally dependent upon the efforts of our key personnel. ● Our officers and directors have fiduciary obligations to other companies and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. ● Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business. ● Our business may be adversely affected by health epidemics and or pandemics, including the COVID-19 pandemic. ● Failure in our information technology or storage systems could significantly disrupt our operations and our research and development efforts, which could adversely impact our revenues, as well as our research, development and commercialization efforts. ● We may become the subject of various claims, threats of litigation, litigation or investigations which could have a material adverse effect on our business, financial condition, results of operations or price of our common stock. 17 Risks Related to Regulatory Matters ● Any future products or services we may develop may not be approved for sale in the U.S. or in any other country.
This conflict of interest could have a negative impact on our operations. ● Our ability to be successful will be totally dependent upon the efforts of our key personnel. ● Our officers and directors have fiduciary obligations to other companies and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. ● Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business. ● Failure in our information technology or storage systems could significantly disrupt our operations and our research and development efforts, which could adversely impact our revenues, as well as our research, development and commercialization efforts. ● We may become the subject of various claims, threats of litigation, litigation or investigations which could have a material adverse effect on our business, financial condition, results of operations or price of our common stock. 16 Risks Associated with Healthcare Regulation, Billing and Reimbursement, and Product Safety and Effectiveness ● If private or governmental third-party payors do not maintain reimbursement for our products at adequate reimbursement rates, we may be unable to successfully commercialize our products which would limit or slow our revenue generation and likely have a material adverse effect on our business. ● FDA has proposed a policy under which it would phase out its general enforcement discretion approach for LDTs so that IVDs manufactured at a laboratory would generally fall under the same enforcement approach as other IVDs.
However, there can be no assurance that the Company will be able to obtain the requisite shareholder vote to approve such a transaction. A robust public market for our common stock may not be sustained, which could affect your ability to sell our common stock or depress the market price of our common stock.
A robust public market for our common stock may not be sustained, which could affect your ability to sell our common stock or depress the market price of our common stock. We are unable to predict whether an active trading market for our common stock will be sustained.
While the holders of such notes agreed to waive any such non-compliance during such aforementioned time periods, there can be no assurance that it will do so in the future. If we are unable to make the required cash payments, there could be a default under one or more of the instruments governing our indebtedness.
If we are unable to make the required cash payments, there could be a default under one or more of the instruments governing our indebtedness. Any such default or acceleration may further result in an event of default and acceleration of our other indebtedness.
Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending litigation or future claims, litigation or investigation could have a material adverse effect on our business, financial condition, results of operations and price of our common stock.
Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws.
The results of the Company’s clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects. In addition, delays or termination of our clinical trials may have an adverse impact on our ability to commercialize our product candidates.
Such increased costs and delays or failures could adversely affect our business, operating results and prospects. 27 The results of the Company’s clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects.
In addition, the Senior Convertible Notes have a current outstanding principal amount of $32.7 million, which are convertible into 6,549,400 shares of our common stock (assuming the Senior Convertible Notes were converted in full on such date at the initial fixed conversion price of $5.00 per share).
Employee Stock Purchase Plan (“PAVmed ESPP”) (ii) 11,937,450 Series Z Warrants, representing the right to purchase 795,830 shares of the Company’s common stock at an exercise price of $23.48 per whole share; and (iii) 1,305,213 shares of Series B Convertible Preferred Stock, convertible into 87,015 shares of our common stock. 32 In addition, the Senior Convertible Notes have a current outstanding principal amount of $26.7 million, which are convertible into 355,520 shares of our common stock (assuming the Senior Convertible Notes were converted in full on such date at the initial fixed conversion price of $75.00 per share).
On December 29, 2022, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC stating that, for the prior 30 consecutive business days (through December 28, 2022), the closing bid price of the Company’s common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market.
On March 7, 2024, the Company received a notice from the Nasdaq Listing Qualifications Department stating that, for the preceding 30 consecutive business days (through March 6, 2024), the market value of the Company’s listed securities (“MVLS”) had been below the minimum of $35 million required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).
Any necessary remediation efforts would place a significant burden on management and add increased pressure to our financial resources and processes.
Although our management determined that our internal control over financial reporting was effective as of December 31, 2023, we may experience material weaknesses in our internal control over financial reporting in the future. Any necessary remediation efforts would place a significant burden on management and add increased pressure to our financial resources and processes.
As a result, any gain you will realize on our common stock (including common stock obtained upon exercise of our warrants) will result solely from the appreciation of such shares. We are subject to evolving corporate governance and public disclosure expectations and regulations that impact compliance costs and risks of noncompliance.
As a result, any gain you will realize on our common stock (including common stock obtained upon exercise of our warrants) will result solely from the appreciation of such shares. We have made distributions of shares of Lucid common stock to our shareholders in the past, but there is no assurance we will do so in the future.
If any of the closing conditions to the issuance of the March 2023 Lucid Senior Convertible Note are not met, or if the Lucid Investor fails to purchase the March 2023 Lucid Senior Convertible Note when required to do so under the Lucid SPA, the note may not be issued. 19 The accounting method for convertible debt securities that may be settled in cash, such as the Senior Convertible Notes, is the subject of recent changes that could have a material effect on our reported financial results.
The accounting method for convertible debt securities that may be settled in cash, such as the Senior Convertible Notes, could have a material effect on our reported financial results. In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No.
We have only two products, EsoGuard and the Veris Cancer Care Platform, that we are actively seeking to commercialize, and have not generated substantial revenue from product sales to date. We have limited experience managing a sales force, customer support operation, manufacturing and clinical laboratory operations for multiple products in multiple locations with divergent regulatory requirements.
The only two products, EsoGuard and the Veris Cancer Care Platform, that we are actively seeking to commercialize have not generated substantial revenue from product sales to date. Accordingly, we will need to find other sources of capital to fund their activities, and there can be no assurance that we will be able to do so.
As of December 31, 2022, our management and their affiliates collectively owned approximately 10% of our issued and outstanding shares of common stock. Accordingly, these individuals would have considerable influence regarding the outcome of any transaction that requires stockholder approval.
Our management and their affiliates control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. As of December 31, 2023, our management and their affiliates collectively owned approximately 11% of our issued and outstanding shares of common stock.
Removed
In order to obtain approval, we may need to conduct clinical trials necessary to support a FDA 510(k) notice or PMA application will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. ● The results of the Company’s clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects.
Added
While we are confident that the proposed policy will not have a material impact on our business, there can be no assurance that will be the case. ● Any future products or services we may develop may not be approved for sale in the U.S. or in any other country.
Removed
Any such default or acceleration may further result in an event of default and acceleration of our other indebtedness.
Added
As a result, we expect to continue to incur operating losses for the foreseeable future. We have concluded there is substantial doubt of our ability to continue as a going concern and our independent registered public accounting firm’s report on our financial statements contains an explanatory paragraph describing our ability to continue as a going concern.
Removed
The March 2023 Senior Convertible Note has not been issued, and it may not be issued, including if certain closing conditions to the issuance of such note are not satisfied. On March 13, 2023, Lucid entered into the Lucid SPA, pursuant to which Lucid anticipates issuing the March 2023 Lucid Senior Convertible Note.
Added
In our December 31, 2023 consolidated financial statements, we have concluded and stated that our recurring losses from operations, recurring cash flows used in operations and the requirement that we will need to raise additional capital in order to fund our ongoing operations beyond March 2025 raise substantial doubt regarding our ability to continue as a going concern.
Removed
However, such issuance is subject to certain closing conditions, some of which are outside of Lucid’s control.
Added
Additionally, our independent registered public accounting firm’s report on our consolidated financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company or its subsidiaries also have entered into leases for a research and development facility in Massachusetts with 7,375 square feet, which has a remaining term of 4.25 years, a CLIA laboratory in California with 21,019 square feet, which has a remaining term of 2 years, and an office space in Pennsylvania with 4,300 square feet, which has a remaining term of 4.8 years.
Biggest changeThe Company or its subsidiaries also have entered into leases for a research and development facility in Massachusetts with 7,375 square feet, which has a remaining term expiring April 30, 2027, a CLIA laboratory in California with 21,019 square feet, which has a remaining term expiring December 31, 2024, and an office space in Pennsylvania with 4,300 square feet, which has a remaining term expiring October 31, 2027.
We also have lease agreements for our Lucid Test Centers in various locations in Arizona, California, Colorado, Florida, Idaho, Illinois, Nevada, Ohio, Oregon, Texas and Utah that in the aggregate approximate 11,429 square feet. At this time, we consider our facility space to be commensurate with our current operations.
We also have lease agreements for our Lucid Test Centers in various locations in Arizona, California, Colorado, Florida, Idaho, Illinois, Nevada, Ohio, Oregon, Texas and Utah that in the aggregate approximate 15,048 square feet. At this time, we consider our facility space to be commensurate with our current operations.
Removed
Notwithstanding, we may obtain additional space in the future, as warranted by our business operations. Effective with the respective lease commencement dates, subsequent to December 31, 2022, the Company and its subsidiaries have entered into additional lease agreements for additional Lucid Testing Centers with an aggregate of approximately 2,046 square feet. 33
Added
Notwithstanding, we may obtain additional space in the future, as warranted by our business operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAdditionally, although the Company has specific insurance for certain potential risks, the Company may in the future incur judgments or enter into settlements of claims which may have a material adverse impact on the Company’s business, financial position, results of operations, and /or cash flows. Item 4. Mine Safety Disclosures Not applicable. 34 PART II
Biggest changeAdditionally, 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.
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.
Item 3. Legal Proceedings In the ordinary course of PAVmed business, particularly as it begins commercialization of its products, the Company may be subject to legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from time to time.
Removed
Item 3. Legal Proceedings See Note 12, Commitment and Contingencies - Legal Proceedings , of the consolidated financial statements included in this Annual Report, for a description of certain material legal proceedings involving the Company, which description is incorporated herein by reference.
Added
The Company is not aware of any such pending legal or other proceedings that are reasonably likely to have a material impact on the Company.
Removed
Delaware Court of Chancery Complaint 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 PAVmed Inc. 2014 Long-Term Incentive Equity Plan and the PAVmed Inc.
Removed
Employee Stock Purchase Plan). The relief sought under the complaint included 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.
Removed
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.
Removed
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 reached agreement on a Settlement Term Sheet Agreement, dated January 28, 2021, to settle the complaint, the terms of which did not contemplate payment of monetary damages to the putative class in the proceeding.
Removed
In connection with the foregoing, on August 3, 2022, the parties agreed that plaintiff’s counsel would not seek an award from the Court in excess of $450,000, to be paid by the Company, upon Court approval, as compensation for the benefits conferred by the settlement, and the Company would not object to an award of up to such maximum amount.
Removed
The settlement and a plaintiff’s fee award of $450,000 were approved by the Court on November 3, 2022, with such award having been subsequently paid by the Company in December 2022. Benchmark Investments, Inc. / Benchmark Investments LLC On December 23, 2020, Benchmark Investments, Inc. filed a complaint against the Company in the U.S.
Removed
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.
Removed
On December 16, 2021, the court granted PAVmed’s motion to dismiss the case for lack of subject matter jurisdiction.
Removed
On February 7, 2022, Benchmark Investments LLC, which claimed to be a successor to 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.
Removed
In November 2022, the Company filed its answer to such complaint and asserted certain counterclaims against Kingswood Capital Markets, including for fraudulent inducement and breach of contract. The Company disagrees with the allegations made by Kingswood Capital Markets set forth in the complaint and intends to vigorously contest the complaint.
Removed
On February 13, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with EF Hutton, a division of Benchmark Investments, LLC (f/k/a Kingswood Capital Markets, a division of Benchmark Investments, Inc.) (“EF Hutton”) and Benchmark Investments, LLC (f/k/a Benchmark Investments, Inc.).
Removed
Under the Settlement Agreement, the Company agreed to pay EF Hutton $450,000 in full and final satisfaction of all claims and disputes the parties made or could have made against one another arising out of or relating in any way to the above described actions.
Removed
The Settlement Agreement also included a mutual release and certain other covenants that are customary for agreements of this nature. On February 17, 2023, the Company wired the settlement payment to EF Hutton. On that same date, the parties filed a stipulation of discontinuance, ending the action and resolving the dispute.
Removed
Except as otherwise noted herein, the Company does not believe it is currently a party to any other pending legal proceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

12 edited+2 added−0 removed3 unchanged
Biggest changeSubsequent to December 31, 2022, in January 2023, the Company’s board of directors declared a Series B Convertible Preferred Stock dividend earned as of December 31, 2022 and payable as of January 1, 2023, of approximately $72, to be settled by the issue of an additional 24,128 shares of Series B Convertible Preferred Stock (with such dividend not recognized as a dividend payable as of December 31, 2022, as the Company’s board of directors had not declared such dividends payable as of such date).
Biggest changeSubsequent to December 31, 2023, the Company’s board of directors declared a Series B Convertible Preferred Stock dividend, earned as of December 31, 2023, of $78, to be settled by the issue of 26,123 additional shares of Series B Convertible Preferred Stock.
We do not anticipate paying dividends in the foreseeable future but expect to retain earnings to finance the growth of our business. Subject to the restrictions described below and applicable law, our board of directors has complete discretion on whether to pay dividends.
We do not anticipate paying cash dividends in the foreseeable future but expect to retain earnings to finance the growth of our business. Subject to the restrictions described below and applicable law, our board of directors has complete discretion on whether to pay cash dividends.
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, amongst and other factors deemed relevant.
Even if our board of directors decides to pay cash dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, amongst and other factors deemed relevant.
Recent Sales of Unregistered Securities Except as previously disclosed in our current reports on Form 8-K and quarterly reports on Form 10-Q or as described under the heading “ Recent Developments—Financing ” in Item 7 below, we did not sell any unregistered securities or repurchase any of our securities during the fiscal year ended December 31, 2022.
Recent Sales of Unregistered Securities Except as previously disclosed in our current reports on Form 8-K and quarterly reports on Form 10-Q or as described under the heading “ Recent Developments—Financing ” in Item 7 below, we did not sell any unregistered securities or repurchase any of our securities during the fiscal year ended December 31, 2023.
During the period ended December 31, 2022, the Company’s board of directors declared an aggregate of approximately $276 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2021, March 31, 2022, June 30, 2022, and September 30, 2022, which have been settled by the issue of an additional aggregate 91,885 shares of Series B Convertible Preferred Stock.
During the year ended December 31, 2022, the Company’s board of directors declared an aggregate of approximately $276 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2021; March 31, 2022; June 30, 2022; and September 30, 2022, which have been settled by the issue of an additional aggregate 91,885 shares of Series B Convertible Preferred Stock.
Our shares of common stock are held by an estimated 214 holders of record and we believe our shares of common stock are held by significantly more beneficial owners. Dividends Common Stock We have not paid any cash dividends on our common stock to date. Any future decisions regarding dividends will be made by our board of directors.
Our shares of common stock are held by an estimated 225 holders of record and we believe our shares of common stock are held by significantly more beneficial owners. Dividends Common Stock We have not paid any cash dividends on our common stock to date. Any future decisions regarding cash dividends will be made by our board of directors.
Series B Convertible Preferred Stock The Series B Convertible Preferred Stock has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and at the holders’ election, is convertible into shares of our common stock at a conversion price of $3.00 per share.
Series B Convertible Preferred Stock The Series B Convertible Preferred Stock has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and at the holders’ election, every fifteen shares of Series B Convertible Preferred Stock is convertible into one whole share of our common stock .
The notification letter stated that the Company would be afforded 180 calendar days (until June 27, 2023) to regain compliance. See “ Recent Developments—Business—Nasdaq Notice ” in Item 7 below for more information. Holders As of March 9, 2023, there were 98,419,795 shares of our common stock outstanding.
The notification letter stated that the Company would be afforded 180 calendar days (until September 3, 2024) to regain compliance. See “ Recent Developments—Business—Nasdaq Notice ” in Item 7 below for more information. Holders As of March 21, 2024, there were 9,172,331 shares of our common stock outstanding.
During the period ended December 31, 2021, the Company’s board of directors declared an aggregate of approximately $288 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2020, March 31, 2021, June 30, 2021, and September 30, 2021, which have been settled by the issue of an additional aggregate 96,262 shares of Series B Convertible Preferred Stock.
During the year ended December 31, 2023, the Company’s board of directors declared an aggregate of approximately $298 of Series B Convertible Preferred Stock dividends, earned as of December 31, 2022; March 31, 2023; June 30, 2023; and September 30, 2023, which have been settled by the issue of an additional aggregate 99,454 shares of Series B Convertible Preferred Stock.
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Equity Our common stock is traded on the Nasdaq Capital Market under the symbol “PAVM” and our Series Z Warrants are traded on the Nasdaq Capital Market under the symbol “PAVMZ.” On December 29, 2022, we received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30 consecutive business days (through December 28, 2022), the closing bid price of our common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Equity Our common stock is traded on the Nasdaq Capital Market under the symbol “PAVM” and our Series Z Warrants are traded on the Nasdaq Capital Market under the symbol “PAVMZ.” On March 7, 2024, the Company received a notice from the Nasdaq Listing Qualifications Department stating that, for the preceding 30 consecutive business days (through March 6, 2024), the market value of the Company’s listed securities had been below the minimum of $35 million required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).
During the periods ended December 31, 2022 and 2021, respectively, at each of the respective holders’ election, a total of 45 and 210,448 shares of Series B Convertible Preferred Stock were converted into the same number of shares of common stock of PAVmed Inc.
During the period ended December 31, 2022 at each of the respective holders’ election, a total of 45 shares of Series B Convertible Preferred Stock were converted into 3 shares of common stock of PAVmed Inc, adjusted for the 1-for-15 reverse stock split effective December 7, 2023, as disclosed in Note 3, Summary of Significant Accounting Policies .
Furthermore, our common stock is junior to the Series B Convertible Preferred Stock with respect to dividends.
Furthermore, our common stock is junior to the Series B Convertible Preferred Stock with respect to dividends. We have paid one in-kind dividend on our common stock to date. On February 15, 2024, we distributed by special dividend to our stockholders 3,331,747 shares of Lucid common stock held by us.
Added
On such date, each of our stockholders as of the January 15, 2024 record date received a stock dividend of approximately 38 shares of Lucid common stock for every 100 shares of PAVmed common stock they held as of such date. Our board of directors has no present intention to pay any further in-kind dividends.
Added
There were no Series B Convertible Preferred Stock converted during the year ended December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+80 added−59 removed14 unchanged
Biggest changeIn the prior year ended December 31, 2021, a debt extinguishment loss in the aggregate of approximately $3.7 million was recognized in connection with the (previous) convertible notes, as discussed below. ● On January 5, 2021, the repayment of the remaining face value principal of the November 2019 Senior Convertible Note, along with the payment of interest thereon of approximately $1.0 million, were settled with the issuance of 667,668 shares of our common stock, with a fair value of approximately $1.7 million (with such fair value measured as the respective conversion date quoted closing price of our common stock), resulting in the recognition of a loss from extinguishment of debt of approximately $0.8 million in the year ended December 31, 2021; and, ● On January 30, 2021, we paid in cash a $350 partial principal repayment of the Senior Convertible Note dated April 30, 2020 (“April 2020 Senior Convertible Note”); and on March 2, 2021, we made a cash payment of approximately $14.5 million, resulting in the repayment-in-full on such date of both the April 2020 Senior Convertible Note and the Senior Secured Convertible Note dated August 6, 2021, resulting in the recognition of a loss from extinguishment of debt of approximately $3.0 million in the year ended December 31, 2021.
Biggest changeLoss on Debt Extinguishment In the year ended December 31, 2023, a debt extinguishment loss in the aggregate of approximately $3.8 million was recognized in connection with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below. ● In the year ended December 31, 2023, approximately $6.1 million of principal repayments along with $0.4 million of interest expense thereon, were settled through the issuance of 1,745,824 shares of common stock of the Company, with such shares having a fair value of approximately $10.0 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).
The price per share of PAVmed Inc. common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the PAVmed Inc. 2014 Equity Plan is its quoted closing price per share.
The price per share of PAVmed Inc. common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the PAVmed 2014 Equity Plan is its quoted closing price per share.
Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022 Effective as of March 31, 2022, we entered into the SPA with the Investor, pursuant to which we agreed to sell, and the Investor agreed to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.
Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022 Effective as of March 31, 2022, we entered into the SPA with an accredited investor, pursuant to which we agreed to sell, and the investor agreed to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.
The terms of the Lucid Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series A Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
The terms of the Lucid Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series A Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance date.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the corresponding periods. In accordance with U.S.
The preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the corresponding periods. In accordance with U.S.
While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity facility, insofar as it allows Lucid Diagnostics to raise primary capital on a periodic basis at prices based on the existing market price.
While there are distinct differences, the committed equity facility is structured similarly to a traditional at-the-market equity facility, insofar as it allows Lucid Diagnostics to raise primary equity capital on a periodic basis at prices based on the existing market price.
The April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 14, Debt. The April 2022 Senior Convertible Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the Company’s offering costs of approximately $0.6 million, inclusive primarily of $0.5 million placement agent fees.
The April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 13, Debt . The April 2022 Senior Convertible Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the Company’s offering costs of approximately $0.6 million, inclusive primarily of $0.5 million placement agent fees.
Other Income and Expense, net Other income and expense, net, consists principally of changes in fair value of our convertible notes and losses on extinguishment of debt upon repayment of such convertible notes. 39 Results of Operations - continued Presentation of Dollar Amounts All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars in millions, except for per share amounts.
Other Income and Expense, net Other income and expense, net, consists principally of changes in fair value of our convertible notes and losses on extinguishment of debt upon repayment of such convertible notes. 40 Results of Operations - continued Presentation of Dollar Amounts All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars in millions, except for share and per share amounts.
The Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, which requires the Company to make certain weighted-average valuation estimates and assumptions for stock-based awards, principally as follows: ● With respect to the PAVmed Inc. 2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of PAVmed Inc. common stock and the volatilities of similar entities within the medical device industry over the period commensurate with the expected term with respect to stock options granted to the board of directors and employees in the years ended December 31, 2022 and 2021; 45 ● With respect to stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan, the expected stock price volatility was based on the historical stock price volatility of similar entities within the medical device industry over the period commensurate with the expected term with respect to stock options granted to employees in the years ended December 31, 2022 and 2021; ● The risk-free interest rate is based on the interest rate payable on U.S.
The Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan, which requires the Company to make certain weighted average valuation estimates and assumptions for stock-based awards, principally as follows: ● With respect to the PAVmed 2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of PAVmed Inc. common stock over the period commensurate with the expected term with respect to stock options granted to the board of directors and employees in the years ended December 31, 2023 and 2022; ● With respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of Lucid Diagnostics common stock and the volatilities of similar entities within the medical device industry over the period commensurate with the expected term with respect to stock options granted to employees in the years ended December 31, 2023 and 2022; ● The risk-free interest rate is based on the interest rate payable on U.S.
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 or the September 2022 Senior Convertible Note).
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).
We anticipate our general and administrative expenses will increase in the future as and to the extent our business operations grow. We also anticipate continued expenses related to being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance as a public company, insurance premiums and investor relations costs.
We anticipate our general and administrative expenses will increase in the future to the extent our business operations grow. Furthermore, we anticipate continued expenses related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related services, insurance premiums and investor relations costs associated with maintaining compliance as a public company.
Our current research and development activities, including our clinical trials, are focused principally on the acceleration of EsoGuard and Veris Cancer Care Platform commercialization. We will resume research and development activities with respect to as well as applicable new technologies, as resources permit.
Our current research and development activities, including our clinical trials, are focused principally on the acceleration of EsoGuard and Veris Cancer Care Platform commercialization. We will resume research and development activities with respect to other products in our pipeline as well as applicable new technologies, as resources permit.
Under the Senior Convertible Notes and the SPA, we are subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.
Under the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the SPA, we are subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.
We expect that gross margin for our services will continue to fluctuate and be affected by EsoGuard test volume, our operating efficiencies, patient compliance rates, payor mix, the levels of reimbursement, and payment patterns of payors and patients.
We expect that gross margin for our services will continue to fluctuate and be affected by EsoGuard test volume, our operating efficiencies, patient compliance rates, payer mix, the levels of reimbursement, and payment patterns of payers and patients.
General and administrative expenses General and administrative expenses consist primarily of salaries and related costs for personnel, travel expenses, facility-related costs, professional fees, accounting and legal services, employees involved in third-party payor reimbursement contract negotiations and consultants and expenses associated with obtaining and maintaining patents within our intellectual property portfolio.
General and administrative expenses General and administrative expenses consist primarily of salaries and related costs for personnel, travel expenses, facility-related costs, professional fees for accounting, tax, audit and legal services, salaries and related costs for employees involved in third-party payor reimbursement contract negotiations and consulting fees and other expenses associated with obtaining and maintaining patents within our intellectual property portfolio.
Loss on Debt Extinguishment In the year ended December 31, 2022, a debt extinguishment loss in the aggregate of approximately $5.4 million was recognized in connection with our April 2022 Senior Convertible Note as discussed below. ● In 2022, approximately $6.0 million of principal repayments along with $0.4 million of interest expense thereon, were settled through the issuance of 7,189,358 shares of common stock of the Company, with such shares having a fair value of approximately $11.8 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).
In comparison, in the year ended December 31, 2022, a debt extinguishment loss in the aggregate of approximately $5.4 million was recognized in connection with our April 2022 Senior Convertible Note as discussed below. ● In August 2022, approximately $6.0 million of principal repayments along with $0.4 million of interest expense thereon, were settled through the issuance of 479,291 shares of common stock of the Company, with such shares having a fair value of approximately $11.8 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).
Each share of the Lucid Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.
Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444.
The estimated fair value adjustment of the April 2022 Senior Convertible Note is presented in a single line item within other income (expense) in the accompanying consolidated statement of operations (as provided for by ASC 825-10-50-30(b)).
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 consolidated statement of operations (as provided for by ASC 825-10-50-30(b)).
We also are subject to financial covenants requiring that (i) the amount of our available cash equal or exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days, not exceed 30% (except that such maximum percentage is 50% for the period from September 8, 2022 through March 5, 2023) (the “Debt to Market Cap Ratio Test”), and (iii) that our market capitalization shall at no time be less than $75 million (the “Market Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).
We also are subject to financial covenants requiring that (i) the amount of our available cash equal or exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days, not exceed 30% (the “Debt to Market Cap Ratio Test”), and (iii) that our market capitalization shall at no time be less than $75 million (the “Market Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).
Cost of revenue In the year ended December 31, 2022, cost of revenue was approximately $3.6 million as compared to $0.6 million in the prior year.
Cost of revenue In the year ended December 31, 2023, cost of revenue was approximately $6.4 million as compared to $3.6 million in the prior year.
Research and development expenses Research and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred for the research and development of our products, including: ● consulting costs charged to us by various external contract research organizations we contract with to conduct clinical and preclinical studies and engineering design and development; ● salary and benefit costs associated with our chief medical officer and engineering personnel; ● costs associated with regulatory filings; ● patent license fees; ● cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; ● product design engineering studies; and ● rental expense for facilities maintained solely for research and development purposes.
Research and development expenses Research and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred for the development of our products, including: ● consulting costs for engineering design and development; ● salary and benefit costs associated with our medical research personnel and engineering personnel; ● costs associated with regulatory filings; ● patent license fees; ● cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; ● product design engineering studies; and ● expenses for facilities maintained solely for research and development purposes.
Amortization of Acquired Intangible Assets In the year ended December 31, 2022, the amortization of acquired intangible assets was approximately $1.8 million as compared to $0.1 million in the prior year.
Amortization of Acquired Intangible Assets The amortization of acquired intangible assets increased to $2.0 million in the year ended December 31, 2023, as compared to $1.8 million in the prior year.
Unless the context otherwise requires, references herein to “we”, “us”, and “our”, and to the “Company” or “PAVmed” are to PAVmed Inc. and Subsidiaries, including its majority-owned subsidiaries, including Lucid Diagnostics Inc. (“Lucid Diagnostics” or “LUCID”) and Veris Health Inc. (“Veris Health” or “VERIS”).
Unless the context otherwise requires, (i) “we”, “us”, and “our”, and the “Company” and “PAVmed” refer to PAVmed Inc. and its subsidiaries, including its majority-owned subsidiary Lucid Diagnostics Inc. (“Lucid Diagnostics” or “Lucid”) and its majority-owned subsidiary Veris Health Inc.
The April 2022 and September 2022 Senior Convertible Notes were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of the reporting period date. The Company initially recognized a $3.5 million fair value non-cash expense on the issue-dates.
The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting period date. The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates.
Lucid Diagnostics - Private Placement - Securities Purchase Agreement Effective as of March 13, 2023, Lucid entered into a Securities Purchase Agreement (“Lucid SPA”) with an accredited institutional investor (“Lucid Investor”, “Lucid Lender”, and /or “Lucid Holder”), pursuant to which Lucid agreed to sell, and the Lucid Investor agreed to purchase a Senior Secured Convertible Note with a face value principal of up to $11.1 million (the “March 2023 Lucid Senior Convertible Note”).
Lucid Diagnostics - Securities Purchase Agreement - March 13, 2023 - Senior Secured Convertible Note - March 21, 2023 Effective as of March 13, 2023, Lucid Diagnostics entered into the Lucid SPA with an accredited institutional investor, pursuant to which Lucid Diagnostics agreed to sell, and the investor agreed to purchase the Lucid March 2023 Senior Convertible Note with a face value principal of $11.1 million.
General and administrative expenses In the year ended December 31, 2022, general and administrative costs were approximately $41.0 million, compared to $25.4 million in the prior year.
General and administrative expenses In the year ended December 31, 2023, general and administrative costs were approximately $30.9 million as compared to $41.4 million in the prior year.
Research and development expenses In the year ended December 31, 2022, research and development costs were approximately $25.5 million as compared to $19.8 million in the prior year.
Research and development expenses In the year ended December 31, 2023, research and development costs were approximately $14.3 million as compared to $25.3 million in the prior year.
In November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor Fitzgerald & Co. In the year ended December 31, 2022, there were no Lucid Diagnostics shares sold through their at-the-market equity facility.
In November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.
In November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor Fitzgerald & Co. In the year ended December 31, 2022, there were no Lucid Diagnostics shares sold through their at-the-market equity facility.
In November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.
The April 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of April 4, 2024.
The April 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price (adjusted for the December 2023 1-for-15 reverse stock split) of $75.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and an initial contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4, 2025.
The September 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of September 6, 2024.
The September 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price (adjusted for the December 2023 1-for-15 reverse stock split) of $75.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of September 8, 2024 which maturity date the investor agreed to extend by one year, to September 8, 2025.
Under the March 2023 Lucid Senior Convertible Note, Lucid would also be subject to financial covenants requiring that (i) the amount of Lucid’s available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) Lucid’s average market capitalization over the prior ten trading days, not exceed 30%, and (iii) that Lucid’s market capitalization shall at no time be less than an amount to be agreed upon. 43 Liquidity and Capital Resources - continued PAVmed Inc.
Under the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is also subject to financial covenants requiring that (i) the amount of its available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid late charges, as of the last day of any fiscal quarter commencing with September 30, 2023, to (b) Lucid Diagnostics’ average market capitalization over the prior ten trading days, not exceed 30%, and (iii) that Lucid Diagnostics’ market capitalization shall at no time be less than $30 million (the “Lucid Financial Tests”).
ATM Facility In December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity Offering Agreement between us and Cantor Fitzgerald & Co. In the year ended December 31, 2022, the Company sold 106,225 shares through their at-the-market equity facility for approximately $79.
PAVmed Inc. ATM Facility In December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity Offering Agreement between us and Cantor.
Under the terms of the committed equity facility, Cantor has committed to purchase up to $50 million of Lucid Diagnostics common stock from time to time at the request of Lucid Diagnostics.
Lucid Diagnostics Inc. - Committed Equity Facility and ATM Facility In March 2022, Lucid Diagnostics entered into a committed equity facility with a Cantor affiliate. Under the terms of the committed equity facility, the Cantor affiliate has committed to purchase up to $50 million of Lucid Diagnostics’ common stock from time to time at Lucid Diagnostics’ request.
The September 2022 Senior Convertible Note proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s offering costs of approximately $0.2 million, inclusive primarily of placement agent fees.
The September 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 13, Debt . The September 2022 Senior Convertible Note proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s total offering costs of approximately $0.2 million, inclusive primarily of placement agent fees.
From time to time from and after September 8, 2022, including as of December 31, 2022, the Company was not in compliance with the Financial Tests. As of March 12, 2023, the Investor agreed to waive any such non-compliance during such aforementioned time periods, under the Senior Convertible Notes and the SPA.
From time to time from and after December 1, 2023 through March 12, 2024, the Company was not in compliance with the Financial Tests. As of March 12, 2024, the investor agreed to waive any such non-compliance during such time period and thereafter through August 31, 2024.
Under the March 2023 Lucid Senior Convertible Note, Lucid is and would be subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.
The Lucid March 2023 Senior Convertible Note proceeds were $9.925 million after deducting a $1.186 million lender fee and offering costs as described under the heading “ Recent Developments—Financing ” in Item 7 above, Under the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.
The cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement is inclusive of: a royalty fee incurred under the Amended CWRU License Agreement; employee related costs of employees engaged in the administration to patients of the EsoCheck cell sample collection procedure (principally at the Lucid Test Centers); the EsoCheck devices and EsoGuard mailers (cell sample shipping costs) distributed to medical practitioners locations and the Lucid Test Centers; and Lucid Test Centers operating expenses, including rent expense and supplies.
For the previously terminated EsoGuard Commercialization Agreement in February 2022, the cost of revenue recognized is inclusive of: a royalty fee incurred under our license agreement with CWRU; the cost of EsoCheck devices and EsoGuard mailers (cell sample shipping costs); and Lucid Test Centers operating expenses, including rent expense and supplies.
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.
Practical Expedients —We do not adjust the transaction price for the effects of a significant financing component, as at contract inception, we expect the collection cycle to be one year or less. 45 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.
The notification letter stated that the Company would be afforded 180 calendar days (until June 27, 2023) to regain compliance. In order to regain compliance, the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days.
The notification letter stated that the Company would be afforded 180 calendar days (until September 3, 2024) to regain compliance. In order to regain compliance, the Company’s MVLS must close at $35 million or more for a minimum of ten consecutive business days.
As of December 31, 2022, under the committed equity facility, a total of 680,263 shares of common stock of Lucid Diagnostics were issued for proceeds of approximately $1.8 million.
Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of December 31, 2023.
Above in Part I, Item 1 - Business is a summary of each of our key products within these sectors, including in particular EsoGuard and the Veris Cancer Care Platform, currently our two leading products.
See Part I, Item 1, Business above for a more detailed summary of the medical device, diagnostics, and digital health sectors and our key products, including in particular EsoGuard and the Veris Platform, which are currently our two leading products.
Additionally, revenue was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Lucid Diagnostics Inc. and ResearchDx Inc. (“RDx”), a CLIA certified commercial laboratory service provider. On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon the execution of an Asset Purchase Agreement between the Company’s wholly-owned subsidiary of LucidDx Labs Inc. and RDx.
Additionally, in the three months ended March 31, 2022, revenue was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Lucid Diagnostics and ResearchDx Inc. (“RDx”), a CLIA certified commercial laboratory service provider.
While our significant accounting policies are described in more detail in our consolidated financial notes, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.
While our significant accounting policies are described in more detail in our consolidated financial notes, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements. 44 Revenue Recognition Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration we expect to collect in exchange for those services.
NASDAQ Notice On December 29, 2022, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30 consecutive business days (through December 28, 2022), the closing bid price of the Company’s common stock had been below the minimum of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).
Nasdaq Notice On March 7, 2024, the Company received a notice from the Nasdaq Listing Qualifications Department stating that, for the preceding 30 consecutive business days (through March 6, 2024), the market value of the Company’s listed securities (“MVLS”) had been below the minimum of $35 million required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).
Sales and marketing expenses Sales and marketing expenses consist primarily of salaries and related costs for employees engaged in sales and marketing activities, as well as advertising and promotion expenses. We anticipate our sales and marketing expenses will increase in the future, to the extent we expand our commercial sales and marketing operations as resources permit.
Sales and marketing expenses Sales and marketing expenses consist primarily of salaries and related costs for employees engaged in sales, sales support and marketing activities, as well as advertising and promotion expenses.
Subsequent to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility for approximately $0.3 million. 44 Critical Accounting Policies and Significant Judgments and Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP.
Through December 31, 2022, 680,263 shares of common stock of Lucid Diagnostics were issued under this facility for total proceeds of approximately $1.8 million.
Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of December 31, 2023.
The $0.1 million decrease principally relates to the termination of the EsoGuard Commercialization Agreement with RDx, as the Company transitioned to its own laboratory operations effective February 25, 2022. The decrease was partially offset by revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory for the year ended December 31, 2022.
The year ended December 31, 2023 as compared to year ended December 31, 2022 Revenue In the year ended December 31, 2023, revenue was $2.5 million as compared to $0.4 million in the prior year. The $2.1 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory.
Subsequent to December 31, 2022, through March 9, 2023, we sold 1,081,997 shares through their at-the-market equity facility for approximately $0.5 million. Lucid Diagnostics Inc. - Committed Equity Facility and ATM Facility In March 2022, our majority-owned subsidiary, Lucid Diagnostics, entered into a committed equity facility with Cantor.
In the year ended December 31, 2023, the Company sold 321,288 shares through its at-the-market equity facility for net proceeds of approximately $1.8 million, after payment of 3% commissions. Lucid Diagnostics Inc. - Committed Equity Facility and ATM Facility In March 2022, Lucid Diagnostics entered into a committed equity facility with a Cantor affiliate.
Sales and marketing expenses In the year ended December 31, 2022, sales and marketing costs were approximately $19.3 million, compared to $8.9 million in the prior year.
Sales and marketing expenses In the year ended December 31, 2023, sales and marketing costs were approximately $17.6 million as compared to $19.3 million in the prior year. The net decrease of $1.7 million was principally related to: ● approximately $1.9 million decrease in third party marketing expenses; and ● approximately $0.2 million increase in facility-related costs.
There are no assurances, however, we will be able to obtain an adequate level of financial resources required for the short-term or long-term commercialization and development of its products and services. We have financed our operations principally through the public and private issuances of our common stock, preferred stock, common stock purchase warrants, and debt.
Liquidity and Capital Resources Our current financing strategy is to obtain capital directly into Lucid, Veris and other subsidiaries to fund any product development or other related activities. There are no assurances, however, we will be able to obtain an adequate level of financial resources required for the short-term or long-term commercialization and development of our products and services.
See Note 13, Financial Instruments Fair Value Measurements , with respect to the FVO election; and Note 14, Debt , for a discussion of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note.
See Note 12, Financial Instruments Fair Value Measurements , with respect to the FVO election; and Note 13, Debt , for a discussion of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note. 46 Stock-Based Compensation Stock-based awards are made to members of the board of directors of the Company, the Company’s employees and nonemployees, under each of the PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan.
Issue of Shares of Our Common Stock During the year ended December 31, 2022 ● We issued 299,999 shares of our common stock for cash proceeds of approximately $0.3 million upon exercise of stock options granted under the PAVmed 2014 Equity Plan, as such equity plan is discussed in Note 15, Stock-Based Compensation , to the Financial Statements. ● We issued 385,938 shares of our common stock for proceeds of approximately $0.4 million under the PAVmed Employee Stock Purchase Plan (“ESPP”), as such plan is discussed in Note 15, Stock-Based Compensation, to the Financial Statements. ● We issued 106,225 shares of our common stock for proceeds of approximately $0.1 million from the sale of shares through PAVmed’s at-the-market equity facility through Cantor Fitzgerald & Co.
These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying consolidated financial statements are issued. 42 Liquidity and Capital Resources - continued Issue of Shares of Our Common Stock During the year ended December 31, 2023 ● We issued 58,483 shares of our common stock for proceeds of approximately $0.3 million under the PAVmed Employee Stock Purchase Plan (“ESPP”), as such plan is discussed in Note 14, Stock-Based Compensation, to the Financial Statements. ● We issued 321,288 shares of our common stock for net proceeds of approximately $1.8 million, after payment of 3% commissions, from the sale of shares through PAVmed’s at-the-market equity facility through Cantor.
The conversions resulted in a debt extinguishment loss of $5.4 million in the year ended December 31, 2022.
The conversions resulted in a debt extinguishment loss of $5.4 million in the year ended December 31, 2022. See Note 13 , Debt , to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.
Lucid Diagnostics - Series A Preferred Stock Offering On March 7, 2023, Lucid entered into subscription agreements for the sale of 13,625 shares (the “ Lucid Series A Preferred Stock ”). Each share of the Lucid Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.
Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444.
The net increase was principally related to the purchase of a defensive asset in Q4 2021 and the purchase of laboratory licenses and certifications and laboratory information management software in Q1 2022. 40 Results of Operations - continued The year ended December 31, 2022 as compared to the year ended December 31, 2021 - continued Other Income and Expense Change in fair value of convertible debt In the year ended December 31, 2022, the non-cash expense recognized for the change in the fair value of our convertible notes was approximately $1.3 million, related to both the April 2022 and September 2022 Senior Convertible Notes.
The increase of $0.2 million in the current period was due to the timing of the acquired intangible assets in 2022. 41 Results of Operations - continued The year ended December 31, 2023 as compared to year ended December 31, 2022 - continued Other Income and Expense Change in fair value of convertible debt In the year ended December 31, 2023, the change in the fair value of our convertible notes was approximately $6.0 million of expense, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.
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. More broadly, we strive to maintain balance within our pipeline with shorter-term, lower-risk projects with the prospect for rapid commercialization and revenue generation supporting development of longer-term projects.
Finally, as resources permit, we will continue to explore external innovations that fulfill our project selection criteria without limiting ourselves to any target sector, specialty or condition.
Stock-Based Compensation Stock-based awards are made to members of the board of directors of the Company, the Company’s employees and non-employees, under each of the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan. The Company accounts for stock-based compensation in accordance with the provisions of FASB ASC Topic 718, Stock Compensation (“ASC 718”).
The Company accounts for stock-based compensation in accordance with the provisions of FASB ASC Topic 718, Stock Compensation (“ASC 718”).
We expect to continue to experience recurring losses from operations, and will continue to fund our operations with debt and/or equity financing transactions.
We expect to continue to experience recurring losses and negative cash flows from operations, and will continue to fund our operations with debt and/or equity financing transactions, including current obligations on the Company’s existing convertible debt which in accordance with management’s plans may include conversions to equity and refinancing our existing debt obligations to extend the maturity date.
Subsequent to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility for approximately $0.3 million. Lucid Diagnostics - Series A Preferred Stock Offering On March 7, 2023, Lucid entered into subscription agreements for the sale of 13,625 shares (the “ Lucid Series A Preferred Stock ”).
In the year ended December 31, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility for net proceeds of approximately $0.3 million, after payment of 3% commissions.
The price per share of Lucid Diagnostics Inc. common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan is as follows: (i) for the period October 14, 2021 to December 31, 2022 it is its quoted closing price per share; and (ii) for the period January 1, 2021 to October 14, 2021, it was estimated using a probability-weighted average expected return methodology (“PWERM”), which involves the determination of equity value under various exit scenarios and an estimation of the return to the common stockholders under each scenario.
The price per share of Lucid Diagnostics common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan is its quoted closing price per share.
The net increase of $10.4 million was principally related to: ● approximately $7.4 million increase in compensation related costs principally as a result of an increase in headcount; ● approximately $1.2 million increase in stock based compensation from RSA grants to Lucid Diagnostics and PAVmed employees and non-employees, and an increase in stock options granted corresponding with the increase in headcount; ● approximately $1.6 million increase in consulting and outside professional services; and ● approximately $0.2 million increase general business expenses.
The net decrease of $10.5 million was principally related to: ● approximately $8.1 million decrease in stock-based compensation, primarily related to decreases at Lucid, partially offset by increases at PAVmed; ● approximately $3.5 million decrease in third-party professional fees and expenses related to legal services, consulting fees and professional recruiting services; ● approximately $1.3 million increase in compensation related costs; and ● approximately $0.2 million decrease related to facility related costs at Lucid, partially offset by an increase in facility related costs at PAVmed.
The $3.0 million increase principally related to: ● approximately $0.5 million increase in compensation related costs as a result of an increase in headcount; ● approximately $0.8 million increase in EsoCheck and EsoGuard supplies usage costs; and ● approximately $1.7 million increase in laboratory operations costs.
The $2.8 million increase was principally related to: ● approximately $1.6 million increase in EsoCheck and EsoGuard supplies costs; and ● approximately $1.2 million increase in compensation related costs, including stock-based compensation at Lucid and Veris.
The net increase $5.7 million was principally related to: ● approximately $3.2 million increase in development costs, particularly in clinical trial activities and outside professional and consulting fees with respect to EsoCheck, Veris Cancer Care Platform, CarpX, EsoCure and PortIO; and ● approximately $2.5 million increase in compensation related costs and related to expanded clinical and engineering staff.
The net decrease of $11.0 million was principally related to: ● approximately $10.1 million decrease in development costs, particularly in clinical trial activities and outside professional and consulting fees; and ● approximately $0.9 million decrease in third party professional fees and expenses related to consulting.
In February 2023, the Company distributed a proxy statement for a special meeting of shareholders to be held on March 31, 2023 (the “Special Meeting”), at which the Company will be seeking approval of an amendment to the Company’s Certificate of Incorporation, to effect, at any time prior to the one-year anniversary date of the Special Meeting, (i) a reverse split of the Company’s outstanding shares of common stock at a specific ratio, ranging from 1-for-5 to 1-for-15, to be determined by the board of directors of the Company in its sole discretion, and (ii) an associated reduction in the number of shares of common stock the Company is authorized to issue, from 250,000,000 shares to 50,000,000 shares.
Reverse Stock Split On December 7, 2023, the Company implemented a 1-for-15 reverse stock split of its common stock and reduced its authorized shares from 250,000,000 to 50,000,000, each in accordance with shareholder approval granted at a March 31, 2023 special meeting of the Company’s stockholders. The Company filed an amended Certificate of Incorporation reflecting the reduction in authorized shares.
Financing Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Note - April 4, 2022 and Senior Secured Convertible Note - September 8, 2022 Effective as of March 31, 2022, we entered into a Securities Purchase Agreement (“SPA”) with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), pursuant to which we agreed to sell, and the Investor agreed to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.
Financing Securities Purchase Agreement - March 31, 2022 - Senior Secured Convertible Note - April 4, 2022 and Senior Secured Convertible Note - September 8, 2022 Effective as of March 12, 2024, the Company entered into an amendment and waiver (the “Note Amendment and Waiver”) with the holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note (each such term as defined below).
The change in the fair value adjustment of the convertible notes is principally related to each of the convertible notes being repaid-in-full during the year ended December 31, 2021, as discussed herein below under “Loss from Extinguishment of Debt.” Loss on Issue and Offering Costs - Senior Secured Convertible Note In the year ended December 31, 2022, in connection with the issue of both the April 2022 and the September 2022 Senior Convertible Notes, we recognized a total of approximately $4.3 million of other expense, inclusive of approximately $3.5 million of lender fee non-cash expense, and approximately $0.8 million of offering costs paid by us.
In the year ended December 31, 2022, in connection with the issue of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note, we recognized a total of approximately $4.3 million of lender fees and offering costs.
The issuance of the March 2023 Lucid Senior Convertible Note is subject to customary closing conditions.
Lucid Diagnostics issued the Lucid March 2023 Senior Convertible Note on March 21, 2023 pursuant to the Lucid SPA.
The Lucid Series A Preferred Stock is a non-voting security, other than with respect to limited matters related to changes in terms of the Lucid Series A Preferred Stock. The aggregate gross proceeds from the sale of shares in such offering were $13.625 million.
The Lucid Series B Preferred Stock is a voting security. The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).
The Lucid Series A Preferred Stock is a non-voting security, other than with respect to limited matters related to changes in terms of the Lucid Series A Preferred Stock. The aggregate gross proceeds from the sale of shares in such offering were $13.625 million.
The Lucid Series B Preferred Stock is a voting security. The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).
Under the March 2023 Lucid Senior Convertible Note, Lucid would also be subject to financial covenants requiring that (i) the amount of Lucid’s available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) Lucid’s average market capitalization over the prior ten trading days, not exceed 30%, and (iii) that Lucid’s market capitalization shall at no time be less than an amount to be agreed upon. 38 Results of Operations Overview Revenue The Company recognized revenue resulting from the delivery of patient EsoGuard test results when the Company considered the collection of such consideration to be probable to the extent that it is unconstrained.
The holder of the such note also waived, for the period commencing on December 1, 2023 and ending on August 31, 2024, the financial covenant contained in such notes requiring that the ratio of (a) the outstanding principal amount of the notes, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, not exceed 30%, and that the Company’s market capitalization not be less than $75 million.
As contemplated by such amendment, in the year ended December 31, 2022, approximately $6.0 million of principal repayments along with $0.4 million of interest expense thereon, were settled through the issuance of 7,189,358 shares of our common stock.
See Note 16, Common Stock and Common Stock Purchase Warrants for additional discussion. ● We issued 1,745,824 shares of our common stock in satisfaction of approximately $6.1 million of principal repayments along with approximately $0.4 million of interest expense thereon under the April 2022 Senior Convertible Note and September 2022 Senior Convertible Note.
Removed
Overview PAVmed is a highly differentiated, multi-product, commercial-stage medical technology company 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. Our current central focus is predominantly on commercial expansion and execution including the acceleration of EsoGuard and Veris Cancer Care Platform commercialization.
Added
(“Veris Health” or “Veris”), (ii) “FDA” refers to the Food and Drug Administration, (iii) “510(k)” refers to a premarket notification, submitted to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) “CLIA” refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) “LDT” refers to a diagnostic test, defined by the FDA as “an IVD that is intended for clinical use and designed, manufactured and used within a single laboratory,” which is generally subject only to self-certification of analytical validity under the CMS CLIA program.
Removed
At the same time, we are continuously re-assessing each project’s long-term commercial potential relative to other projects in our pipeline, accelerating or decelerating the project and reallocating resources accordingly. The Company operates in one segment as a medical technology company, with the following lines of business: Diagnostics, Medical Devices and Digital Health.
Added
Overview PAVmed is structured to be a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies. Led by a team of highly skilled personnel with a track record of bringing innovative products to market, PAVmed is focused on innovating, developing, acquiring, and commercializing novel products that target unmet needs with large addressable market opportunities.
Removed
We are also pursuing a number of research and development project and product opportunities across these three lines of business, which have either been developed internally or have been presented to us by clinician innovators and academic medical institutions for consideration..
Added
Leveraging our corporate structure—a parent company that will establish distinct subsidiaries for each financed asset—we have the flexibility to raise capital at the PAVmed level to fund product development, or to structure financing directly into each subsidiary in a manner tailored to the applicable product, the latter of which is our current strategy given prevailing market conditions.

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