UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37685 PAVmed Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 47-1214177 (State or Other Jurisdiction of ...

PAVmed Inc. (NASDAQ:PAVM) Q4 2018 Earnings Conference Call April 4, 2019 4:30 PM ET Company Participants Mike Havrilla - Director of IR Lishan Aklog - CEO Dennis McGrath - CFO Conference Call Participants Anthony Vendetti - Maxim Group Operator Greetings, and welcome to the PAVmed Inc. Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recor ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) The company is a capital-efficient medical device firm advancing a pipeline of innovative products to market - PAVmed Inc. is a highly-differentiated multi-product medical device company focused on commercializing innovative medical technologies to address unmet clinical needs[17](index=17&type=chunk)[341](index=341&type=chunk) - The company's business model emphasizes **capital efficiency and speed-to-market** through an outsourced structure with low fixed costs[43](index=43&type=chunk)[111](index=111&type=chunk) - Lead products under development include CarpX™, EsoCheck™, PortIO™, DisappEAR™, and NextFlo™[24](index=24&type=chunk)[121](index=121&type=chunk)[343](index=343&type=chunk) - The company repaid **$5.0 million** of its Senior Secured Note in December 2018 using proceeds from a new convertible note[18](index=18&type=chunk)[53](index=53&type=chunk)[60](index=60&type=chunk) - Key regulatory milestones include planned FDA 510(k) submissions for CarpX™ and EsoCheck™, and pursuit of de novo classification for PortIO™[26](index=26&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) 2018 Financing Activities (Net Proceeds) | Source | Net Proceeds (approx.) | | :----------------------------------- | :--------------------- | | Underwritten Public Offering (Jan 2018) | $4.3 million | | Equity Subscription Rights Offering (June 2018) | $9.2 million | | Senior Secured Convertible Note (Dec 2018) | $7.0 million | | **Total Net Proceeds (2018)** | **$15.5 million** | [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from its limited operating history, recurring losses, and need for additional funding - The company has a history of operating losses, with a **net loss of approximately $18.8 million in 2018** and an accumulated deficit of $37.0 million[212](index=212&type=chunk)[213](index=213&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern**, requiring additional funding[216](index=216&type=chunk)[217](index=217&type=chunk) - The medical device market is **highly competitive**, with larger competitors possessing greater financial and technical resources[175](index=175&type=chunk)[221](index=221&type=chunk) - Product commercialization success is uncertain due to regulatory hurdles, market acceptance, and potential product liability lawsuits[223](index=223&type=chunk)[225](index=225&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - The **FDA regulatory approval process is expensive, time-consuming, and uncertain**, with no guarantee of timely market entry[185](index=185&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - Future issuances of common or preferred stock could **significantly dilute existing equity interests**[291](index=291&type=chunk)[292](index=292&type=chunk)[309](index=309&type=chunk) [Item 1B. Unresolved Staff Comments](index=70&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[321](index=321&type=chunk) [Item 2. Property](index=70&type=section&id=Item%202.%20Property) The company's principal corporate offices are leased on a month-to-month basis in New York, NY - The principal corporate offices are located at One Grand Central Place, 60 East 42nd Street, Suite 4600, New York, NY 10165[321](index=321&type=chunk) - The office space is leased on a month-to-month basis and is deemed adequate for current operations[321](index=321&type=chunk) [Item 3. Legal Proceedings](index=70&type=section&id=Item%203.%20Legal%20Proceedings) The company settled a breach of contract claim in December 2018 and acknowledges potential future legal actions - The company executed a settlement agreement in December 2018, resulting in a payment of **$136,606** to a former financial advisor[322](index=322&type=chunk) - The company may be subject to other legal actions as it begins commercialization of its products[323](index=323&type=chunk) [Item 4. Mine Safety Disclosures](index=70&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[324](index=324&type=chunk) PART II [Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=71&type=section&id=Item%205.%20Market%20for%20Registrants%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and certain warrants trade on Nasdaq, and no cash dividends are anticipated on common stock - The company's Common Stock and certain warrants are traded on the Nasdaq Capital Market under symbols PAVM, PAVMZ, and PAVMW[327](index=327&type=chunk) - The company has not paid cash dividends on its common stock and does not anticipate doing so, intending to retain earnings for growth[329](index=329&type=chunk) - Series B Convertible Preferred Stock provides for an **8% per annum dividend**, payable-in-kind (PIK)[330](index=330&type=chunk) Common Stock Outstanding | Date | Shares Outstanding | | :--- | :--- | | March 29, 2019 | 27,893,023 | [Item 6. Selected Financial Data](index=72&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as selected financial data is not presented separately - Selected Financial Data is not applicable[335](index=335&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=72&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company has no revenue, incurs significant losses, and requires future funding for product development and commercialization - PAVmed Inc is an early-stage medical device company with **no product sales revenue to date**[341](index=341&type=chunk)[343](index=343&type=chunk)[379](index=379&type=chunk) - The company incurred a **net loss of $18.8 million in 2018**, an increase from $10.4 million in 2017, with an accumulated deficit of $37.0 million[384](index=384&type=chunk)[529](index=529&type=chunk) - Significant non-cash expenses in 2018 included a **$1.4 million debt extinguishment loss** and a **$1.14 million warrant modification expense**[404](index=404&type=chunk)[409](index=409&type=chunk)[414](index=414&type=chunk) - The company's ability to continue as a **going concern is in substantial doubt** due to recurring losses and negative cash flows[529](index=529&type=chunk)[530](index=530&type=chunk)[531](index=531&type=chunk)[532](index=532&type=chunk) Operating Expenses Comparison (2018 vs. 2017) | Expense Category | 2018 (USD) | 2017 (USD) | Change (USD) | % Change | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $6,310,206 | $5,412,593 | $897,613 | 17% | | Research and development | $4,252,999 | $2,621,526 | $1,631,473 | 62% | | **Total Operating Expenses** | **$10,563,205** | **$8,034,119** | **$2,529,086** | **31%** | Cash Flows Summary (2018 vs. 2017) | Activity | 2018 (USD) | 2017 (USD) | | :--- | :--- | :--- | | Operating activities | $(8,787,907) | $(6,608,208) | | Investing activities | $(26,609) | $(5,301) | | Financing activities | $15,501,613 | $7,562,851 | | **Net increase in cash** | **$6,687,097** | **$949,342** | | **Cash, end of period** | **$8,222,119** | **$1,535,022** | [Item 7A. Quantitative and Qualitative Disclosure About Market Risk](index=122&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section is not applicable as no material market risk disclosures are provided - Quantitative and Qualitative Disclosure About Market Risk is not applicable[587](index=587&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=122&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the consolidated financial statements commencing on page F-1 - The consolidated financial statements and supplementary data are incorporated by reference and appear commencing on page F-1[588](index=588&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=122&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - There are no changes in and disagreements with accountants on accounting and financial disclosure[589](index=589&type=chunk) [Item 9A. Controls and Procedures](index=123&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of year-end 2018 - The company's disclosure controls and procedures were evaluated and concluded to be **effective as of December 31, 2018**[591](index=591&type=chunk) - Management's report on internal control over financial reporting concluded that the system was **effective as of December 31, 2018**[594](index=594&type=chunk) - There were **no material changes** in internal controls over financial reporting during the fourth quarter[596](index=596&type=chunk) [Item 9B. Other Information](index=123&type=section&id=Item%209B.%20Other%20Information) The company reports no other information required by this item - There is no other information to report under this item[596](index=596&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=124&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's proxy statement - Information regarding Directors, Executive Officers, and Corporate Governance is incorporated by reference to the Proxy Statement[598](index=598&type=chunk) [Item 11. Executive Compensation](index=124&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's proxy statement - Information regarding Executive Compensation is incorporated by reference to the Proxy Statement[599](index=599&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=124&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's proxy statement - Information regarding Security Ownership is incorporated by reference to the Proxy Statement[600](index=600&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=124&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's proxy statement - Information regarding Certain Relationships and Related Transactions is incorporated by reference to the Proxy Statement[601](index=601&type=chunk) [Item 14. Principal Accountant Fees and Services](index=124&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's proxy statement - Information regarding Principal Accountant Fees and Services is incorporated by reference to the Proxy Statement[602](index=602&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=125&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and various exhibits filed as part of the annual report - The report includes the Report of Independent Registered Public Accounting Firm, consolidated financial statements, and notes[608](index=608&type=chunk) - Various exhibits are filed, including corporate documents, warrant agreements, and employment agreements[607](index=607&type=chunk)[609](index=609&type=chunk)[610](index=610&type=chunk)[611](index=611&type=chunk) Consolidated Financial Statements [Report of Independent Registered Public Accounting Firm](index=130&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The firm issued an unqualified opinion but highlighted substantial doubt about the company's ability to continue as a going concern - Citrin Cooperman & Company, LLP issued an **unqualified opinion**, stating the financial statements present fairly the company's financial position[621](index=621&type=chunk) - The report includes an explanatory paragraph expressing **substantial doubt about the company's ability to continue as a going concern**[622](index=622&type=chunk) [Consolidated Balance Sheets](index=131&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show increased cash and total assets, alongside a significant rise in total liabilities in 2018 Consolidated Balance Sheet Highlights | Item | December 31, 2018 (USD) | December 31, 2017 (USD) | | :--- | :--- | :--- | | Cash | $8,222,119 | $1,535,022 | | Total assets | $8,496,430 | $1,639,680 | | Total current liabilities | $10,972,583 | $2,543,769 | | Total liabilities | $10,972,583 | $4,488,037 | | Total stockholders' deficit | $(2,476,153) | $(2,848,357) | [Consolidated Statements of Operations](index=133&type=section&id=Consolidated%20Statements%20of%20Operations) The company generated no revenue and experienced a significantly higher net loss in 2018 driven by increased expenses Consolidated Statements of Operations Highlights | Item | Year Ended Dec 31, 2018 (USD) | Year Ended Dec 31, 2017 (USD) | | :--- | :--- | :--- | | Revenue | $— | $— | | Total operating expenses | $10,563,205 | $8,034,119 | | Loss from operations | $(10,563,205) | $(8,034,119) | | Debt extinguishment - Senior Secured Note | $(1,408,296) | — | | Net loss - attributable to PAVmed Inc. common stockholders | $(18,750,798) | $(10,398,134) | | Net loss per share - basic and diluted | $(0.84) | $(0.77) | [Consolidated Statement of Changes in Series A Convertible Preferred Stock and Stockholders' Equity (Deficit) for the year ended December 31, 2018](index=135&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Series%20A%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)%20for%20the%20year%20ended%20December%2031%2C%202018) Equity changes in 2018 were driven by capital raises, debt repayment, and the exchange of preferred stock series Changes in Stockholders' Equity (Deficit) - 2018 | Item | Common Stock (Shares) | Additional Paid-In Capital (USD) | Accumulated Deficit (USD) | Total Stockholders' Equity (Deficit) (USD) | | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2017 | 14,551,234 | $14,012,053 | $(17,907,611) | $(2,848,357) | | Underwritten public offering, net | 2,649,818 | $4,272,011 | — | $4,274,661 | | Equity Subscription Rights Offering, net | 9,000,000 | $9,202,326 | — | $9,211,326 | | Net loss | — | — | $(17,968,750) | $(18,172,822) | | **Balance at December 31, 2018** | **27,142,979** | **$32,619,282** | **$(36,992,911)** | **$(2,476,153)** | [Consolidated Statement of Changes in Series A Convertible Preferred Stock and Stockholders' Equity (Deficit) for the year ended December 31, 2017](index=137&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Series%20A%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)%20for%20the%20year%20ended%20December%2031%2C%202017) Equity changes in 2017 were driven by preferred stock offerings, warrant issuances, and the net loss for the year Changes in Stockholders' Equity (Deficit) - 2017 | Item | Common Stock (Shares) | Additional Paid-In Capital (USD) | Accumulated Deficit (USD) | Total Stockholders' Equity (Deficit) (USD) | | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2016 | 13,330,811 | $7,369,437 | $(7,701,835) | $(319,067) | | Series S Warrants issued | — | $3,434,452 | — | $3,434,452 | | Stock-based compensation | — | $1,048,127 | — | $1,048,127 | | Net loss | — | — | $(9,519,269) | $(9,519,269) | | **Balance at December 31, 2017** | **14,551,234** | **$14,012,053** | **$(17,907,611)** | **$(2,848,357)** | [Consolidated Statements of Cash Flows](index=138&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash increased in 2018 due to significant financing activities that offset cash used in operations - Financing activities in 2018 included **$7.0 million** net proceeds from a convertible note and **$13.8 million** from equity offerings[538](index=538&type=chunk)[539](index=539&type=chunk) - In 2018, **$5.0 million** was used for the repayment of the previously issued Senior Secured Note[539](index=539&type=chunk) Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Year Ended Dec 31, 2018 (USD) | Year Ended Dec 31, 2017 (USD) | | :--- | :--- | :--- | | Net cash flows used in operating activities | $(8,787,907) | $(6,608,208) | | Net cash flows used in investing activities | $(26,609) | $(5,301) | | Net cash flows provided by financing activities | $15,501,613 | $7,562,851 | | **Net increase in cash** | **$6,687,097** | **$949,342** | | **Cash, end of period** | **$8,222,119** | **$1,535,022** | [Notes to Consolidated Financial Statements](index=139&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial instruments, debt, equity, and going concern uncertainty [Note 1 — The Company and Description of the Business](index=139&type=section&id=Note%201%20%E2%80%94%20The%20Company%20and%20Description%20of%20the%20Business) PAVmed is a pre-revenue medical device company focused on commercializing its pipeline of innovative technologies - PAVmed Inc was incorporated on June 26, 2014, and operates as a multi-product medical device company[641](index=641&type=chunk) - Lucid Diagnostics Inc, a majority-owned subsidiary, was incorporated in May 2018 to license the EsoCheck™ Technology[642](index=642&type=chunk) - The company has **not recognized revenue to date** and is focused on obtaining FDA clearance for its lead product candidates[643](index=643&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=140&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note details key accounting policies, use of estimates, and the substantial doubt about the company's going concern ability - The company is an 'emerging growth company' and has elected to delay adopting new accounting standards[649](index=649&type=chunk) - Management has concluded there is **substantial doubt about the company's ability to continue as a going concern**[654](index=654&type=chunk)[655](index=655&type=chunk) - Research and development expenses are expensed as incurred[664](index=664&type=chunk)[665](index=665&type=chunk) - Financial instruments, including warrants and the Senior Secured Convertible Note, are subject to fair value measurements[673](index=673&type=chunk)[676](index=676&type=chunk) - The company applies a **full valuation allowance** against its net deferred tax assets, resulting in a 0% effective tax rate[678](index=678&type=chunk) [Note 3 — Prepaid Expenses and Other Current Assets](index=148&type=section&id=Note%203%20%E2%80%94%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses consist primarily of security deposits and advanced payments to service providers and suppliers Prepaid Expenses and Other Current Assets | Item | December 31, 2018 (USD) | December 31, 2017 (USD) | | :--- | :--- | :--- | | Security deposits | $14,250 | $14,250 | | Advanced payments to service providers and suppliers | $223,790 | $74,217 | | **Total** | **$238,040** | **$88,467** | [Note 4 — Equipment, Net](index=148&type=section&id=Note%204%20%E2%80%94%20Equipment%2C%20Net) The company's net equipment value increased in 2018 due to purchases of R&D equipment Equipment, Net | Item | December 31, 2018 (USD) | December 31, 2017 (USD) | | :--- | :--- | :--- | | Equipment, gross | $56,964 | $27,094 | | Less: accumulated depreciation | $(20,693) | $(10,903) | | **Equipment, net** | **$36,271** | **$16,191** | Depreciation Expense | Year Ended | Depreciation Expense (USD) | | :--- | :--- | | Dec 31, 2018 | $9,790 | | Dec 31, 2017 | $7,110 | [Note 5 — Accrued Expenses and Other Current Liabilities](index=148&type=section&id=Note%205%20%E2%80%94%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses increased significantly in 2018, driven by higher accrued bonuses, payroll, and license fees - The accrued CEO payroll of $145,937 as of December 31, 2018, was subsequently paid in January 2019[699](index=699&type=chunk) Accrued Expenses and Other Current Liabilities | Item | December 31, 2018 (USD) | December 31, 2017 (USD) | | :--- | :--- | :--- | | Bonus | $873,621 | $459,451 | | Payroll | $145,937 | $125,088 | | EsoCheck™ License Agreement fee | $222,553 | — | | **Total** | **$1,330,746** | **$706,964** | [Note 6 — Income Taxes](index=149&type=section&id=Note%206%20%E2%80%94%20Income%20Taxes) The company recognized no income tax benefit due to a full valuation allowance against its net deferred tax assets - The Tax Cuts and Jobs Act of 2017 reduced the U.S. federal corporate tax rate to 21%, but the effect was fully offset by the valuation allowance[704](index=704&type=chunk)[705](index=705&type=chunk) - The company has estimated federal and state **net operating loss (NOL) carryforwards of approximately $22.9 million** as of 2018[707](index=707&type=chunk) Income Tax (Benefit) Expense | Item | Year Ended Dec 31, 2018 (USD) | Year Ended Dec 31, 2017 (USD) | | :--- | :--- | :--- | | Deferred: Federal, state, and local | $(4,816,641) | $(576,615) | | Less: Valuation allowance reserve | $4,816,641 | $576,616 | | **Total Income Tax (Benefit) Expense** | **$—** | **$—** | Deferred Tax Assets, Net (after valuation allowance) | Item | December 31, 2018 (USD) | December 31, 2017 (USD) | | :--- | :--- | :--- | | Net operating loss | $7,155,358 | $4,309,231 | | **Deferred tax assets, net after valuation allowance** | **$—** | **$—** | [Note 7 — Agreements Related to Acquired Intellectual Property Rights](index=152&type=section&id=Note%207%20%E2%80%94%20Agreements%20Related%20to%20Acquired%20Intellectual%20Property%20Rights) This note details key intellectual property license agreements for the EsoCheck™ and DisappEAR™ technologies - Lucid Diagnostics Inc entered into an exclusive worldwide license agreement with CWRU for the EsoCheck™ Technology in May 2018[710](index=710&type=chunk)[711](index=711&type=chunk) - The EsoCheck™ License Agreement incurred a payment obligation of approximately **$273,000**, with future payments contingent on financing[712](index=712&type=chunk) - The Tufts Patent License Agreement grants exclusive rights to develop DisappEAR™ based on proprietary aqueous silk technology[718](index=718&type=chunk)[719](index=719&type=chunk) - Both license agreements provide for potential milestone payments and future royalties on net sales[714](index=714&type=chunk)[720](index=720&type=chunk) [Note 8 — Related Party Transactions](index=154&type=section&id=Note%208%20%E2%80%94%20Related%20Party%20Transactions) This note discloses transactions with affiliates, including management services and consulting agreements - A management services agreement with HCP/Advisors LLC expired in October 2018, with expenses of **$225,000 in 2018**[722](index=722&type=chunk) - The company incurred **$80,000 in expenses in 2017** related to consulting agreements with HCFP/Strategy Advisors LLC[724](index=724&type=chunk) - HCFP/Capital Markets received a **$177,576 placement agent fee** in 2017 for a private placement[725](index=725&type=chunk) - A consulting agreement with Michael J Glennon, Vice Chairman, was terminated in June 2017 with all compensation waived[726](index=726&type=chunk) [Note 9 — Commitments and Contingencies](index=155&type=section&id=Note%209%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines commitments including an office lease, a legal settlement, and executive employment agreements - The corporate office lease is on a month-to-month basis, with estimated future payments of approximately **$131,500 for 2019**[728](index=728&type=chunk) - A settlement payment of **$136,606** was made in December 2018 to a former financial advisor[729](index=729&type=chunk) - Employment agreements for key executives include severance compensation provisions[731](index=731&type=chunk) - In March 2019, employment agreements for the CEO and President/CFO were amended, and they were granted restricted stock awards[732](index=732&type=chunk) [Note 10 — Stock-Based Compensation](index=156&type=section&id=Note%2010%20%E2%80%94%20Stock-Based%20Compensation) This note details the company's equity incentive plans, stock option activity, and related compensation expense - As of December 31, 2018, total unrecognized stock-based compensation expense was approximately **$1.55 million**[751](index=751&type=chunk) - The Black-Scholes valuation model is used, with weighted-average assumptions for 2018 including **volatility of 50-62%**[752](index=752&type=chunk)[753](index=753&type=chunk)[754](index=754&type=chunk) PAVmed Inc. 2014 Equity Plan Stock Options Activity | Item | 2018 (Number of Stock Options) | 2017 (Number of Stock Options) | | :--- | :--- | :--- | | Outstanding at December 31 | 3,327,140 | 1,936,924 | | Granted | 1,585,324 | 380,000 | | Forfeited | (195,108) | (76,389) | Lucid Diagnostics Inc. 2018 Equity Plan Stock Options Activity | Item | 2018 (Number of Stock Options) | | :--- | :--- | | Outstanding at December 31 | 375,000 | | Granted | 375,000 | Consolidated Stock-Based Compensation Expense | Expense Category | Year Ended Dec 31, 2018 (USD) | Year Ended Dec 31, 2017 (USD) | | :--- | :--- | :--- | | General and administrative expenses | $948,143 | $925,534 | | Research and development expenses | $280,556 | $122,593 | | **Total** | **$1,228,699** | **$1,048,127** | [Note 11 — Financial Instruments Fair Value Measurements](index=162&type=section&id=Note%2011%20%E2%80%94%20Financial%20Instruments%20Fair%20Value%20Measurements) This note details the fair value of financial instruments, primarily the Senior Secured Convertible Note and derivative liabilities - The Senior Secured Convertible Note is measured at fair value, with an estimated value of **$7,903,000** as of December 31, 2018[759](index=759&type=chunk)[760](index=760&type=chunk) - The Series A Warrants and preferred stock derivative liabilities were **fully extinguished** upon the March 2018 Exchange Offer[756](index=756&type=chunk)[766](index=766&type=chunk) - The March 2018 Exchange Offer resulted in a **$726,531 deemed dividend** charged to accumulated deficit[776](index=776&type=chunk) - The March 2018 Exchange Offer also resulted in a **$349,796 modification expense** from the exchange of warrants[780](index=780&type=chunk) Fair Value Measurement Hierarchy (December 31, 2018) | Item | Level-1 Inputs (USD) | Level-2 Inputs (USD) | Level-3 Inputs (USD) | Total (USD) | | :--- | :--- | :--- | :--- | :--- | | Senior Secured Convertible Note | $— | $— | $7,903,000 | $7,903,000 | [Note 12 — Debt](index=175&type=section&id=Note%2012%20%E2%80%94%20Debt) This note details the company's debt, including a new Senior Secured Convertible Note and the repayment of a prior note - A Senior Secured Convertible Note with a face value of **$7.75 million** was issued in December 2018, yielding $7.0 million in net proceeds[794](index=794&type=chunk)[795](index=795&type=chunk) - The Senior Convertible Note is convertible into common stock at an initial price of **$1.60 per share**[796](index=796&type=chunk)[797](index=797&type=chunk) - The previously issued Senior Secured Note of **$5.0 million was fully repaid** in December 2018, resulting in a $1.4 million debt extinguishment loss[814](index=814&type=chunk)[819](index=819&type=chunk) - The Senior Convertible Note is guaranteed by PAVmed Inc and its subsidiary, Lucid Diagnostics Inc, and secured by all of their assets[807](index=807&type=chunk)[808](index=808&type=chunk) [Note 13 — Preferred Stock](index=182&type=section&id=Note%2013%20%E2%80%94%20Preferred%20Stock) This note details the company's preferred stock, primarily the outstanding Series B Convertible Preferred Stock - As of December 31, 2018, **1,069,941 shares of Series B Convertible Preferred Stock** were issued and outstanding[832](index=832&type=chunk) - Series B Convertible Preferred Stock has a stated value of $3.00 per share and is convertible into common stock at a 1:1 ratio[833](index=833&type=chunk) - Series B Convertible Preferred Stock provides for an **8% annual dividend**, compounded quarterly and payable-in-kind (PIK)[834](index=834&type=chunk) - The Series A and Series A-1 Convertible Preferred Stock were **fully exchanged for Series B** in the March 2018 Exchange Offer[831](index=831&type=chunk) - The Series A Preferred Stock Units private placement in 2017 resulted in a **$3.12 million loss** due to associated derivative liabilities[839](index=839&type=chunk)[842](index=842&type=chunk) [Note 14 — Stockholders' Equity and Common Stock Purchase Warrants](index=189&type=section&id=Note%2014%20%E2%80%94%20Stockholders'%20Equity%20and%20Common%20Stock%20Purchase%20Warrants) This note details common stock and various warrants, including issuances, exchanges, and modifications - Common stock issuances in 2018 included **9.0 million shares** from a rights offering and **2.65 million shares** from a public offering[866](index=866&type=chunk)[867](index=867&type=chunk) - The exercise price of Series Z Warrants was adjusted from $3.00 to **$1.60 per share** in June 2018, resulting in a $1.14 million modification expense[873](index=873&type=chunk)[878](index=878&type=chunk) - A warrant exchange offer in April 2018 resulted in **10.2 million Series W Warrants being exchanged** for 5.1 million Series Z Warrants[881](index=881&type=chunk) - Lucid Diagnostics Inc has a **noncontrolling interest (NCI) of $(161,512)** as of December 31, 2018, representing 18.125% minority ownership[905](index=905&type=chunk)[906](index=906&type=chunk) Common Stock Issued and Outstanding | Date | Shares Issued and Outstanding | | :--- | :--- | | Dec 31, 2017 | 14,551,234 | | Dec 31, 2018 | 27,142,979 | Common Stock Purchase Warrants Outstanding (December 31, 2018) | Warrant Type | Number Outstanding | Exercise Price/Share | | :--- | :--- | :--- | | Series Z Warrants | 16,815,039 | $1.60 | | Series W Warrants | 381,818 | $5.00 | | Series S Warrants | 1,199,383 | $0.01 | | UPO - Series Z | 53,000 | $1.60 | [Note 15 — Loss Per Share](index=201&type=section&id=Note%2015%20%E2%80%94%20Loss%20Per%20Share) This note presents the net loss per share, which increased in 2018, with dilutive securities excluded due to the net loss - Common stock equivalents were excluded from the diluted weighted average shares outstanding calculation because their inclusion would be anti-dilutive[909](index=909&type=chunk)[911](index=911&type=chunk) Net Loss Per Share (Basic and Diluted) | Item | Year Ended Dec 31, 2018 | Year Ended Dec 31, 2017 | | :--- | :--- | :--- | | Net loss attributable to PAVmed Inc. common stockholders | $(0.84) | $(0.77) | | Weighted-average common shares outstanding - basic and diluted | 22,276,347 | 13,495,951 | [Note 16 — Subsequent Events](index=204&type=section&id=Note%2016%20%E2%80%94%20Subsequent%20Events) The company evaluated subsequent events and found none requiring adjustments or disclosures - The company has evaluated subsequent events through the filing date and found no further events requiring adjustments or disclosures[920](index=920&type=chunk)