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PAVM:Segment
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark
One)
☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended SEPTEMBER 30, 2021
OR
☐ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from______ to______
Commission
File Number: 001-37685
PAVmed
Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
|
|
47-1214177
|
(State
or Other Jurisdiction of
Incorporation
or Organization) |
|
(IRS
Employer
Identification
No.) |
One
Grand Central Place
Suite
4600
New
York, NY |
|
10165 |
(Address
of Principal Executive Offices) |
|
(Zip
Code) |
(212)
949-4319
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title
of each class |
|
Trading
Symbols |
|
Name
of each exchange on which registered |
Common
Stock, $0.001 par value per share |
|
PAVM |
|
The
NASDAQ Stock Market LLC |
Series
Z Warrants, each to purchase one share of Common Stock |
|
PAVMZ |
|
The
NASDAQ Stock Market LLC |
Series
W Warrants, each to purchase one share of Common Stock |
|
PAVMW |
|
The
NASDAQ Stock Market LLC |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of ”large accelerated filer”, “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |
☐ |
|
Accelerated
filer |
☐ |
Non-accelerated
filer |
☒ |
|
Smaller
reporting company |
☒ |
|
|
|
Emerging
growth company |
☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As
of November 18, 2021, there were 87,930,411 shares of the registrant’s Common Stock, par value $0.001 per share,
outstanding.
TABLE
OF CONTENTS
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands except number of shares and per share data)
(unaudited)
| |
September
30, 2021 | | |
December
31, 2020 | |
Assets: | |
| | | |
| | |
Current
assets: | |
| | | |
| | |
Cash | |
$ | 37,341 | | |
$ | 17,256 | |
Accounts
receivable | |
| 200 | | |
| — | |
Inventory | |
| 50 | | |
| — | |
Prepaid
expenses, deposits, and other current assets | |
| 4,141 | | |
| 1,685 | |
Total
current assets | |
| 41,732 | | |
| 18,941 | |
Fixed assets, net | |
| 451 | | |
| 82 | |
Intangible assets, net | |
| 47 | | |
| — | |
Other
assets | |
| 755 | | |
| 755 | |
Total
assets | |
$ | 42,985 | | |
$ | 19,778 | |
Liabilities,
Preferred Stock and Stockholders’ Deficit | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | |
Accounts
payable | |
$ | 6,080 | | |
$ | 2,966 | |
Accrued
expenses and other current liabilities | |
| 1,671 | | |
| 2,325 | |
CARES
Act Paycheck Protection Program note payable | |
| — | | |
| 300 | |
Senior
Secured Convertible Notes - at fair value | |
| — | | |
| 10,060 | |
Senior
Convertible Note - at fair value | |
| — | | |
| 4,600 | |
Total
liabilities | |
| 7,751 | | |
| 20,251 | |
Commitments
and contingencies (Note 6) | |
| — | | |
| — | |
Stockholders’
Equity (Deficit): | |
| | | |
| | |
Preferred
stock, $0.001 par
value. Authorized, 20,000,000 shares;
Series B Convertible Preferred Stock, par value $0.001,
issued and outstanding 1,091,448
at
September 30, 2021 and 1,228,075
shares
at December 31, 2020 | |
| 2,352 | | |
| 2,537 | |
Common
stock, $0.001 par value. Authorized, 150,000,000 shares; 84,400,822 and 63,819,935 shares outstanding as of September 30, 2021
and December 31, 2020, respectively | |
| 84 | | |
| 64 | |
Additional
paid-in capital | |
| 154,059 | | |
| 87,570 | |
Accumulated
deficit | |
| (121,625 | ) | |
| (88,275 | ) |
Total
PAVmed Inc. Stockholders’ Equity | |
| 34,870 | | |
| 1,896 | |
Noncontrolling
interests | |
| 364 | | |
| (2,369 | ) |
Total
Stockholders’ Equity (Deficit) | |
| 35,234 | | |
| (473 | ) |
Total
Liabilities and Stockholders’ Equity | |
$ | 42,985 | | |
$ | 19,778 | |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands except number of shares and per share amounts)
(unaudited)
| |
2021 | | |
2020 | | |
2021 | | |
2020 | |
| |
Three
Months Ended September 30, | | |
Nine
Months Ended September 30, | |
| |
2021 | | |
2020 | | |
2021 | | |
2020 | |
Revenue | |
$ | 200 | | |
$ | — | | |
$ | 200 | | |
$ | — | |
Cost
of revenue | |
| 144 | | |
| — | | |
| 144 | | |
| — | |
Gross
profit | |
| 56 | | |
| — | | |
| 56 | | |
| — | |
Operating
expenses: | |
| | | |
| | | |
| | | |
| | |
Commercial
operations | |
| 2,432 | | |
| 687 | | |
| 5,792 | | |
| 1,532 | |
General
and administrative | |
| 5,987 | | |
| 2,222 | | |
| 16,100 | | |
| 6,942 | |
Research
and development | |
| 5,305 | | |
| 2,619 | | |
| 12,878 | | |
| 7,321 | |
Total
operating expenses | |
| 13,724 | | |
| 5,528 | | |
| 34,770 | | |
| 15,795 | |
Loss
from operations | |
| (13,668 | ) | |
| (5,528 | ) | |
| (34,714 | ) | |
| (15,795 | ) |
Other
income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest
expense | |
| — | | |
| — | | |
| — | | |
| (53 | ) |
Change
in fair value - Senior Secured Convertible Notes and Senior Convertible Note | |
| — | | |
| 367 | | |
| 1,682 | | |
| (5,521 | ) |
Offering
costs - Senior Secured Convertible Note and Senior Convertible Note | |
| — | | |
| (50 | ) | |
| — | | |
| (660 | ) |
Debt
extinguishments loss - Senior Secured Convertible Notes | |
| — | | |
| (663 | ) | |
| (3,715 | ) | |
| (4,600 | ) |
Debt
forgiveness | |
| — | | |
| — | | |
| 300 | | |
| — | |
Other
income (expense), net | |
| — | | |
| (346 | ) | |
| (1,733 | ) | |
| (10,834 | ) |
Provision
for income taxes | |
| — | | |
| — | | |
| — | | |
| — | |
Net
loss before noncontrolling interests | |
| (13,668 | ) | |
| (5,874 | ) | |
| (36,447 | ) | |
| (26,629 | ) |
Net
loss attributable to the noncontrolling interests | |
| 1,441 | | |
| 391 | | |
| 3,318 | | |
| 1,093 | |
Net
loss attributable to PAVmed Inc. | |
| (12,227 | ) | |
| (5,483 | ) | |
| (33,129 | ) | |
| (25,536 | ) |
Less:
Series B Convertible Preferred Stock dividends earned | |
| (67 | ) | |
| (74 | ) | |
| (216 | ) | |
| (215 | ) |
Net
loss attributable to PAVmed Inc. common stockholders | |
$ | (12,294 | ) | |
$ | (5,557 | ) | |
$ | (33,345 | ) | |
$ | (25,751 | ) |
Per
share information: | |
| | | |
| | | |
| | | |
| | |
Net
loss per share attributable to PAVmed Inc. - basic and diluted | |
$ | (0.15 | ) | |
$ | (0.11 | ) | |
$ | (0.41 | ) | |
$ | (0.56 | ) |
Net
loss per share attributable to PAVmed Inc. common stockholders – basic and diluted | |
$ | (0.15 | ) | |
$ | (0.11 | ) | |
$ | (0.42 | ) | |
$ | (0.57 | ) |
Weighted
average common shares outstanding, basic and diluted | |
| 83,307,170 | | |
| 48,380,677 | | |
| 79,873,583 | | |
| 45,563,961 | |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for
the THREE MONTHS ENDED September 30, 2021
(in
thousands except number of shares and per share data)
(unaudited)
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
PAVmed
Inc. Stockholders’ Deficit | | |
| | |
| |
| |
Series
B | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Convertible | | |
| | |
| | |
Additional | | |
| | |
Non | | |
| |
| |
Preferred
Stock | | |
Common
Stock | | |
Paid-In | | |
Accumulated | | |
controlling | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Interest | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance
- June 30, 2021 | |
| 1,185,685 | | |
$ | 2,499 | | |
| 82,576,816 | | |
$ | 83 | | |
$ | 149,694 | | |
$ | (109,325 | ) | |
$ | (911 | ) | |
$ | 42,040 | |
Dividends
declared - Series B Convertible Preferred Stock | |
| 24,577 | | |
| 73 | | |
| — | | |
| — | | |
| — | | |
| (73 | ) | |
| — | | |
| — | |
Conversions
- Series B Convertible Preferred Stock | |
| (118,814 | ) | |
| (220 | ) | |
| 118,814 | | |
| — | | |
| 220 | | |
| — | | |
| — | | |
| — | |
Exercise
- Series Z Warrants | |
| — | | |
| — | | |
| 1,186,467 | | |
| 1 | | |
| 1,897 | | |
| — | | |
| — | | |
| 1,898 | |
Exercise
- Series W Warrants | |
| — | | |
| — | | |
| 3,945 | | |
| — | | |
| 20 | | |
| — | | |
| — | | |
| 20 | |
Exercise
- stock options | |
| — | | |
| — | | |
| 483,668 | | |
| — | | |
| 823 | | |
| — | | |
| — | | |
| 823 | |
Purchase
- Employee Stock Purchase Plan | |
| — | | |
| — | | |
| 31,112 | | |
| — | | |
| 131 | | |
| — | | |
| — | | |
| 131 | |
Stock-based
compensation – PAVmed Inc. | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,218 | | |
| — | | |
| — | | |
| 1,218 | |
Stock-based
compensation – majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| 56 | | |
| — | | |
| 2,716 | | |
| 2,772 | |
Conversions
- Senior Secured Convertible Note | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Conversions
- Senior Secured Convertible Note, shares | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Registered
offerings, net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Registered
offerings, net, shares | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Vest
- restricted stock awards vests | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Vest
- restricted stock awards vests, shares | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issue
common stock of majority-owned subsidiary | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Exercise
- Series S warrants | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Exercise
- Series S warrants, shares | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Exercise
- stock options - majority-owned subsidiary | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (12,227 | ) | |
| (1,441 | ) | |
| (13,668 | ) |
Balance
- September 30, 2021 | |
| 1,091,448 | | |
$ | 2,352 | | |
| 84,400,822 | | |
$ | 84 | | |
$ | 154,059 | | |
$ | (121,625 | ) | |
$ | 364 | | |
$ | 35,234 | |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for
the THREE MONTHS ENDED September 30, 2020
(in
thousands except number of shares and per share data)
(unaudited)
| |
PAVmed
Inc. Stockholders’ Deficit | | |
| | |
| |
| |
Series
B | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Convertible | | |
| | |
| | |
Additional | | |
| | |
Non | | |
| |
| |
Preferred
Stock | | |
Common
Stock | | |
Paid-In | | |
Accumulated | | |
controlling | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Interest | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance
- June 30, 2020 | |
| 1,179,872 | | |
$ | 2,393 | | |
| 47,919,386 | | |
$ | 48 | | |
$ | 60,147 | | |
$ | (73,908 | ) | |
$ | (1,485 | ) | |
$ | (12,805 | ) |
Dividends
declared - Series B Convertible Preferred Stock | |
| 23,616 | | |
| 70 | | |
| — | | |
| — | | |
| — | | |
| (70 | ) | |
| — | | |
| — | |
Conversions
- Senior Secured Convertible Note | |
| — | | |
| — | | |
| 1,584,140 | | |
| 2 | | |
| 3,100 | | |
| — | | |
| — | | |
| 3,102 | |
Exercise
- Series Z warrants | |
| — | | |
| — | | |
| 100 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Purchase
- Employee Stock Purchase Plan | |
| — | | |
| — | | |
| 152,289 | | |
| — | | |
| 230 | | |
| — | | |
| — | | |
| 230 | |
Stock-based
compensation - PAVmed Inc. | |
| — | | |
| — | | |
| — | | |
| — | | |
| 570 | | |
| — | | |
| — | | |
| 570 | |
Stock-based
compensation – majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3 | | |
| — | | |
| 13 | | |
| 16 | |
Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (5,483 | ) | |
| (391 | ) | |
| (5,874 | ) |
Balance
- September 30, 2020 | |
| 1,203,488 | | |
$ | 2,463 | | |
| 49,655,915 | | |
$ | 50 | | |
$ | 64,050 | | |
$ | (79,461 | ) | |
$ | (1,863 | ) | |
$ | (14,761 | ) |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for
the NINE MONTHS ENDED September 30, 2021
(in
thousands except number of shares and per share data)
(unaudited)
| |
PAVmed
Inc. Stockholders’ Deficit | | |
| | |
| |
| |
Series
B | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Convertible | | |
| | |
| | |
Additional | | |
| | |
Non | | |
| |
| |
Preferred
Stock | | |
Common
Stock | | |
Paid-In | | |
Accumulated | | |
controlling | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Interest | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance
- December 31, 2020 | |
| 1,228,075 | | |
$ | 2,537 | | |
| 63,819,935 | | |
$ | 64 | | |
$ | 87,570 | | |
$ | (88,275 | ) | |
$ | (2,369 | ) | |
$ | (473 | ) |
Dividends
declared - Series B Convertible Preferred Stock | |
| 73,821 | | |
| 221 | | |
| — | | |
| — | | |
| — | | |
| (221 | ) | |
| — | | |
| — | |
Conversions
- Series B Convertible Preferred Stock | |
| (210,448 | ) | |
| (406 | ) | |
| 210,448 | | |
| — | | |
| 406 | | |
| — | | |
| — | | |
| — | |
Registered
offerings, net | |
| — | | |
| — | | |
| 15,782,609 | | |
| 16 | | |
| 53,688 | | |
| — | | |
| — | | |
| 53,704 | |
Vest
- restricted stock awards vests | |
| — | | |
| — | | |
| 150,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Exercise
- Series Z warrants | |
| — | | |
| — | | |
| 2,927,125 | | |
| 3 | | |
| 4,680 | | |
| — | | |
| — | | |
| 4,683 | |
Exercise
- Series W warrants | |
| — | | |
| — | | |
| 3,945 | | |
| — | | |
| 20 | | |
| — | | |
| — | | |
| 20 | |
Conversions
- Senior Secured Convertible Note | |
| — | | |
| — | | |
| 667,668 | | |
| 1 | | |
| 1,722 | | |
| — | | |
| — | | |
| 1,723 | |
Exercise
- stock options | |
| — | | |
| — | | |
| 604,500 | | |
| — | | |
| 953 | | |
| — | | |
| — | | |
| 953 | |
Purchase
- Employee Stock Purchase Plan | |
| — | | |
| — | | |
| 234,592 | | |
| — | | |
| 436 | | |
| — | | |
| — | | |
| 436 | |
Issue
common stock of majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6 | | |
| 6 | |
Stock-based
compensation - PAVmed Inc. | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,473 | | |
| — | | |
| — | | |
| 4,473 | |
Stock-based
compensation - majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| 111 | | |
| — | | |
| 6,045 | | |
| 6,156 | |
Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (33,129 | ) | |
| (3,318 | ) | |
| (36,447 | ) |
Balance
- September 30, 2021 | |
| 1,091,448 | | |
$ | 2,352 | | |
| 84,400,822 | | |
$ | 84 | | |
| 154,059 | | |
| (121,625 | ) | |
| 364 | | |
| 35,234 | |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
for
the NINE MONTHS ENDED September 30, 2020
(in
thousands except number of shares and per share data)
(unaudited)
| |
PAVmed
Inc. Stockholders’ Deficit | | |
| | |
| |
| |
Series
B | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
Convertible | | |
| | |
| | |
Additional | | |
| | |
Non | | |
| |
| |
Preferred
Stock | | |
Common
Stock | | |
Paid-In | | |
Accumulated | | |
controlling | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Interest | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance
- December 31, 2019 | |
| 1,158,209 | | |
$ | 2,296 | | |
| 40,478,861 | | |
$ | 41 | | |
$ | 47,554 | | |
$ | (53,715 | ) | |
$ | (814 | ) | |
$ | (4,638 | ) |
Dividends
declared - Series B Convertible Preferred Stock | |
| 70,279 | | |
| 210 | | |
| — | | |
| — | | |
| — | | |
| (210 | ) | |
| — | | |
| — | |
Conversion
- Series B Convertible Preferred Stock | |
| (25,000 | ) | |
| (43 | ) | |
| 25,000 | | |
| — | | |
| 43 | | |
| — | | |
| — | | |
| — | |
Conversions
- Senior Secured Convertible Note | |
| — | | |
| — | | |
| 7,412,682 | | |
| 8 | | |
| 14,667 | | |
| — | | |
| — | | |
| 14,675 | |
Exercise
- Series S warrants | |
| — | | |
| — | | |
| 1,199,383 | | |
| 1 | | |
| 11 | | |
| — | | |
| — | | |
| 12 | |
Exercise
- Series Z warrants | |
| — | | |
| — | | |
| 100 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Purchase
- Employee Stock Purchase Plan | |
| — | | |
| — | | |
| 306,555 | | |
| — | | |
| 356 | | |
| — | | |
| — | | |
| 356 | |
Vest
- restricted stock awards | |
| — | | |
| — | | |
| 233,334 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Vest
- restricted stock awards vests | |
| — | | |
| — | | |
| 233,334 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Exercise
- stock options - majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5 | | |
| 5 | |
Stock-based
compensation - PAVmed Inc. | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,409 | | |
| — | | |
| — | | |
| 1,409 | |
Stock-based
compensation - majority-owned subsidiary | |
| — | | |
| — | | |
| — | | |
| — | | |
| 10 | | |
| — | | |
| 39 | | |
| 49 | |
Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (25,536 | ) | |
| (1,093 | ) | |
| (26,629 | ) |
Balance
at September 30, 2020 | |
| 1,203,488 | | |
$ | 2,463 | | |
| 49,655,915 | | |
$ | 50 | | |
$ | 64,050 | | |
$ | (79,461 | ) | |
$ | (1,863 | ) | |
$ | (14,761 | ) |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands except number of shares and per share data)
(unaudited)
| |
2021 | | |
2020 | |
| |
Nine
Months Ended September 30, | |
| |
2021 | | |
2020 | |
Cash
flows from operating activities | |
| | | |
| | |
Net
loss - before non controlling interest (“NCI”) | |
$ | (36,447 | ) | |
$ | (26,629 | ) |
| |
| | | |
| | |
Adjustments
to reconcile net loss - before NCI to net cash used in operating activities | |
| | | |
| | |
Depreciation
and amortization expense | |
| 60 | | |
| 17 | |
Stock-based
compensation | |
| 10,629 | | |
| 1,458 | |
In-process
R&D charge | |
| 133 | | |
| — | |
Change
in fair value - Senior Secured Convertible Notes and Senior Convertible Note | |
| (1,682 | ) | |
| 5,521 | |
Debt
extinguishment loss - Senior Secured Convertible Notes and Senior Convertible Note | |
| 3,715 | | |
| 4,600 | |
Debt
forgiveness | |
| (300 | ) | |
| — | |
Changes
in operating assets and liabilities: | |
| | | |
| | |
Accounts
receivable | |
| (200 | ) | |
| — | |
Prepaid
expenses and other current assets | |
| (1,918 | ) | |
| (1,159 | ) |
Accounts
payable | |
| 2,911 | | |
| 854 | |
Accrued
expenses and other current liabilities | |
| (715 | ) | |
| 152 | |
Net
cash flows used in operating activities | |
| (23,814 | ) | |
| (15,186 | ) |
| |
| | | |
| | |
Cash
flows from investing activities | |
| | | |
| | |
Purchase
of equipment | |
| (192 | ) | |
| (47 | ) |
Acquisition,
net of cash acquired | |
| (147 | ) | |
| — | |
Net
cash flows used in investing activities | |
| (339 | ) | |
| (47 | ) |
| |
| | | |
| | |
Cash
flows from financing activities | |
| | | |
| | |
Proceeds
– issue of common stock – registered offerings | |
| 55,016 | | |
| — | |
Payment
– offering costs – registered offerings | |
| (1,312 | ) | |
| — | |
Proceeds
– issue of Senior Secured Convertible Notes | |
| — | | |
| 13,300 | |
Proceeds
– issue of Senior Convertible Note | |
| — | | |
| 3,700 | |
Proceeds
– Cares Act Paycheck Protection Program Loan | |
| — | | |
| 300 | |
Payment
– repayment of Senior Convertible Note and Senior Secured Convertible Note | |
| (14,816 | ) | |
| — | |
Payment
– Senior Convertible Note and Senior Secured Convertible Note – non-installment payments | |
| (154 | ) | |
| (366 | ) |
Proceeds
– exercise of Series Z warrants | |
| 4,115 | | |
| — | |
Proceeds
– exercise of Series S warrants | |
| — | | |
| 12 | |
Proceeds
– exercise of stock options | |
| 953 | | |
| — | |
Proceeds
– issue common stock – Employee Stock Purchase Plan | |
| 436 | | |
| 356 | |
Proceeds
– exercise of stock options issued under equity incentive plan of majority owned subsidiary | |
| — | | |
| 5 | |
Net
cash flows provided by financing activities | |
| 44,238 | | |
| 17,307 | |
Net
increase (decrease) in cash | |
| 20,085 | | |
| 2,074 | |
Cash,
beginning of period | |
| 17,256 | | |
| 6,219 | |
Cash,
end of period | |
$ | 37,341 | | |
$ | 8,293 | |
See
accompanying notes to the unaudited condensed consolidated financial statements.
PAVMED
INC.
and
SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts
in these accompanying notes are presented in thousands, except number of shares and per-share amounts.)
Note
1 — The Company
PAVmed
Inc. (“PAVmed” or the “Company”) together with its majority owned subsidiaries, Lucid Diagnostics, Inc. (“Lucid
Diagnostics” or “LUCID”), Veris Health, Inc. (“Veris Health” or “VERIS”), and Solys Diagnostics,
Inc. (“Solys Diagnostics” or “SOLYS”), were organized to advance a broad pipeline of innovative medical technologies
from concept to commercialization, employing a business model focused on capital efficiency and speed to market. The Company’s
activities have focused on advancing the lead products towards regulatory approval and commercialization, protecting its intellectual
property, and building its corporate infrastructure and management team. The Company operates in one segment as a medical technology
company.
The
ability of the Company to generate revenue depends upon the Company’s ability to successfully advance the commercialization of
EsoGuard and CarpX while also completing the development and the necessary regulatory approvals of its other products and services. In
this regard:
|
● |
EsoCheck
has received 510(k) marketing clearance from the FDA as an esophageal cell collection device in June 2019; |
|
|
|
|
● |
EsoGuard
completed the certification required by the Clinical Laboratory Improvement Amendment (“CLIA”) and accreditation of the
College of American Pathologists (“CAP”) making it commercially available as a Laboratory Developed Test (“LDT”)
at LUCID’s contract diagnostic laboratory service provider in California in December 2019; and, |
|
|
|
|
● |
CarpX,
developed as a patented, single-use, disposable, minimally invasive device designed as a precision cutting tool to treat carpal tunnel
syndrome while reducing recovery times, received 510(k) marketing clearance from the FDA in April 2020 with the first commercial
procedure successfully performed in December 2020. |
Although
the Company’s current operational activities are principally focused on the commercialization of EsoGuard and CarpX its development
activities are focused on pursuing FDA approval and clearance of other lead products in our product portfolio pipeline, including EsoGuard
IVD, PortIO, DisappEAR, NextFlo, EsoCure and digital health technologies acquired by the Company’s majority-owned subsidiary Veris
Health Inc.
Lucid
Diagnostics Inc. Initial Public Offering - October 14, 2021
Subsequent
to September 30, 2021, on October 14, 2021, Lucid Diagnostics Inc. completed an initial public offering (“IPO”) of its common
stock under an effective registration statement on Form S-1 (SEC File No. 333-259721), wherein a total of 5.0
million IPO shares of common stock of Lucid Diagnostics
Inc. were issued, with such total IPO shares inclusive of 571,428
shares issued to PAVmed Inc., at an IPO offering
price of $14.00
per share, resulting gross proceeds of $70.0
million, before underwriting fees of $4.9
million, and approximately $0.7
million of offering costs incurred by Lucid Diagnostics
Inc. See Note 12, Noncontrolling Interest, with respect to Lucid Diagnostics Inc.
Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates
Significant
Accounting Policies
The
Company’s significant accounting policies are as disclosed in the Company’s annual report on Form 10-K for the year ended
December 31, 2020 as filed with the SEC on March 15, 2021, except as otherwise noted herein below.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned
subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company holds a majority ownership
interest and has controlling financial interest in each of: Lucid Diagnostics Inc., Veris Health Inc., and Solys Diagnostics Inc. with
the corresponding noncontrolling interest included as a separate component of consolidated stockholders’ equity (deficit), including
the recognition in the unaudited condensed consolidated statement of the net loss attributable to the noncontrolling interest based on
the respective minority interest equity ownership of each majority-owned subsidiary. See Note 12, Noncontrolling Interest,
for a discussion of each of the majority-owned subsidiaries noted above.
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities
and Exchange Commission (“SEC”) regarding interim financial reporting. As permitted under SEC rules, certain footnotes or
other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2020
has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial
statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of
management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair presentation of the Company’s
unaudited condensed consolidated financial information.
The
consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the consolidated
results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future periods. The accompanying
unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read
in conjunction with the PAVmed Inc and Subsidiaries audited consolidated financial statements and related notes thereto as of and for
the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 15, 2021.
Subsequent
to September 30, 2021, effective October 6, 2021, the Lucid Diagnostics Inc. board of directors: increased the authorized shares of common
stock of Lucid Diagnostics Inc. to 100.0
million shares; and declared a 1.411-to-1.0 common stock-split
with respect to Lucid Diagnostics Inc. common stock (with no adjustment to the par value per share). All shares of Lucid
Diagnostics Inc. common stock, stock options, and restricted stock awards, and per share amounts, have been adjusted for the
common stock-split and are presented for all periods on a retrospective basis.
All
amounts in the accompanying unaudited notes to the unaudited condensed consolidated financial statements are presented in thousands,
if not otherwise noted as being presented in millions, except for the number of shares and per share amounts.
Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued
Significant
Accounting Policies - continued
Use
of Estimates
In
preparing unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the unaudited condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period.
Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these
estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include the estimated
fair value of stock-based equity awards, and the estimated fair value of financial instruments recognized as liabilities. In addition,
management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and
timing of future cash inflows and outflows.
Revenue Recognition
The Company recognizes revenue
under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 606, Revenue from Contracts with Customers, (“ASC 606”). At its inception, an arrangement is accounted for under
the provisions of ASC 606 as a contract with a customer when there is: a legally enforceable contract between the parties; the rights
of the parties are identified; the arrangement has commercial substance; and collectability of the contract consideration is deemed probable.
To determine revenue recognition for arrangements determined to be within the scope of ASC 606, the Company performs the following five
steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the
entity satisfies a performance obligation.
Statement
of Cash Flows - Supplemental Information
The
unaudited condensed consolidated statement of cash flows supplemental information as of September 30, 2021 is as follows: cash flows
used in investing activities with respect to the purchase of fixed assets of $192 is net of $153 included in accounts payable and $60
included in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheet as of September
30, 2021; and cash flows from financing activities with respect to proceeds from exercise of warrants of $4,115 is net of each of $568
of exercise proceeds from the exercise of 354,996 Series Z Warrants, and $20 from the exercise of 3,945 Series W Warrants, with such
exercise proceeds received from the Company’s transfer agent subsequent to September 30, 2021 on October 4, 2021, with such amounts
due from the transfer agent included prepaid expenses, deposits, and other current assets, in the accompanying unaudited condensed consolidated
balance sheet as of September 30, 2021.
Financial
Condition
The
Company has financed its operations principally through the public and private issuances of its common stock, preferred stock, common
stock purchase warrants, and debt. The Company is subject to all of the risks and uncertainties typically faced by medical device and
diagnostic and medical device companies that devote substantially all of their efforts to the commercialization of their initial product
and services and ongoing R&D and clinical trials. The Company expects to continue to experience recurring losses from operations
and will continue to fund its operations with debt and equity financing transactions. Notwithstanding, however, with the cash on-hand
as of the date hereof, the Company expects to be able to fund its future operations for one year from the date of the issue of
the Company’s unaudited condensed consolidated financial statements, as included herein in this Quarterly Report on Form 10-Q for
the period ended September 30, 2021.
Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued
Recent
Accounting Standards Updates
Accounting Standards Updates
Adopted
In
August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40), (“ASU 2020-06”). ASU 2020-06 simplifies
the accounting for certain financial instruments with characteristics of liabilities and equity, by eliminating the beneficial conversion
and cash conversion accounting models previously contained in ASC 470-20 that required separate accounting for embedded conversion features.
ASU 2020-06 also simplified the assessment of a financial instruments settlement to determine whether a contract is an entity’s
own equity qualifies for equity classification by removing certain conditions from ASC 815-4-25. The ASU 2020-06 amendments are effective
for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal
years. The Company’s adoption of the ASU 2020-06 guidance as of January 1, 2021 did not have an effect on the Company’s financial
statements.
In
December 2019, the FASB issued ASU No. 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes”, (“ASU
2019-12”). The guidance of ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intra-period
allocation, and calculating income taxes in interim periods, and adds revised guidance to reduce complexity in certain areas, including
recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. Adoption of the guidance of ASU
2019-12 is required for annual and interim financial statements beginning after December 15, 2020. The Company’s adoption of the
ASU 2019-12 guidance as of January 1, 2021 did not have an effect on the Company’s financial statements.
Accounting Standards Updates
Not Yet Adopted
FASB
ASC Topic 842, Leases, (“ASC 842”) (ASU No. 2016-02, Leases, February-2016 - “ASU 2016-02”)
which established a right-of-use (“ROU”) model requiring a lessee to recognize a ROU asset and a lease liability for
all leases with terms greater-than 12 months. Leases are classified as either finance or operating, with classification affecting the
pattern of expense recognition in the income statement. The ASC 842 effective date for the Company is December 31, 2022 for its annual
financial statements, and for interim quarterly financial statements commencing March 31, 2023.
Note
3 — Patent License Agreement – Case Western Reserve University
Overview
The
Company, through its majority-owned subsidiary Lucid Diagnostics Inc., entered into a patent license agreement with Case Western Reserve
University (“CWRU”), captioned the Amended and Restated License Agreement and dated August 23, 2021 (“Amended CWRU
License Agreement”). The Amended CWRU License Agreement is a successor to and replaced in its entirety the previous CWRU License
Agreement, dated May 12, 2018, between Lucid Diagnostics Inc. and CWRU. The Amended CWRU License Agreement terminates upon the expiration
of certain related patents, or on May 12, 2038 in countries where no such patents exist, or upon expiration of any exclusive marketing
rights granted by the FDA or other U.S. government agency, whichever comes later.
The
Amended CWRU License Agreement (as did the predecessor CWRU License Agreement) provides for the exclusive worldwide license of the intellectual
property rights for the proprietary technologies of two distinct technology components - the “EsoCheck Cell Collection Device”
referred to as “EsoCheck®”; and a panel of proprietary methylated DNA biomarkers, a laboratory developed test (“LDT”),
referred to as “EsoGuard®”; and together are collectively referred to as the “EsoGuard Technology”.
The
CWRU License Agreement Fee was $273,
of which $50
was previously paid in 2018. On the August
23, 2021 effective date of the Amended CWRU License Agreement, the remaining balance of $223
became payable, and such amount was paid
in September 2021. Additionally, also in September 2021, the Company paid a $10
amendment fee in connection with the Amended
CWRU License Agreement. Additionally, the Amended CWRU License Agreement provides for each of patent fees reimbursement payments; milestone
payments; and royalty payments - each as discussed below.
Patent
Fees Reimbursement
Lucid
Diagnostics Inc. is responsible for reimbursement of certain CWRU billed patent fees. See Note 4, Related Party Transactions,
for patent fee reimbursement payments paid to CWRU in the three and nine months ended September 30, 2021 and 2020.
Milestones
The (predecessor) CWRU License
Agreement contained milestones, including regulatory milestones with respect to the FDA 501(k) submission of EsoCheck and the FDA clearance
of EsoCheck, respectively regulatory submissions and clearances; which were achieved in accordance with the requisite contractual due
dates, for which a $75 research and development expense was recognized and paid with respect to the achievement of the regulatory milestone
related to FDA clearance of EsoCheck. The CWRU License Agreement was amended effective February 12, 2021, to: change the achievement
date of commercialization milestone from November 2020 to August 2021; to eliminate the payment with respect to the commercialization
milestone; and to add a non-refundable $100 payment to CWRU in consideration for such changes to the commercialization milestone (“CWRU
License Agreement Amendment Fee”), with such fee recognized as general and administrative expense as of December 31, 2020 and paid
in February 2021. The regulatory milestone related to FDA PMA submission of a licensed product (“PMA Milestone”) is included
in the Amended CWRU License Agreement, and is the sole remaining unachieved milestone, for which a $200 milestone payment would be payable
to CWRU upon its achievement.
Note
3 — Patent License Agreement – Case Western Reserve University - continued
Royalty
Fee
Under
the Amended CWRU License Agreement. the Company is required to pay a royalty fee to CWRU with respect to the “Licensed Products”
(as defined in the CWRU License Agreement) of a percentage of “Net Sales”, as defined in the Amended CWRU License Agreement,
as follows: 5.0% of Net Sales up to $100.0 million per year; and 8.0% of Net Sales of $100.0 million or greater per year, with such amounts
subject-to a minimum annual royalty fee.
The
base minimum annual royalty fee is $50
commencing January 1 following the first anniversary of the
“First Commercial Sale” of a “Licensed Product” (as such terms are defined in the Amended CWRU License Agreement).
The minimum annual royalty fee increases to each of: $150
if the annual “Net Sales” (as
defined in the Amended CWRU License Agreement) exceed $25.0
million up to $50.0
million; $300
if annual Net Sales exceed $50.0
million up to $100.0
million; and $600
if annual Net Sales exceed $100.0
million. The Company recognized a 5.0%
royalty fee payment liability as of September 30, 2021 with respect to the revenue recognized under the EsoGuard Commercialization Agreement,
dated August 1, 2021, between Lucid Diagnostics Inc. and Research Dx Inc. Prior to September 30, 2021, no royalty fee has been incurred
under the CWRU license agreements.
Additionally,
the Company is required to pay a royalty fee on (sub-license) “Other Proceeds” (as defined in the Amended CWRU License Agreement)
of: 30% of sub-license proceeds to extent the sub-license proceeds are realized prior to the first commercial Sale of a Licensed Product;
or 15% of sub-license proceeds to extent the sub-license proceeds are realized after the first commercial Sale of a Licensed Product.
Consulting
Agreements with Physician Inventors - Intellectual Property - CWRU License Agreement
Lucid
Diagnostics Inc. entered into consulting agreements with each of the three physician inventors of the intellectual property licensed
under the Amended CWRU License Agreement (“Physician Inventors”), with each such consulting agreement providing for compensation
on a contractual rate per hour for consulting services provided, and an expiration date of May 12, 2024, upon each of the respective
the agreements’ renewal effective May 12, 2021. Additionally, each of the Physician Inventors have been granted stock options and
restricted stock awards under the Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan; and stock options under the PAVmed Inc.
2014 Long-Term Incentive Equity Plan. See Note 4, Related Party Transactions, with respect to the consulting fee expense
and stock based compensation expense recognized with respect to the Physician Inventors consulting agreements and stock options and restricted
awards discussed above; and Note 9, Stock-Based Compensation, for information regarding each of the “Lucid Diagnostics
Inc. 2018 Long-Term Incentive Equity Plan” and the separate “PAVmed Inc. 2014 Long-Term Incentive Equity Plan”.
Note
4 —Related Party Transaction