What changed in this filing

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Item 1. Business

2022-04-06 compared with 2021-03-15 · 1564 added, 631 removed, 53 unchanged (98% of the section changed)

Business - continued

Business Model

contrast to pharmaceuticals and other life science technologies, which typically require long and capital-intensive paths to translate

cellular or biochemical processes into commercially-viable therapeutics or diagnostics, we believe that medical devices have the

potential to move much more rapidly from concept to commercialization with significantly less capital investment.

Many commercially

successful medical devices are often elegant solutions to important and prevalent clinical problems.

Most medical device companies,

however, are not structurally or operationally equipped to fulfill this potential.

According to a report by Josh Makower, M.D.,

Consulting Professor of Medicine at Stanford University, the typical medical device company will spend over $31.0 million for

each product under development and take approximately five years to develop and commercialize a product through the FDA’s

510(k) pathway and over $100.0 million and seven or more years through the FDA’s PMA regulatory pathway.

to forming PAVmed, our leadership team established a model to realize this potential in “single-product companies”

by advancing medical device products from concept to commercialization using significantly less capital and time than a typical

medical device company.

When previously applied to single-product venture backed companies, the model utilized a virtual business

PAVmed’s structure enables us to retain the model’s tight focus on capital and time efficiency and the

core elements which drive efficiency, including limited infrastructure and low fixed costs, while taking advantages of the economies

of scale and flexibility inherent in a multi-product company.

Due to this virtual business model, the Company was able to continue

to move its products thru engineering and regulatory development despite the general overall industry slowdown caused by the COVID-19

key element of our model is the project selection process.

We choose projects to develop and commercialize based on characteristics

which contribute to a strong commercial opportunity.

We place a heavy emphasis on medical device products with the potential for

high-margins and high-impact in attractive markets without regard to the target specialty or clinical area.

project selection process begins with the identification of an unmet clinical need.

We seek prevalent medical conditions where

we believe an opportunity exists to advance the care of the patient through improvements in existing technologies or the introduction

of new platform technologies.

In the current healthcare environment, this usually means our products must be less invasive and

more cost effective.

We select projects which we believe have the potential to lessen procedural invasiveness and/or the opportunity

to shift care from the surgical operating room to lower-cost venues such as the interventional suite or the ambulatory setting.

We expect our products to decrease complications, hospital stays, recovery times and indirect costs associated with a patient’s

loss of productivity.

characteristics which impact a project’s commercial opportunity are its technology, regulatory and reimbursement profiles.

We typically select projects with strong intellectual property position, low to moderate technological complexity, low to moderate

manufacturing costs and primarily disposable products do not require significant capital equipment.

of the most important features we consider is the project’s regulatory pathway, both in the U.S.

and internationally.

FDA’s 510(k) pathway requires us to demonstrate our product is safe and substantially equivalent to FDA-cleared predicates.

The FDA’s costlier and more prolonged PMA pathway requires us to demonstrate our product is safe and effective through randomized

clinical studies.

A product which is eligible for the 510(k) pathway will require substantially less capital and time than one

that requires full PMA clearance.

With all our products we are very aggressive about identifying what we believe are the quickest

paths to regulatory clearance, paying very careful attention to selection of the best predicates and references as well as careful

attention to precisely crafting the primary indications for use language.

Although we favor products eligible for the FDA’s

510(k) pathway, with or without clinical safety studies, we may also pursue PMA pathway products with large addressable markets,

or in the case of one of our lead products, PortIO™, pursue classification under section 513(f)(2) of the FDCA, also referred

to as de novo classification, which could be more rigorous than the 510(k) pathway, but generally require substantially

less time and resources than a PMA pathway.

We have a variety of options to commercialize such products more efficiently by initially,

or even exclusively, targeting European or emerging markets which have shorter, less costly regulatory pathways for such projects.

We also attempt to identify narrower applications and indications with lower regulatory hurdles will allow us to start commercializing

our product, while broader applications and indications with higher hurdles move through the regulatory process.

Business - continued

Business Model - continued

project’s reimbursement profile, both in the U.S.

and internationally, is another very important component of the project’s

commercial opportunity.

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value

surgical procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure

and Commercialization Processes

we add a project to our pipeline, we map out development and commercialization processes specifically tailored to the product

seeking to optimize capital and time efficiency and maximize value creation.

The model emphasizes parallel development processes,

such as engineering, quality, regulatory, supply chain, and manufacturing, utilizing outsourced, best-in-class process experts

on an as-needed basis.

We initially select the shortest, most-efficient path to commercialization of a safe and effective first-generation

We then proceed with iterative product development based on real-life product performance and user feedback.

intend to continue to utilize outsourced best-in-class process experts.

We have strong relationships with a network of experts

in design engineering, regulatory affairs, quality systems, supply chain management and manufacturing, including many with highly

specialized skills in areas critical to our current and future pipeline.

We will not be reluctant, however, to in-source certain

heavily utilized process experts when and if we decide such a move will enhance our ability to execute on our strategy.

grow, we expect to maintain a lean management infrastructure while expanding our bandwidth primarily with skilled project managers.

believe our structure will enhance our flexibility to commercialize our products compared to these and other single-product, development-stage

Each of our products generally follow one of three commercialization pathways.

For certain products with one or more

natural strategic acquirers such as PortIO and NextFlo, we may seek an early acquisition of the product prior to or soon after

regulatory clearance, providing us with a source of non-dilutive capital.

For certain groundbreaking products with large market

opportunities such as CarpX and EsoGuard/EsoCheck, we retain the flexibility to fully commercialize our products for the foreseeable

For certain other high-volume, lower sale price products such as DisappEAR, we may seek to co-market them with strategic

partners through sales and distribution agreements.

For products we choose to commercialize ourselves, we may do so through a

network of independent U.S.

medical representatives and/or inventory-stocking distributors.

We eventually may, however, choose

to build (or obtain through a strategic acquisition) our own sales and marketing team, initially utilizing a hybrid model with

national /regional sales management of independent distributors moving towards direct sales as warranted.

As our pipeline grows,

we may choose to jointly commercialize subsets of related products which target certain medical specialties or healthcare locations.

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.

We plan to increase our research and development expenses for the foreseeable

future as we continue development of our products Our current research and development activities are focused principally on obtaining

FDA approval and clearance and initializing commercialization of the other lead products in our product portfolio pipeline, such

as EsoGuard IVD, NextFlo, and PortIO, while advancing DisappEAR and glucose monitoring through development.

The research and development

activities on the other portfolio products is commensurate with available sufficient capital resources.

Business - continued

Business Model - continued

Implementation

intend to advance our lead products towards commercialization as quickly and efficiently as possible and expand our product pipeline

by advancing our conceptual phase projects through patent submission and early testing.

we will continue to conceive and develop products internally, as we grow and expand our resources, we intend to expand our pipeline

with innovative products sourced from third parties.

In contrast to pharmaceuticals and other life sciences technologies, medical

device innovation often begins with one, or at most a few, clinicians and/or engineers identifying an unmet clinical need and

proposing a technological solution to address such need.

Many academic medical centers and other large institutions try to aggregate

their intellectual property through technology transfer centers and, more recently, through “innovation”

centers which

do not merely secure and transfer intellectual property, but actually advance projects internally prior to spinning them out for

eventual commercialization.

is our belief, despite these efforts, only a small fraction of the potential pool of intellectual capital (i .e .

of individual clinicians with innovative product ideas) is participating in medical device innovation.

These clinicians rarely

engage in the process for a variety of reasons, including the belief they are too busy, can’t afford to divert time away

from their practice or that the upfront out-of-pocket costs are too great.

Other clinicians believe they lack the knowledge or

connections to successfully navigate the process.

Technology transfer and full-fledged innovation centers have only had modest

success in getting their clinicians to bring them innovative product ideas and even less success getting these products commercialized.

Even centers with extensive resources are usually limited in their ability to advance products beyond the pre-clinical phase and

are dependent on a shrinking pool of early-stage medical device venture capital to bring their products to market.

some technology transfer and innovation centers associated with not-for-profit hospitals, universities, endowments and charitable

organizations may be precluded from directly engaging in commercial sales of medical devices, creating opportunities for us to

commercialize and market their intellectual property.

capital and time efficient model put us in strong position to partner with innovative clinicians and academic medical centers

focusing on medical device innovation.

We have developed a collaboration model focused on licensing technologies for development

and commercialization.

Since our founding, we have been contacted by clinicians and centers inquiring about opportunities to work

with us on developing and commercializing their ideas and technologies.

In November 2016, we signed a definitive licensing agreement

with a group of leading academic institutions, including Tufts University and two Harvard Medical School teaching hospitals –

Massachusetts Eye and Ear Infirmary and Massachusetts General Hospital.

The agreement provides us with an exclusive worldwide

license to develop and commercialize antibiotic-eluting resorbable ear tubes based on a proprietary aqueous silk technology conceived

and developed at these institutions, a product we have initially referred to as DisappEAR.

More recently, in May 2018, we licensed

technologies from Case Western Reserve University for EsoGuard and EsoCheck.

Within the twelve to eighteen months following the

grant date of the license, Lucid Diagnostics Inc., our majority owned subsidiary, achieved FDA 510(k) market clearance for EsoCheck

and launched EsoGuard as an LDT at our contract laboratory in California.

Typical in-license products, once commercialized, provided

for the licensor institution to receive royalties based on revenue, and/or milestone payments, potentially including a portion

of certain additional proceeds from the sale or sublicensing of the technology to a third party.

internally or externally sourced, we seek to maintain balance within our pipeline with shorter-term, lower-risk products which

offer the opportunity for more rapid commercialization, generating revenue to support development of longer-term products.

each product moves through our pipeline from concept to commercialization, we continuously reassess the product’s long-term

commercial potential, balance it against other products in the pipeline and re-allocate resources accordingly.

As such, we expect

to have much greater flexibility to move products through our pipeline based on the actual developments and the overall interests

of our company.

We may accelerate, decelerate, pause or abandon a product and increase or decrease resources applied to a product

based on a variety of factors including available capital, shifts in the regulatory, clinical, market and/or intellectual property

landscape for a particular product, the emergence of one or more products with significantly greater commercial potential, or

any other factor which may impact its long-term commercial potential.

Business - continued

Business Model - continued

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.

From inception on June 26, 2014, thru 2020, the Company’s activities were technology-focused on advancing its lead products towards

regulatory approval and pre-commercialization, protecting its intellectual property, and building its corporate infrastructure and management

Beginning in 2020 through 2021 our activities and efforts are best described as transition years focused mainly on infrastructure

expansion including personnel, systems, and facilities.

Additionally, the focus increasingly involved building out the commercial foundation

including reimbursement with CMS and private payor engagement, sales operations, clinical services and Lucid Test Centers.

For the years

2022 and beyond, the central focus will be predominantly on commercial expansion and execution including the acceleration of EsoGuard

commercialization and the transition of NextFlo, EsoCure, Veris, and the next generation of CarpX from pre-commercial activities to commercial

Company operates in one segment as a medical device company with four operating divisions which include Medical Devices, Diagnostics,

Digital Health, and Emerging Innovations.

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.

In addition to activities ongoing at

the parent company level, the Company also has ongoing operations conducted in three majority owned subsidiaries:

Lucid Diagnostics,

(“Lucid Diagnostics” or “LUCID”) incorporated in May 2018, Veris Health, Inc.

(“Veris”) founded

in May 2021 with the acquisition of Oncodisc, Inc and its digital health technologies, and Solys Diagnostics, Inc.

(“Solys Diagnostics”

or “SOLYS”) incorporated in October 2019.

October 14, 2021, Lucid Diagnostics 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

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 in gross proceeds to Lucid Diagnostics Inc.

of $70.0 million, before underwriting fees of $4.9 million,

and approximately $0.7 million of offering costs incurred by Lucid Diagnostics Inc.

and its subsidiaries have proprietary rights to the trademarks used herein, including, among others, PAVmed™, Lucid Diagnostics™,

LUCID™, Veris Health™, VERIS™, Oncodisc™, Solys Diagnostics™, SOLYS™, Caldus™, CarpX®,

DisappEAR™, EsoCheck®, EsoGuard®, EsoCheck Cell Collection Device®, EsoCure Esophageal Ablation Device™, NextCath™,

NextFlo™, PortIO™, and “Innovating at the Speed of Life”™.

Solely as a matter of convenience, trademarks

and trade names referred to herein may or may not be accompanied with the requisite marks of “™” or “®”.

However, the absence of such marks is not intended to indicate, in any way, PAVmed Inc.

or its subsidiaries will not assert, to the fullest

extent possible under applicable law, their respective rights to such trademarks and trade names.

multiple products are in various phases of development, regulatory clearances, approvals, and commercialization, including:

EsoCheck device received 510(k) marketing clearance from the U.S.

Food and Drug Administration

(“FDA”), in June 2019 and European CE Mark Certification in May 2021 as an esophageal

cell collection device;

and, EsoGuard has been established as a Laboratory Developed Test

(“LDT”), completed European CE Mark Certification in June 2021, and was launched

commercially in December 2019 after Clinical Laboratory Improvement Amendment (“CLIA”)

and College of American Pathologists accreditation of the test at Lucid Diagnostics commercial

diagnostic laboratory partner ResearchDx Inc.

(“RDx”), headquartered in Irvine,

On February 25, 2022, Lucid Diagnostics new, wholly owned subsidiary, LucidDx

(“LucidDx Labs”) acquired from ResearchDx, Inc.

a CLIA-certified, CAP-accredited clinical laboratory operator located in Irvine, CA, 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 August 2021, Lucid Diagnostics

launched a strategic partnership with direct-to-consumer telemedicine company UpScriptHealth

to support our commercialization efforts.

Also in August 2021, we tested our first patients

referred by primary care physicians (“PCPs”) in three Lucid Test Centers opened

in the Phoenix metropolitan area.

CarpX device is a patented, single-use, disposable, minimally invasive surgical device designed

as a precision cutting tool to treat carpal tunnel syndrome while reducing recovery times

that was cleared by the FDA under section 510(k) in April 2020, with the first commercial

procedure successfully performed in December 2020.

In May 2021 European CE Mark Certification

was received for CarpX.

May 2021, we formed Veris Health, which is our newest majority-owned subsidiary.

In connection

with it formation, Veris Health acquired Oncodisc Inc (“Oncodisc”), a digital

health company with ground breaking tools to improve personalized cancer care through remote

patient monitoring.

Oncodisc’s core technologies include the first intelligent implantable

vascular 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

Its vascular access port contains biologic sensors capable of generating continuous

data on key physiologic parameters known to predict adverse outcomes in cancer patients undergoing

Wireless communication to the patient’s smartphone and its cloud-based digital

healthcare platform efficiently and effectively delivers actionable real time data to patients

and physicians.

The technologies are the subject of multiple patent applications and one

allowed patent awaiting final issuance.

discussed herein below, our current lines-of-business are as follows:

● Diagnostics

- EsoGuard Esophageal DNA Test, EsoCheck Esophageal Cell Collection Device;

Esophageal Ablation Device with Caldus Technology;

Devices - CarpX Minimally Invasive Surgical Device for Carpal Tunnel Syndrome;

Therapy - PortIO Implantable Intraosseous Vascular Access Device and NextFlo Highly Accurate

Disposable Intravenous Infusion Platform Technology;

Health – Veris cancer healthcare platform and implantable intelligent vascular

port combining remote monitoring and data analytics;

Medical Devices – NextVent single-use ventilators;

FlexMO medical circulatory

support cannulas;

Veris Cardiac Monitor;

DisappEAR resorbable pediatric ear tubes;

Solys Noninvasive glucose monitoring;

EsoCheck, and EsoCure

and EsoCheck are based on patented technology licensed from Case Western Reserve University (“CWRU”) through our majority-owned

subsidiary, Lucid.

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”).

is a bisulfite-converted next-generation sequencing (NGS) DNA assay performed on surface esophageal cells collected with EsoCheck.

quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1).

The assay was evaluated in a 408-patient multicenter

case-control study published in Science Translational Medicine and showed greater than 90% sensitivity and specificity at detecting esophageal

precancer and all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova, et al.

Sci Transl Med.

2018 Jan 17;10(424):

EsoGuard is commercially available in the U.S.

as a Laboratory Developed Test (LDT) performed at our

CLIA-certified laboratory partner, ResearchDx Inc.

(“RDx”), which does business as “PacificDx”.

Cell samples,

including those collected with EsoCheck, as discussed below, are sent to RDx, for testing and analyses using our proprietary EsoGuard

NGS DNA assay.

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells

in a less than five-minute office.

It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from

which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells.

When vacuum suction is applied, the

balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by cells outside of the targeted

region during device withdrawal.

We believe this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal

cell collection device capable of such anatomically targeted and protected sampling.

December 2019, we secured “gapfill” determination for the EsoGuard PLA code 0114U through the United States Department of

Health and Human Services (“HHS”) Centers for Medicare and Medicaid Services (“CMS”) Clinical Laboratory Fee

Schedule (“CLFS”) process, which has allowed us to engage directly with Medicare contractor Palmetto GBA, LLC and its MolDx

Program on CMS payment and coverage.

In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective

January 1, 2021.

We are still awaiting Medicare local coverage determination from MolDx, which we understand is working to clear a significant

backlog of reviews.

are also aggressively pursuing EsoGuard U.S.

private payor payment and coverage.

We recently held our initial advisory board meetings

with medical directors of major insurers to obtain feedback and guidance on the type of clinical data that will be helpful in securing

payment and coverage.

Although the claim cycle can be prolonged during the early commercialization of a new test, PacificDx is starting

to receive out-of-network private insurance payments on our behalf.

initial EsoGuard commercialization efforts focused on gastroenterology (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.

We have previously relied upon a hybrid sales model with full-time sales management and approximately fifty independent

sales representatives.

We significantly expanded our full-time commercial team in 2021 and are actively recruiting full-time territory

managers and sales representatives nationwide.

Our Lucid Vice President of Sales and three Area Sales Directors (“ASD”) oversee

a growing number of Sales Representatives, Market Development Mangers (“MDM”) and Clinical Specialists.

EsoGuard testing

has accelerated as pandemic-related healthcare facility limitations have eased.

EsoGuard commercialization efforts span multiple channels including targeting primary care physicians and consumers in addition to GI

To assure sufficient testing capacity and geographic coverage, as part of this expansion, we are building 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, starting with three test centers launched in the Phoenix metropolitan area.

We have expanded our test centers

to include Salt Lake City, Utah, Henderson, Nevada, and Denver, Colorado.

We are currently expanding into Portland, Oregon, Seattle,

Washington, and Boise, Idaho.

have also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party telemedicine provider,

that accommodates EsoGuard self-referrals from direct-to-consumer marketing.

active clinical research and development program seeks to expand the clinical evidence of our products’ efficacy to support our

ongoing regulatory, reimbursement and commercial efforts, including an FDA PMA submission for approval of EsoGuard and EsoCheck as an

in vitro diagnostics (“IVD”) device, as currently, EsoGuard and EsoCheck are permitted to be marketed separately,

but not in combination.

We are actively enrolling patients in two international multicenter clinical trials to support FDA PMA approval

of EsoGuard, used with EsoCheck, as an IVD indicated to detect NDBE.

ESOGUARD-BE-1 is a screening study which will enroll approximately

500 to 900 male GERD patients over 50 years of age with one other risk factor.

ESOGUARD-BE-2 is a case control study which will enroll

approximately 500 male GERD patients with a previous diagnosis of NDBE, LGD, HGD, or EAC, along with normal controls.

February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic medical device (“IVD”).

The FDA Breakthrough Device Program was created to offer patients more timely access to breakthrough technologies which provide for more

effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions by expediting their development,

assessment and review through enhanced communications and more efficient and flexible clinical study design, including more favorable

pre/post market data collection balance.

The Centers for Medicare and Medicaid Services and the United States Congress continue to work

to provide an expedited coverage pathway for emerging technologies.

have received ISO 13485:2016 certification for Lucid’s quality management system and received CE Mark certification for EsoCheck

in May 2021 which allows it to be marketed in CE Mark European countries, which include the European Economic Area (the EU, Norway, Iceland,

and Lichtenstein), Switzerland, and, until July 1, 2023, the United Kingdom.

In June 2021, we completed the European Directive 98/79/EC

for In-Vitro Diagnostic Medical Devices (“IVDD”) CE Mark certification for EsoGuard after Lucid and its European Union (“EU”)

authorized representative completed the Commission of the European Union (“EC”) declaration of conformity procedure, including

the associated technical documentation, ensuring and declaring EsoGuard meets the essential requirements of the IVDD.

is in development as an 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.

We have successfully

completed a pre-clinical feasibility animal study of EsoCure demonstrating excellent, controlled circumferential ablation of the esophageal

mucosal lining.

We have also completed an acute and survival animal study of EsoCure™ Esophageal Ablation Device, demonstrating

successful direct thermal balloon catheter ablation of esophageal lining through working channel of standard endoscope.

We plan to conduct

additional development work and animal testing of EsoCure to support a future FDA 510(k) submission.

March 2022, both the PAVmed and Lucid board of directors have approved entering into an intercompany license between PAVmed and Lucid

such that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus, including

a royalty arrangement whereby Lucid will pay PAVmed a 5% royalty on all EsoCure sales up to $100 million per calendar year, and 8% above

that threshold.

Lucid will obligated to fund ongoing development costs and cumulative patent expenses.

EsoCure will become part of an

integrated suite of Lucid products addressing BE-EAC.

Furthermore, should PAVmed acquire businesses or commercial products or develop

technologies that may be partially or wholly synergistic with Lucid’s lead products and therefore provide the opportunity to create

value, Lucid may also seek to negotiate an arms-length commercial license from PAVmed to market the relevant commercial products that

may originate from PAVmed’s development or acquisition initiatives.

To that end, In March 2022, both the PAVmed and Lucid board

of directors have approved entering into a purchase and sale of the CapNostics, LLC assets from PAVmed to Lucid as well as transferring

the consulting agreement with the previous principal owner of CapNostics, LLC.

The transfer price is $2.1 million

for the assets, the same purchase price paid by PAVmed’s subsidiary.

is a minimally invasive surgical device for use in the treatment of carpal tunnel syndrome which received FDA 510(k) marketing clearance

in April 2020, with the first commercial procedure successfully performed in December 2020.

After an initial slowdown in commercialization

related to COVID, more recently we have recruited new sales leadership and have recently trained eight new surgeons to perform the CarpX

procedure with four more scheduled to undergo training in the coming months.

Our limited-release commercialization efforts thru 2022

are focused on engaging key opinion hand surgeons designed to solicit input for ergonomic improvements to the device, procedure development

and surgical-time optimization, and ease of use.

Concurrently, we are presently working on improvements to the device that will released

in stages over the next several quarters.

believe CarpX is designed to allow the physician to relieve the compression on the median nerve without an open incision or the need

for endoscopic or other imaging equipment.

To use CarpX, the operator first advances a guidewire through the carpal tunnel under the

ligament, and then advanced over the wire and positioned in the carpal tunnel under ultrasonic and/or fluoroscopic guidance.

CarpX balloon is inflated it creates tension in the ligament positioning the cutting electrodes underneath it and creates space within

the tunnel, providing anatomic separation between the target ligament and critical structures such as the median nerve.

Radiofrequency

energy is briefly delivered to the electrodes, rapidly cutting the ligament, and relieving the pressure on the nerve.

We believe CarpX

will be significantly less invasive than existing treatments.

presently have a National Sales Director, one Sales Representative, and one Clinical Specialist that are overseeing our CarpX commercial

As we broaden adoption of the device beyond key opinion leaders.

we intend to commercialize CarpX through a network of independent

sales representatives and/or inventory stocking medical distributors together with our in-house sales management and marketing teams.

Our focus on CarpX, and other high margin products and services, is particularly suitable to this mode of distribution.

margin allows us to properly incentivize our distributors, which in turn allows us to attract the top distributors with the most robust

networks in our targeted specialties.

Independent distributors play an even larger role in many parts of Europe, most of Asia and emerging

markets worldwide.

may also choose to enter into distribution agreements with larger strategic partners whereby we take full responsibility for the manufacturing

of CarpX but outsource some or all of its distribution to a partner, particularly outside the United States, with its own robust distribution

have received ISO 13485:2016 certification for PAVmed’s quality management system and received CE Mark certification for CarpX

in May 2021 which allows it to be marketed in CE Mark European countries, which include the European Economic Area (the EU, Norway, Iceland,

and Lichtenstein), Switzerland, and, until July 1, 2023, the United Kingdom.

is a novel, patented, 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 may not require regular flushing.

It features simplified, near-percutaneous insertion and removal, without the need for surgical dissection or radiographic confirmation.

It provides a near limitless number of potential access sites and can be used in patients with chronic total occlusion of their central

The absence of an intravascular component will likely result in a very low infection rate.

on encouraging animal data, we have initiated a long-term (60-day implant duration) first-in-human clinical study in dialysis patients

or those with poor venous access in Colombia, South America and intend to fulfill the likely FDA request for human clinical data with

a clinical safety study in the U.S.

following FDA clearance of our Investigational Device Exemption (“IDE”) submission to

begin clinical testing in dialysis patients to support a future de novo regulatory submission.

In March of 2022, the First-In-Human implantations

of PortIO devices were successfully performed at the Clinica Porto Azul in Barranquilla, Colombia.

is a patented, disposable, and highly accurate infusion platform technology including intravenous (“IV”) infusion sets and

disposable infusion pumps designed to eliminate the need for complex and expensive electronic infusion pumps for most of the estimated

one million infusions of fluids, medications and other substances delivered each day in hospitals and outpatient settings in the U.S.

NextFlo is designed to deliver highly accurate gravity-driven infusions independent of the height of the IV bag.

It maintains constant

flow by incorporating a proprietary, passive, pressure-dependent variable flow-resistor consisting entirely of inexpensive, easy-to-manufacture

disposable mechanical parts.

NextFlo testing has demonstrated constant flow rates across a wide range of IV bag heights, with accuracy

rates comparable to electronic infusion pumps.

may seek a long-term strategic partnership or acquiror with respect to NextFlo, as we continue to have periodic discussions continue

with large strategic partners to license the NextFlo technology for disposable infusion pumps.

Notwithstanding, we continue to advance

the technology towards self-commercialization.

We have initiated design freeze verification testing in preparation for final verification

and validation testing of NextFlo IV Infusion Set, to support FDA 510(k) submission and clearance targeted for the second half of 2022.

recently hired a director of sales who will focus on all aspects of NextFlo’s commercial launch including and not limited to creating

and executing the sales strategy, hiring/mentoring the commercial launch team, and collaborating with internal resources on product development

and marketing.

Target customers include Acute Inpatient Care, Outpatient Care, Infusion Centers, Home Infusions, Outpatient Pharmacy,

EMS, and the Department of Defense.

May 2021, we formed Veris Health, which is our newest majority 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.

was founded by experienced physician entrepreneurs, James Mitchell, M.D., who joins Veris Health as its full-time Chief Medical Officer,

and Andrew Thoreson, M.D., who will serve as a Veris Health consultant.

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.

was founded in 2018 by Mitchell, a radiation oncologist, and Thoreson, an interventional radiologist, who previously co-founded Redsmith,

Inc., an interventional catheter company whose technology was acquired by C.R.

Bard Inc., now BD Inc.

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.

groundbreaking vascular access port contains biologic sensors capable of generating continuous data on key physiologic parameters known

to predict adverse outcomes in cancer patients undergoing treatment.

Wireless communication to the patient’s smartphone and its

cloud-based digital healthcare platform efficiently and effectively delivers actionable real time data to patients and physicians.

technologies are the subject of multiple patent applications and one issued patent.

planned Veris Health business model seeks to generate 100% recurring revenue through oncology practice and hospital-based subscriptions.

These entities would purchase seats on the platform and pay a monthly remote monitoring charge to drive revenues from remote patient

monitoring and device implantation under existing CPT codes, as well as established CMS Oncology Care Model (OCM) bonuses and CMS Quality

Reporting Program incentives.

Veris Health also anticipates strong demand for its intelligent implantable vascular access port and remote

monitoring platform from oncology biotherapeutic companies to support clinical trials of their novel immunotherapy and chemotherapy agents

with continuous physiologic data and transformative analytics.

addition to targeting the oncology market, Veris plan to expand into cardiovascular diseases, end-stage renal disease, and lung disorders

We have already initiated R&D efforts around an enhanced implantable cardiac monitor capable of detecting cardiac arrhythmias

and other physiologic parameters critical for high-risk cardiac patients.

Future devices will combine novel sensing technology with seamless

communication, engaging user interface design, and data analytics driving actionable clinical insights for patients with congestive heart

These technologies will then be expanded for high-risk kidney disease and pulmonary patients.

Medical Devices

Innovations include a diversified and expanding portfolio of innovative products designed to address unmet clinical needs across a broad

range of clinical conditions.

We are evaluating a number of these product opportunities and intellectual property covering a wide spectrum

of clinical conditions, which have either been developed internally or have been presented to us by clinician innovators and academic

medical institutions for consideration of a partnership to develop and commercialize these products.

This collection of products includes:

NextVent (single use ventilators);

FlexMO (medical circulatory support cannulas);

Veris Cariac monitor;

DisappEAR (resorbable

pediatric ear tubes);

and Solys (Noninvasive glucose monitoring).

In June 2020, we announced the execution of a letter of intent

to consummate a series of agreements to develop and utilize Canon Virginia’s commercial grade and scalable aqueous silk fibroin

molding process to manufacture PAVmed’s DisappEAR molded pediatric ear tubes for commercialization.

Furthermore, we are exploring

other opportunities to grow our business and enhance shareholder value through the acquisition of pre-commercial or commercial stage

products and/or companies with potential strategic corporate and commercial synergies.

majority owned subsidiary, Lucid Diagnostics, Inc.

LUCD) is a commercial-stage medical diagnostics technology company focused

on the millions of patients with gastroesophageal reflux disease (GERD), also known as chronic heartburn, acid reflux or simply reflux,

who are at risk of developing esophageal precancer and cancer, specifically highly lethal esophageal adenocarcinoma (EAC).

believe that our lead products, the EsoGuard ® Esophageal DNA Test performed on samples collected with the EsoCheck ®

Esophageal Cell Collection Device, constitute 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 in at-risk GERD patients.

The technologies

were highlighted in the NCI’s Annual Plan and Budget Proposal for FY2020 to Congress as one of the year’s significant advances

in cancer prevention.

We believe EsoGuard could have as great an impact in preventing EAC deaths as widespread Pap test screening has

had in preventing cervical cancer deaths.

just over three years since our inception, we have advanced the technologies underlying EsoGuard and EsoCheck from the academic research

laboratory to commercial products within scalable business model.

EsoGuard is commercialized in the U.S.

as a Laboratory Developed Test

(LDT) and was granted final Medicare payment determination of $1,938.01, effective January 1, 2021.

EsoCheck is commercialized in the

as a 510(k)-cleared esophageal cell collection device.

EsoGuard, used with EsoCheck, was granted FDA Breakthrough Device designation

and is the subject of two large, actively enrolling, international multicenter PMA clinical trials.

Gastroesophageal

reflux disease (GERD), a pathologic condition in which stomach fluid, including acid, inappropriately refluxes into the lower esophagus,

is ubiquitous and can lead to highly lethal esophageal adenocarcinoma (EAC).

Our opportunity is to prevent EAC deaths through the early

detection of esophageal precancer and cancer in millions of at-risk GERD patients.

2021, approximately 20,000 U.S.

GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it.

80% of EAC patients will die within five years of diagnosis, making it the second most lethal cancer in the U.S.

EAC has increased 500% over the past four decades, while the incidences of other common cancers have declined or remained flat.

all cases, EAC silently progresses until it manifests itself with new symptoms of advanced disease.

EAC is nearly always invasive at

diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages.

to 50 million, or one in four, U.S.

adults have weekly GERD symptoms.

Although symptoms can be ameliorated with medications, including

proton pump inhibitors (PPIs) such as Nexium® and Prilosec®, medications do not prevent progression to esophageal precancer or

Esophagus (BE) is an esophageal precancer and complication of GERD characterized by pathologic transformation of surface esophageal cells.

Dysplastic BE is a late esophageal precancer characterized by further premalignant pathologic transformation called dysplasia.

is believed to arise from BE as the culmination of pathologic changes along the BE-EAC precancer-cancer spectrum—from nondysplastic

BE (NDBE), to low-grade dysplastic BE (LGD), high-grade dysplastic BE (HGD) and finally EAC.

Dysplastic BE can be cured with endoscopic

esophageal ablation which reliably halts progression to EAC.

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.

Risk factors include age over 50 years, male gender, White race, obesity,

smoking history and a family history of BE-EAC.

The ACG BE Guidelines recommend screening

for patients with a five-year history of, or severe, GERD and three or more risk factors.

The highest risk symptomatic GERD cohort recommended for screening consists of the estimated

13 million U.S.

men over 50 with one additional risk factor.

An estimated 60% of at-risk

GERD patients are Medicare beneficiaries.

Unfortunately,

for a variety of reasons, less than 10% of at-risk GERD patients who are recommended for screening undergo traditional invasive upper

gastrointestinal endoscopy (EGD).

We believe that the profound tragedy of an EAC diagnosis is that likely death could have been prevented

if the at-risk GERD patient had been screened and then undergone surveillance and curative endoscopic esophageal ablation of dysplastic

mortality rates are high even in early stage EAC, preventing EAC deaths requires detection and intervention at the precancer stage.

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.

Gastroesophageal

reflux disease (GERD), a pathologic condition in which stomach fluid, including acid, inappropriately refluxes into the lower esophagus,

is ubiquitous and can lead to highly lethal esophageal adenocarcinoma (EAC).

Our opportunity is to prevent EAC deaths through the early

detection of esophageal precancer and cancer in millions of at-risk GERD patients.

2021, approximately 20,000 U.S.

GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it.

80% of EAC patients will die within five years of diagnosis, making it the second most lethal cancer in the U.S.

EAC has increased 500% over the past four decades, while the incidences of other common cancers have declined or remained flat.

all cases, EAC silently progresses until it manifests itself with new symptoms of advanced disease.

EAC is nearly always invasive at

diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages.

to 50 million, or one in four, U.S.

adults have weekly GERD symptoms.

Although symptoms can be ameliorated with medications, including

proton pump inhibitors (PPIs) such as Nexium ® and Prilosec ® , medications do not prevent progression to

esophageal precancer or cancer.

Esophagus (BE) is an esophageal precancer and complication of GERD characterized by pathologic transformation of surface esophageal cells.

Dysplastic BE is a late esophageal precancer characterized by further premalignant pathologic transformation called dysplasia.

is believed to arise from BE as the culmination of pathologic changes along the BE-EAC precancer-cancer spectrum—from nondysplastic

BE (NDBE), to low-grade dysplastic BE (LGD), high-grade dysplastic BE (HGD) and finally EAC.

Dysplastic BE can be cured with endoscopic

esophageal ablation which reliably halts progression to EAC.

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.

Risk factors include age over 50 years, male gender, White race,

obesity, smoking history and a family history of BE-EAC.

The ACG BE Guidelines recommend screening for patients with a five-year history

of, or severe, GERD and three or more risk factors.

The highest risk symptomatic GERD cohort recommended for screening consists of the

estimated 13 million U.S.

men over 50 with one additional risk factor.

An estimated 60% of at-risk GERD patients are Medicare beneficiaries.

Unfortunately,

for a variety of reasons, less than 10% of at-risk GERD patients who are recommended for screening undergo traditional invasive upper

gastrointestinal endoscopy (EGD).

We believe that the profound tragedy of an EAC diagnosis is that likely death could have been prevented

if the at-risk GERD patient had been screened and then undergone surveillance and curative endoscopic esophageal ablation of dysplastic

mortality rates are high even in early stage EAC, preventing EAC deaths requires detection and intervention at the precancer stage.

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.

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

at-risk GERD patients.

is a bisulfite-converted next-generation sequencing (NGS) DNA assay performed on surface esophageal cells collected with EsoCheck.

quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1).

The assay was evaluated in a 408-patient multicenter

case-control study published in Science Translational Medicine, and showed greater than 90% sensitivity and specificity at detecting

esophageal precancer and all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova, et al.

2018 Jan 17;10(424):

Large ongoing clinical trials seek to replicate these results, including a prospective

screening study of at-risk GERD patients.

EsoGuard is commercially available in the U.S.

as a Laboratory Developed Test (LDT) performed

at our CLIA-certified laboratory partner, ResearchDx Inc.

dba PacificDx.

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells

in a less than five-minute office.

It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from

which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells.

When vacuum suction is applied, the

balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by cells outside of the targeted

region during device withdrawal.

We believe this proprietary Collect+Protect ™ technology makes EsoCheck the only noninvasive

esophageal cell collection device capable of such anatomically targeted and protected sampling.

The sample is sent by overnight express

mail to our third-party CLIA-certified laboratory partner for EsoGuard testing.

Status of EsoGuard and EsoCheck

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.

In December 2019, our CLIA-certified laboratory partner, completed documentation of EsoGuard

analytical validity allowing us to commercialize it as a Laboratory Developed Test (LDT).

In May 2021, we received CE Mark certification

for EsoCheck, and in June 2021, we completed CE Mark self-certification for EsoGuard, indicating both may be marketed in CE Mark European

status as a commercially available LDT is dependent on the FDA exercising enforcement discretion for LDTs.

Notwithstanding the fact that

FDA has exercised such discretion despite indicating through non-binding communications and documents it might consider no longer doing

so, and the fact that HHS recently forbade FDA from requiring premarket review of LDTs absent a formal rulemaking process, pending legislation

seeking to revamp the regulatory framework of diagnostic tests keeps the regulatory landscape for LDTs such as EsoGuard uncertain.

mitigate that risk long-term, we have decided to pursue FDA PMA approval for EsoGuard, as an IVD.

In October 2019, we participated in

a FDA pre-submission meeting and received feedback on a proposed initial indication for use and the design of our two international multi-center

clinical studies to support a PMA application for FDA approval of EsoGuard on samples collected with EsoCheck.

We expect to complete

enrollment by the end of 2022 and submit our PMA by early 2023.

Manufacturing

currently have no plans to manufacture our own products because the fixed overhead costs and limited flexibility that come with

owning manufacturing facilities are not consistent with our capital efficient model.

The entire medical device industry, including

many of its largest players, depends heavily on contract manufacturers operating in the United States and abroad.

Medical device

manufacturers are subject to extensive regulation by the FDA and other authorities.

Compliance with these regulations is costly

and particularly onerous on small, development-phase companies.

Contract manufacturers can also take advantage of significant

economies of scale in terms of purchasing, machining, tooling, specialized personnel, sub-contracting or even off-shoring certain

processes to lower-cost operators.

These economies are simply not available to us.

have relationships with many contract manufacturers, including those with specialized skills in several processes important to

We expect them to have sufficient capacity to handle our manufacturing needs and anticipate our growth will be better

served by deploying our resources to expand our pipeline and commercialization efforts.

intend to work closely with our contract manufacturing partners to establish and manage our products’

supply chain, dual

sourcing whenever possible.

We expect to help them design and build our products’

manufacturing lines including subassembly,

assembly, sterilization and packaging and to work closely with them to manage our quality system, to assure compliance with all

regulations and to handle inspections or other queries with regulatory bodies.

Our contract manufacturers have the ability to

add lines and shifts to increase the manufacturing capacity of our products as our demand dictates.

We may ship our products directly

from our contract manufacturers, but we may also choose to utilize third-party regional warehousing and distribution services.

is currently manufactured for us by our partner Sage Product Development Inc.

on a line that can produce over ten thousand units per

In July 2021 we entered into an agreement to transfer the EsoCheck manufacturing line to high-volume manufacturer Coastline International

The initial term of the agreement expires on September 1, 2023, subject to automatic renewal for successive two-year terms unless

either party notifies the other of intent to terminate the agreement no less than 90 days prior to the initial termination date or the

expiration of any successive term.

The agreement, as amended, provides per unit pricing for up to 250,000 units per year, a non-recurring

charge to cover the costs associated with the transfer process, and a detailed timeline that allows for the flexibility to move production

to Coastline later in 2022 as test volumes increase.

The manufacturing line is being designed to allow capacity to be scaled to over

one million units per year.

Our EsoGuard Specimen Kits are manufactured for us by our partner ResearchDx and can be transferred to a

higher volume manufacturer whenever demand dictates.

The warehousing, logistics, fulfillment and customer support of our products is

managed for us by our partner HealthLink International, a leading third-party logistics company.

Reimbursement

December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS process.

allowed us to engage directly with Medicare contractor Palmetto GBA and its MolDx Program on CMS payment and coverage.

In October 2020,

CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.

We are still awaiting Medicare local

coverage determination from MolDx, which we understand is working to clear a significant backlog of reviews.

are also aggressively pursuing EsoGuard U.S.

private payor payment and coverage.

We recently held our first advisory board meeting with

medical directors of major insurers to obtain feedback and guidance on the type of clinical data that will be helpful in securing payment

and coverage.

Although the claim cycle can be prolonged during the early commercialization of a new test, PacificDx has received out-of-network

private insurance payments on our behalf.

Commercialization

initial EsoGuard commercialization efforts on gastroenterology (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.

At the outset of our commercialization, we utilized a hybrid sales model with full-time sales management but have

since transitioned and significantly expanded our full-time commercial team in 2021 and are actively recruiting full-time territory market

develop managers and sales representatives nationwide.

EsoGuard testing has begun accelerating as pandemic-related healthcare facility

limitations have eased.

are now expanding EsoGuard commercialization to target primary care physicians (PCPs).

The vast majority of at-risk GERD patients are

cared for by PCPs and never see a gastroenterologist.

To assure sufficient testing capacity and geographic coverage during this expansion,

we are building our own network of Lucid Test Centers, where Lucid-employed clinical personnel will perform the EsoCheck procedure for

EsoGuard testing.

We have hired personnel and leased medical office space and have launched three pilot Lucid Test Centers in the Phoenix

metropolitan area and added centers in Utah, Colorado, and Nevada.

We are presently focused on adding Centers in Oregon, Washington,

Additionally, we have established an EsoGuard Telemedicine Program, in partnership with an independent third-party telemedicine

provider, that can accommodate EsoGuard self-referrals from direct-to-consumer marketing.

In July 2021, we entered into an agreement

with UpScript, LLC (“UpScript”) to develop and operate a web-based platform to allow individuals access to licensed physicians

and healthcare professionals in order to engage in a telemedicine consult.

UpScript will develop, operate, and maintain a Lucid website

for individuals to request a Laboratory Test and access physicians and other healthcare professionals that are each qualified by law

for professional services they are providing.

The Lucid website will have the ability to transmit the requests from individuals and return

a test order, if authorized.

UpScript will transmit any such test order to the CLIA-certified laboratory directed by Lucid in order arrange

for the performance of the specimen collection with the EsoCheck and performance of the laboratory test (EsoGuard).

Research & Development

active clinical research and development program seeks to expand the clinical evidence of our products’ efficacy to support our

ongoing regulatory, reimbursement and commercial efforts.

We are actively enrolling patients in two international multicenter clinical

trials to support FDA PMA approval of EsoGuard, used with EsoCheck, as an IVD indicated to detect NDBE.

ESOGUARD-BE-1 is a screening

study which will enroll approximately 500 to 900 male GERD patients over 50 years of age with one other risk factor.

ESOGUARD-BE-2 is

a case control study which will enroll approximately 500 male GERD patients with a previous diagnosis of NDBE, LGD, HGD, or EAC, along

with normal controls.

Approximately one-half of the U.S.

sites and one European site are actively enrolling.

We expect to complete enrollment

in both trials by the end of 2022 or the early part of 2023 and submit our PMA to FDA by mid-2023.

Growth Strategy

believe EsoGuard’s total addressable U.S.

market opportunity exceeds $25 billion based on an effective Medicare payment of $1,938

and the over 13 million U.S.

male at-risk GERD patients recommended for screening by clinical practice guidelines.

We believe that EsoGuard,

used with EsoCheck, as the first and only commercially available test capable of serving as a widespread BE-EAC screening tool, has the

potential to become the standard of care to detect esophageal precancer in at-risk GERD patients.

EsoGuard Commercialization Across Multiple Channels

first pillar of our overall growth strategy is to expand EsoGuard commercialization across multiple channels, targeting primary care

physicians (PCPs) and consumers in addition to GI physicians.

We continue to accelerate the expansion of our sales and marketing team

targeting these multiple channels.

have the opportunity to educate PCPs that GERD can lead to EAC, and that, for the first time, they can refer their at-risk GERD patients

for testing using a non-endoscopic alternative to EGD.

We believe our Lucid Test Centers will play a critical role in significantly growing

EsoGuard testing from PCP referrals.

After advancing the pilot program in Phoenix, we are steadily expanding our Lucid Test Centers to

other metropolitan areas, first in Western U.S.

states and then nationwide.

believe that direct-to-consumer (DTC) education and marketing will help drive our long-term growth.

We believe that educating consumers

on the link between GERD and BE-EAC, and the availability of a simple noninvasive test to detect esophageal precancer, will encourage

those at risk to consider EsoGuard testing.

We have launched an EsoGuard Telemedicine Program with DTC marketing in Phoenix and will

expand it to other metropolitan areas once we demonstrate an acceptable return on investment.

Our Clinical Evidence to Support Commercialization, Reimbursement and Regulatory Efforts

second pillar of our growth strategy is to aggressively expand the clinical evidence for our products to support our commercialization,

reimbursement and regulatory efforts, as well as to secure recommendations in clinical practice guidelines, an important value creation

We are currently undertaking multiple ongoing and future clinical trials to build this evidence.

seek to accelerate completion of our ongoing ESOGUARD-BE-1 and ESOGUARD-BE-2 clinical trials to support FDA PMA approval of EsoGuard,

used with EsoCheck, as an IVD.

We will then work with FDA, pursuant to our Breakthrough Device designation, to extend the ESOGUARD-BE-1

to enroll sufficient patients to support an expanded indication to detect dysplastic BE, a substantial but potentially highly rewarding

Finally, we are planning several EsoGuard/EsoCheck clinical utility studies, including a large registry and a study using

electronic medical record screening to assess an EsoGuard-driven strategy to find BE-EAC disease in at-risk GERD patients.

Our Manufacturing and Laboratory Testing Capacity

are in the process of scaling our operational capacity, enhance efficiency and improve operating margins as demand for our products grows.

We will complete transfer of EsoCheck manufacturing to a high-volume partner in 2022, which will provide sufficient long-term manufacturing

capacity and substantially lower per-unit cost of goods.

We anticipated doing the same for EsoGuard Specimen Kit manufacturing as demand

Although the CLIA-certified laboratory at ResearchDX has sufficient capacity to meet EsoGuard testing for the medium-term,

we believe it is in our long-term interest to secure our own CLIA-certified laboratory, to increase capacity further, streamline billing

and claims management, and decrease per-test cost of goods.

On February 25.

2022, Lucid Diagnostics new, wholly owned subsidiary, LucidDx

acquired from ResearchDx, Inc., a CLIA-certified, CAP-accredited clinical laboratory operator located in Irvine, CA, 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.

Our Product Portfolio

seek to expand our product portfolio with at least two highly synergistic technologies under development—BE-EAC progression markers

and PAVmed’s EsoCure device—that would create a fully integrated suite of products to address the diagnosis, monitoring and

treatment of BE-EAC.

We have the opportunity to license and develop biomarkers with the potential to discriminate between NDBE and dysplastic

BE on samples collected with EsoCheck, which we believe would revolutionize NDBE surveillance.

When dysplastic BE is identified, endoscopic

esophageal ablation is indicated to cure the BE and halt progression to EAC.

EsoCure has certain key features which give it the potential,

once cleared and clinically available, to unseat the dominant RF ablation technology.

We intend to pursue these and any other technologies

which synergize with our lead products, improve our competitive position or otherwise provide the opportunity to create value.

of 2022, both the PAVmed and Lucid boards approved entering into an intercompany license agreement for Lucid to formally license EsoCure.

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 in vitro diagnostic (“IVD”), device.

In September 2019, we entered into an agreement with a

clinical research organization to assist us with two ongoing clinical trials for EsoGuard as an IVD device, which are actively enrolling

patients and consist of a screening study (ESOGUARD-BE-1) and a case control study (ESOGUARD-BE-2).

screening study is enrolling GERD patients without a prior diagnosis of BE or EAC who satisfy ACG BE screening guidelines.

The case control

study is enrolling patients with a previous diagnosis of non-dysplastic BE, dysplastic BE (both low and high-grade) or EAC.

In both studies,

EsoGuard is comparing to the gold standard of endoscopy with biopsies.

In February 2020, EsoGuard has received Breakthrough Device designation

from the FDA for its EsoGuard Esophageal DNA Test on esophageal samples collected using its EsoCheck Cell Collection Device in a prevalent

well-defined group of patients at elevated risk for esophageal dysplasia due to chronic GERD.

Breakthrough Device

Food and Drug Administration “Breakthrough Device” designation relates to the FDA’s Breakthrough Device Program

that was created to offer patients more timely access to breakthrough technologies which provide for more effective treatment or diagnosis

of life-threatening or irreversibly debilitating human disease or conditions by expediting their development, assessment and review through

enhanced communications and more efficient and flexible clinical study design, including more favorable pre- and post-market data collection.

Breakthrough Devices receive priority FDA review, and the Centers for Medicare and Medicaid Services and the United States Congress continue

to work to provide an expedited coverage pathway for emerging technologies.

to our Breakthrough Device discussions with FDA, we intend to extend enrollment in the ESOGUARD-BE-1 screening study until it is sufficiently

powered to support expansion to the above proposed indication for use to include detection of dysplastic BE.

FDA indicated that although

they would have preferred to a study powered for HGD, they understood that the study size would be impracticable and that they would

be open to including LGD.

It also indicated that it would consider study designs with some enrichment and, potentially, interim analysis

and approval to mitigate sample size.

We will be working with FDA to finalize an extension of our current screening study to support

such an expanded dysplastic BE indication once FDA resumes Breakthrough Device meetings for IVDs, which are currently on hold as the

branch works to clear a Covid-19 pandemic related backlog.

This study will be a substantial, capital-intensive, but potentially highly

rewarding undertaking.

Although the study size is yet to be determined and will depend on negotiations with FDA, it will be in the thousands.

Clinical Utility Studies

Demonstrating

EsoGuard clinical utility requires providing evidence that it has a meaningful impact on the clinical care of patients undergoing the

It does not require demonstrating the performance of the assay, i.e.

, the negative and positive predictive values.

Our PMA trials are designed and powered to do so.

Clinical utility studies need to demonstrate that patients with a positive EsoGuard

test undergoes confirmatory EGD which leads to a specific intervention, e.g.

, implementation of an NDBE surveillance program or

ablation of dysplastic BE.

Ideally, the near-term EGD rate of EsoGuard negative patients should be low.

In other words, EsoGuard testing

should be able to triage patient to EGD vs.

no EGD, with EGD positive patients receiving an intervention, which would not have happened

if the patient had not been triaged by EsoGuard.

Demonstrating

EsoGuard’s clinical utility is very important for a variety of purposes, including, importantly, for private payor payment and

Our recent advisor board meeting with medical directors of private insurers confirmed this.

They strongly indicated that one

of the most important factors in their future decision to grant payment and coverage will be demonstrating that physicians order the

test and, when they do, that clinical utility can be demonstrated.

utility studies are also important for general EsoGuard commercialization to physician who want to know that it can “find disease”.

A recent U.K.

study from Dr.

Fitzgerald’s team is a good example.

They published a large study of GERD patients in a primary care

setting who underwent screening with Cytosponge/TFF-3 and showed that they were able to identify patients with BE and the occasional

This was not a performance study with routine EGD so the authors could not say how many BE-EAC patients were missed, which was likely

non-trivial given the published data on suboptimal Cytosponge/TFF-3 performance.

However, the study was useful in convincing U.K.

to initiate mobile testing centers around the country.

shortly will launch an EsoGuard Registry study as our primary study to demonstrate clinical utility.

Every patient undergoing EsoCheck

testing will be asked to provide informed consent for us to collect limited post-procedural data from the patient’s physician on

care received after EsoGuard testing, most importantly whether they underwent EGD and, if so, what the results showed.

are also in discussions with a large academic medical center to initiate a clinical utility study in which investigators would use the

network-wide electronic medical record to systematically identify at-risk GERD patients, offer them EsoGuard testing and compare them

to historical controls also identified from the database.

The study would seek to demonstrate that an EsoGuard-guided strategy identifies

more BE-EAC patient than historical practice.

we are helping investigators at a VA medical center launch a Department of Defense supported study to compare the positive predictive

value of EsoGuard followed by EGD compared to EGD alone and the relative costs of each strategy.

The study would seek to demonstrate

that EsoGuard increases the positive rate of EGD, an important measure of the clinical utility of a noninvasive diagnostic test.

Esophagitis Using EsoCheck

are exploring additional EsoCheck applications beyond our core focus of BE-EAC.

The application with the greatest potential may be the

monitoring of patients with Eosinophilic Esophagitis (EoE).

EoE is a rapidly emerging allergy-mediated inflammatory condition of the

esophagus similar to, and often associated with, inflammatory bowel disease (IBD).

Although underappreciated by the medical community

and frequently confused with GERD, EoE has a prevalence comparable to IBD and exacts a significant burden on patients.

It can lead to

swallowing difficulties, esophageal scarring, food impaction and pain.

Current treatment includes oral steroids and an elimination diet.

Several anti-inflammatory biologics are being evaluated to treat EoE.

Since inflammation can persist despite resolution of symptoms,

treatment courses can be very difficult and costly for patients, requiring multiple and frequent invasive endoscopies with biopsies.

To date, efforts to replace endoscopy with a noninvasive diagnostic device have proven unsuccessful.

March 2020, we entered into a clinical trial research agreement with the University of Pennsylvania to perform a pilot study to assess

whether EsoCheck can detect the eosinophils characteristic of active EoE and potentially serve as a less-invasive, more efficient, and

cost-effective alternative to endoscopic biopsies in the management of EoE patients.

The study, entitled “ Pilot Study of EsoCheck

Compared to Biopsies and Brush Cytology During Endoscopy for Evaluation of Eosinophilic Esophagitis ”, was led by Gary W.

M.D., an internationally renowned expert on esophageal disease with specific experience and expertise in the management of EoE.

which has been completed, was a prospective cross-sectional pilot feasibility study of ten patients with suspected or established EoE

scheduled for a clinically indicated upper endoscopy.

The patients underwent esophageal sampling using EsoCheck, with the sample sent

for traditional cytologic analysis, followed by EGD, including brushings and biopsies.

The study results have yet to be published but

preliminary reports indicate that EsoCheck is able to detect a meaningful number of eosinophils in patients with active disease.

already initiated discussions with Dr.

Falk to lead a larger multicenter follow-up study powered to document EsoCheck’s sensitivity

and specificity in detecting active EoE, compared to EGD with brushings and biopsy.

and EsoCheck Intellectual Property

Diagnostics business will depend on proprietary medical device and diagnostic technologies, including the EsoCheck and EsoGuard technology

licensed by us.

We intend to vigorously protect our proprietary technologies’ intellectual property rights in patents, trademarks

and copyrights, as available through registration in the United States and internationally.

Patent protection and other proprietary rights

are thus essential to our Diagnostics business.

The EsoCheck and EsoGuard technology is protected by patents in the United States and

internationally, and our policy is to continue to aggressively file patent applications, both independently and in collaboration with

CWRU, as appropriate, to protect this technology and other proprietary technologies of ours relating to our Diagnostics business, including

inventions and improvements to inventions.

Under the CWRU License Agreement, CWRU has agreed to apply for patent coverage, at our expense,

in any country requested by us, to the extent such protection is reasonably attainable.

We seek patent protection, as appropriate, on:

product itself including all embodiments with future commercial potential;

methods of using the product;

methods of manufacturing the product.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in Canada,

the European Union and other countries worldwide.

Foreign filings can be cumbersome and expensive, and we will pursue such filings when

we believe they are warranted as we try to balance our international commercialization plans with our desire to protect the global value

of the technology.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.

In the United States,

a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution

by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative

delays by the USPTO in granting a patent.

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify the position of our Diagnostics

business in the United States and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate

the existing proprietary rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement

upon competing rights of others.

will also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in the future,

to develop and maintain our competitive position in our Diagnostics business.

We intend to protect our proprietary rights through a variety

of methods, including confidentiality agreements and/or proprietary information agreements with suppliers, employees, consultants, independent

contractors and other entities who may have access to proprietary information.

We will generally require employees to assign patents

and other intellectual property to us as a condition of employment with us.

All our consulting agreements will pre-emptively assign to

us all new and improved intellectual property that arise during the term of the agreement.

and EsoCheck Competition

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.

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.

test faces competition from procedure-based detection technologies such as upper endoscopy, and other screening technologies such as

pill-based imaging solutions like PillCam Eso, cleared by the FDA in November 2004, and transnasal esophagoscopy, a flexible tube with

a miniature camera that is inserted into the nose and advanced through the esophagus into the upper portion of the stomach.

device faces competition from other manufactures with devices designed to collect cell samples from targeted regions of the esophagus.

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.

Interpace Diagnostics (Nasdaq:

IDXG), NeoGenomics (Nasdaq:

NEO) and Cernostics (private) are developing progression type

test for known patients with BE aimed at assessing or predicting the likely development of EAC.

Our competitors may also be developing

additional methods of detecting esophageal cancer and pre-cancer that have not yet been announced.

the market for our Diagnostics products is highly competitive and is characterized by extensive research and clinical efforts and rapid

technological change.

In order to compete effectively, EsoGuard and EsoCheck will have to achieve market acceptance, receive adequate

insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.

We believe that the principal competitive

factors in our markets are:

accuracy and the quality of outcomes for medical conditions;

by physicians and the medical device market generally;

of use and reliability;

leadership and superiority;

marketing and distribution;

price and qualification for coverage and reimbursement.

of our existing and potential competitors have substantially greater financial, marketing, sales, distribution, manufacturing and technological

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.

These competitors may have greater name recognition

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.

We may be unable

to respond to such technical advances.

Notwithstanding

that the market for BE and EAC screening is highly competitive, we believe that EsoCheck, currently cleared by the FDA pursuant to a

510(k), and EsoGuard, the first and only DNA-based non-invasive BE screening LDT test on the market today, compare favorably to other

available products and services.

When used in combination after achieving FDA approval as an IVD medical device through the PMA process,

the use of EsoGuard, on samples collected using EsoCheck, may offer an accurate, lower cost, non-invasive approach, that does not require

endoscopy, to screen for BE and EAC.

The test may be performed in five minutes, without sedation, in an outpatient ambulatory setting

such as a primary care or family practice physician’s office or a freestanding diagnostic facility.

and EsoCheck Specific Government Regulation

and Other Privacy Laws

Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical

Health Act (“HIPAA”) established comprehensive protection for the privacy and security of health information.

The HIPAA standards

apply to three types of organizations, or “Covered Entities”:

health plans, healthcare clearinghouses, and healthcare providers

that conduct certain healthcare transactions electronically.

Covered Entities and their business associates must have in place administrative,

physical, and technical standards to guard against the misuse of individually identifiable health information.

We perform activities

that may implicate HIPAA, such as providing clinical laboratory testing services and entering specific kinds of relationships with Covered

Entities and business associates of Covered Entities.

Penalties for violations of HIPAA include civil money and criminal penalties.

activities must also comply with other applicable privacy laws, which impose restrictions on the access, use and disclosure of personal

More state and international privacy laws are being adopted.

Many state laws are not preempted by HIPAA because they are

more stringent or are broader in scope than HIPAA.

Beginning in 2020 we will also need to comply with the California Consumer Privacy

Act of 2018, which protects personal information other than health information covered by HIPAA.

In the E.U., the General Data Protection

Regulation (“GDPR”) took effect in May 2018 and imposes increasingly stringent data protection and privacy rules.

laws may impact our business and may change periodically, which could have an effect on our business operations if compliance becomes

substantially costlier than under current requirements.

Our failure to comply with these privacy laws or significant changes in the laws

restricting our ability to obtain patient samples and associated patient information could significantly impact our business and our

future business plans.

Self-Referral

federal “self-referral” law, commonly referred to as the “Stark” law, provides that physicians who, personally

or through a family member, have ownership interests in or compensation arrangements with a laboratory are prohibited from making a referral

to that laboratory for laboratory tests reimbursable by Medicare, and also prohibits laboratories from submitting a claim for Medicare

payments for laboratory tests referred by physicians who, personally or through a family member, have ownership interests in or compensation

arrangements with the testing laboratory.

The Stark law contains several specific exceptions which, if met, permit physicians who have

ownership or compensation arrangements with a testing laboratory to make referrals to that laboratory and permit the laboratory to submit

claims for Medicare payments for laboratory tests performed pursuant to such referrals.

We are subject to comparable state laws, some

of which apply to all payers regardless of source of payment, and do not contain identical exceptions to the Stark law.

Transportation

commercialization activities for EsoGuard subject us to regulations of the Department of Transportation, the United States Postal Service,

and the Centers for Disease Control and Prevention that apply to the surface and air transportation of clinical laboratory specimens.

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 Diagnostics business.

were no material capital expenditures for environmental control facilities in the years ended December 31, 2021 and 2020.

- Percutaneous Device to Treat Carpal Tunnel Syndrome

Tunnel Syndrome (“CTS”) is the most common cumulative trauma disorder and accounts for over half of all occupational injuries.

The carpal tunnel is an anatomic compartment in the wrist through which tendons and the median nerve pass.

Cumulative trauma leads to

inflammation which manifests itself clinically through its compressive effect on the median nerve, resulting in motor and sensory dysfunction

A survey published in the Journal of the American Medical Association reported 2.5% of U.S.

adults, or approximately five

million individuals, have CTS and about 600,000 surgical procedures are performed annually for CTS.

According to the Centers for Disease

Control and Prevention, CTS accounts for two million office visits per year.

Of the CTS patients that are candidates for surgery, an

estimated 1.5 million CTS patients continue to suffer in silence rather than undergoing traditional invasive surgery due to concerns

over the prolonged recovery time associated with an open incision.

According to the Agency for Health Care Policy and Research, CTS costs

over $20.0 billion in annual workers’ compensation costs.

Devices and Their Limitations

who have failed to improve with physical therapy or other non-invasive treatments are candidates for interventions which seek to relieve

the compression of the median nerve by cutting the transverse carpal ligament, which forms the superficial wall of the carpal tunnel.

Traditional surgical approaches are effective but are invasive and must be performed in a surgical operating room.

Endoscopic approaches

are less invasive, but are more technically challenging, more expensive and have been associated with higher complication rates.

approaches still require a surgical incision and some surgical dissection before the endoscope is passed into the carpal tunnel.

less-invasive devices are currently on the market.

One device attempts to use transillumination to guide blind passage of a protected

knife and the other passes a saw-like device blindly or by ultrasound guidance.

Technical limitations have hindered market acceptance

of these devices.

have developed CarpX as a patented, single-use disposable, minimally invasive medical device designed as a precision cutting tool to

treat carpal tunnel syndrome while reducing recovery times.

We believe our device will allow the physician to relieve the compression

on the median nerve without an open incision or the need for endoscopic or other imaging equipment.

To use our device, the operator first

advances a guidewire through the carpal tunnel under the ligament.

Our device is then advanced over the wire and positioned in the carpal

tunnel under ultrasonic and/or fluoroscopic guidance.

When the balloon is inflated it creates tension in the ligament positioning the

cutting electrodes underneath it and creates space within the tunnel, providing anatomic separation between the target ligament and critical

structures such as the median nerve.

Radiofrequency energy is briefly delivered to the electrodes, rapidly cutting the ligament and relieving

the pressure on the nerve.

We believe our device will be significantly less invasive than existing treatments.

We also believe it will

allow for more extensive lateral dissection within the tunnel and more reliable division of the ligament, resulting in lower recurrence

rates than some of the endoscopic approaches.

The USPTO has issued U.S.

Patent 10,335,189 which covers the technology underlying PAVmed’s

CarpX minimally invasive device developed to treat carpal tunnel syndrome.

The patent, assigned to PAVmed at its founding, lists Lishan

Aklog, M.D., PAVmed’s Chairman and Chief Executive Officer, and Brian J.

deGuzman, M.D., its Chief Medical Officer, as inventors.

We have advanced, in partnership with our design and contract manufacturing partners, our CarpX product from concept to working prototypes,

completed successful benchtop and cadaver testing confirming the device consistently cuts the transverse carpal ligament, as well as

commercial design and development, and performed pre-submission verification and validation testing.

January 2019, following an in-person pre-submission meeting, the FDA recommended clinical testing to definitively document CarpX procedural

safety in humans and indicated data from a properly structured clinical study outside of the U.S.

would be acceptable, precluding the

need to engage in the time-consuming FDA Investigational Device Exemption (IDE) process required for U.S.

We offered to amend

our previously planned first-in-human (“FIH”) clinical trial in New Zealand to meet this clinical testing recommendation

and postponed the initiation of the amended study until study parameters were finalized with the FDA.

The CarpX FIH safety study was

designed as a single-arm, two-center, two-surgeon, 20-patient study of the CarpX procedure in carpal tunnel syndrome patients, with a

device safety primary endpoint defined as the absence of certain serious device-related adverse events over a limited 90-day follow-up

All 20 patients underwent successful CarpX procedures.

observations from the study strongly support CarpX’s clinical and commercial potential.

Surgeons were able to achieve the same

anatomic result as traditional open surgery using a minimally invasive approach.

Endoscopic visualization showed that CarpX cut the ligament

cleanly and precisely, without evidence of thermal spread beyond the target tissue cut line.

Procedure times fell after a short learning

curve, indicating that CarpX minimally invasive carpal tunnel release can be performed in the same or less time as traditional open surgery.

The final set of procedures were performed through 5-10 mm keyhole incisions, with no incision crossing the base of the palm, an area

known to be problematic for healing, resulting in delayed recovery and persistent pain after traditional open surgery.

The surgeons also

observed that the CarpX balloon appeared to create more space within the carpal tunnel than traditional carpal tunnel release, which

could favorably impact long-term outcomes.

Sales and Marketing

received FDA marketing clearance under section 510(k) in April 2020 for our CarpX minimally invasive surgical device for use in the treatment

of carpal tunnel syndrome and after months of delay caused by the COVID-19 pandemic, the first commercial procedure was successfully

performed in December 2020.

More recently we have recruited new sales leadership and have recently trained eight new surgeons to perform

the CarpX procedure with four more scheduled to undergo training in the coming months.

Our limited-release commercialization efforts

thru 2022 are focused on engaging key opinion hand surgeons designed to solicit input for ergonomic improvements to the device, procedure

development and surgical-time optimization, and ease of use.

Concurrently, we are presently working on improvements to the device that

will released in stages over the next several quarters.

We presently have a National Sales Director, one Sales Representative, and one

Clinical Specialist that are overseeing our CarpX commercial efforts.

As we broaden adoption of the device beyond key opinion leaders.

we intend to commercialize CarpX through a network of independent U.S.

sales representatives and/or inventory stocking medical distributors

together with our in-house sales management and marketing teams.

Our focus on CarpX, and other high margin products and services, is

particularly suitable to this mode of distribution.

A high gross margin allows us to properly incentivize our distributors, which in

turn allows us to attract the top distributors with the most robust networks in our targeted specialties.

Independent distributors play

an even larger role in many parts of Europe, most of Asia and emerging markets worldwide.

have received ISO 13485:2016 certification for PAVmed’s quality management system and received CE Mark certification for CarpX

in May 2021 which allows it to be marketed in CE Mark European countries, which include the European Economic Area (the EU, Norway, Iceland,

and Lichtenstein), Switzerland, and, until July 1, 2023, the United Kingdom.

– Implantable Intraosseous Vascular Access Device

access devices, including peripheral intravenous catheters, central venous lines, peripherally inserted central catheters, tunneled catheters

or implanted ports, are used to deliver various medications, fluids, blood products, nutrition or other therapeutic agents to patients

with a wide variety of clinical conditions over multiple episodes spanning a period of days to weeks to months.

A report by iData Research

Group estimates the market for such devices to be several billion dollars annually.

The market is moderately fragmented and highly commoditized,

with slight premium pricing for modest features, including anti-infective coating, anti-thrombotic properties, tip location and power

injector compatibility.

Devices and Their Limitations

chronically ill patients requiring long-term vascular access devices have poor or no central venous access as a result of repeated instrumentation

of the veins or the presence of pacemaker and defibrillator leads, resulting in thrombosis or scarring.

In addition, patients with renal

failure need preservation of their peripheral and central veins for future dialysis access.

The decades-old core technologies underlying

currently available long-term vascular access devices have several limitations which relate directly to the intravascular component of

Up to 10% of such devices become infected, which can lead to costly and severe complications and even death (van de Wetering,

Cochrane Database 2013).

Since they are in constant contact with the blood stream, current devices require regular flushes to clear stagnant

blood and prevent thrombus formation and occlusion.

Despite these maneuvers, up to one-third of long-term vascular access devices become

occluded at some point during their implantation period (Baskin, et al., Lancet 2009) and the resulting clot can dislodge as an embolism

causing further downstream complications.

This complication requires treatment with clot-dissolving agents or removal and implantation

of a new device at an alternative site which in turn can lead to additional complications.

Finally, most long-term vascular access devices

require surgical insertion and removal, radiographic confirmation of tip placement and careful handling by trained clinicians to prevent

the introduction of air into the circulation.

intraosseous route provides a means for infusing fluids, medications and other substances directly into the bone marrow cavity which

communicates with the central venous circulation via nutrient and emissary veins.

This route is well established, having been used for

decades in a variety of settings including trauma, especially military trauma, and pediatric emergencies.

It has been shown to be bioequivalent

to the intravenous route.

Complication rates are low and there are few contraindications.

Recently, physicians have expanded the use

of the intraosseous route to non-emergent clinical scenarios.

Currently available intraosseous devices pass through the skin into the

bone and are therefore limited to short term use.

We have developed 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.

It provides a near limitless number of potential access sites

and can be used in patients with chronic total occlusion of their central veins.

We believe the absence of an intravascular component

will result in a very low infection rate.

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.

have advanced, in partnership with our design and contract manufacturing partners, our PortIO product from concept to working prototypes,

benchtop, animal, and cadaver testing, commercial design and development, verification and validation testing.

We are pursuing an FDA

clearance for use in patients with a need for longer term vascular access under de novo classification of section 513(f)2 of the FDCA.

The broader clearance is being pursued in discussion with FDA following our previous initial submission to the FDA for a 510(k) premarket

notification for use in patients only requiring 24-hour emergency type vascular access.

The GLP animal study requested by the FDA has

been completed along with supplementary cadaver and animal studies.

Of significance toward our belief of PortIO will one day become the

answer to solve many of the current drawbacks intravenous access devices regularly encounter, our supplemental animal testing has demonstrated

maintenance-free patency over a six-month implant duration.

Based on this encouraging animal data, we have initiated a long-term (60-day

implant duration) first-in-human clinical study in dialysis patients or those with poor venous access in Colombia, South America and

intend to fulfill the likely FDA request for human clinical data with a clinical safety study in the U.S.

following FDA clearance of

our Investigational Device Exemption (“IDE”), submission to begin clinical testing in dialysis patients to support a future

de novo regulatory submission.

In March of 2022, the First-In-Human implantations of PortIO devices were successfully performed at the

Clinica Porto Azul in Barranquilla, Colombia.

– Highly-Accurate Disposable Infusion Platform Technology

day, over one million patients receive some type of infusion and 90% of hospitalized patients receive an intravenous infusion at some

point during their hospital stay.

(Husch et al.

Quality & Safety in Health Care 2005;

Unlike twenty years ago, nearly

all inpatient infusions, including routine ones which do not require flow adjustment, are delivered by expensive electric infusion pumps

instead of with simple gravity.

An increasing number of these patients are receiving infusions of medications or other substances outside

of a hospital, in ambulatory facilities and at home.

Disposable infusion pumps (“DIPs”) have many attractive features that

favor their use in these settings over outpatient electric infusion pumps.

Patients tend to favor DIPs because they are small, disposable,

simple to operate, easy to conceal, and allow for greater mobility.

They are used to deliver medications including antibiotics, local

anesthetics and opioids.

According to a report by Transparency Market Research, the overall global infusion market is estimated to be

over $5.0 billion annually.

DIPs account for approximately 10% of this market and inpatient infusion sets for about 20%.

Devices and Their Limitations

pump errors are a serious ongoing problem and represent a large share of the overall human and economic burden of medical errors.

infusion pumps have become expensive, high-maintenance devices and have been plagued in recent years with recalls due to serious software

and hardware problems.

These pumps are designed for fine titration of infusions in complex patients such as those in a critical care

Using them for routine administration of medications or fluids is technological overkill.

We believe there is a significant

market opportunity for a simple, disposable device which can be incorporated into a standard infusion set and eliminate the need for

expensive, problem-prone infusion pumps for routine inpatient infusions.

In terms of outpatient infusions, currently marketed DIPs are

powered by elastomeric membranes, compressed springs, compressed gas or vacuum and controlled by mechanical flow limiters.

limitation of DIPs is they can be highly inaccurate in actual use because they can be susceptible to changes in operating conditions

(e.g., temperature, atmospheric pressure, viscosity, back pressure, partial filing and prolonged storage).

As a result, their safety

profiles make them unsuitable for use with medications, such as chemotherapeutics, where flow accuracy is critical to achieve the desired

therapeutic effect and avoid complications.

The FDA’s MAUDE database includes numerous reports of complications and even deaths

as a result of DIPs infusing a particular medication too slowly or too fast.

We believe there is a significant market opportunity for

highly accurate disposable infusion pumps for outpatient use.

have developed a highly accurate infusion system with variable flow resistors.

We acquired U.S.

Patent 8,622,976 issued January 7, 2014,

and associated U.S.

and international patent applications, “System and Methods for Infusion of Fluids Using Stored Potential Energy

and a Variable Flow Resistor”.

We have built on the principles underlying this patent and developed a new concept whereby the variable

resistor does not have to be mechanically linked to the infusion drive mechanism.

This simplifies the design and expands the range of

potential follow-on products.

We have performed extensive computer simulation, built protypes, and conducted benchtop testing on various

embodiments and have demonstrated highly accurate flow rates across a wide range of driving pressures.

NextFlo platform technology includes a highly accurate, disposable intravenous (“IV”) infusion set.

NextFlo maintains constant

flow by incorporating a proprietary, passive, pressure-dependent variable flow-resistor consisting entirely of inexpensive, easy-to-manufacture

disposable mechanical parts.

We believe this technology will permit hospitals to return to gravity-driven infusions and eliminate expensive

and troublesome electronic pumps for most of the over one million infusions of fluids, medications and other substances delivered each

day in hospitals and outpatient settings in the United States.

NextFlo disposable IV infusion set has achieved a key milestone in its quest to eliminate the need for complex and expensive electronic

infusion pumps.

NextFlo testing has now repeatedly demonstrated it can achieve constant flow rates across a wide range of IV bag heights,

with accuracy rates comparable to electronic infusion pumps.

Deloitte Consulting LLP has completed a comprehensive market research and

strategic analysis of NextFlo demonstrating a very large addressable market An initial FDA 510(k) submission for the NextFlo IV Infusion

Set is planned for the second half of 2022.

recently hired a director of sales who will focus on all aspects of NextFlo’s commercial launch including and not limited to creating

and executing the sales strategy, hiring/mentoring the commercial launch team, and collaborating with internal resources on product development

and marketing.

Target customers include Acute Inpatient Care, Outpatient Care, Infusion Centers, Home Infusions, Outpatient Pharmacy,

EMS, and the Department of Defense.

Health - implantable vascular healthcare platform

development continues in parallel with software platform development, with integration of the software and hardware teams ensuring end-to-end

functionality.

Device R&D is led by the internal PAVmed technical team, leveraging consultants with expertise in active implantable

devices, medical hardware, and firmware.

In Q4 2021, Veris successfully completed feasibility animal testing of multiple device prototypes.

Design freeze on the initial Veris intelligent implantable device is expected by the end of 2022, followed by filing for 510(k) clearance

Veris has also initiated regulatory and commercial strategies for the European Union.

addition to targeting the oncology market, Veris plan to expand into cardiovascular diseases, end-stage renal disease, and lung disorders

We have already initiated R&D efforts around an enhanced implantable cardiac monitor capable of detecting cardiac arrhythmias

and other physiologic parameters critical for high-risk cardiac patients.

Future devices will combine novel sensing technology with seamless

communication, engaging user interface design, and data analytics driving actionable clinical insights for patients with congestive heart

These technologies will then be expanded for high-risk kidney disease and pulmonary patients.

are currently recruiting a Veris Chief Commercial Officer to assist with further developing the sales strategy and hiring the commercial

launch team to lay the groundwork with customer targets including major cancer centers and oncology practices.

We are planning a limited

commercial release of the first product to key accounts with wearable connected devices when the software is completed, currently

expected in the six months ended Dec 31, 2022.

Innovations include a diversified and expanding portfolio of innovative products designed to address unmet clinical needs across a broad

range of clinical conditions.

We are evaluating a number of these product opportunities and intellectual property covering a wide spectrum

of clinical conditions, which have either been developed internally or have been presented to us by clinician innovators and academic

medical institutions for consideration of a partnership to develop and commercialize these products.

This collection of products includes,

without limitation, initiatives in non-invasive laser-based glucose monitoring, mechanical circulatory support cannulas, single-use ventilators

and resorbable pediatric ear tubes.

In June 2020, we announced the execution of a letter of intent to consummate a series of agreements

to develop and utilize Canon Virginia’s commercial grade and scalable aqueous silk fibroin molding process to manufacture PAVmed’s

DisappEAR molded pediatric ear tubes for commercialization.

Furthermore, we are exploring other opportunities to grow our business and

enhance shareholder value through the acquisition of pre-commercial or commercial stage products and/or companies with potential strategic

corporate and commercial synergies.

Financing Transactions Generally

PAVmed Inc and Subsidiaries

financing transactions in the year ended December 31, 2021, resulted in approximately $117.0 million of gross proceeds, before placement

agent fees and expenses and offering costs, including $62.0 gross proceeds resulting from the issue of shares of Lucid Diagnostics Inc.

common stock at an offering price of $14.00 per share in an IPO on October 14, 2021, with such gross proceeds of $62.0 million not including

the purchase by PAVmed Inc.

of 571,428 shares of Lucid Diagnostics Inc.

common stock at the $14.00 IPO offering price.

PAVmed ATM Facility

In December 2021, we filed Form

S-3 registration statement (File No.

333-261814) with the SEC (a “Shelf Registration”) and a base prospectus to provide future

financing for the Company in either common stock, shares of preferred stock, warrants, debt securities or units of one or more classes

of securities not to exceed $275 million.

Also included in the registration statement is a prospectus supplement (the “ATM Prospectus”)

for 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.

March 2022 Notes

Subsequent to December 31, 2021,

on March 31, 2022, we entered into a Securities Purchase Agreement (“March 2022 SPA”) with an accredited institutional investor

, for the sale of up to $50,000,000 in initial principal amount of Senior Secured Convertible Promissory Notes (the “March 2022

Notes”), in a registered direct offering (the “Offering”), for a purchase price equal to $1,000 for each $1,100 in

principal amount of March 2022 Notes.

Pursuant to the SPA we executed

the agreements for an initial closing for the sale of $27.5 million in principal amount of March 2022 Notes , of which the Investor funded and the Company received

cash proceeds of $24.9 million on April 5, 2022, after deduction of lender fees .

Subject to certain conditions

being met or waived, from time to time after such time that stockholder approval for an increase in our authorized shares from 150 million

to 250 million is obtained, but before March 31, 2024, one or more additional closings for up to the remaining principal amount of March

2022 Notes may occur, upon five trading days’ notice by us to the investor.

The aggregate principal amount of March 2022 Notes

that may be offered in the additional closings may not be more than $22.5 million .

The investor’s obligation to purchase the notes

at each additional closing is subject to certain conditions set forth in the March 2022 SPA (including minimum price and volume thresholds,

maximum ratio of debt to market capitalization, and minimum market capitalization), which may be waived by the Required Holders (as defined

in the March 2022 SPA).

Under the March 2022 SPA, the investor will be required to purchase March 2022 Notes in the additional closings

if such conditions are met or waived.

In addition, from and after March 31, 2023, the investor may by written notice to us elect to require

us to issue up to $22.5 million in initial principal amount of March 2022 Notes, so long as in doing so it would not cause the ratio of

(a) the outstanding principal amount of the March 2022 Notes (including the additional March 2022 Notes), accrued and unpaid interest

thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days, to exceed 25%.

If we fail to complete the sale of the additional Notes contemplated by any such written notice, or if the investor is unable to deliver

any such notice prior to March 31, 2024 as a result of the limitation described in the preceding sentence, then we will be obligated

to pay a break-up fee to the investor at such time in an aggregate amount equal to $1.35 million .

We will not pay any selling

commission to any party in connection with the Offering, although we will pay a financial advisory fee equal to 1.8% of the gross proceeds

from the Offering to an independent financial advisor.

The Company estimates that the net cash proceeds will be approximately $20.4 million

from the additional closings of the Offering, after deducting the estimated expenses of the Offering, assuming the sale of all of the

March 2022 Notes.

The March 2022 Notes have a

voluntary fixed conversion price of $5.00 per share, a stated interest rate of 7.875% per annum, and a maturity of 24 months (subject

to extension in certain circumstances).

The March 2022 Notes will be secured by all our existing and future assets (including those of

our significant subsidiaries, other than Lucid and its subsidiaries), but including only 9.99% of Lucid’s outstanding common stock

held by us, pursuant to a security agreement by and between the Company and the Investor.

Recent Events - continued

PAVmed March 2022 Notes - continued

On the date six months after

the issuance of a March 2022 Note, on the 1st and 10th trading day of each calendar month thereafter, and on the maturity date (each

an “Installment Date”), the Company will make an amortization payment on the March 2022 Note in an amount equal to the initial

principal balance of the note divided by the total number of such amortization payments (such that the entire initial principal balance

will be repaid by the maturity date), plus any amounts that have been deferred or accelerated to the applicable installment date, plus

all accrued and unpaid interest and any late charges (the “Installment Amount”).

Each amortization payment will be satisfied

in shares of the Company’s common stock, subject to certain customary equity conditions (including minimum price and volume thresholds)

at 100% of the Installment Amount or otherwise (or at our election, in whole or in part) in cash at 115% of the Installment Amount.

conversion price for any Installment Amount so converted will be based on the then current market price, but not more than the fixed

conversion price then in effect and not less than a floor price.

The Offering was made pursuant

to the Company’s existing shelf registration statement on Form S-3 (Registration No.

333-261814), which was filed with the SEC

on December 21, 2021 and declared effective by the SEC on January 7, 2022.

A prospectus supplement relating to the Offering, together

with the accompanying base prospectus included in the registration statement, was filed with the SEC on April 4, 2022.

Lucid Equity Facility

to December 31, 2021, on March 28, 2022, Lucid Diagnostics, Inc.

entered into a committed equity facility with an affiliate of

Cantor Fitzgerald (“Cantor”).

Under the terms of the facility, Cantor has committed to purchase up to $50

million of Lucid Diagnostics Inc.

common stock from time to time at the request of Lucid Diagnostics Inc.

While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity

facility, insofar as it allows Lucid Diagnostics Inc.

to raise primary equity capital on a periodic basis at prices based on the existing

market price.

Lucid Laboratory Asset Acquisition

to December 31, 2021, on February 25, 2022, Lucid Diagnostics, Inc., through its wholly-owned subsidiary LucidDx Labs, Inc., entered

into an asset purchase agreement (“RDx APA”) with ResearchDx, Inc.

(“RDx”), an unrelated third-party.

RDx APA, LucidDx Labs Inc.

acquired certain licenses and other related assets necessary to operate a CLIA-certified, CAP-accredited commercial

clinical laboratory.

The RDx APA acquired assets, along with other LucidDx Labs Inc.

purchased and leased property and equipment, are

being used to commence laboratory operations to perform the EsoGuard® Esophageal DNA assay, inclusive of DNA extraction, next generation

sequencing (“NGS”) and specimen storage.

Prior to consummation of the RDx APA, RDx provided such laboratory services at its

owned CLIA-certified, CAP-accredited laboratory.

Under the RDx APA, LucidDx Labs Inc.

will pay RDx an aggregate purchase price of up

to $6.2 million for the acquired assets.

Concurrent with the RDx APA, LucidDx Labs Inc.

and RDx also entered into a management services

agreement (“RDx MSA”), with a term of three years, and a total of approximately $1.8 million of quarterly payments.

business will depend on our ability to create or acquire proprietary medical device technologies to commercialize.

vigorously protect our proprietary technologies’

intellectual property rights in patents, trademarks and copyrights, as

available through registration in the United States and internationally.

We currently have applied for or own 72 patents across

10 families of products.

We intend to vigorously

protect our proprietary technologies’ intellectual property rights in patents, trademarks and copyrights, as available through

registration in the United States and internationally.

We currently have applied for or own 72 patents across 10 families of products.

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.

patent protection, as appropriate, on:

Our policy is to aggressively file patent applications

to protect our proprietary technologies including inventions and improvements to inventions.

We seek patent protection, as appropriate,

product itself including all embodiments with future commercial potential;

1 unchanged sentence

methods of manufacturing the product.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications

in Europe, Canada, Japan, Australia, China and other countries worldwide.

Foreign filings can be cumbersome and expensive, and

we will pursue such filings when we believe they are warranted as we try to balance our international commercialization plans

with our desire to protect the global value of the technology.

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in Europe,

Canada, Japan, Australia, China and other countries worldwide.

Foreign filings can be cumbersome and expensive, and we will pursue such

filings when we believe they are warranted as we try to balance our international commercialization plans with our desire to protect

the global value of the technology.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

1 unchanged sentence

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application.

In the United

States, a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays

in patent prosecution by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates

a patentee for administrative delays by the U.S.

In the United States,

a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution

by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative

delays by the U.S.

Patent and Trademark Office in granting a patent.

Business - continued

Business Model - continued

Property - continued

May 12, 2018, we entered into a license agreement with Case Western Reserve University (“CWRU”) - the “CWRU

License Agreement”

- wherein we acquired an exclusive worldwide right to use the intellectual property rights to the EsoGuard

and EsoCheck proprietary technology for the detection of changes in the esophagus.

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 that have been granted by the FDA or other U.S.

agency, whichever comes later.

The key EsoGuard U.S.

patents begin to expire in August 2024, however, the company is pursuing

applications of the clinical utility to extend the patent protection with more recently filed families of cases that have a twenty

year term and will be set to expire in the mid to late 2030’s once they are issued.

It is noteworthy the accuracy confidence

of the EsoGuard assay has only been tested with cells collected using the EsoCheck Collect + Protect technology.

The key EsoCheck

patents begin to expire in December 2034.

July 2019, the USPTO issued patent number 10,335,189 related to our other commercially available product, CarpX.

Although this

patent does not expire until 2039, we have filed other pending patents which can further expand the protection of our intellectual

property for this minimally-invasive carpal tunnel surgical device.

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify our position in the United

States and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate the existing proprietary

rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement upon competing

rights of others.

will also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in

the future, to develop and maintain our competitive position.

We intend to protect our proprietary rights through a variety of

methods, including confidentiality agreements and/or proprietary information agreements with suppliers, employees, consultants,

independent contractors and other entities who may have access to proprietary information.

We will generally require employees

to assign patents and other intellectual property to us as a condition of employment with us.

All of our consulting agreements

will pre-emptively assign to us all new and improved intellectual property that arise during the term of the agreement.

Business - continued

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify our position in the United States

and internationally.

Prior to acquiring or licensing a technology from a third party, we will evaluate the existing proprietary rights,

our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement upon competing rights of

will also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in the future,

to develop and maintain our competitive position.

We intend to protect our proprietary rights through a variety of methods, including

confidentiality agreements and/or proprietary information agreements with suppliers, employees, consultants, independent contractors

and other entities who may have access to proprietary information.

We will generally require employees to assign patents and other intellectual

property to us as a condition of employment with us.

All of our consulting agreements will pre-emptively assign to us all new and improved

intellectual property that arise during the term of the agreement.

Insurance Coverage and Reimbursement

ability to successfully commercialize our products will depend in part on the extent to which governmental authorities, private

health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures

during which our products are used.

the United States, third-party payors continue to implement initiatives that restrict the use of certain technologies to those

that meet certain clinical evidentiary requirements.

In addition to uncertainties surrounding coverage policies, there are periodic

changes to reimbursement.

Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies

used to determine reimbursement amounts.

This includes annual updates to payments to physicians, hospitals and ambulatory surgery

centers for procedures during which our products are used.

An example of payment updates is the Medicare program’s updates

to hospital and physician payments, which are done on an annual basis using a prescribed statutory formula.

In the past, when

the application of the formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions.

product’s reimbursement profile, both in the U.S.

and internationally, is an important component of the product’s

commercial opportunity.

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value

surgical procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure

For those products that have high strategic value, but with less defined reimbursement, we have engaged reimbursement experts

and support from industry associations to accelerate the acquisition of satisfactory reimbursement levels.

ability to successfully commercialize our products will depend in part on the extent to which governmental authorities, private health

insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which

our products are used.

the United States, third-party payors continue to implement initiatives that restrict the use of certain technologies to those that meet

certain clinical evidentiary requirements.

In addition to uncertainties surrounding coverage policies, there are periodic changes to

reimbursement.

Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to

determine reimbursement amounts.

This includes annual updates to payments to physicians, hospitals and ambulatory surgery centers for

procedures during which our products are used.

An example of payment updates is the Medicare program’s updates to hospital and

physician payments, which are done on an annual basis using a prescribed statutory formula.

In the past, when the application of the

formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions.

product’s reimbursement profile, both in the U.S.

and internationally, is an important component of the product’s commercial

We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value surgical

procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure codes.

those products that have high strategic value, but with less defined reimbursement, we have engaged reimbursement experts and support

from industry associations to accelerate the acquisition of satisfactory reimbursement levels.

for New Medical Device Innovation

and commercializing new products is highly competitive.

The market is characterized by extensive research and clinical efforts

and rapid technological change.

We face intense competition worldwide from medical device, biomedical technology and medical products

and combination products companies, including major medical products companies.

We may be unable to respond to technological advances

through the development and introduction of new products.

Most of our existing and potential competitors have substantially greater

financial, marketing, sales, distribution, manufacturing and technological resources.

These competitors may also be in the process

of seeking FDA or other regulatory approvals, or patent protection, for new products.

Our competitors may commercialize new products

in advance of our products.

Our products also face competition from numerous existing products and procedures, some of which currently

are considered part of the standard of care.

The market is characterized by extensive research and clinical efforts and rapid

technological change.

We face intense competition worldwide from medical device, biomedical technology and medical products and combination

products companies, including major medical products companies.

We may be unable to respond to technological advances through the development

and introduction of new products.

Most of our existing and potential competitors have substantially greater financial, marketing, sales,

distribution, manufacturing and technological resources.

These competitors may also be in the process of seeking FDA or other regulatory

approvals, or patent protection, for new products.

Our competitors may commercialize new products in advance of our products.

also face competition from numerous existing products and procedures, some of which currently are considered part of the standard of

We believe the principal competitive factors in our markets are:

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price and qualification for coverage and reimbursement.

will also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as in

acquiring technologies and licenses complementary to our products or advantageous to our business.

We are aware of several companies

that compete or are developing technologies in our current and future products areas.

In order to compete effectively, our products

will have to achieve market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously

safe and effective.

Business - continued

authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other

things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping,

promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such

as those we are developing.

The following is a summary of the government regulations applicable to our business.

and future legislative proposals to further reform healthcare or reduce healthcare costs may result in lower reimbursement for

our products, or for the procedures associated with the use of our products, or limit coverage of our products.

The cost containment

measures payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could

significantly reduce our revenues from the sale of our products.

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.

implementation of the Affordable Care Act is an example that has the potential to substantially change healthcare financing and

delivery by both governmental and private insurers can have a significant impact on the pharmaceutical and medical device industries.

an example of Healthcare legislation volatility, the Affordable Care Act imposed, among other things, a new federal excise tax

on the sale of certain medical devices.

The Consolidated Appropriations Act, 2016 (Pub.

114-113), signed into law on Dec.

2015, included a two-year moratorium on the medical device excise tax imposed by Internal Revenue Code section 4191.

the moratorium, the medical device excise tax did not apply to sales of taxable medical devices during the period beginning on

January 1, 2016 and ending on December 31, 2017.

The moratorium expired on Dec.

On January 22, 2018 as part of a stop

gap spending bill, President Trump signed into law a moratorium for an additional two years retroactive to January 1, 2018.

tax was scheduled to go into effect until January 1, 2020.

On December 20, 2019, the U.S.

President signed into law a federal

spending package that permanently repealed the 2.3% medical excise tax.

addition, the ACA implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals,

physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled

payment models.

In addition, other legislative changes have been proposed and adopted since the Patient Protection and Affordable

Care Act, (“PPACA”) was enacted.

On August 2, 2011, President Obama signed into law the Budget Control Act of 2011,

which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending

The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013

through 2021, triggering the legislation’s automatic reduction to several government programs.

This includes reductions

to Medicare payments to providers of 2.0% per fiscal year, which went into effect on April 1, 2013, and will stay in effect through

2024 unless congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012 took effect, which, among

other things, reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers

and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

We expect additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the

amounts federal and state governments will pay for healthcare products and services, which could result in reduced demand for

our products or additional pricing pressure.

Additionally, there is no assurance the PPACA, in whole or in part, will not be repealed

in the future.

Any impact such a repeal would have on the medical device industry remains unclear.

Business - continued

Regulation - continued

will also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as in acquiring

technologies and licenses complementary to our products or advantageous to our business.

We are aware of several companies that compete

or are developing technologies in our current and future products areas.

In order to compete effectively, our products will have to achieve

market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.

products we develop must be cleared by the FDA before they are marketed in the United States.

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.

FDA regulations govern, among other things, the development, testing, manufacturing,

labeling, safety, storage, recordkeeping, market clearance or approval, advertising and promotion, import and export, marketing

and sales, and distribution of medical devices and products.

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:

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.

FDA regulations govern, among other things, the development, testing, manufacturing, labeling,

safety, storage, recordkeeping, market clearance or approval, advertising and promotion, import and export, marketing and sales, and

distribution of medical devices and products.

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:

general controls, such as labeling and adherence to quality system regulations;

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

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;

special controls and approval of a PMA application.

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.

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.

For example, the FDA could grant 510(k) status, but require a human clinical trial,

a typical requirement of a PMA.

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.

The longest and most expensive

path would be a PMA with extensive randomized human clinical trials.

We cannot predict how the FDA will classify our products,

nor predict what requirements will be placed upon us to obtain market approval, or even if they will approve our products at all.

request marketing authorization by means of a 510(k) clearance, we must submit a pre-market notification demonstrating the proposed

device is substantially equivalent to another currently legally marketed medical device, has the same intended use, and is as

safe and effective as a currently legally marketed device and does not raise different questions of safety and effectiveness than

does a currently legally marketed device.

510(k) submissions generally include, among other things, a description of the device

and its manufacturing, device labeling, medical devices to which the device is substantially equivalent, safety and biocompatibility

information, and the results of performance testing.

In some cases, a 510(k) submission must include data from human clinical

Marketing may commence only when the FDA issues a clearance letter finding substantial equivalence.

After a device receives

510(k) clearance, any product modification that could significantly affect the safety or effectiveness of the product, or would

constitute a significant change in intended use, requires a new 510(k) clearance or, if the device would no longer be substantially

equivalent, would require PMA, or possibly, a de novo pathway under section 513(f)2 of the FDCA.

In addition, any additional claims

the Company wished to make at a later date may require a PMA.

If the FDA determines the product does not qualify for 510(k) clearance,

they will issue a Not Substantially Equivalent letter, at which point the Company must submit and the FDA must approve a PMA or

issue premarket clearance using the de novo before marketing can begin.

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.

this process, a sponsor who receives an NSE determination may, within 30 days of receiving notice of the NSE determination, request

FDA to make a risk-based classification of the device under section 513(a)(1) of the Act.

Business - continued

Regulation - continued

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 this second pathway, a sponsor who determines there is

no legally marketed device upon which to base a determination of substantial equivalence may request FDA to make a risk-based

classification of the device under section 513(a)(1) of the Act without first submitting a 510(k).

the review of a 510(k) submission, the FDA may request more information or additional studies and may decide the indications for

which we seek approval or clearance should be limited.

In addition, laws and regulations and the interpretation of those laws

and regulations by the FDA may change in the future.

and least expensive pathway would be 510(k) approval with just a review of existing data.

The longest and most expensive path would be

a PMA with extensive randomized human clinical trials.

We cannot predict how the FDA will classify our products, nor predict what requirements

will be placed upon us to obtain market approval, or even if they will approve our products at all.

request marketing authorization by means of a 510(k) clearance, we must submit a pre-market notification demonstrating the proposed device

is substantially equivalent to another currently legally marketed medical device, has the same intended use, and is as safe and effective

as a currently legally marketed device and does not raise different questions of safety and effectiveness than does a currently legally

marketed device.

510(k) submissions generally include, among other things, a description of the device and its manufacturing, device

labeling, medical devices to which the device is substantially equivalent, safety and biocompatibility information, and the results of

performance testing.

In some cases, a 510(k) submission must include data from human clinical studies.

Marketing may commence only when

the FDA issues a clearance letter finding substantial equivalence.

After a device receives 510(k) clearance, any product modification

that could significantly affect the safety or effectiveness of the product, or would constitute a significant change in intended use,

requires a new 510(k) clearance or, if the device would no longer be substantially equivalent, would require PMA, or possibly, a de novo

pathway under section 513(f)2 of the FDCA.

In addition, any additional claims the Company wished to make at a later date may require

If the FDA determines the product does not qualify for 510(k) clearance, they will issue a Not Substantially Equivalent letter,

at which point the Company must submit and the FDA must approve a PMA or issue premarket clearance using the de novo before marketing

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 this process, a sponsor

who receives an NSE determination may, within 30 days of receiving notice of the NSE determination, request FDA to make a risk-based

classification of the device under section 513(a)(1) of the Act.

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 this second pathway, a sponsor who determines there is no legally

marketed device upon which to base a determination of substantial equivalence may request FDA to make a risk-based classification of

the device under section 513(a)(1) of the Act without first submitting a 510(k).

the review of a 510(k) submission, the FDA may request more information or additional studies and may decide the indications for which

we seek approval or clearance should be limited.

In addition, laws and regulations and the interpretation of those laws and regulations

by the FDA may change in the future.

We cannot foresee what effect, if any, such changes may have on us.

Regulations will continue to change and evolve including the 2016-21st Century Cures Act which mandated the creation and revision

of policies and processes intended to speed patient access to new medical devices and codifying into law the FDA’s expedited

review program for breakthrough devices for which EsoGuard was so designated.

In 2017, the Food and Drug Administration Reauthorization

Act (FDARA) which included improvements to premarket review times and investments in strategic initiatives like the National Evaluation

System for health Technology (NEST) and patient input and decoupling accessory classification from classification of the parent

We must continue to be aware of these changes that possibly impact our development and commercialization work.

has a network of professionals with extensive experience in these matters that advise us on both the pre-approval/clearance requirements

as well as the post market surveillance compliance obligations.

Trials of Medical Devices

Regulations will continue to change and evolve including the 2016-21st Century Cures Act which mandated the creation and revision of

policies and processes intended to speed patient access to new medical devices and codifying into law the FDA’s expedited review

program for breakthrough devices for which EsoGuard was so designated.

In 2017, the Food and Drug Administration Reauthorization Act

(FDARA) which included improvements to premarket review times and investments in strategic initiatives like the National Evaluation System

for health Technology (NEST) and patient input and decoupling accessory classification from classification of the parent device.

continue to be aware of these changes that possibly impact our development and commercialization work.

The Company has a network of professionals

with extensive experience in these matters that advise us on both the pre-approval/clearance requirements as well as the post market

surveillance compliance obligations.

Trials of Medical Technology

or more clinical trials may be necessary to support an FDA submission.

Clinical studies of unapproved or uncleared medical devices

or devices being studied for uses for which they are not approved or cleared (investigational devices) must be conducted in compliance

with FDA requirements.

If an investigational device could pose a significant risk to patients, the sponsor company must submit

an Investigational Device Exemption, or IDE application to the FDA prior to initiation of the clinical study.

An IDE application

must be supported by appropriate data, such as animal and laboratory test results, showing it is safe to test the device on humans

and the testing protocol is scientifically sound.

The IDE will automatically become effective 30 days after receipt by the FDA

unless the FDA notifies the company the investigation may not begin.

Clinical studies of investigational devices may not begin

until an institutional review board (“IRB”) has approved the study.

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 investigators must obtain patient informed consent, rigorously follow

the investigational plan and study protocol, control the disposition of investigational devices, and comply with reporting and

record keeping requirements.

We, the FDA, or the IRB at each institution at which a clinical trial is being conducted may suspend

a clinical trial at any time for various reasons, including a belief the subjects are being exposed to an unacceptable risk.

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.

Business - continued

Regulation - continued

Clinical studies of unapproved or uncleared medical devices or

devices being studied for uses for which they are not approved or cleared (investigational devices) must be conducted in compliance with

FDA requirements.

If an investigational device could pose a significant risk to patients, the sponsor company must submit an Investigational

Device Exemption, or IDE application to the FDA prior to initiation of the clinical study.

An IDE application must be supported by appropriate

data, such as animal and laboratory test results, showing it is safe to test the device on humans and the testing protocol is scientifically

The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company the investigation

may not begin.

Clinical studies of investigational devices may not begin until an institutional review board (“IRB”) has

approved the study.

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 investigators must obtain patient informed consent, rigorously follow the investigational

plan and study protocol, control the disposition of investigational devices, and comply with reporting and record keeping requirements.

We, the FDA, or the IRB at each institution at which a clinical trial is being conducted may suspend a clinical trial at any time for

various reasons, including a belief the subjects are being exposed to an unacceptable risk.

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

2 unchanged sentences

These include:

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;

and claims regulations, which prohibit the promotion of products for unapproved or “off-label”

uses and impose

other restrictions on labeling;

Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experience associated with use

of the product.

FDA Quality Systems Regulation (QSR), which governs, among other things, how manufacturers

design, test manufacture, exercise quality control over, and document manufacturing of their

and claims regulations, which prohibit the promotion of products for unapproved or “off-label”

uses and impose other restrictions on labeling;

Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse

experience associated with use of the product.

will continue to be subject to inspection by the FDA to determine our compliance with regulatory requirements.

2 unchanged sentences

Manufacturers

of medical devices are required to comply with FDA manufacturing requirements contained in the FDA’s current Good Manufacturing

Practices (cGMP) set forth in the quality system regulations promulgated under section 520 of the FDCA.

cGMP regulations require,

among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation.

Failure to comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including

the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing

operations, and civil and criminal penalties.

Adverse experiences with the product must be reported to the FDA and could result

in the imposition of marketing restrictions through labeling changes or in product withdrawal.

Product approvals may be withdrawn

if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur

following the approval.

We expect to use contract manufacturers to manufacture our products for the foreseeable future we will

therefore be dependent on their compliance with these requirements to market our products.

We work closely with our contract manufacturers

to assure our products are in strict compliance with these regulations.

addition to FDA restrictions on marketing and promotion of drugs and devices, other federal and state laws restrict our business

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.

of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is

possible some of our business activities, including certain sales and marketing practices and the provision of certain items and

services to our customers, could be subject to challenge under one or more of such laws.

If our operations are found to be in

violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties,

including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment,

exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens,

diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect

our ability to operate our business and our results of operations.

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.

Business - continued

Regulation - continued

cGMP regulations require, among

other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation.

comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including the seizure

or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations, and civil

and criminal penalties.

Adverse experiences with the product must be reported to the FDA and could result in the imposition of marketing

restrictions through labeling changes or in product withdrawal.

Product approvals may be withdrawn if compliance with regulatory requirements

is not maintained or if problems concerning safety or efficacy of the product occur following the approval.

We expect to use contract

manufacturers to manufacture our products for the foreseeable future we will therefore be dependent on their compliance with these requirements

to market our products.

We work closely with our contract manufacturers to assure our products are in strict compliance with these regulations.

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.

of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible

some of our business activities, including certain sales and marketing practices and the provision of certain items and services to our

customers, could be subject to challenge under one or more of such laws.

If our operations are found to be in violation of any of the

health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant

criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government

healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the

curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results

of operations.

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.

Payment Sunshine Act

has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals

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.

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.

We currently do not have any products covered by Medicare,

Medicaid, or Children’s Health Insurance Program as none of our products have premarket approval or clearance notification.

We expect once our products receive regulatory clearance, we will be required to comply with the Sunshine Act provisions.

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.

The shifting commercial compliance environment

and the need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements

in multiple jurisdictions increase the possibility a healthcare company may fail to comply fully with one or more of these requirements.

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.

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.

do not have any products covered by Medicare, Medicaid, or Children’s Health Insurance Program as none of our products have premarket

approval or clearance notification.

We expect once our products receive regulatory clearance, we will be required to comply with the

Sunshine Act provisions.

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.

The shifting commercial compliance environment and the

need to build and maintain robust and expandable systems to comply with different compliance or reporting requirements in multiple jurisdictions

increase the possibility a healthcare company may fail to comply fully with one or more of these requirements.

Anti-Kickback Statute

Federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving

any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce or in return

for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or

service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration”

has been broadly interpreted to include anything of value.

Although there are a number of statutory exceptions and regulatory

safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject

to scrutiny if they do not qualify for an exception or safe harbor.

Failure to meet all of the requirements of a particular applicable

statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute.

the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

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.

Federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration

(including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing,

ordering or arranging for or recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole

or in part, under Medicare, Medicaid or other federal healthcare programs.

The term “remuneration” has been broadly interpreted

to include anything of value.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common

activities from prosecution, the exceptions and safe harbors are drawn narrowly.

Practices that involve remuneration that may be alleged

to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception

or safe harbor.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does

not make the conduct per se illegal under the Anti-Kickback Statute.

Instead, the legality of the arrangement will be evaluated on a

case-by-case basis based on a cumulative review of all its facts and circumstances.

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.

Additionally,

the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as

amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, to a stricter standard

such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order

to have committed a violation.

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.

Business - continued

Regulation - continued

the intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act of 2010, as amended

by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act, to a stricter standard such that a

person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed

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.

False Claims Act

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.

A claim includes “any

request or demand”

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.

A claim includes “any request or demand”

for money or property presented to the U.S.

The False Claims Act also applies to false submissions

that cause the government to be paid less than the amount to which it is entitled, such as a rebate.

Intent to deceive is not

required to establish liability under the False Claims Act.

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.

The False Claims Act also applies to false submissions that cause the government

to be paid less than the amount to which it is entitled, such as a rebate.

Intent to deceive is not required to establish liability under

the False Claims Act.

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.

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.

Foreign Corrupt Practices Act

Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S.

individual or business from paying, offering, or authorizing payment

or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose

of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining

The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions

requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including

international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines,

imprisonment, disgorgement, oversight, and debarment from government contracts.

Business - continued

individual or business from paying, offering, or authorizing payment or

offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing

any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company

to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries,

and to devise and maintain an adequate system of internal accounting controls for international operations.

Activities that violate the

FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight,

and debarment from government contracts.

International

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.

We may be subject to regulations and product registration

requirements in the areas of product standards, packaging requirements, labeling requirements, import and export restrictions

and tariff regulations, duties and tax requirements.

Whether or not we obtain FDA approval for a product, we would need to obtain

the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of

the product in foreign countries and jurisdictions.

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.

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.

To obtain CE mark certification of our products, we will be

required to work with an accredited European notified body organization to determine the appropriate documents required to support

certification in accordance with existing medical device directive.

The predictability of the length of time and cost associated

with such a CE mark may vary or may include lengthy clinical trials to support such a marking.

Once the CE mark is obtained, we

may market our product in the countries of the EU.

The new European Medical Device Regulation (EU MDR 2017/745) which was scheduled

to go into effect on May 26, 2020 has been extended by one year to May 26, 2021.

The EU MDR imposes strict new requirements on

medical device companies marketing their products in Europe.

As such, many device companies have been scrambling to renew existing

CE certificates granted under the Medical Devices Directive (MDD 93/42/EEC).

Notified Bodies are now focused on their current

customers and those customers’

current devices making it virtually impossible to submit a new MDD application before May

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.

We may be subject to regulations and product registration requirements

in the areas of product standards, packaging requirements, labeling requirements, import and export restrictions and tariff regulations,

duties and tax requirements.

Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by

the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries

and jurisdictions.

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.

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.

To obtain CE mark certification of our products, we will be required to

work with an accredited European notified body organization to determine the appropriate documents required to support certification

in accordance with existing medical device directive.

The predictability of the length of time and cost associated with such a CE mark

may vary or may include lengthy clinical trials to support such a marking.

Once the CE mark is obtained, we may market our product in

the countries of the EU.

The new European Medical Device Regulation (EU MDR 2017/745) which was scheduled to go into effect on May 26,

2020 has been extended by one year to May 26, 2021.

The EU MDR imposes strict new requirements on medical device companies marketing

their products in Europe.

As such, many device companies have been scrambling to renew existing CE certificates granted under the Medical

Devices Directive (MDD 93/42/EEC).

Notified Bodies are now focused on their current customers and those customers’ current devices

making it virtually impossible to submit a new MDD application before May 2020.

Good Manufacturing Practices

2 unchanged sentences

Compliance with GMP is generally assessed by the competent regulatory

Typically, quality system evaluation is performed by a Notified Body, which also recommends to the relevant competent

authority for the European Community CE Marking of a device.

The Competent Authority may conduct inspections of relevant facilities,

and review manufacturing procedures, operating systems and personnel qualifications.

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.

Business - continued

we have twenty five full-time compensated employees, inclusive of our of Chairman of the Board of Directors and Chief Executive

Officer (“CEO”), our President and Chief Financial Officer (“CFO”), and our Chief Medical Officer (“CMO”)

(with each comprising our named executive officers)..

No employees are covered by a collective bargaining agreement.

our relationship with our employees to be good.

were incorporated on June 26, 2014 in the State of Delaware, under the name PAXmed Inc.

On April 19, 2015, we changed our name

to PAVmed Inc.

corporate address is One Grand Central Place, Suite 4600, 60 East 42nd Street, New York, New York 10165, and our main telephone

number is (212) 949-4319.

founders include three accomplished medical device entrepreneurs including:

Lishan Aklog M.D., Michael J.

Glennon, and Dr.

deGuzman, M.D.

In 2007, they founded Pavilion Holdings Group (“PHG”), a medical device holding company with

a vision to create innovative single-product medical device companies using an outsourced business model focused on capital efficiency

and speed to market.

Two years later PHG formed Pavilion Medical Innovations (“PMI”), a venture-backed medical device

Between 2008 and 2013, PHG and PMI founded four distinct, single-product medical device companies, three of which commercialized

products and one of which was acquired.

was founded to be a multi-product company with access to public capital markets.

We believe this model allows us to conceive,

develop and commercialize our pipeline of laboratory developed tests, diagnostic devices and services, and medical device products

based on a model of efficient capital investment and time-to-market, as well as provide a pathway to incorporate outside innovations.

make available free of charge through our website - www.pavmed.com - our periodic reports and registration statements filed

with the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a)

and 15(d) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.”

We make these reports available

through our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports

also make available, free of charge on our website, the reports filed with the SEC by our named executive officers, directors,

and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after those filings are provided

to us by those persons.

The public also may read and copy any materials we file with the SEC at the SEC’s Public Reference

Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m.

The public may

obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC also maintains

an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding

us that we file electronically with the SEC.

Typically, quality system evaluation is performed by a Notified Body, which also recommends to the relevant competent authority

for the European Community CE Marking of a device.

The Competent Authority may conduct inspections of relevant facilities, and review

manufacturing procedures, operating systems and personnel qualifications.

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.

as of March 29, 2022, we have 89 full-time compensated employees, inclusive of our of Chairman of the Board of Directors

and Chief Executive Officer (“CEO”), our President and Chief Financial Officer (“CFO”), our Chief Operating Officer

(“COO”) and our Chief Medical Officer (“CMO”) (with each comprising our named executive officers).

are covered by a collective bargaining agreement.

We consider our relationship with our employees to be good.

were incorporated in Delaware on June 26, 2014.

Our corporate headquarters address is One Grand Central Place, Suite 4600, 60 East 42nd Street, New York, New York 10165, and

our main telephone number is (212) 949-4319.

make available free of charge through our website - www.pavmed.com - our periodic reports and registration statements filed with the

United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly Reports on

Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the

Securities Exchange Act of 1934, as amended, or the “Exchange Act.” We make these reports available through our website as

soon as reasonably practicable after we electronically file such reports with, or furnish such reports to the SEC.

also make available, free of charge on our website, the reports filed with the SEC by our named executive officers, directors, and 10%

stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after those filings are provided to us by

those persons.

The public also may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F

Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m.

The public may obtain information

on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC also maintains an Internet site (http://www.sec.gov)

that contains reports, proxy and information statements, and other information regarding us that we file electronically with the SEC.

website address is www.pavmed.com.

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.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business