What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-24 compared with 2024-03-25 · 649 added, 538 removed, 137 unchanged (90% of the section changed)

9 unchanged sentences

refer to PAVmed Inc.

and its subsidiaries, including its majority-owned subsidiary Lucid Diagnostics Inc.

(“Lucid Diagnostics”

or “Lucid”) and its majority-owned subsidiary Veris Health Inc.

(“Veris Health” or “Veris”), (ii)

“FDA” refers to the Food and Drug Administration, (iii) “510(k)” refers to a premarket notification, submitted

to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) “CLIA”

refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) “LDT”

refers to a diagnostic test, defined by the FDA as “an IVD that is intended for clinical use and designed, manufactured and used

within a single laboratory,” which is generally subject only to self-certification of analytical validity under the CMS CLIA program.

is structured to be a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies.

by a team of highly skilled personnel with a track record of bringing innovative products to market, PAVmed is focused on

innovating, developing, acquiring, and commercializing novel products that target unmet needs with large addressable market

opportunities.

Leveraging our corporate structure—a parent company that will establish distinct subsidiaries for each financed

asset—we have the flexibility to raise capital at the PAVmed level to fund product development, or to structure financing

directly into each subsidiary in a manner tailored to the applicable product, the latter of which is our current strategy given

prevailing market conditions.

current focus is multi-fold.

We continue to pursue commercial expansion and execution of EsoGuard, which is the flagship product of

our majority-owned subsidiary Lucid Diagnostics Inc.

LUCD) (“Lucid” or “Lucid Diagnostics”).

addition, through a separate majority-owned subsidiary, Veris Health Inc.

(“Veris” or “Veris Health”), we are focused on entering into

strategic partnership opportunities with leading academic oncology systems to expand access to the Veris Platform.

In terms of other

existing products and technologies, we have created an incubator-type platform where we are looking to obtain financing on a

product-by-product basis as necessary to advance each asset to a meaningful inflection point along its path to commercialization.

Finally, as resources permit, we will continue to explore external innovations that fulfill our project selection criteria without

limiting ourselves to any target sector, specialty or condition.

Part I, Item 1, Business above for a more detailed summary of the medical device, diagnostics, and digital health sectors and

our key products, including in particular EsoGuard and the Veris Platform, which are currently our two leading products.

Recent Developments

Series Z Warrant Modification

On December 4, 2023, the Company

announced the extension of the Company’s Series Z Warrants, by 12 months, to April 30, 2025.

In addition, as a result of the

reverse stock split, described below, the Series Z Warrants became exercisable to purchase one whole share of common stock of the Company

at an exercise price of $24.00, which exercise price per whole share was further reduced to $23.48 as described below under the heading

“ PAVmed Distribution of Lucid Diagnostics Common Stock to Shareholders ”.

The Company recognized the incremental value

associated with the Series Z Warrants modification for the term extension as a deemed dividend charge of $1.8 million and as an increase

of net loss available to common stockholders on the consolidated statements of operations in 2023.

Reverse Stock Split

On December 7, 2023, the Company

implemented a 1-for-15 reverse stock split of its common stock and reduced its authorized shares from 250,000,000 to 50,000,000, each

in accordance with shareholder approval granted at a March 31, 2023 special meeting of the Company’s stockholders.

The Company filed

an amended Certificate of Incorporation reflecting the reduction in authorized shares.

The purpose of the reverse stock

split was to regain compliance with the $1 minimum bid price requirement for continued listing on the Nasdaq Capital Market.

January 7, 2024, the Company received a letter from the Listing Qualifications Department of Nasdaq, stating the Company had regained

compliance with such requirement.

Management Services Agreement/Payroll Benefits

and Expense Reimbursement Agreement with Lucid Diagnostics

On March 22, 2024, PAVmed and Lucid entered into an eighth amendment to the the management

services agreement between PAVmed and Lucid (“MSA”) to increase the monthly fee thereunder from $0.75 million per month to

$0.83 million per month, effective as of January 1, 2024.

The amendment also reset the maximum number of shares issuable under the agreement

to 19.99% of the shares outstanding as of the date of the amendment.

On January 26, 2024, in accordance

with the MSA and the payroll, benefits and expense reimbursement agreement between PAVmed and Lucid (“PBERA”), PAVmed elected

to receive payment of approximately $4.7 million of fees and reimbursements accrued under the MSA and the PBERA through the issuance of

3,331,771 shares of Lucid’s common stock.

PAVmed Distribution of Lucid Diagnostics Common

Stock to Shareholders

and its subsidiaries, including its subsidiary Lucid Diagnostics Inc.

(“Lucid Diagnostics” or “Lucid”)

and its majority-owned subsidiary Veris Health Inc.

(“Veris Health” or “Veris”), (ii) “FDA” refers

to the Food and Drug Administration, (iii) “510(k)” refers to a premarket notification, submitted to the FDA by a manufacturer

pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) “CLIA” refers to the Clinical

Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) “LDT” refers

to a diagnostic test, defined by the FDA as “an IVD that is intended for clinical use and designed, manufactured and used within

a single laboratory,” which is generally subject only to self-certification of analytical validity under the CMS CLIA program.

is a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies.

Led by a team of highly

skilled personnel with a track record of bringing innovative products to market, PAVmed is focused on innovating, developing, acquiring,

and commercializing novel products that target unmet needs with large addressable market opportunities.

Leveraging our corporate structure—a

parent company that will establish distinct subsidiaries for each financed asset—we have the flexibility to raise capital at the

PAVmed level to fund product development, or to structure financing directly into each subsidiary in a manner tailored to the applicable

product, the latter of which is our current strategy given prevailing market conditions.

Our current focus is multi-fold.

We continue to support commercial expansion

and execution of EsoGuard, which is the flagship product of our subsidiary, Lucid Diagnostics, of which we remain the shareholder with

the largest voting interest.

In addition, through a separate majority-owned subsidiary, Veris Health, we offer the Veris Cancer Care Platform.

We are focused in the immediate term on entering into strategic partnership opportunities with leading academic oncology systems to expand

access to the Veris Cancer Care Platform, while concurrently developing an implantable physiological monitor, designed to be implanted

alongside a chemotherapy port, which will interface with the Veris Cancer Care Platform.

In terms of other existing products and technologies,

we have adopted an incubator-type platform where we are looking to obtain financing on a product-by-product basis as necessary to advance

each asset to a meaningful inflection point along its path to commercialization.

Finally, as resources permit, we will continue to explore

external innovations that fulfill our project selection criteria without limiting ourselves to any target sector, specialty or condition.

See Part I, Item 1, Business above for a more detailed summary of the medical device, diagnostics, and digital

health sectors and our key products, including in particular EsoGuard and the Veris Cancer Care Platform, which are currently our two leading products.

Medicare Coverage

November 2024, Lucid submitted to MolDx its complete clinical evidence package in support of a request for reconsideration of the non-coverage

language in the LCD to secure Medicare coverage for EsoGuard.

The EsoGuard clinical evidence package included six new peer-reviewed publications:

three clinical validation studies (two in the intended use population, one case control), two clinical utility studies, and one analytical

validation study.

The current LCD provides clear coverage criteria consistent with the American College of Gastroenterology (ACG) guidelines

for esophageal precancer testing.

The package was submitted as part of a request for reconsideration of the non-coverage language in

the LCD to secure Medicare coverage for EsoGuard.

NCCN Clinical Practice Guidelines Update

In March 2025, Lucid announced that a recent update to the National Comprehensive Cancer Network® (NCCN) Clinical

Practice Guidelines in Oncology (NCCN Guidelines®) focused on Esophageal and Esophagogastric Junction Cancers (Version 1.2025) has

added a new section on BE screening.

The NCCN Guidelines® now reference professional society guidelines on BE screening, including

the most recent ACG clinical guideline discussed above, which recommends non-endoscopic biomarker testing, such as EsoGuard performed

on samples collected with EsoCheck, as an acceptable alternative to invasive upper endoscopy to detect esophageal precancer.

Clinical Study Publications

On March 18, 2025, Lucid announced that its ENVET-BE clinical utility study has been accepted for publication in

Gastroenterology & Hepatology—the fifth peer-reviewed publication of clinical utility data for Lucid’s EsoGuard® Esophageal

DNA Test, and the second to present findings from a real-world screening population.

The manuscript, entitled “Enhancing the Diagnostic

Yield of EGD for Diagnosis of Barrett’s Esophagus Through Methylated DNA Biomarker Triage,” demonstrates that confirmatory upper

endoscopy (EGD) performed in EsoGuard-positive patients had a substantially higher diagnostic yield for detecting esophageal precancer

(Barrett’s Esophagus or BE) than the expected yield of screening EGD alone in at-risk patients.

The ENVET-BE study reviewed real-world

data from a cohort of 199 EsoGuard-positive patients who completed confirmatory EGD.

The overall positive diagnostic yield for BE was

2.4-fold higher than the expected yield of screening EGD alone, based on disease prevalence within an at-risk population.

The yield was

nearly three-fold higher in patients meeting American College of Gastroenterology (ACG) screening criteria.

On November 7, 2024, Lucid announced that its manuscript for its multi-center ESOGUARD BE-1 study has been accepted

for publication in The American Journal of Gastroenterology, the official journal of the American College of Gastroenterology (ACG).

is the fourth publication presenting clinical validation data for Lucid’s EsoGuard® Esophageal DNA Test, and the second to demonstrate

its performance in an intended-use screening population.

Consistent with previous studies, EsoGuard showed high sensitivity and negative

predictive value in detecting esophageal precancer (Barrett’s Esophagus or BE).

The prospective, multi-center study presented data from

a cohort of patients who met ACG guideline criteria for esophageal precancer screening and underwent non-endoscopic EsoGuard testing followed

by traditional upper endoscopy.

EsoGuard sensitivity and negative predictive value for detecting BE were approximately 88% and 99%, respectively.

Specificity and positive predictive value were approximately 81% and 30%, respectively.

No serious adverse events were reported.

Reimbursement Approval

March 13, 2025, Lucid announced that Highmark Blue Cross Blue Shield, an independent licensee of the Blue Cross and Blue Shield Association,

has issued a positive coverage policy for non-invasive screening of esophageal precancer and cancer in New York state.

The new policy

will cover EsoGuard in patients who meet established criteria for esophageal precancer testing consistent with professional society guidelines.

NIH Grant Related to EsoGuard and EsoCheck

February 27, 2025, Lucid announced that principal investigators from CWRU and University Hospitals (“UH”), were awarded an

$8 million National Institutes of Health (NIH) R01 grant to conduct a five-year clinical study designed to evaluate esophageal precancer

detection using EsoCheck and EsoGuard among at-risk individuals without symptoms of chronic gastroesophageal reflux disease (“GERD”).

The study, “A Clinical Trial of Cancer Prevention by Biomarker Based Detections of Barrett’s Esophagus and Its Progression,”

aims to evaluate the effectiveness of EsoCheck and EsoGuard in detecting esophageal precancer (Barrett’s Esophagus or BE) to prevent

esophageal cancer (EAC) within a non-GERD at-risk population.

To accomplish this aim, 800 patients without GERD symptoms who meet the

American Gastroenterological Association’s (AGA) risk criteria for screening will be recruited across five participating research

University Hospitals, University of Colorado, Johns Hopkins University, University of North Carolina, and Cleveland Clinic.

Recent Developments - continued

Business - continued

October 10, 2024, PAVmed announced that Veris has been awarded a $1.8 million grant from the National Institute on Minority Health and

Health Disparities (NIMHD), an institute of the National Institutes of Health (NIH).

The two-year grant will fund research to optimize

and validate the Veris Cancer Care Platform for the needs of medically underserved cancer patients, in partnership with an academic cancer

The research project, “Bridging the Gap:

Enhancing Cancer Care for Underserved Populations with the Veris Health Cancer

Care Platform,” will focus on patients facing language barriers, limited access to technology, and socioeconomic disparities.

to Board Composition

as of September 10, 2024, James L.

Cox, M.D., and Joan B.

Harvey resigned from the Company’s board of directors.

Harvey’s resignation was due to any disagreement with the Company on any matter relating to its operations, policies or

effective as of September 10, 2024, the Company’s board of directors appointed Sundeep Agrawal, M.D.

as a Class B director.

to being appointed to the Company’s board of directors, Dr.

Agrawal had entered into a strategic advisory agreement with the Company

to provide certain M&A advisory services.

Such agreement will remains in effect.

Pursuant to the

agreement, Dr.

Agrawal will receive a monthly consulting fee of $3 thousand.

The agreement is terminable by the Company on 10 days’

written notice.

Except for the foregoing, Dr.

Agrawal has not engaged in any transactions with the Company that are required to be reported

pursuant to Item 404(a) of Regulation S-K.

Agreements with Lucid

August 6, 2024, the Company and Lucid entered into a ninth amendment to the management services agreement between them (“MSA”)

to increase the monthly fee thereunder from $0.83 million per month to $1.05 million per month, effective as of July 1, 2024.

under the terms of our convertible debt (as amended as of January 17, 2025), we are required to elect that these payments be made in cash.

Cancer Care Platform

June 13, 2024, we announced that Veris and a National Cancer Institute-Designated Comprehensive Cancer Center launched a pilot program

and has enrolled the first patients from such center in such program on the Veris Cancer Care Platform.

Common Stock Offering

February 18, 2025, the Company and Veris entered into subscription agreements (each, a “Subscription Agreement”) with certain

accredited investors (collectively, the “Investors”), pursuant to which the Company agreed to sell and the Investors agreed

to purchase (the “Offering”) 2,574,350 shares of the Company’s common stock and pre-funded warrants to purchase 756,734

shares of the Company’s common stock (the “Pre-Funded Warrants”), at a purchase price of $0.7115 per share or warrant

share (as applicable).

In addition, Veris agreed to issue to each Investor approximately 0.2033 shares of Veris’ common stock for

each share or warrant share (as applicable) purchased by such Investor, for an aggregate of 677,143 shares of Veris’ common stock.

On February 21, 2025, the Company consummated the Offering, generating gross proceeds to the Company of $2.37 million.

The proceeds of

the offering will be used to resume development activities related to Veris’ implantable physiological monitor and for general

working capital purposes.

Subscription Agreement contains customary representations, warranties, covenants and indemnities of the Company and the Investors,

as well as a covenant by the Company to provide the Investors with protection against subsequent equity raises by the Company or

Veris at a lower purchase price (solely to the extent the Investors continue to hold the shares issued in the Offering), with such

protection to be effected through the issuance of additional shares of Veris’ common stock.

In addition, the Company (i)

agreed to solicit the affirmative vote of its stockholders by no later than its next meeting of stockholders, which will be held no

later than June 30, 2025, for approval, for the purposes of the rules of The Nasdaq Stock Market LLC (“Nasdaq”), of the issuance of all of the

shares underlying the Pre-Funded Warrants, and to hold additional meetings quarterly thereafter to the extent such approval is not

obtained, (ii) granted the Investors a 100% participation right in future offerings of equity securities of the Company or its

majority-owned subsidiaries, subject to existing participation rights of the Company’s debt holder, and (iii) agreed not to

incur, and not to permit its majority-owned subsidiaries to incur, any indebtedness until August 18, 2026, subject to certain

In accordance with the Subscription Agreement, the Company also entered into a registration rights agreement (the

“Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to file a registration

statement covering the resale of the shares of the Company’s common stock issued in the Offering, including the shares

underlying the Pre-Funded Warrants.

Pre-Funded Warrants become exercisable upon the receipt of the stockholder approval described above, expire on February 18, 2030, and

have an exercise price of $0.001 per share, subject to adjustment as described below.

The Pre-Funded Warrants may be exercised for cash,

or on a cashless basis.

In the event the Pre-Funded Warrants are exercised on a cashless basis, the holder will be entitled to receive

a number of shares of the Company’s common stock equal to (x) the excess of the market value of the Company’s common stock

over the exercise price, multiplied by (y) the number of shares as to which the Pre-Funded Warrant is being exercised, divided by (z)

the market value of the Company’s common stock.

The exercise price and number and type of securities or other property issuable

on exercise of the Pre-Funded Warrants may be adjusted in certain circumstances, including in the event of a stock split or combination,

stock dividend, or a recapitalization, reorganization, merger or similar transaction.

In addition, a holder of the Pre-Funded Warrants

will be entitled to participate in rights offerings or pro rata distributions by the Company.

However, there will be no adjustment for

issuances of shares of common stock at a price below the exercise price.

Recent Developments - continued

Financing - continued

lead investor in the Offering also agreed with the Company that it would, with respect to the election of the Company’s directors, vote

its shares of the Company’s common stock (including those exercisable in respect of their Pre-Funded Warrants) in accordance with

the Company’s board’s recommendations.

Nasdaq Compliance with Stockholders’

Equity Continued Listing Standard

On February 14, 2025, the Company

distributed by special dividend to the Company stockholders 3,331,747 shares of Lucid Diagnostics common stock held by the Company.

such date, each PAVmed shareholder as of the January 15, 2024 record date received a stock dividend of approximately 38 shares of Lucid

common stock for every 100 shares of PAVmed common stock they held as of such date.

The shares distributed were approximately equal to

the number of shares of common stock that Lucid issued to PAVmed on or about January 26, 2024 in satisfaction of certain intercompany

obligations due to Lucid from PAVmed, as discussed above.

This distribution constituted an

“Extraordinary Dividend” as defined in the warrant agreement that governs the Company’s Series Z Warrants.

pursuant to the warrant agreement, the exercise price under the Series Z Warrants per full share of PAVmed common stock was automatically

decreased by $0.52 (the fair market value of 0.37709668 of a share of Lucid Diagnostics’ common stock) to $23.48 per share.

Nasdaq Notice

On March 7, 2024, the Company

received a notice from the Nasdaq Listing Qualifications Department stating that, for the preceding 30 consecutive business days (through

March 6, 2024), the market value of the Company’s listed securities (“MVLS”) had been below the minimum of $35 million

required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).

The notification letter stated that

the Company would be afforded 180 calendar days (until September 3, 2024) to regain compliance.

In order to regain compliance, the Company’s

MVLS must close at $35 million or more for a minimum of ten consecutive business days.

The notification letter also states that in the

event the Company does not regain compliance prior to the expiration of the 180-day period, the Company will receive written notification

that its securities are subject to delisting.

The Nasdaq notification has no effect at this time on the listing of the Company’s

common stock or Series Z warrants, and the stock and warrants will continue to trade uninterrupted under the symbol “PAVM”

and “PAVMZ”, respectively.

Incubator Program

On March 21, 2024, the Company announced

that it has launched a wholly owned incubator, PMX, to complete development and commercialization of existing portfolio technologies,

including PortIO, EsoCure and CarpX.

PMX and Hatch Medical, L.L.C.

(“Hatch Medical”), a medical device incubator and technology

brokerage firm, have executed a joint venture agreement to advance the technologies.

Pursuant to the joint venture agreement,

PAVmed will assign PortIO, EsoCure and CarpX to its wholly owned incubator, PMX.

Starting with PortIO, the Company will seek to independently

finance a separate subsidiary of the incubator to develop and commercialize each technology.

Hatch Medical will provide strategic advisory

and brokerage services to the subsidiary to advance the technology through key milestones and, subsequently, seek to engage a strategic

partner to acquire, license or distribute the commercial product.

Securities Purchase Agreement - March 31, 2022

- Senior Secured Convertible Note - April 4, 2022 and Senior Secured Convertible Note - September 8, 2022

Effective as of March 12, 2024,

the Company entered into an amendment and waiver (the “Note Amendment and Waiver”) with the holder of the April 2022 Senior

Convertible Note and the September 2022 Senior Convertible Note (each such term as defined below).

Pursuant to the Note Amendment and

Waiver, the maturity date of the April 2022 Senior Convertible Note was extended to April 4, 2025 and the maturity date of the September

2022 Senior Convertible Note was extended to September 8, 2025, in each case subject to further extension in certain circumstances.

holder of the such note also waived, for the period commencing on December 1, 2023 and ending on August 31, 2024, the financial covenant

contained in such notes requiring that the ratio of (a) the outstanding principal amount of the notes, accrued and unpaid interest thereon

and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, not exceed

30%, and that the Company’s market capitalization not be less than $75 million.

In consideration of the Note Amendment and Waiver,

the Company agreed to pay the holder of the notes $2,000,000 in cash (or in such other form as may be mutually agreed in writing) by April

See our accompanying consolidated

financial statements Note 13, Debt , for further discussion of the SPA dated March 31, 2022 and the senior convertible notes.

received a notification letter from the Nasdaq Listing Qualifications Department, stating that the Company had regained compliance with

the Nasdaq continued listing standard under Nasdaq Listing Rule 5550(b)(1), which requires, among other things, that the Company maintain

at least $2.5 million in stockholders’ equity.

As previously disclosed, on March

7, 2024, the Company received a notice from the Nasdaq Listing Qualifications Department stating that, for the prior 30 consecutive business

days (through March 6, 2024), the market value of the Company’s listed securities had been below the minimum of $35 million required

for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).

The Company did not regain compliance with

the rule during the time period originally allotted under Nasdaq rules.

Accordingly, the Company timely requested a hearing before a Nasdaq

Hearings Panel (the “Panel”), which took place on October 29, 2024.

On November 8, 2024, the Panel granted the Company an

extension, until January 31, 2025, to regain compliance with the Nasdaq continued listing standards under Nasdaq Listing Rule 5550(b)(1),

in lieu of Nasdaq Listing Rule 5550(b)(2).

The Company achieved compliance through (1) the exchange of secured convertible notes with a principal amount outstanding

of $22.3 million for shares of Series C convertible preferred stock, par value $0.001 (the “Series C Preferred Stock”), which

was consummated on January 17, 2025, (2) the issuance of additional shares of Series C Preferred Stock for an aggregate purchase price

of $2.653 million, which was consummated on January 24, 2025, and (3) a reduction in operating expenses as a result of the Company’s

completed deconsolidation of Lucid from its balance sheet, each of which transactions was previously disclosed and is outlined in more

detail below.

As a result, the Company met the terms of the Panel’s decision.

C Preferred Stock Debt Exchange ;

Amendments to September 2022 Convertible Note.

Under a Securities Purchase Agreement

dated March 31, 2022, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April

2022 Senior Convertible Note”, and a Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September

2022 Senior Convertible Note”.

November 15, 2024, the Company entered into an Exchange Agreement (the “Debt Exchange Agreement”) with the holder (the “Holder”)

of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note.

The Debt Exchange Agreement provided for the

exchange of $22.3 million in principal amount of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note

and interest thereon for 22,347 shares of Series C Preferred Stock.

January 17, 2025, after satisfaction of all conditions to closing the Exchange, the parties consummated the Exchange.

Following consummation of the Exchange, the April 2022 Senior Convertible Note was satisfied in full, and the outstanding

principal balance of the remaining September 2022 Senior Convertible Note was approximately $6.6 million.

the Debt Exchange Agreement discussed above, effective as of consummation on the Exchange as of January 17, 2025, the Company also

agreed to certain amendments and modifications to the September 2022 Convertible Note, including, without limitation, that the

conversion price thereunder was reset to $1.068;

that the maturity date was extended to December 31, 2025;

that any change of

control or disposition by the Company of its shares of Lucid common stock would require the prior written consent of the Required

Holders (as defined in the September 2022 Convertible Note);

certain other terms and conditions regarding payments under the MSA and

the application of the same (including that all MSA payments from Lucid must be made in cash);

that the Company waives its right to redeem the September 2022 Convertible Note so long as any shares

of Series C Preferred Stock are outstanding;

that the Holder waives, until December 31, 2025, the financial covenants under the

September 2022 Convertible Note requiring that (i) the amount of the Company’s available cash equal or exceed $8.0 million at

all times, (ii) the ratio of (a) the outstanding principal amount of the September 2022 Convertible Note, accrued and unpaid

interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten

trading days, not exceed 30%, and (iii) that the Company’s market capitalization shall at no time be less than $75 million;

and that so long as any shares of Series C Preferred Stock remain outstanding, the Holder will be entitled to exchange all, or any

portion, of the September 2022 Convertible Note (including any interest that would accrue thereon through the maturity date thereof)

into shares of Lucid common stock held by the Company, at an exchange price per share of Lucid common stock equal to $0.85 per share

(as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events), subject to certain

beneficial ownership limitations.

The key terms of the Series C Preferred Stock can be found on Exhibit 4.1 to this Form 10-K.

C Preferred Stock Security Purchase Agreement.

On November 20, 2024, the Company entered into a Securities Purchase

Agreement (the “Series C Securities Purchase Agreement”) with the Holder.

The Series C Securities Purchase Agreement

provides for the purchase of 2,653 shares of Series C Preferred Stock at a price of $1,000 per share, with the purchase price to be

satisfied through the cancellation of $2.6 million of certain unsecured debt obligations owed by the Company to the Holder (the

January 24, 2025, after satisfaction of all conditions to closing the Purchase, the parties consummated the Purchase.

Recent Developments - continued

Financing - continued

Lucid Diagnostics - Preferred Stock Offerings

On March 13, 2024, Lucid entered

into subscription agreements (each, a “Series B Subscription Agreement”) and exchange agreements (each, an “Exchange

Agreement”) with certain accredited investors (collectively, the “Series B Investors”), which agreements provided for

(i) the sale to the Series B Investors of 12,495 shares of Lucid’s newly designated Series B Convertible Preferred Stock, par value

$0.001 per share (the “Lucid Series B Preferred Stock”), at a purchase price of $1,000 per share, and (ii) the exchange by

the Series B Investors of 13,625 shares of Lucid’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Lucid

Series A Preferred Stock”), and 10,670 shares of Lucid’s Series A-1 Convertible Preferred Stock, par value $0.001 per share

(the “Lucid Series A-1 Preferred Stock”), held by them for 31,790 shares of Lucid Series B Preferred Stock (collectively,

the “Lucid Series B Offering and Exchange”).

Prior to the execution of the Series B Subscription Agreements and the Exchange

Agreements, Lucid entered into subscription agreements with certain of the Series B Investors providing for the sale to such investors

of 5,670 shares of Lucid Series A-1 Preferred Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed

to exchange for shares of Lucid Series B Preferred Stock pursuant to the Exchange Agreements (and are included in the 10,670 shares of

Lucid Series A-1 Preferred Stock set forth above).

Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a

conversion price of $1.2444.

The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and a

right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock is

convertible, payable on the one-year and two-year anniversary of the issuance date.

The Lucid Series B Preferred Stock is a voting security.

The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds

from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).

As a result of 100% of the then-outstanding

shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged for shares of Lucid Series B Preferred Stock

in the Lucid Series B Offering and Exchange, no shares of Lucid Series A Preferred Stock or Lucid Series A-1 Preferred Stock remain outstanding.

On October 17, 2023, Lucid sold

5,000 shares of Lucid Series A-1 Preferred Stock, solely to accredited investors (all of which were including in the 10,670 shares of

Lucid Series A-1 Preferred exchanged for Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange).

The aggregate gross

proceeds to Lucid of this offering was $5.0 million.

In December 2021, we entered into

an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity

Offering Agreement between us and Cantor.

In March 2023, the “at-the-market offering” became subject to General Instruction

I.B.6 of Form S-3, which limits sales of our securities under this instruction in any 12-month period to one-third of the aggregate market

value of our public float (unless our public float rises to $75 million or more, in which case the instruction will cease to apply).

a result of this limitation and our then-current public float, in May 2023, we amended our “at-the-market offering” to cover

up to an additional $18 million of our common stock.

In the year ended December 31, 2023, the Company sold 321,288 shares through

its at-the-market equity facility for net proceeds of approximately $1.8 million, after payment of 3% commissions.

Lucid Diagnostics Inc.

- Committed Equity Facility

and ATM Facility

In March 2022, Lucid Diagnostics

entered into a committed equity facility with a Cantor affiliate.

Under the terms of the committed equity facility, the Cantor affiliate

has committed to purchase up to $50 million of Lucid Diagnostics’ common stock from time to time at Lucid Diagnostics’ request.

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

insofar as it allows Lucid Diagnostics to raise primary equity capital on a periodic basis at prices based on the existing market price.

Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million,

after a 4% discount, as of December 31, 2023.

In November 2022, Lucid Diagnostics

also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under

a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.

In the year ended December 31, 2023, Lucid Diagnostics

sold 230,068 shares through its at-the-market equity facility for net proceeds of approximately $0.3 million, after payment of 3% commissions.

Lucid Deconsolidation.

On September 10, 2024, the Company determined that Lucid and

its subsidiaries will be deconsolidated from the Company’s financial statements as of September 10, 2024, as a result of the changes

in the composition of the Company’s board of directors discussed above, in combination with the Company ceasing to have control

over a majority of the voting power of Lucid.

As a result of these events, the Company is considered to cease to have control over Lucid

for the purposes of U.S.

generally accepted accounting principles, even though it continues to own, and has not disposed any of its,

31,302,444 shares of common stock of Lucid.

Nasdaq Notice

of Noncompliance with the Minimum Bid Price Requirement

On January 23, 2025, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30

consecutive business days (through January 22, 2025), the closing bid price of the Company’s common stock had been below the minimum

of $1 per share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

The notification letter

stated that the Company would be afforded 180 calendar days (until July 22, 2025) to regain compliance.

In order to regain compliance,

the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days.

The notification

letter also stated that, in the event the Company does not regain compliance within the initial 180-day period, the Company may be eligible

for an additional 180-day period.

If the Company is not eligible for the additional 180-day period, or if it appears to the Nasdaq staff

that the Company will not be able to cure the deficiency, the Nasdaq Listing Qualifications Department will provide notice after the

end of the initial 180-day period that the Company’s securities will be subject to delisting.

The Nasdaq notification has no effect

at this time on the listing of the Company’s common stock or Series Z warrants, and the common stock and Series Z warrants will

continue to trade uninterrupted under the symbol “PAVM” and “PAVMZ,” respectively.

Long-Term Incentive Plan

January 2025, the Company accepted from employees the voluntary forfeiture of approximately 494,202 of previously granted Company stock

options, each with an exercise price greater than $4.00 per share and collectively with a weighted average exercise price of $23.38 per

None of the forfeitures were from officers or board members.

Share Increase

January 15, 2025, the Company received shareholder approval to amend its certificate of incorporation, as amended, to increase the total

number of shares of common stock the Company is authorized to issue by 200 million shares from 50 million shares to 250 million shares.

An amendment effecting such change was filed with the Secretary of State of Delaware on January 15, 2025.

Diagnostics — Registered Direct Offering

March 5, 2025, Lucid closed on the sale of 13,939,331 shares of its common stock, pursuant to its previously announced offering of shares

of common stock at a price of $1.10 per share (the “Lucid Offering”).

net proceeds of the Lucid Offering, after deducting the estimated placement agent’s fees and other expenses of the Lucid Offering,

was approximately $14.5 million.

Lucid intends to use the net proceeds from the Lucid Offering for working capital and other general

corporate purposes.

connection with the Lucid Offering, Lucid suspended its “at the market offering” program.

In November 2022, Lucid

entered into a Controlled Equity Offering℠ Sales Agreement (the “Lucid Sales Agreement”) with Cantor Fitzgerald

Pursuant to the Sales Agreement, from time to time, Lucid may offer and sell shares of its common

stock to or through Cantor, acting as sales agent or principal.

Sales of Lucid’s common stock by Cantor, if any, under the

Sales Agreement may be made by any method permitted by law and deemed to be an “at the market offering” as defined in

Rule 415(a)(4) promulgated under the Securities Act (the “Lucid ATM Offering”).

Lucid filed a prospectus supplement

dated December 6, 2022 (the “Lucid ATM Prospectus Supplement”), for the offer and sale of shares of its common stock

having an aggregate offering price of up to $6.5 million in the Lucid ATM Offering.

Effective as of March 4, 2025, Lucid terminated

the Lucid ATM Prospectus Supplement.

Lucid will not make any sales of common stock in the Lucid ATM Offering unless and until a new

prospectus or prospectus supplement is filed.

Other than the termination of the Lucid ATM Prospectus Supplement, the Lucid Sales

Agreement remains in full force and effect.

Diagnostics — Debt Refinancing

November 22, 2024, Lucid closed on the sale of $21.975 million in principal amount of 12.0% Senior Secured Convertible Notes due 2029

(collectively, the “Lucid 2024 Convertible Notes”), in a private placement, to certain accredited investors (the “Lucid

2024 Note Investors”).

The sale of the Lucid 2024 Convertible Notes was completed pursuant to the terms of the previously disclosed

Securities Purchase Agreement, dated as of November 12, 2024 (the “Lucid 2024 SPA”), between Lucid and the Lucid 2024 Note

Lucid realized gross proceeds of $21.95 million and, after giving effect to the repayment in full of the Lucid 2023 Convertible

Note (as defined below), net proceeds of $18.3 million from the sale of the Lucid 2024 Convertible Notes.

used a portion of the proceeds from the sale of the Lucid 2024 Convertible Notes to repay the Senior Convertible Note (the “Lucid

2023 Convertible Note”) issued pursuant to that certain Securities Purchase Agreement, dated as of March 13, 2023.

the terms of the Lucid 2023 Convertible Note, on November 22, 2024, Lucid redeemed the Lucid 2023 Convertible Note by paying the contractual

redemption price of approximately $3.6 million.

December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered

and sold under a Controlled Equity Offering Agreement between us and Cantor.

In March 2023, the “at-the-market offering”

became subject to General Instruction I.B.6 of Form S-3, which limits sales of our securities under this instruction in any 12-month

period to one-third of the aggregate market value of our public float (unless our public float rises to $75 million or more, in which

case the instruction will cease to apply).

As a result of this limitation and our then-current public float, in May 2023, we amended

our “at-the-market offering” to cover up to an additional $18 million of our common stock.

In the year ended December 31,

2024, the Company sold 1,032,298 shares through its at-the-market equity facility for net proceeds of approximately $1.3 million, after

payment of 3% commissions.

Subsequent to December 31, 2024, as of March 20, 2025, the Company sold 1,210,704 shares through

their at-market equity facility for net proceeds of approximately $0.8 million, after payment of 3% commissions.

of Operations

Company recognized revenue resulting from the delivery of patient EsoGuard test results when the Company considered the collection of

such consideration to be probable to the extent that it is unconstrained.

Additionally, in the three months ended March 31, 2022, revenue

was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Lucid Diagnostics and ResearchDx

(“RDx”), a CLIA certified commercial laboratory service provider.

On February 25, 2022, the EsoGuard Commercialization

Agreement was terminated upon Lucid’s acquisition, pursuant to the APA-RDx, of certain assets necessary to operate its own CLIA

certified laboratory.

For a fuller description of the APA-RDx, see Note 5, Asset Purchase Agreement and Management Services Agreement ,

to our accompanying consolidated financial statements.

of revenues recognized from the delivery of patient EsoGuard test results includes costs related to EsoCheck device usage, shipment of

test collection kits, royalties and the cost of services to process tests and provide results to physicians.

We incur expenses for tests

in the period in which the activities occur, therefore, gross margin as a percentage of revenue may vary from quarter to quarter due

to costs being incurred in one period that relate to revenues recognized in a later period.

expect that gross margin for our services will continue to fluctuate and be affected by EsoGuard test volume, our operating efficiencies,

patient compliance rates, payer mix, the levels of reimbursement, and payment patterns of payers and patients.

the previously terminated EsoGuard Commercialization Agreement in February 2022, the cost of revenue recognized is inclusive of:

fee incurred under our license agreement with CWRU;

the cost of EsoCheck devices and EsoGuard mailers (cell sample shipping costs);

Lucid Test Centers operating expenses, including rent expense and supplies.

Company recognized revenue primarily resulting from the delivery of patient EsoGuard test results when the Company considered the collection

of such consideration to be probable to the extent that it is unconstrained.

of revenues recognized primarily from the delivery of patient EsoGuard test results includes costs related to EsoCheck device usage,

shipment of test collection kits, royalties and the cost of services to process tests and provide results to physicians.

We have incurred

expenses for tests in the period in which the activities occur, therefore, gross margin as a percentage of revenue has varied from quarter

to quarter due to costs being incurred in one period that relate to revenues recognized in a later period.

expect that gross margin for our services will fluctuate based on the commercialization efforts of our subsidiaries.

and marketing expenses

1 unchanged sentence

as well as advertising and promotion expenses.

We anticipate our sales and marketing expenses will increase in the future, to the extent

we expand our commercial sales and marketing operations as resources permit and insurance reimbursement coverage for our EsoGuard test

We anticipate our sales and marketing expenses to decrease in the future compared to historical

periods due to the deconsolidation of Lucid, as the sales and marketing operations for the Lucid EsoGuard test is no longer recorded

within the Company’s operating results.

and administrative expenses

3 unchanged sentences

property portfolio.

anticipate our general and administrative expenses will increase in the future to the extent our business operations grow.

we anticipate continued expenses related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related

services, insurance premiums and investor relations costs associated with maintaining compliance as a public company.

anticipate our general and administrative expenses will decrease in the future compared to historical periods due to the deconsolidation

of Lucid as the general and administrative expenses, including third-party payor reimbursement costs, incurred by Lucid will no longer

be recorded within the Company’s operating results.

In the future, general and administrative expenses will include those expenses

related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related services, insurance premiums

and investor relations costs associated with maintaining compliance as a public company for PAVmed and its majority-owned subsidiaries.

and development expenses

3 unchanged sentences

and benefit costs associated with our medical research personnel and engineering personnel;

associated with regulatory filings;

license fees;

associated with submission of regulatory filings;

of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes;

design engineering studies.

expenses for facilities maintained solely for research and

development purposes.

current research and development activities, including our clinical trials, are focused principally on the acceleration of EsoGuard and

Veris Cancer Care Platform commercialization.

We will resume research and development activities with respect to other products in our

pipeline as well as applicable new technologies, as resources permit.

reported research and development activities, including our clinical trials, were focused principally on the acceleration of EsoGuard

and Veris Cancer Care Platform commercialization.

In the future, the research and development activities will focus on the Veris Cancer

Care Platform, the PMX incubator program and other products in our pipeline as well as applicable new technologies, as resources permit.

Income and Expense, net

1 unchanged sentence

upon repayment of such convertible notes.

of Operations - continued

of Dollar Amounts

1 unchanged sentence

in millions, except for share and per share amounts.

of Operations - continued

year ended December 31, 2024 as compared to year ended December 31, 2023

the year ended December 31, 2023, revenue was $2.5 million as compared to $0.4 million in the prior year.

The $2.1 million increase principally

relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory.

During the year ended December 31,

2022, there was revenue from the EsoGuard Commercialization Agreement with RDx recognized in first two months of the year.

Commercialization Agreement was terminated on February 25, 2022 when Lucid Diagnostics transitioned to its own laboratory operations.

the year ended December 31, 2023, cost of revenue was approximately $6.4 million as compared to $3.6 million in the prior year.

million increase was principally related to:

● approximately

$1.6 million increase in EsoCheck and EsoGuard supplies costs;

● approximately

$1.2 million increase in compensation related costs, including stock-based compensation at

Lucid and Veris.

the year ended December 31, 2024, revenue was $3.0 million as compared to $2.5 million for the corresponding period in the prior year.

The $0.5 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory

for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Tests.

the year ended December 31, 2024, cost of revenue was $4.8 million as compared $6.4 million for the corresponding period in the

The net decrease of $1.6 million was principally related to Lucid’s results only being included in the

Company’s operating results through September 10, 2024 in the year ended December 31, 2024, as compared to the prior year, during which all twelve months of Lucid’s

operating results were so included.

and marketing expenses

the year ended December 31, 2023, sales and marketing costs were approximately $17.6 million as compared to $19.3 million in the prior

the year ended December 31, 2024, sales and marketing costs were approximately $11.6 million as compared to $17.6 million for the corresponding

period in the prior year.

The net decrease of $6.0 million was principally related to:

● approximately

$1.9 million decrease in third party marketing expenses;

$5.1 million decrease related to Lucid’s results only being including in the

Company’s operating results through September 10, 2024 in the year ended December 31, 2024, as compared to the prior year, during which

all twelve months of Lucid’s operating results were so included;

● approximately

$0.2 million increase in facility-related costs.

$0.7 million decrease in compensation related costs, including stock-based compensation;

● approximately

$0.2 million decrease in third party sales and marketing costs.

and administrative expenses

the year ended December 31, 2023, general and administrative costs were approximately $30.9 million as compared to $41.4 million in the

the year ended December 31, 2024, general and administrative costs were approximately $24.5 million as compared to $30.9 million for

the corresponding period in the prior year.

The net decrease of $6.4 million was principally related to:

● approximately

$8.1 million decrease in stock-based compensation, primarily related to decreases at Lucid, partially offset by increases at PAVmed;

approximately

$3.5 million decrease in third-party professional fees and expenses related to legal services, consulting fees and professional recruiting

$4.3 million decrease related to Lucid’s results only being including in the

Company’s operating results through September 10, 2024 in the year ended December 31, 2024, as compared to the prior year, during which

all twelve months of Lucid’s operating results were so included;

● approximately

$1.3 million increase in compensation related costs;

$3.1 million decrease in stock-based compensation, related to decreases at both PAVmed and

● approximately

$0.2 million decrease related to facility related costs at Lucid, partially offset by an increase in facility related costs at PAVmed.

$1.0 million increase in third-party professional fees, including expenses related to investor

and development expenses

the year ended December 31, 2023, research and development costs were approximately $14.3 million as compared to $25.3 million in the

the year ended December 31, 2024, research and development costs were approximately $5.9 million as compared to $14.3 million for the

corresponding period in the prior year.

The net decrease of $8.4 million was principally related to:

● approximately

$10.1 million decrease in development costs, particularly in clinical trial activities and

$5.3 million decrease in development costs, particularly in clinical trials activities and

outside professional and consulting fees;

● approximately

$0.9 million decrease in third party professional fees and expenses related to consulting.

$1.8 million decrease related to Lucid’s results only being including in the Company’s operating results through

September 10, 2024 in the year ended December 31, 2024, as compared to the prior year, during which all twelve months of

Lucid’s operating results were so included;

● approximately

$1.3 million decrease in compensation related costs and stock-based compensation.

of Acquired Intangible Assets

amortization of acquired intangible assets increased to $2.0 million in the year ended December 31, 2023, as compared to $1.8 million

in the prior year.

The increase of $0.2 million in the current period was due to the timing of the acquired intangible assets in 2022.

of Operations - continued

year ended December 31, 2023 as compared to year ended December 31, 2022 - continued

amortization of acquired intangible assets was approximately $0.6 million in the year ended December 31, 2024, as compared to $2.0 million

for the corresponding period in the prior year.

The decrease of $1.4 million in the current period was due to certain acquired intangible

assets being fully amortized in February 2024.

Income and Expense

in fair value of convertible debt

the year ended December 31, 2023, the change in the fair value of our convertible notes was approximately $6.0 million of expense, related

to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.

The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note

were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting

The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates.

the years ended December 31, 2024 and December 31, 2023, the change in the fair value of our convertible notes was approximately

$0.5 million of income and $6.0 million of expense, respectively, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the

Lucid March 2023 Senior Convertible Note.

The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and

the Lucid March 2023 Senior Convertible Note were initially measured at their issue-date estimated fair value and subsequently

remeasured at estimated fair value as of each reporting period date.

The Company initially recognized an aggregate of $4.3 million

of fair value non-cash expense on the issue dates.

of Operations - continued

year ended December 31, 2024 as compared to year ended December 31, 2023 - continued

Income and Expense - continued

on Issue and Offering Costs - Senior Secured Convertible Note

the year ended December 31, 2023, in connection with the issue of the Lucid March 2023 Senior Convertible Note, we recognized a total

of approximately $1.2 million of lender fees and offering costs paid by us.

In the year ended December 31, 2022, in connection with the

issue of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note, we recognized a total of approximately

$4.3 million of lender fees and offering costs.

of approximately $1.2 million of lender fees and offering costs.

The Company did not incur lender fees and offering costs in the year

ended December 31, 2024.

on Debt Extinguishment

1 unchanged sentence

with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below.

the year ended December 31, 2023, approximately $6.1 million of principal repayments along with $0.4 million of interest expense

thereon, were settled through the issuance of 1,745,824 shares of common stock of the Company, with such shares having a fair value

of approximately $10.0 million (with such fair value measured as the respective conversion date quoted closing price of the common

stock of the Company).

In addition, the Company paid $0.2 million in cash related to acceleration floor payments on these notes related to

the conversion price being below $2.70, recorded as debt extinguishment loss.

The conversions resulted in a debt extinguishment loss

of $3.8 million in the year ended December 31, 2023.

the year ended December 31, 2024, approximately $1.4 million of principal repayments along

with $0.1 million of interest expense thereon, were settled through the issuance of 1,084,366

shares of common stock of the Company, with such shares having a fair value of approximately

$2.0 million (with such fair value measured as the quoted closing price of the common stock

of the Company on the respective conversion date).

In addition, the Company agreed to pay

$1.1 million in cash related to acceleration floor payments on these notes related to the

conversion price being below the conversion floor price specified in the notes, recorded

as debt extinguishment loss.

The conversions and cash paid resulted in a debt extinguishment

loss of $1.5 million in the year ended December 31, 2024.

the period of January 1, 2024 through September 10, 2024, the date of PAVmed’s deconsolidation

of Lucid, approximately $2.0 million of principal repayments along with approximately $0.8

million of interest expense thereon, were settled through the issuance of 4,172,002 shares

of Lucid common stock, with such shares having a fair value of approximately $3.8 million

(with such fair value measured as the quoted closing price of the common stock of Lucid on

the respective conversion date).

The conversions resulted in a debt extinguishment loss of

$1.0 million in the period of January 1, 2024 through September 10, 2024.

comparison, in the year ended December 31, 2023, a debt extinguishment loss in the aggregate of approximately $3.8 million was recognized

in connection with our April 2022 Senior Convertible Note as discussed below.

August 2022, approximately $6.0 million of principal repayments along with $0.4 million of interest expense thereon, were

settled through the issuance of 479,291 shares of common stock of the Company, with such shares having a fair value of approximately

$11.8 million (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).

The conversions resulted in a debt extinguishment loss of $5.4 million in the year ended December 31, 2022.

in connection with our April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note as discussed below.

the year ended December 31, 2023, approximately $6.1 million of principal repayments along

with $0.4 million of interest expense thereon, were settled through the issuance of 1,745,824

shares of common stock of the Company, with such shares having a fair value of approximately

$10.0 million (with such fair value measured as the quoted closing price of the common stock

of the Company on the respective conversion date).

In addition, the Company agreed to pay

$0.2 million in cash related to acceleration floor payments on these notes related to the

conversion price being below the conversion floor price specified in the notes, recorded

as debt extinguishment loss.

The conversions and cash paid resulted in a debt extinguishment

loss of $3.8 million in the year ended December 31, 2023.

Note 13 , Debt , to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note,

the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.

on Deconsolidation of Lucid

of December 31, 2024, there were 63,071,950 shares of common stock of Lucid Diagnostics issued and outstanding, of which, the Company

held 31,302,444 shares.

On September 10, 2024, as a result of changes in the composition of the Company’s board of directors described

above, in combination with the Company ceasing to have control over a majority of the voting power of Lucid, the Company was considered

to cease to have control over Lucid for the purposes of U.S.

GAAP, even though it continues to own, and has not disposed any of its,

31,302,444 shares of common stock of Lucid.

However, PAVmed retained the ability to exercise significant influence over Lucid.

the Company deconsolidated Lucid.

Upon deconsolidation, the Company’s ownership of 31,302,444 shares of Lucid Diagnostics common

stock was valued at $25.1 million, which resulted in a gain on deconsolidation of $72.3 million in the accompanying consolidated statements

of operations for the year ended December 31, 2024.

in fair value of Equity Method Investment

September 10, 2024 and December 31, 2024, the fair value of the Company’s investment in Lucid was $25.1 million and $25.6 million,

respectively, with the company recognizing an unrealized gain on its investment in Lucid of $0.5 million in the accompanying consolidated

statements of operations for the year ended December 31, 2024.

The fair value of common shares held by the Company was determined using

the closing price of Lucid’s common stock per share on September 10, 2024 and December 31, 2024 of $0.802 and $0.819, respectively.

of Operations - continued

year ended December 31, 2024 as compared to year ended December 31, 2023 - continued

Income and Expense - continued

Dividend on Series A and Series A-1 Convertible Preferred Stock Exchange Offer

fair value of the consideration given in the form of the issue of 31,790 shares of Lucid Series B Preferred Stock, with such fair value

recognized as the carrying value of such issued shares of Lucid Series B Preferred Stock, as compared to the carrying value of the extinguished

Lucid Series A and Series A-1 Preferred Stock (carrying value of $24.3 million), resulting in an excess of fair value of $7.5 million

recognized as a deemed dividend charged to accumulated deficit in the consolidated balance sheet on March 13, 2024, with such deemed

dividend included as a component of net loss attributable to common stockholders, summarized as follows:

Series B Convertible Preferred Stock Issuance and Series A/A-1 Exchange Offer

March 13, 2024

Fair Value - 31,790 shares of Lucid Series B Preferred Stock issued in exchange for Lucid Series A and Lucid Series A-1 Preferred Stock

Carrying value related to Series A and Series A-1 Preferred Stock Exchanged for Series B Preferred Stock (of 24,295 shares)

Deemed Dividend Charged to Accumulated Deficit

and Capital Resources

current financing strategy is to obtain capital directly into Lucid, Veris and other subsidiaries to fund any product development or

other related activities.

There are no assurances, however, we will be able to obtain an adequate level of financial resources required

for the short-term or long-term commercialization and development of our products and services.

other related activities, although we retain the flexibility to raise capital at the PAVmed level.

There are no assurances, however,

we will be able to obtain an adequate level of financial resources required for the short-term or long-term commercialization and development

of our products and services.

have financed our operations principally through the public and private issuances of our common stock, preferred stock, common stock

purchase warrants, and debt.

We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic and

medical device companies that devote substantially all of their efforts to the commercialization of their initial product and services

and ongoing R&D and clinical trials.

We experienced a net loss before noncontrolling interests of approximately $79.3 million and

used approximately $52.0 million of cash in operations for the year ended December 31, 2023.

Financing activities provided $31.2 million

of cash during the year ended December 31, 2023.

We ended the year with cash on-hand of $19.6 million as of December 31, 2023.

expect to continue to experience recurring losses and negative cash flows from operations, and will continue to fund our operations with

debt and/or equity financing transactions, including current obligations on the Company’s existing convertible debt which in accordance

with management’s plans may include conversions to equity and refinancing our existing debt obligations to extend the maturity

The Company’s ability to continue operations beyond March 2025 will depend upon generating substantial

revenue that is conditioned on obtaining positive third-party reimbursement coverage for its EsoGuard Esophageal DNA Test from both government

and private health insurance providers, increasing revenue through contracting directly with self-insured employers, and on its ability

to raise additional capital through various potential sources including equity and/or debt financings or refinancing existing debt obligations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date

the accompanying consolidated financial statements are issued.

Liquidity and Capital Resources - continued

purchase warrants, and debt, both at the PAVmed level and, in the case of Lucid, at the subsidiary level.

We are subject to all of the

risks and uncertainties typically faced by medical device and diagnostic and medical device companies that devote substantially all of

their efforts to the commercialization of their initial product and services and ongoing R&D and clinical trials.

We experienced

net income before noncontrolling interests of approximately $28.4 million and used approximately $33.6 million of cash in operations

for the year ended December 31, 2024.

Financing activities provided $31.3 million of cash during the year ended December 31, 2024.

ended the year with cash on-hand of $1.2 million as of December 31, 2024.

We expect to continue to experience recurring losses and negative

cash flows from operations, and will continue to fund our operations with debt and/or equity financing transactions, including current

obligations on the Company’s existing convertible debt which in accordance with management’s plans may include conversions

to equity and refinancing our existing debt obligations to extend the maturity date.

The Company’s ability to continue operations

12 months beyond the issuance of the financial statements, will depend upon its ability to control its operating costs within the limits

of the amounts collected from its management service contracts with its non-consolidated subsidiaries, to substantially increase its

revenues from the Veris Cancer Care platform, and to raise additional capital through various potential sources including equity or debt

financings or refinancing or restructuring existing debt obligations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within one

year after the date the accompanying consolidated financial statements are issued.

of Shares of Our Common Stock

1 unchanged sentence

issued 34,332 shares of our common stock for proceeds of approximately $0.1 million under

the PAVmed Employee Stock Purchase Plan (“ESPP”), as such plan is discussed in

Note 14, Stock-Based Compensation, to the Financial Statements.

the PAVmed Employee Stock Purchase Plan (“ESPP”).

For more information about

the ESPP, see Note 14, Stock-Based Compensation, to the Financial Statements.

issued 1,032,298 shares of our common stock for net proceeds of approximately $1.3 million,

after payment of 3% commissions, from the sale of shares through PAVmed’s at-the-market

equity facility through Cantor.

See below for more information.

issued 100,000 shares of our common stock to a service provider as the consideration for

services rendered.

The issued shares of common stock had a fair value of approximately $0.6

See Note 16, Common Stock and Common Stock Purchase Warrants for additional

after payment of 3% commissions, through our at-the-market equity facility with Cantor.

below for more information.

issued 1,084,366 shares of our common stock in satisfaction of approximately $1.4 million

of principal repayments along with approximately $0.4 million of interest expense thereon

under the April 2022 Senior Convertible Note and September 2022 Senior Convertible Note.

of principal repayments along with $0.1 million of interest expense thereon under the April

2022 Senior Convertible Note and September 2022 Senior Convertible Note.

issued 333,380 shares of our common stock to vendors in exchange for $0.35 million of agreed

upon services, which is included in general and administrative operating expenses on the

Company’s consolidated statement of operations.

Subsequent to December 31, 2024, the Company and its subsidiaries completed a number of financing-related transactions.

See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Financing

above for more details on these transactions.

Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022

as of March 31, 2022, we entered into the SPA with an accredited investor, pursuant to which we agreed to sell, and the investor agreed

to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.

The SPA provided for the sale of

the initial Senior Secured Convertible Note with a face value principal of $27.5 million, which closed on April 4, 2022 (referred to

as the “April 2022 Senior Convertible Note”).

The SPA also provided for sales of additional Senior Secured Convertible Notes

in one or more additional closings (upon the satisfaction of certain conditions), with an aggregate face value principal of up to an

additional $22.5 million.

The April 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion

price (adjusted for the December 2023 1-for-15 reverse stock split) of $75.00 per share of the Company’s common stock (subject

to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction),

and an initial contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4,

The April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note

The April 2022 Senior Convertible Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the

Company’s offering costs of approximately $0.6 million, inclusive primarily of $0.5 million placement agent fees.

as of March 31, 2022, we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor, pursuant to

which we agreed to sell, and the investor agreed to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible

On April 4, 2022, we completed an initial closing under the SPA, in which we sold to the investor a Senior Secured Convertible

Note with a face value principal of $27.5 million (the “April 2022 Senior Convertible Note”).

The April 2022 Senior Secured

Convertible Note had an initial contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one

year, to April 4, 2025.

The April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock

as described in Note 13, Debt .

September 8, 2022, we completed an additional closing under the SPA, in which we sold to the investor an additional Senior Secured Convertible

Note with a face value principal of $11.25 million (referred to as the “September 2022 Senior Convertible Note”).

The September

2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price (adjusted for the December

2023 1-for-15 reverse stock split) of $75.00 per share of the Company’s common stock (subject to standard adjustments in the event

of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date

of September 8, 2024 which maturity date the investor agreed to extend by one year, to September 8, 2025.

The September 2022 Senior Convertible

Note may be converted into or otherwise paid in shares of our common stock as described in Note 13, Debt .

Note with a face value principal of $11.25 million (the “September 2022 Senior Convertible Note”).

The September 2022 Senior

Convertible Note proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s total offering costs of

approximately $0.2 million, inclusive primarily of placement agent fees.

the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the SPA, we are subject to certain customary

affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness

and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets,

the maturity of other indebtedness, and transactions with affiliates, among other customary matters.

We also are subject to

financial covenants requiring that (i) the amount of our available cash equal or exceed $8.0 million at all times, (ii) the ratio of

(a) the outstanding principal amount of the notes issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid

late charges to (b) our average market capitalization over the prior ten trading days, not exceed 30% (the “Debt to Market Cap

Ratio Test”), and (iii) that our market capitalization shall at no time be less than $75 million (the “Market Cap

Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).

From time to time from and

after December 1, 2023 through March 12, 2024, the Company was not in compliance with the Financial Tests.

As of March 12, 2024, the

investor agreed to waive any such non-compliance during such time period and thereafter through August 31, 2024.

waiver, as of December 31, 2023, the Company was in compliance with the Financial Tests.

In addition, based on the waiver, the

Company presently is in compliance with the Financial Tests.

In consideration of the covenant

waiver and maturity extensions discussed above, the Company agreed to pay the holder of the notes $2,000,000 in cash (or in such other

form as may be mutually agreed in writing) by April 25, 2024.

Secured Convertible Note had an initial contractual maturity date of September 6, 2024, which maturity date has been now extended to

December 31, 2025.

The September 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as

described in Note 13, Debt .

Liquidity and Capital Resources - continued

the April 2022 Senior Convertible Note (until it was satisfied in full on January 17, 2025 upon consummation of the Exchange), the September

2022 Senior Convertible Note and the SPA, we are subject to certain customary affirmative and negative covenants regarding the incurrence

of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect

of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates,

among other customary matters.

We also are subject to financial covenants requiring that (i) the amount of our available cash equal or

exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and

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

not exceed 30% (the “Debt to Market Cap Ratio Test”), and (iii) that our market capitalization shall at no time be less than

$75 million (the “Market Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).

From time to time from and after September 1, 2024 through November 11, 2024, the Company was not in compliance with the Financial Tests.

As of November 11, 2024, the investor agreed to waive any such non-compliance during such time period and thereafter through December

Based on the waiver, as of December 31, 2024, the Company was in compliance with the Financial Tests.

In addition, based on

a separate waiver granted effective as of the consummation of the Exchange that extended the waiver period to continue through December

31, 2025, the Company presently is in compliance with the Financial Tests.

Note 13 , Debt , to the Financial Statements for additional information about the SPA, the April 2022 Senior Convertible Note, and

the September 2022 Senior Convertible Note.

and Capital Resources - continued

Lucid Diagnostics - Preferred Stock Offerings

On March 13, 2024, Lucid entered

into subscription agreements (each, a “Series B Subscription Agreement”) and exchange agreements (each, an “Exchange

Agreement”) with certain accredited investors (collectively, the “Series B Investors”), which agreements provided for

(i) the sale to the Series B Investors of 12,495 shares of Lucid’s newly designated Series B Convertible Preferred Stock, par value

$0.001 per share (the “Lucid Series B Preferred Stock”), at a purchase price of $1,000 per share, and (ii) the exchange by

the Series B Investors of 13,625 shares of Lucid’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Lucid

Series A Preferred Stock”), and 10,670 shares of Lucid’s Series A-1 Convertible Preferred Stock, par value $0.001 per share

(the “Lucid Series A-1 Preferred Stock”), held by them for 31,790 shares of Lucid Series B Preferred Stock (collectively,

the “Lucid Series B Offering and Exchange”).

Prior to the execution of the Series B Subscription Agreements and the Exchange

Agreements, Lucid entered into subscription agreements with certain of the Series B Investors providing for the sale to such investors

of 5,670 shares of Lucid Series A-1 Preferred Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed

to exchange for shares of Lucid Series B Preferred Stock pursuant to the Exchange Agreements (and are included in the 10,670 shares of

Lucid Series A-1 Preferred Stock set forth above).

Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and a

conversion price of $1.2444.

The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and a

right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock is

convertible, payable on the one-year and two-year anniversary of the issuance date.

The Lucid Series B Preferred Stock is a voting security.

The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds

from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).

As a result of 100% of the then-outstanding

shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged for shares of Lucid Series B Preferred Stock

in the Lucid Series B Offering and Exchange, no shares of Lucid Series A Preferred Stock or Lucid Series A-1 Preferred Stock remain outstanding.

On October 17, 2023, Lucid sold

5,000 shares of Lucid Series A-1 Preferred Stock, solely to accredited investors (all of which were including in the 10,670 shares of

Lucid Series A-1 Preferred exchanged for Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange).

The aggregate gross

proceeds to Lucid of this offering was $5.0 million.

Diagnostics - Preferred Stock Offerings

March 13, 2024, Lucid entered into Lucid Series B Subscription Agreements and Lucid Series B Exchange Agreements with the Lucid Series

B Investors, which agreements provided for (i) the sale to the Lucid Series B Investors of 12,495 shares of newly designated Lucid Series

B Preferred Stock, at a purchase price of $1,000 per share, and (ii) the exchange by the Lucid Series B Investors of 13,625 shares of

Lucid Series A Preferred Stock, and 10,670 shares of Lucid Series A-1 Preferred Stock held by them for 31,790 shares of Lucid Series

B Preferred Stock.

Prior to the execution of the Lucid Series B Subscription Agreements and the Lucid Series B Exchange Agreements, Lucid

entered into subscription agreements with certain of the Lucid Series B Investors providing for the sale to such investors of 5,670 shares

of Lucid Series A-1 Preferred Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed to exchange

for shares of Lucid Series B Preferred Stock pursuant to the Lucid Series B Exchange Agreements (and are included in the 10,670 shares

of Lucid Series A-1 Preferred Stock set forth above).

Each share of the Lucid Series B Preferred Stock has a stated value of $1,000 and

a conversion price of $1.2444.

The terms of the Lucid Series B Preferred Stock also include a one times preference on liquidation and

a right to receive dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series B Preferred Stock

is convertible, payable on the one-year and two-year anniversary of the issuance date.

The holders of the Lucid Series B Preferred Stock

also will be entitled to dividends equal, on an as-if-converted to shares of Lucid common stock basis, to and in the same form as dividends

actually paid on shares of the Lucid common stock when, as, and if such dividends are paid on shares of the Lucid common stock.

Series B Preferred Stock is a voting security.

The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive

of $5.67 million of aggregate gross proceeds from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for

Lucid Series B Preferred Stock in the transactions).

a result of 100% of the then-outstanding shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged

for shares of Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange, no shares of Lucid Series A Preferred Stock

or Lucid Series A-1 Preferred Stock remain outstanding.

May 6, 2024, Lucid issued approximately 11,634 shares of newly designated Lucid Series B-1 Preferred Stock.

The terms of the Lucid Series

B-1 Preferred Stock are substantially identical to the terms of the Lucid Series B Preferred Stock, except that the Lucid Series B-1

Preferred Stock has a conversion price of $0.7228.

The aggregate gross proceeds from the sale of shares in such offering were $11.6 million.

Diagnostics - Securities Purchase Agreement - March 13, 2023 - Senior Secured Convertible Note - March 21, 2023

as of March 13, 2023, Lucid Diagnostics entered into the Lucid SPA with an accredited institutional investor, pursuant to which Lucid

Diagnostics agreed to sell, and the investor agreed to purchase the Lucid March 2023 Senior Convertible Note with a face value principal

of $11.1 million.

Lucid Diagnostics issued the Lucid March 2023 Senior Convertible Note on March 21, 2023 pursuant to the Lucid SPA.

The Lucid March 2023 Senior Convertible Note proceeds were $9.925 million after deducting a $1.186 million lender fee and offering costs

as described under the heading “ Recent Developments—Financing ” in Item 7 above,

as of March 13, 2023, Lucid Diagnostics entered into a Securities Purchase Agreement (the “Lucid SPA”) with an accredited

institutional investor, pursuant to which Lucid Diagnostics agreed to sell, and the investor agreed to purchase a Senior Convertible

Note (the “Lucid March 2023 Senior Convertible Note”) with a face value principal of $11.1 million.

Lucid Diagnostics issued

the Lucid March 2023 Senior Convertible Note on March 21, 2023 pursuant to the Lucid SPA.

the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is subject to certain customary affirmative and negative covenants regarding

11 unchanged sentences

In addition, Lucid Diagnostics presently is in compliance with the Lucid Financial Tests.

and Capital Resources - continued

On November 8, 2024, Lucid gave notice to the holder of the Lucid March

2023 Senior Convertible Note that it was exercising its right pursuant to such note to redeem the same for the Optional Redemption Price

specified in such note.

To finance the payment of the Optional Redemption Price, Lucid entered into a securities purchase agreement with

the 2024 Note Investors.

Under the agreement, Lucid issued, and the 2024 Note Investors purchased the November 2024 Senior Convertible

Notes, which are 12.0% senior secured convertible notes due 2029.

Lucid realized gross proceeds of $21.95 million, a portion of which

were used for the repayment in full of the Lucid March 2023 Senior Convertible Note on November 22, 2024.

December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered

and sold under a Controlled Equity Offering Agreement between us and Cantor as described under the heading “ Recent Developments—Financing ”

in Item 7 above.

In the year ended December 31, 2023, the Company sold 321,288 shares through its at-the-market equity facility for net

proceeds of approximately $1.8 million, after payment of 3% commissions.

and sold under a Controlled Equity Offering Agreement between us and Cantor.

In the year ended December 31, 2024, the Company sold

1,032,298 shares through its at-the-market equity facility for net proceeds of approximately $1.3 million, after payment of 3%

Subsequent to December 31, 2024, as of March 20, 2025, the Company sold 1,210,704 shares through its at-market equity

facility for net proceeds of approximately $837, after payment of 3% commissions.

Diagnostics Inc.

5 unchanged sentences

that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.

In the year ended December

31, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility for net proceeds of approximately $0.3 million,

after payment of 3% commissions.

Accounting Policies and Estimates

Cumulatively, a total

of 230,068 shares of Lucid Diagnostics’ common stock were issued through its at-the-market equity facility for net proceeds of

approximately $0.3 million, after payment of 3% commissions, as of December 31, 2024.

Accounting Estimates

discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which

10 unchanged sentences

While our significant accounting policies are described in more detail in our consolidated financial

notes, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated

notes, we believe the following accounting estimates to be critical to the judgments and estimates used in the preparation of our consolidated

financial statements.

are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration we expect to

collect in exchange for those services.

Our revenue is primarily generated by its laboratory testing services utilizing its EsoGuard

Esophageal DNA tests.

The services are completed upon release of a patient’s test result to the ordering healthcare provider.

recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage

policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity.

revenue recognition for the arrangements that we determine are within the scope of ASC 606, Revenue from Contracts with Customers, we

perform the following five steps:

(1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract,

(3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize

revenue when (or as) the entity satisfies a performance obligation.

key aspects we consider include the following:

Contracts —Our

customer is primarily the patient, but we do not enter into a formal reimbursement contract with a patient.

We establish a contract with

a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and

a patient specimen has been returned to the laboratory for testing.

Payment terms are a function of a patient’s existing insurance

benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable

reimbursement contracts established between us and payers.

However, when a patient is considered self-pay, we require payment from the

patient prior to the commencement of our performance obligations.

Our consideration can be deemed variable or fixed depending on the

structure of specific payer contracts, and we consider collection of such consideration to be probable to the extent that it is unconstrained.

obligations —A performance obligation is a promise in a contract to transfer a distinct good or service (or a bundle of goods

or services) to the customer.

Our contracts have a single performance obligation, which is satisfied upon rendering of services, which

culminates in the release of a patient’s test result to the ordering healthcare provider.

We elected the practical expedient related

to the disclosure of unsatisfied performance obligations, as the duration of time between providing testing supplies, the receipt of

a sample, and the release of a test result to the ordering healthcare provider is far less than one year.

price —The transaction price is the amount of consideration that we expects to collect in exchange for transferring promised

goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes).

The consideration

expected to be collected from a contract with a customer may include fixed amounts, variable amounts, or both.

the consideration derived from the contracts is deemed to be variable, we estimate the amount of consideration to which it will be entitled

in exchange for the promised goods or services.

We limit the amount of variable consideration included in the transaction price to the

unconstrained portion of such consideration.

In other words, we recognize revenue up to the amount of variable consideration that is

not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments

or refunds is subsequently resolved.

we do not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable

consideration may result in no revenue being recognized upon delivery of patient EsoGuard test results to the ordering healthcare provider.

As such, we recognize revenue up to the amount of variable consideration not subject to a significant reversal until additional information

is obtained or the uncertainty associated with additional payments or refunds, if any, is subsequently resolved.

Differences between

original estimates and subsequent revisions, including final settlements, represent changes in estimated expected variable consideration,

with the change in estimate recognized in the period of such revised estimate.

With respect to a contracted service arrangement, the

fixed consideration revenue is recognized on an as-billed basis upon delivery of the laboratory test report with realization of such

fixed consideration deemed probable based upon actual historical experience.

transaction price —The transaction price is allocated entirely to the performance obligation contained within the contract with

a customer on the basis of the relative standalone selling prices of each distinct good or service.

Expedients —We do not adjust the transaction price for the effects of a significant financing component, as at contract inception,

we expect the collection cycle to be one year or less.

Value Option (“FVO”) Election

5 unchanged sentences

referred to herein as the “Lucid March 2023 Senior Convertible Note”, which is accounted under the “fair value option

election” as discussed below.

election”, through September 10, 2024, the date of Lucid’s deconsolidation from PAVmed’s results of operations, as

discussed below.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative

10 unchanged sentences

The estimated fair value adjustment of the

April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note are presented

in a single line item within other income (expense) in the accompanying consolidated statement of operations (as provided for by ASC

825-10-50-30(b)).

Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change

in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”)

(for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible

Note or the Lucid March 2023 Senior Convertible Note).

The estimated fair values recognized utilized PAVmed and Lucid’s common stock prices, along with certain Level

3 inputs, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models.

The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses, including the respective

common stock prices, the dividend yields, the risk-free rates based on U.S.

Treasury security yields, and certain other Level-3 inputs

including, assumptions regarding the estimated volatility in the value of the respective common stock prices.

Changes in these assumptions

can materially affect the recognized estimated fair values.

April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and (through September 10, 2024, Lucid’s deconsolidation

date) the Lucid March 2023 Senior Convertible Note are presented in a single line item within other income (expense) in the accompanying

consolidated statement of operations (as provided for by ASC 825-10-50-30(b)).

Further, as required by ASC 825-10-45-5, to the extent

a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized

as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022

Senior Convertible Note, the September 2022 Senior Convertible Note or (through September 10, 2024, Lucid’s deconsolidation date)

the Lucid March 2023 Senior Convertible Note).

estimated fair values recognized utilized PAVmed and Lucid’s common stock prices, along with certain Level 3 inputs, in the development

of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models.

The estimated fair values are

subjective and are affected by changes in inputs to the valuation models and analyses, including the respective common stock prices,

the dividend yields, the risk-free rates based on U.S.

Treasury security yields, and certain other Level-3 inputs including, assumptions

regarding the estimated volatility in the value of the respective common stock prices.

Changes in these assumptions can materially affect

the recognized estimated fair values.

Note 12, Financial Instruments Fair Value Measurements , with respect to the FVO election;

1 unchanged sentence

of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note.

awards are made to members of the board of directors of the Company, the Company’s employees and nonemployees, under each of the

PAVmed 2014 Equity Plan and the Lucid Diagnostics 2018 Equity Plan.

The Company accounts for stock-based compensation in accordance

with the provisions of FASB ASC Topic 718, Stock Compensation (“ASC 718”).

grant date estimated fair value of the stock-based award is recognized on a straight-line basis over the requisite service period,

which is generally the vesting period of the respective stock-based award, with such straight-line recognition adjusted, as

applicable, so the cumulative expense recognized is at least equal to or greater than the estimated fair value of the vested portion

of the respective stock-based award as of the reporting date.

Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed 2014 Equity

Plan and the Lucid Diagnostics 2018 Equity Plan, which requires the Company to make certain weighted average valuation estimates

and assumptions for stock-based awards, principally as follows:

respect to the PAVmed 2014 Equity Plan, the expected stock price volatility is based

on the historical stock price volatility of PAVmed Inc.

common stock over the period commensurate

with the expected term with respect to stock options granted to the board of directors and

employees in the years ended December 31, 2023 and 2022;

respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan, the expected

stock price volatility is based on the historical stock price volatility of Lucid Diagnostics common stock and the volatilities of similar entities within the medical device industry

over the period commensurate with the expected term with respect to stock options granted

to employees in the years ended December 31, 2023 and 2022;

risk-free interest rate is based on the interest rate payable on U.S.

Treasury securities

in effect at the time of grant for a period commensurate with either the expected term or

the remaining contractual term, as applicable, of the stock option;

expected dividend yield is based on annual dividends of $0.00 as there have not been dividends

paid to-date, and there is no plan to pay dividends for the foreseeable future.

The price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the PAVmed 2014

Equity Plan is its quoted closing price per share.

The price per share of Lucid Diagnostics

common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the Lucid Diagnostics

2018 Equity Plan is its quoted closing price per share.

Recent Accounting Standards Updates Adopted

In June 2016, the FASB issued Accounting

Standards Update (“ASU”) No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting

date based on historical experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss

model and is applicable to the measurement of credit losses on financial assets, including trade receivables.

The guidance was adopted

by the Company on January 1, 2023.

The adoption of the ASU did not have an impact on the Company’s consolidated financial statements.

Recent Accounting Standards Updates Not Yet Adopted

In December 2023, the FASB issued

2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to

enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide for enhanced income

tax information primarily through changes to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the

Company prospectively to all annual periods beginning after December 15, 2024.

Accounting Standards Updates Adopted

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU

2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim

basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently

required annually.

The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating

the impact this update will have on our consolidated financial statements and disclosures.

In November 2023, the FASB issued

2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which

require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in

interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years

beginning after December 15, 2024.

The guidance was adopted by the Company on January

The adoption of the ASU did not change the way that the Company identifies its reportable

segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

Refer to Note 20,

Segment Information for further information on the Company’s reportable segment.

Accounting Standards Updates Not Yet Adopted

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income –

Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This update enhances financial statement

disclosures by requiring public business entities to disclose specified information about certain costs and expenses including the amounts

of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each relevant

expense caption.

The update also requires disclosure of certain amounts that are already required to be disclosed under current GAAP,

disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively,

and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The amendments in this update may be applied either prospectively or retrospectively and are effective for annual reporting periods beginning

after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The guidance is applied retrospectively to all periods presented in the

financial statements, unless it is impracticable.

We are currently evaluating the impact this update will have on our consolidated financial

statements and disclosures.

In October 2023, the FASB issued

The Company is

currently evaluating the potential impact of this guidance on its consolidated financial statements.

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”),

which is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide

for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

is effective for the Company prospectively to all annual periods beginning after December 15, 2024.

Early adoption is permitted.

Company does not expect the standard to have a significant impact on its consolidated financial statements.

October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification

This update modifies the disclosure or presentation requirements of a variety of topics in the Accounting Standards Codification

to conform with certain SEC amendments in Release No.

Codification Amendments in Response to the SEC’s Disclosure

Update and Simplification Initiative.

This update modifies the disclosure or presentation requirements of a variety of topics in the

Accounting Standards Codification to conform with certain SEC amendments in Release No.

33-10532, Disclosure Update and Simplification.

The amendments in this update should

be applied prospectively, and the effective date for each amendment will be the date on which the SEC’s removal of that related

disclosure from Regulation S-X or S-K becomes effective.

However, if the SEC has not removed the related disclosure from its regulations

by June 30, 2027, the amendments will be removed from the Codification and not become effective.

The amendments in this update should be applied prospectively, and the effective date for each amendment will be the date on which the

SEC’s removal of that related disclosure from Regulation S-X or S-K becomes effective.

However, if the SEC has not removed the

related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and not become effective.

Early adoption is prohibited.

currently evaluating the potential impact of this guidance on its consolidated financial statements.

Off-Balance sheet arrangements

We do not have any off-balance

We are currently evaluating the potential impact of this guidance on its consolidated financial statements.

sheet arrangements

do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure About Market Risk

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 7. Management’s Discussion and Analysis