PAVmed Inc.

Previous wording

To date, since our inception in June 2014, we have financed our operations principally through issuances of common stock, preferred stock, warrants, and debt, in both private placements and public offerings of our securities. Our ability to generate sufficient revenue from any of our products in development, and to transition to profitability and generate consistent positive cash flows is dependent upon factors that may be outside of our control. While we have taken steps to reduce operating expenses, we expect to continue to incur operating expenses in excess of our revenues as we continue to maintain our commercial infrastructure, develop, enhance and commercialize products and incur additional operational and reporting costs associated with being a public company. As a result, we expect to continue to incur operating losses for the foreseeable future.

Current wording

To date, since our inception in June 2014, we have financed our operations principally through issuances (by us or by our subsidiaries) of common stock, preferred stock, warrants, and debt, in both private placements and public offerings of our securities. Our ability to generate sufficient revenue from any of our products in development, and to transition to profitability and generate consistent positive cash flows is dependent upon factors that may be outside of our control. While we have taken steps to reduce operating expenses, we expect to continue to incur operating expenses in excess of our revenues as we continue to maintain our commercial infrastructure, develop, enhance and commercialize products and incur additional operational and reporting costs associated with being a public company. As a result, we expect to continue to incur operating losses for the foreseeable future.

Previous wording

In our December 31, 2023 consolidated financial statements, we have concluded and stated that our recurring losses from operations, recurring cash flows used in operations and the requirement that we will need to raise additional capital in order to fund our ongoing operations beyond March 2025 raise substantial doubt regarding our ability to continue as a going concern. Additionally, our independent registered public accounting firm’s report on our consolidated financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our plans to address this going concern risk include pursuing further financings at Lucid in addition to the recently completed offering of Lucid Series B Preferred Stock (Lucid has recently raised over $18 million in such offering), seeking to restructure our and Lucid Diagnostics’ outstanding indebtedness and pursuing additional offerings of debt and/or equity securities. The consolidated financial statements do not include any adjustments that might result from our inability to consummate such offerings or our ability to continue as a going concern. Moreover, there is no assurance if we consummate additional offerings, we will raise sufficient proceeds in such offerings to pay our financial obligations as they become due. These factors raise substantial doubt about our ability to continue as a going concern.

Current wording

In our December 31, 2024 consolidated financial statements, we have concluded and stated that our recurring losses from operations, recurring cash flows used in operations and the requirement that we will need to raise additional capital in order to fund our ongoing operations beyond March 2026 raise substantial doubt regarding our ability to continue as a going concern. Additionally, our independent registered public accounting firm’s report on our consolidated financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our plans to address this going concern risk include pursuing further financings at PAVmed in addition to the recently completed Series C Preferred Stock Debt Exchange and the PAVmed and Veris Common Stock Offering (we recently raised over $2.4 million in such offering) and pursuing additional offerings of debt and/or equity securities. The consolidated financial statements do not include any adjustments that might result from our inability to consummate such offerings or our ability to continue as a going concern. Moreover, there is no assurance if we consummate additional offerings, we will raise sufficient proceeds in such offerings to pay our financial obligations as they become due. These factors raise substantial doubt about our ability to continue as a going concern.

Previous wording

Due to challenging market conditions, we have found it difficult to raise capital directly into PAVmed. As a result, we have become highly dependent on the ability of each of our subsidiaries to raise capital to fund their own operations. There is no assurance that our subsidiaries will be able to raise capital as needed to fund its operations, or that any of them will be able to do so on commercially reasonable terms. Accordingly, the failure of any of our subsidiaries to raise the capital it needs to fund its operations, could have a material adverse effect on the portion of our business related to such subsidiary.

Current wording

Due to challenging market conditions, we have found it difficult to raise capital directly into PAVmed (notwithstanding our recent $2.37 million capital raise at PAVmed). As a result, we have become highly dependent on the ability of each of our subsidiaries to raise capital to fund their own operations. There is no assurance that our subsidiaries will be able to raise capital as needed to fund its operations, or that any of them will be able to do so on commercially reasonable terms. Accordingly, the failure of any of our subsidiaries to raise the capital it needs to fund its operations, could have a material adverse effect on the portion of our business related to such subsidiary.

Previous wording

In addition, because of the challenges PAVmed has faced in terms of raising capital, we are highly dependent on our subsidiaries, including Lucid Diagnostics, as resources for funding our operations (notably, PAVmed may elect that Lucid Diagnostics satisfy its obligations under our management services agreement through cash payment). If Lucid Diagnostics is unable to continue to make any such cash payments we elect to receive, or determines to terminate the management services agreement (i.e., because it retains its own management team to oversee its operations), and PAVmed is unable to raise sufficient capital itself, it may not have sufficient capital to fund its operations, which in turn could have a material adverse effect on our business. All intercompany obligations between PAVmed, on the one hand, and any of its subsidiaries (including Lucid Diagnostics), on the other hand, are subject to approval by the PAVmed board and the board of the applicable subsidiary (including, in the case of Lucid Diagnostics, their independent directors).

Current wording

In addition, because of the challenges PAVmed has faced in terms of raising capital, we are highly dependent on our subsidiaries, including Lucid Diagnostics, as resources for funding our operations (notably, PAVmed may elect that Lucid Diagnostics satisfy its obligations under our management services agreement through cash payment and, under the terms of our outstanding convertible debt, we are required to elect to receive such payments in cash). In addition, under the terms of our outstanding convertible debt, if the price per share of our common stock is less than the $1.068 conversion price of our Series C Preferred Stock, we are required to reserve 50% of all management services agreement fees we receive, unless the holder of our debt waives such requirement (which it has through March 31, 2025). If Lucid Diagnostics is unable to continue to make any such cash payments we elect to receive, or if we are so required to reserve 50% of the management services agreement fees we receive, or if Lucid Diagnostics determines to terminate the management services agreement (i.e., because it retains its own management team to oversee its operations), and PAVmed is unable to raise sufficient capital itself, it may not have sufficient capital to fund its operations, which in turn could have a material adverse effect on our business.

Previous wording

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. There can be no assurance that the Company will be able to regain compliance by such deadline, in which case, unless the Company is able to obtain an extension for regaining compliance, the Company’s stock would be delisted. If we were so delisted, that could have a material adverse effect on your investment in the Company, including without limitation by substantially reducing the liquidity of our common stock, and by further limiting our access to capital markets for fundraising.

Current wording

Most recently, 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. In any event, there can be no assurance that the Company will be able to regain compliance by the current or any extended deadline, in which case, the Company’s stock would be delisted.

Previous wording

Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future which could reduce the equity interest of PAVmed in Lucid and might cause us to cease to control a majority of the voting stock of Lucid.

Current wording

Our subsidiary Lucid may issue shares of its common and/or preferred stock in the future, and the holder of our convertible debt may exchange such debt for our shares of Lucid common stock. These events could reduce the percentage equity interest of PAVmed in Lucid. and thereby reduce its influence over matters subject to a shareholder vote and otherwise adversely affect your investment in PAVmed.

Previous wording

As of the date hereof, our subsidiary Lucid has issued 44,285 shares of Lucid Series B Preferred Stock. If the maximum amount of common stock underlying such securities were issued (including shares of Lucid common stock issued as a dividend thereon), the percentage of shares of Lucid common stock held by PAVmed would be reduced from approximately [●]% to approximately [●]%. This reduced percentage would be further diluted in the event of future convertible debt or stock issuances by Lucid or by issuances under Lucid’s long-term incentive plan and employee stock purchase plan. While PAVmed would still retain a large ownership interest in Lucid in such event, it may cease to control the vote on matters requiring shareholder approval, including the election of Lucid’s board of directors.

Current wording

As of the date hereof, if the maximum amount of common stock underlying Lucid’s outstanding convertible securities were issued (including shares of Lucid common stock issued as a dividend thereon), the percentage of shares of Lucid common stock held by PAVmed would be reduced from approximately 34% to approximately 18%. This reduced percentage would be further diluted in the event of future convertible debt or stock issuances by Lucid or by issuances under Lucid’s long-term incentive plan and employee stock purchase plan. While PAVmed still has a significant ownership interest in Lucid in such event, the more its interest in Lucid is diluted, the less influence it will have on matters requiring shareholder approval, including the election of Lucid’s board of directors.

Previous wording

Servicing our indebtedness may require a significant amount of cash, and the restrictive covenants contained in our indebtedness could adversely affect our business plan, liquidity, financial condition, and results of operations.

Current wording

Servicing our indebtedness may require a significant amount of cash, and the restrictive covenants contained in the documents that govern our indebtedness and preferred stock could adversely affect our business plan, liquidity, financial condition, and results of operations.

Previous wording

We and our subsidiaries may be required to repay or redeem, or to pay interest on, the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the March 2023 Lucid Senior Convertible Note (collectively, the “Senior Convertible Notes”) or any future permitted indebtedness incurred by us or our subsidiaries, in cash. Despite our right to pay the interest and principal balance of the Senior Convertible Notes by issuing shares of our common stock, we may be required to repay such indebtedness in cash, if we do not meet certain customary equity conditions (including minimum price and volume thresholds) or in certain other circumstances. For example, we may be required to repay the outstanding principal balance and accrued but unpaid interest, along with a premium, upon the occurrence of certain changes of control or an event of default.

Current wording

We and our subsidiaries may be required to repay or redeem, or to pay interest on, the September 2022 Senior Convertible Note or any future permitted indebtedness incurred by us or our subsidiaries, in cash. Despite our right to pay the interest and principal balance of the September 2022 Senior Convertible Note by issuing shares of our common stock, we may be required to repay such indebtedness in cash, if we do not meet certain customary equity conditions (including minimum price and volume thresholds) or in certain other circumstances. For example, we may be required to repay the outstanding principal balance and accrued but unpaid interest, along with a premium, upon the occurrence of certain changes of control or an event of default.

Previous wording

Our ability to make payments of the principal of, to pay interest on, or to redeem our indebtedness in cash, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. We have not generated material revenue from operations to date, and our business may not generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures. In addition, the Senior Convertible Notes contain, and any future indebtedness may contain, restrictive covenants, including financial covenants. These payment obligations and covenants could have important consequences on our business. In particular, they could:

Current wording

Our ability to make payments of the principal of, to pay interest on, or to redeem our indebtedness in cash, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. We have not generated material revenue from operations to date, and our business may not generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures. In addition, the September 2022 Senior Convertible Note contains, and any future indebtedness may contain, restrictive covenants, including financial covenants. These payment obligations and covenants could have important consequences on our business. In particular, they could:

Previous wording

The debt service requirements of any other permitted indebtedness we incur or issue in the future, as well as the restrictive covenants contained in the governing documents for any such indebtedness, could intensify these risks. For example, while the Company is currently in compliance with the financial covenants under the Senior Convertible Notes it has issued, from time to time since the date of issuance of such notes (including, in the case of the indebtedness to market capitalization ratio test under such notes, as of December 31, 2023), the Company was not in compliance with certain financial covenants thereunder. The holders of such notes agreed to waive any such non-compliance through August 31, 2024 in consideration of our agreement to pay a $2,000,000 consent fee in cash (or in such other form as may be mutually agreed in writing) by April 25, 2024. However, there can be no assurance that we will have the cash to make such payment or that the holders will be willing to accept payment in another form of consideration, or if they are willing to do so, that it will be on terms and conditions agreeable to us. There is also no assurance that the holders will be willing to waive any future non-compliance with this or any other provision under the Senior Convertible Notes, or if they are willing to do so, if the terms on which they are so willing will be acceptable to us.

Current wording

The debt service requirements of any other permitted indebtedness we incur or issue in the future, as well as the restrictive covenants contained in the governing documents for any such indebtedness, could intensify these risks. For example, from time to time since the date of issuance of the September 2022 Convertible Note, the Company was not in compliance with certain financial covenants thereunder. The holders of such notes agreed to waive any such non-compliance through December 31, 2025. There is also no assurance that the holders will be willing to waive any future non-compliance with this or any other provision under the September 2022 Senior Convertible Note, or if they are willing to do so, if the terms on which they are so willing will be acceptable to us.

Previous wording

The accounting method for convertible debt securities that may be settled in cash, such as the Senior Convertible Notes, could have a material effect on our reported financial results.

Current wording

The accounting method for convertible debt securities that may be settled in cash, such as the September 2022 Senior Convertible Note, could have a material effect on our reported financial results.

Previous wording

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or “ASC 470-20.” Under ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments (such as the Senior Convertible Notes) that may be settled entirely or partially in cash in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Senior Convertible Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the Senior Convertible Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Senior Convertible Notes to their face amount over the term of the Senior Convertible Notes. We will report lower net income in our financial results because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, and the market price of our common stock.

Current wording

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or “ASC 470-20.” Under ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments (such as the September 2022 Senior Convertible Note) that may be settled entirely or partially in cash in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the September 2022 Senior Convertible Note is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the September 2022 Senior Convertible Note. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the September 2022 Senior Convertible Note to their face amount over the term of the September 2022 Senior Convertible Note. We will report lower net income in our financial results because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, and the market price of our common stock.

Previous wording

In addition, under certain circumstances, convertible debt instruments (such as the Senior Convertible Notes) that may be settled entirely or partially in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of the Senior Convertible Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the Senior Convertible Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of our common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the Senior Convertible Notes, then our diluted earnings per share would be adversely affected.

Current wording

In addition, under certain circumstances, convertible debt instruments (such as the September 2022 Senior Convertible Note) that may be settled entirely or partially in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of the September 2022 Senior Convertible Note are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the September 2022 Senior Convertible Note exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of our common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the September 2022 Senior Convertible Note, then our diluted earnings per share would be adversely affected.

Previous wording

We intend to continue to try to raise capital through each of our subsidiaries to support our business growth. Because we have not generated substantial revenue or cash flow to date, unless we are able to generate substantial revenue in the near-term (which we do not anticipate being able to do), we will require additional funds to:

Current wording

Notwithstanding that we were recently able to raise capital directly into PAVmed and that we believe we have sufficient access to capital (including under our management services agreement with Lucid Diagnostics) to maintain our current level of business activity, we intend to raise additional capital, likely through each of our subsidiaries, to support any business growth. Because we have not generated substantial revenue or cash flow to date, unless we are able to generate substantial revenue in the near-term (which we do not anticipate being able to do), we will require additional funds to:

Previous wording

We currently perform our EsoGuard test in one laboratory facility. If demand for our EsoGuard test grows, we may lack adequate facility space and capabilities to meet increased processing requirements. Moreover, if these or any future facilities or our equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.

Current wording

If demand for our EsoGuard test grows, we may lack adequate facility space and capabilities to meet increased processing requirements. Moreover, if these or any future facilities or our equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.

Previous wording

We currently perform the EsoGuard test in a single laboratory facility in Lake Forest, CA. The laboratory facility, without purchasing additional lab equipment applicable to our test, is expected to have an annual capacity of approximately 50,000 tests per year. If demand for the EsoGuard test outstrips this capacity, and we fail to add additional equipment and staff, or complete, or timely complete, an expansion of its available laboratory facilities, it may significantly delay our EsoGuard processing times and limit the volume of EsoGuard tests we can process, which may adversely affect our business, financial condition and results of operation. In addition, our financial condition may be adversely affected if they are unable to complete these expansion projects on budget and otherwise on terms and conditions acceptable to us. Finally, our financial condition will be adversely affected if demand for our products and services does not materialize in line with our current expectations and if, as a result, we end up building excess capacity that does not yield a reasonable return on our investment.

Current wording

Lucid currently has adequate capacity to process EsoGuard tests, based on current test volumes. If demand for the EsoGuard test outstrips this capacity, and we fail to add additional equipment and staff, or complete, or timely complete, an expansion of Lucid’s available laboratory facilities, it may significantly delay EsoGuard processing times and limit the volume of EsoGuard tests Lucid can process, which may adversely affect our business, financial condition and results of operation. In addition, our financial condition may be adversely affected if they are unable to complete these expansion projects on budget and otherwise on terms and conditions acceptable to us. Finally, our financial condition will be adversely affected if demand for our products and services does not materialize in line with our current expectations and if, as a result, we end up building excess capacity that does not yield a reasonable return on our investment.

Previous wording

We believe that the incubator financing structure will provide us with future benefits. These expected benefits are not guaranteed and may not be obtained if market conditions or other circumstances prevent us from taking advantage of the investment, financing and structuring flexibility we expect to gain as a result of the incubator financing structure. If we fail to achieve some or all of the expected benefits of our incubator financing structure, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows. The implementation of our incubator financing structure also may result in substantial direct costs, which are expected to consist primarily of attorneys’ fees and accountants’ fees, as well as loss of certain efficiencies. Moreover, the incubator financing structure may be not fully insulate the liabilities of our subsidiaries from each other or from PAVmed, especially if we do not observe the requisite corporate formalities or adequately capitalize PAVmed or its subsidiaries.

Current wording

We believe that the incubator financing structure will provide us with future benefits. These expected benefits are not guaranteed and may not be obtained if market conditions or other circumstances prevent us from taking advantage of the investment, financing and structuring flexibility we expect to gain as a result of the incubator financing structure (to date, we have been unsuccessful in our efforts to raise capital through this structure). If we fail to achieve some or all of the expected benefits of our incubator financing structure, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows. The implementation of our incubator financing structure also may result in substantial direct costs, which are expected to consist primarily of attorneys’ fees and accountants’ fees, as well as loss of certain efficiencies. Moreover, the incubator financing structure may not fully insulate the liabilities of our subsidiaries from each other or from PAVmed, especially if we do not observe the requisite corporate formalities or adequately capitalize PAVmed or its subsidiaries.

Previous wording

Risks Associated with Healthcare Regulation, Billing and Reimbursement, and Product Safety and Effectiveness****If private or governmental third-party payors do not maintain reimbursement for our products at adequate reimbursement rates, we may be unable to successfully commercialize our products which would limit or slow our revenue generation and likely have a material adverse effect on our business.

Current wording

If private or governmental third-party payors do not maintain reimbursement for our products at adequate reimbursement rates, we may be unable to successfully commercialize our products which would limit or slow our revenue generation and likely have a material adverse effect on our business.

Previous wording

Successful commercialization of Lucid’s EsoGuard test and EsoCheck device, and of any other product or service we develop, license or acquire depends, in large part, on the availability of adequate reimbursement from private or governmental third-party payors.

Current wording

Despite our initiative to establish a robust cash pay program, successful commercialization of Lucid’s EsoGuard test and EsoCheck device, and of any other product or service we develop, license or acquire depends, in large part, on the availability of adequate reimbursement from private or governmental third-party payors.

Previous wording

EsoGuard’s PLA code 0114U has been granted “gapfill” determination through the CMS CLFS process, allowing us to engage directly with Medicare Administrative Contractor (“MAC”) Palmetto GBA, whose Molecular Diagnostics Program (“MolDx”) performs technical assessment of molecular diagnostic tests on behalf of itself and other MACs. Although CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021, we have not received a final Medicare local coverage determination from MolDx. Most recently, in May 2023, a final Local Coverage Determination (“LCD”) L39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia” became effective on the CMS website by MAC Palmetto GBA. (A substantially identical LCD was published by Noridian Healthcare Solutions, the MAC whose geographic jurisdiction covers our CLIA laboratory in Lake Forest, CA.) The LCD outlines criteria for future coverage that MolDX expects upper gastrointestinal precancer and cancer molecular diagnostic tests to meet. These criteria include active GERD with at least two risk factors, as well as evidence of analytic validity, clinical validity, and clinical utility. Although the LCD indicated that it found that no currently existing test has fulfilled all these criteria, it indicated that it will “monitor the evidence and may revise this determination based on the pertinent literature and society recommendations.” Lucid expects to submit EsoGuard for Technical Assessment under this foundational LCD later this year. However, even if Lucid does submit EsoGuard for Technical Assessment as currently planned, there can be no assurance that MolDx will determine that EsoGuard meets the criteria for coverage as specified in the LCD. If Lucid is not granted coverage, or if a determination is substantially delayed, that could have a material adverse effect on Lucid’s ability to commercialize EsoGuard.

Current wording

EsoGuard’s PLA code 0114U has been granted “gapfill” determination through the CMS CLFS process, allowing us to engage directly with Medicare Administrative Contractor (“MAC”) Palmetto GBA, whose Molecular Diagnostics Program (“MolDx”) performs technical assessment of molecular diagnostic tests on behalf of itself and other MACs. Although CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021, we have not received a final Medicare local coverage determination from MolDx. Most recently, in May 2023, a final Local Coverage Determination (“LCD”) L39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia” became effective on the CMS website by MAC Palmetto GBA. (A substantially identical LCD was published by Noridian Healthcare Solutions, the MAC whose geographic jurisdiction covers our CLIA laboratory in Lake Forest, CA.) The LCD outlines criteria for future coverage that MolDX expects upper gastrointestinal precancer and cancer molecular diagnostic tests to meet. These criteria include active GERD with at least two risk factors, as well as evidence of analytic validity, clinical validity, and clinical utility. Although the LCD indicated that it found that no currently existing test has fulfilled all these criteria, it indicated that it will “monitor the evidence and may revise this determination based on the pertinent literature and society recommendations.” In November 2024, we announced that we submitted to MolDx our 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. However, there can be no assurance that MolDx will determine that EsoGuard meets the criteria for coverage as specified in the LCD. If Lucid is not granted coverage, or if a determination is substantially delayed, that could have a material adverse effect on Lucid’s ability to commercialize EsoGuard.

Previous wording

It is currently anticipated that FDA will finalize the proposed policy by April 2024. Once the final policy is released, we will implement the QS requirements in the recommended staged approach and conduct pre-submission meetings with FDA to seek agreement on regulatory pathway for EsoGuard premarket submission. As required by the final policy, Lucid will submit the regulatory premarket submission to the FDA as per the timeframe defined in the final policy. We are confident that the proposed policy will not have a commercial impact as Lucid already has a robust QS management platform for medical devices and EsoGuard will be able to transition to the platform to fulfill the QS requirements, if and when required by FDA. However, there can be no assurance that Lucid will be able to successfully transition the platform to fulfill the QS requirements, if and when required by FDA, and its failure to do so could have a material impact on Lucid’s ability to commercialize EsoGuard and on our business as a whole.

Current wording

As EsoGuard was marketed prior to rule publication and is also NYS CLEP approved, hence, enforcement discretion is applicable for compliance with Stages 4 and 5. We will be implementing compliance with MDR requirements, correction and removal reporting requirements, and quality system (QS) requirements regarding complaint files by March 31, 2025, well before the deadline of May 6, 2025. Gap analysis has been completed and we are expecting our compliance activities to be completed for Stages 2 and 3 before the FDA’s expected timeframes in 2026 and 2027, respectively. We are confident that the proposed final rule will not have a commercial impact as the Company already has a robust QS management platform for medical devices and EsoGuard will be able to easily transition to the platform to fulfill the QS requirements, as required by the FDA. However, there can be no assurance that Lucid will be able to successfully transition the platform to fulfill the QS requirements, as required by FDA, and its failure to do so could have a material impact on Lucid’s ability to commercialize EsoGuard and on our business as a whole.

Previous wording

The FDA has the authority to require the recall of commercialized medical device products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by the Company or one of its distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of the Company’s products would divert managerial and financial resources and have an adverse effect on its financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to the FDA within ten (10) working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. The Company may initiate voluntary recalls involving its products in the future that the Company determines do not require notification of the FDA. If the FDA disagrees with the Company’s determinations, they could require the Company to report those actions as recalls. A future recall announcement could harm the Company’s reputation with customers and negatively affect its sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted. No recalls of the Company’s medical products have been reported to the FDA.

Current wording

The FDA has the authority to require the recall of commercialized medical device products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by the Company or one of its distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of the Company’s products would divert managerial and financial resources and have an adverse effect on its financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to the FDA within ten (10) working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. The Company may initiate voluntary recalls involving its products in the future that the Company determines do not require notification of the FDA. If the FDA disagrees with the Company’s determinations, they could require the Company to report those actions as recalls. A future recall announcement could harm the Company’s reputation with customers and negatively affect its sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted. No recalls of the Company’s medical products that we are seeking to commercialize have been reported to the FDA.

Previous wording

Our certificate of incorporation authorizes the issuance of up to 50,000,000 shares of common stock, par value $.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per share. We may issue a substantial number of additional shares of our common stock or preferred stock, or a combination of common and preferred stock, to raise additional funds or in connection with any strategic acquisition. The issuance of additional shares of our common stock or any number of shares of our preferred stock:

Current wording

Our certificate of incorporation authorizes the issuance of up to 250,000,000 shares of common stock, par value $.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per share. We may issue a substantial number of additional shares of our common stock or preferred stock, or a combination of common and preferred stock, to raise additional funds or in connection with any strategic acquisition. The issuance of additional shares of our common stock or any number of shares of our preferred stock:

Previous wording

As of December 31, 2023, our management and their affiliates collectively owned approximately 11% of our issued and outstanding shares of common stock. Accordingly, these individuals would have considerable influence regarding the outcome of any transaction that requires stockholder approval. Furthermore, our Board of Directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a consequence of our “staggered” Board of Directors, only a minority of the Board of Directors will be considered for election in any given year and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.

Current wording

As of December 31, 2024, our management and their affiliates collectively owned approximately 8% of our issued and outstanding shares of common stock. Accordingly, these individuals would have considerable influence regarding the outcome of any transaction that requires stockholder approval. Furthermore, our Board of Directors is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a consequence of our “staggered” Board of Directors, only a minority of the Board of Directors will be considered for election in any given year and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.

Previous wording

Our outstanding warrants and other convertible securities may have an adverse effect on the market price of our common stock.

Current wording

Our outstanding warrants and other convertible securities may have an adverse effect on the market price of our common stock and the value of your investment in us.

Previous wording

As of December 31, 2023, there were 8,578,505 shares of our common stock issued and outstanding, and, as of such date, we also had issued and outstanding:

Current wording

As of December 31, 2024, there were 11,198,977 shares of our common stock issued and outstanding, and, as of such date, we also had issued and outstanding:

Previous wording

(i) stock options to purchase 1,192,458 shares of our common stock at a weighted average exercise price of $26.18 per share, with such total number inclusive of both stock options granted under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan (“PAVmed 2014 Equity Plan”); 77,518 shares of our common stock reserved for issuance, but not subject to outstanding stock-based equity awards under the PAVmed 2014 Equity Plan; and 7,528 shares of our common stock reserved for issuance under the PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”)

Current wording

(i) stock options to purchase 1,065,319 shares of our common stock at a weighted average exercise price of $25.50 per share, with such total number inclusive of both stock options granted under the PAVmed Inc. 2014 Long-Term Incentive Equity Plan (“PAVmed 2014 Equity Plan”); 247,109 shares of our common stock reserved for issuance, but not subject to outstanding stock-based equity awards under the PAVmed 2014 Equity Plan; and 139,863 shares of our common stock reserved for issuance under the PAVmed Inc. Employee Stock Purchase Plan (“PAVmed ESPP”)

Previous wording

(iii) 1,305,213 shares of Series B Convertible Preferred Stock, convertible into 87,015 shares of our common stock.

Current wording

(iii) 1,412,865 shares of Series B Convertible Preferred Stock, convertible into 94,191 shares of our common stock.

Previous wording

In addition, the Senior Convertible Notes have a current outstanding principal amount of $26.7 million, which are convertible into 355,520 shares of our common stock (assuming the Senior Convertible Notes were converted in full on such date at the initial fixed conversion price of $75.00 per share). The number of shares of common stock to be issued under the Senior Convertible Notes may be substantially greater than the estimate set forth in this paragraph, if we pay the interest and the installments of principal in shares of our common stock, because in such cases (and in certain other cases as described elsewhere in this Annual Report on Form 10-K) the number of shares issued will be determined based on the then current market price (but in any event not more than fixed conversion price per share or less than a floor price specified in the notes). We cannot predict the market price of our common stock at any future date, and therefore, we are unable to accurately forecast or predict the total amount of shares that ultimately may be issued under these notes. In addition, the number of shares issued under these notes may be substantially greater if we voluntarily lower the conversion price, which we are permitted to do pursuant to the terms thereof.

Current wording

In addition, the September 2022 Senior Convertible Note has an outstanding principal amount, as of March 20, 2025, of $6.6 million, which is convertible into 6,160,664 shares of our common stock (assuming the September 2022 Senior Convertible Note was converted in full on such date at the fixed conversion price of $1.068 per share). The number of shares of common stock to be issued under the September 2022 Senior Convertible Note may be substantially greater than the estimate set forth in this paragraph, if we pay the interest and the installments of principal in shares of our common stock, because in such cases (and in certain other cases as described elsewhere in this Annual Report on Form 10-K) the number of shares issued will be determined based on the then current market price (but in any event not more than fixed conversion price per share or less than a floor price specified in the notes), or if we agree to voluntarily reduce the conversion price under the note (for example, in consideration of any waiver or consent we might need). We cannot predict the market price of our common stock at any future date, and therefore, we are unable to accurately forecast or predict the total amount of shares that ultimately may be issued under these notes. In addition, the number of shares issued under this note may be substantially greater if we voluntarily lower the conversion price, which we are permitted to do pursuant to the terms thereof.

Previous wording

The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline.

Current wording

The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline. These convertible securities will also reduce the proceeds distributable to our shareholders, including any distributions of the proceeds of any sale of the shares of Lucid Diagnostics held by us or any other transaction involved a disposition of one of our subsidiaries.