LUCD US Equity☆

Item 1A. Risk Factors 23

Item 1B. Unresolved Staff Comments 65

Item 2. Property 65

Item 3. Legal Proceedings 65

Item 4. Mine Safety Disclosures 65

PART II

Item 6. [Reserved] 66

Item 7A. Quantitative and Qualitative Disclosure About Market Risk 76

Item 8. Financial Statements and Supplementary Data 76

Item 9A. Controls and Procedures 77

Item 9B. Other Information 77

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 77

PART III

Item 10. Directors, Executive Officers, and Corporate Governance 78

Item 11. Executive Compensation 78

Item 14. Principal Accountant Fees and Services 78

PART IV

Item 15. Exhibits and Financial Statement Schedules 79

i

FORWARD-LOOKING

STATEMENTS

This

Annual Report on Form 10-K (this “Form 10-K”) of Lucid Diagnostics Inc. (“we”, “us”, “our”

or “Lucid” or the “Company”) contains forward-looking statements that involve substantial risks and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-K, including statements regarding our future results

of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking

statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,”

“could,” “intends,” “target,” “projects,” “contemplates,” “believes,”

“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or

other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these

identifying words. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ

significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are

not limited to, those discussed in Item 1A of Part I of this Form 10-K under the heading “Risk Factors,” which are incorporated

herein by reference.

Important

factors that may affect our actual results include:

● our limited operating history;

● our financial performance, including our ability to generate revenue;

● our ability of our products to achieve market acceptance;

● our potential ability to obtain additional financing when and if needed;

● our ability to protect our intellectual property;

● our ability to complete strategic acquisitions;

● our ability to manage growth and integrate acquired operations;

● the potential liquidity and trading of our securities;

● regulatory and operational risks;

● cybersecurity risks;

● risks related to SARS-CoV-2 /COVID-19 pandemic;

● the impact of the material weakness identified by our management;

In

addition, our forward-looking statements do not reflect the potential impact of any future financings, acquisitions, mergers, dispositions,

joint ventures or investments we may make.

We

may not actually achieve the plans, intentions, and /or expectations disclosed in our forward-looking statements, and you should not

place undue reliance on our forward-looking statements. You should read this Form 10-K and the documents we have filed as exhibits to

this Form 10-K completely and with the understanding our actual future results may be materially different from what we expect. We do

not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise,

except as required by applicable law.

ii

PART

I

Item

1. Business

Background

and Overview

Lucid

Diagnostics, Inc. (“Lucid”) is a commercial-stage medical diagnostics technology company focused on the millions of patients

with gastroesophageal reflux disease (“GERD”), also known as chronic heartburn, acid reflux or simply reflux, who are at

risk of developing esophageal precancer and cancer, specifically highly lethal esophageal adenocarcinoma (“EAC”). References

in this Form 10-K to “we,” “us” and “our” are to Lucid and, unless the context otherwise requires,

its subsidiaries.

We

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

Cell Collection Device, constitute the first and only commercially available diagnostic test capable of serving as a widespread screening

tool to prevent EAC deaths, through early detection of esophageal precancer in at-risk GERD patients. The technologies were highlighted

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

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

cancer deaths.

Lucid

was formed in May 2018 as a subsidiary of our parent company, PAVmed Inc. (Nasdaq: PAVM) (“PAVmed”), to license the

technologies underlying EsoGuard and EsoCheck from Case Western Reserve University (“CWRU”). For a description of the license

agreement with CWRU, as amended to date (the “License Agreement”), please refer to “Business—License

Agreement.” Since our inception we have been managed pursuant to a management services agreement with PAVmed and have financed

our operations through working capital advances from PAVmed. For a description of the PAVmed management services agreement and financing

of our operations, please refer to “Certain Transactions—Related Party Transactions.”

On

October 14, 2021, Lucid completed an initial public offering (“IPO”) of its common stock under an effective registration

statement on Form S-1 (SEC File No. 333-259721), wherein a total of 5.0 million IPO shares of common stock of Lucid Diagnostics Inc.

were issued, with such total IPO shares inclusive of 571,428 shares issued to PAVmed , at an IPO offering price of $14.00 per share,

resulting gross proceeds of $70.0 million, before underwriting fees of $4.9 million, and approximately $0.7 million of offering costs

incurred by Lucid.

In

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

laboratory to commercial products within scalable business model. EsoGuard is commercialized in the U.S. as a Laboratory Developed Test

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

commercialized in the U.S. as a 510(k)-cleared esophageal cell collection device. EsoGuard, used with EsoCheck, was granted U.S. Food

and Drug Administration (“FDA”) Breakthrough Device designation and is the subject of two large, actively enrolling,

international multicenter PMA clinical trials.

The

proceeds of the IPO offering and transitioning to a public company was aimed at driving a growth strategy focused on expanding commercialization

across multiple channels, including expanding the number of our own testing centers, and expanding the clinical evidence of our products’

efficacy to support our ongoing regulatory, reimbursement and commercial efforts, as well as recommendation of our products in clinical

practice guidelines.

The

EsoCheck device received 510(k) marketing clearance from the FDA, in June 2019 and European CE Mark Certification in May 2021 as an esophageal

cell collection device. EsoGuard has been established as a Laboratory Developed Test (“LDT”), completed European CE Mark

Certification in June 2021, and was launched commercially in December 2019 after Clinical Laboratory Improvement Amendment (“CLIA”)

certification and College of American Pathologists (“CAP”) accreditation of the test at Lucid Diagnostics commercial

diagnostic laboratory partner ResearchDx Inc. (“RDx”), headquartered in Irvine, California. In August 2021, Lucid Diagnostics

launched a strategic partnership with direct-to-consumer telemedicine company UpScriptHealth to support our commercialization efforts.

Also in August 2021, we tested our first patients referred by primary care physicians (“PCPs”) in three Lucid Test Centers

opened in the Phoenix metropolitan area.

Subsequently,

on February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc. (“LucidDx Labs”), acquired from RDx,

certain licenses and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory

located in Lake Forest, CA. Since March 2022, we have conducted EsoGuard testing at our owned laboratory.

EsoGuard,

and EsoCheck and EsoCure

EsoGuard

and EsoCheck are based on patented technology licensed from CWRU. and have been developed to provide an accurate, non-invasive, patient-friendly

screening test for the early detection of EAC and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors

to EAC in patients with chronic GERD.

EsoGuard

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

EsoCheck. It quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1). The assay was evaluated in a 408-patient

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

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

al. Sci Transl Med. 2018 Jan 17;10(424): eaao5848). EsoGuard is commercially available in the U.S. as a LDT performed at our CLIA-certified

and CAP-certified laboratory partner, RDx, which does business as “PacificDx.” Cell samples, including those collected

with EsoCheck, as discussed below, are sent to RDx, for testing and analyses using our proprietary EsoGuard NGS DNA assay.

EsoCheck

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

in a less than five-minute office. It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from

which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells. When vacuum suction is applied, the

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

region during device withdrawal. We believe this proprietary Collect+ProtectTM technology makes EsoCheck the only noninvasive esophageal

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

In

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

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

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

Program on CMS payment and coverage. In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective

January 1, 2021. We are still awaiting Medicare local coverage determination from MolDx, which we understand is working to clear a significant

backlog of reviews.

We

are also aggressively pursuing EsoGuard U.S. private payor payment and coverage. We held advisory board meetings with medical directors

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

Although the claim cycle can be prolonged during the early commercialization of a new test, RDx is starting to receive out-of-network

private insurance payments on our behalf.

Our

initial EsoGuard commercialization efforts focused on gastroenterology (“GI”) physicians who have generally embraced

our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance and, potentially,

treatment with endoscopic esophageal ablation. We have previously relied upon a hybrid sales model with full-time sales management and

approximately fifty independent sales representatives. We significantly expanded our full-time commercial team in 2021 and are actively

recruiting full-time territory managers and sales representatives nationwide. Our Lucid Vice President of Sales and three Area Sales

Directors (“ASD”) oversee a growing number of Sales Representatives, Market Development Mangers (“MDM”) and Clinical

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

Our

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

physicians. To assure sufficient testing capacity and geographic coverage, as part of this expansion, we are building our own network

of Lucid Test Centers, staffed by Lucid-employed clinical personnel, where patients can undergo the EsoCheck procedure and have the sample

sent for EsoGuard testing, starting with three test centers launched in the Phoenix metropolitan area. We have expanded our test centers

to include Salt Lake City, Utah, Henderson, Nevada, and Denver, Colorado. We are currently expanding into Portland, Oregon, Seattle,

Washington, and Boise, Idaho.

We

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

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

Our

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

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

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

but not in combination. We are actively enrolling patients in two international multicenter clinical trials to support FDA PMA approval

of EsoGuard, used with EsoCheck, as an IVD indicated to detect NDBE. ESOGUARD-BE-1 is a screening study which will enroll approximately

500 to 900 male GERD patients over 50 years of age with one other risk factor. ESOGUARD-BE-2 is a case control study which will enroll

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

In

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

medical device. The FDA Breakthrough Device Program was created to offer patients more timely access to breakthrough technologies

which provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions

by expediting their development, assessment and review through enhanced communications and more efficient and flexible clinical study

design, including more favorable pre/post market data collection balance. The Centers for Medicare and Medicaid Services and the United

States Congress continue to work to provide an expedited coverage pathway for emerging technologies.

We

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

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

and Lichtenstein), Switzerland, and, until July 1, 2023, the United Kingdom. In June 2021, we completed the European Directive 98/79/EC

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

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

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

EsoCure

EsoCure

is in development as an Esophageal Ablation Device, with the intent to allow a clinician to treat dysplastic BE before it can progress

to EAC, a highly lethal esophageal cancer, and to do so without the need for complex and expensive capital equipment. We have successfully

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

mucosal lining. We have also completed an acute and survival animal study of EsoCureTM Esophageal Ablation Device, demonstrating

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

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

In

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

that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus. Under the intercompany

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

Lucid will be obligated to fund ongoing development costs and cumulative patent expenses. EsoCure will become part of an integrated

suite of Lucid products addressing BE-EAC. Furthermore, should PAVmed acquire businesses or commercial products or develop technologies

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

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

from PAVmed’s development or acquisition initiatives. To that end, In March 2022, both the PAVmed and Lucid board of directors

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

the consulting agreement with the previous principal owner of CapNostics, LLC. The transfer price is $2.1 million for the

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

Diagnostics

– Opportunity, Solution, and Strategy

GERD,

a pathologic condition in which stomach fluid, including acid, inappropriately refluxes into the lower esophagus, is ubiquitous and can

lead to highly lethal EAC. Our opportunity is to prevent EAC deaths through the early detection of esophageal precancer and cancer in

millions of at-risk GERD patients.

In

2021, approximately 20,000 U.S. GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it. Over

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

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

all cases, EAC silently progresses until it manifests itself with new symptoms of advanced disease. EAC is nearly always invasive at

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

Up

to 50 million, or one in four, U.S. adults have weekly GERD symptoms. Although symptoms can be ameliorated with medications, including

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

cancer.

BE

is an esophageal precancer and complication of GERD characterized by pathologic transformation of surface esophageal cells. Dysplastic

BE is a late esophageal precancer characterized by further premalignant pathologic transformation called dysplasia. All EAC is believed

to arise from BE as the culmination of pathologic changes along the BE-EAC precancer-cancer spectrum—from nondysplastic BE (“NDBE”),

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

BE can be cured with endoscopic esophageal ablation which reliably halts progression to EAC.

The

subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines,

including the American College of Gastroenterology (“ACG”) BE Guidelines. Risk factors include age over 50 years,

male gender, White race, obesity, smoking history and a family history of BE-EAC. The ACG BE Guidelines recommend screening for patients

with a five-year history of, or severe, GERD and three or more risk factors. The highest risk symptomatic GERD cohort recommended for

screening consists of the estimated 13 million U.S. men over 50 with one additional risk factor. An estimated 60% of at-risk GERD patients

are Medicare beneficiaries.

Unfortunately,

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

gastrointestinal endoscopy (“EGD”). We believe that the profound tragedy of an EAC diagnosis is that likely death

could have been prevented if the at-risk GERD patient had been screened and then undergone surveillance and curative endoscopic esophageal

ablation of dysplastic BE.

Since

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

of the necessary elements for such an early detection program are already well established—an at-risk population (at-risk GERD

patients), a precancer (BE), and an intervention which can halt progression to EAC (endoscopic esophageal ablation). The only missing

element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.

We

believe EsoGuard, used with EsoCheck, constitutes that missing element—the first and only commercially available diagnostic test

capable of serving as a widespread screening tool to prevent EAC deaths through early detection of esophageal precancer and cancer in

at-risk GERD patients.

Current

Status of EsoGuard and EsoCheck

Regulatory

In

June 2019, we received FDA 510(k) clearance to market EsoCheck in the U.S. as a device indicated for use in the collection and retrieval

of surface cells of the esophagus in adults. In December 2019, Research Dx Inc. (“RDx”), our CLIA-certified commercial

clinical laboratory services partner, completed documentation of EsoGuard analytical validity allowing us to commercialize

it as an LDT. In March 2022, we transferred testing to our own laboratory, upon our acquisition of certain assets from RDx

as described elsewhere in this report. In May 2021, we received CE Mark certification for EsoCheck, and in June 2021, we completed

CE Mark self-certification for EsoGuard, indicating both may be marketed in CE Mark European countries.

EsoGuard’s

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

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

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

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

mitigate that risk long-term, and to allow the marketing of EsoGuard and EsoCheck together, we have decided to pursue FDA PMA

approval for EsoGuard, as an IVD device. In October 2019, we participated in an FDA pre-submission meeting and received feedback

on a proposed initial indication for use and the design of our two international multi-center clinical studies to support a PMA application

for FDA approval of EsoGuard on samples collected with EsoCheck. We expect to complete enrollment by the end of 2022 and submit our PMA

by early 2023.

Manufacturing

& Logistics

EsoCheck

is currently manufactured for us by our partner Sage Product Development Inc. on a line that can produce over ten thousand units per

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

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

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

expiration of any successive term. The agreement, as amended, provides per unit pricing for up to 250,000 units per year, a non-recurring

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

to Coastline later in 2022 as test volumes increase. The manufacturing line is being designed to allow capacity to be scaled to over

one million units per year. Our EsoGuard Specimen Kits are manufactured for us by our partner RDx and can be transferred to a

higher volume manufacturer whenever demand dictates. The warehousing, logistics, fulfillment and customer support of our products is

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

Reimbursement

In

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

allowed us to engage directly with Medicare contractor Palmetto GBA and its MolDx Program on CMS payment and coverage. In October 2020,

CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021. We are still awaiting Medicare local

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

We

are also aggressively pursuing EsoGuard U.S. private payor payment and coverage. We held advisory board meetings with medical directors

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

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

insurance payments for submitted EsoGuard tests.

Commercialization

Our

initial EsoGuard commercialization efforts on gastroenterology (“GI”) physicians who have generally embraced our message

that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long-term EGD surveillance and, potentially, treatment

with endoscopic esophageal ablation. At the outset of our commercialization, we utilized a hybrid sales model with full-time sales management

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

market develop managers and sales representatives nationwide. EsoGuard testing has begun accelerating as pandemic-related healthcare

facility limitations have eased.

We

are now expanding EsoGuard commercialization to target primary care physicians. The vast majority of at-risk GERD patients are cared

for by PCPs and never see a gastroenterologist. To assure sufficient testing capacity and geographic coverage during this expansion,

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

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

metropolitan area and added centers in Utah, Colorado, and Nevada. We are presently focused on adding Centers in Oregon, Washington,

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

provider, that can accommodate EsoGuard self-referrals from direct-to-consumer marketing. In July 2021, we entered into an agreement

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

and healthcare professionals in order to engage in a telemedicine consult. UpScript will develop, operate, and maintain a Lucid website

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

for professional services they are providing. The Lucid website will have the ability to transmit the requests from individuals and return

a test order, if authorized. UpScript will transmit any such test order to the CLIA-certified laboratory directed by Lucid in order arrange

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

Clinical

Research & Development

Our

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

ongoing regulatory, reimbursement and commercial efforts. We are actively enrolling patients in two international multicenter clinical

trials to support FDA PMA approval of EsoGuard, used with EsoCheck, as an IVD device indicated to detect NDBE. ESOGUARD-BE-1 is

a screening study which will enroll approximately 500 to 900 male GERD patients over 50 years of age with one other risk factor. ESOGUARD-BE-2

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

with normal controls. Approximately one-half of the U.S. sites and one European site are actively enrolling. We expect to complete enrollment

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

Our

Growth Strategy

We

believe EsoGuard’s total addressable U.S. market opportunity exceeds $25 billion based on an effective Medicare payment of $1,938

and the over 13 million U.S. male at-risk GERD patients recommended for screening by clinical practice guidelines. We believe that EsoGuard,

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

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

Expand

EsoGuard Commercialization Across Multiple Channels

The

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

physicians (PCPs) and consumers in addition to GI physicians. We continue to accelerate the expansion of our sales and marketing team

targeting these multiple channels.

We

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

for testing using a non-endoscopic alternative to EGD. We believe our Lucid Test Centers will play a critical role in significantly growing

EsoGuard testing from PCP referrals. After advancing the pilot program in Phoenix, we are steadily expanding our Lucid Test Centers to

other metropolitan areas, first in Western U.S. states and then nationwide.

We

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

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

those at risk to consider EsoGuard testing. We have launched an EsoGuard Telemedicine Program with DTC marketing in Phoenix and will

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

Expand

Our Clinical Evidence to Support Commercialization, Reimbursement and Regulatory Efforts

The

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

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

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

We

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

used with EsoCheck, as an IVD device. We will then work with FDA, pursuant to our Breakthrough Device designation, to extend the ESOGUARD-BE-1

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

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

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

Expand

Our Manufacturing and Laboratory Testing Capacity

We

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

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

capacity and substantially lower per-unit cost of goods. We anticipate doing the same for EsoGuard Specimen Kit manufacturing as demand

dictates. We previously relied on the CLIA-certified commercial clinical laboratory at RDx to meet EsoGuard testing

needs. However, we believed it was in our long-term interest to secure our own CLIA-certified laboratory, to increase

capacity further, streamline billing and claims management, and decrease per-test cost of goods. In that regard, on February 25,

2022, our new, wholly owned subsidiary, LucidDx Labs, acquired from RDx certain licenses and other related assets necessary

for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located in Lake Forest, CA. Since March

2022, we have conducted EsoGuard testing at our owned laboratory.

Expand

Our Product Portfolio

We

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

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

treatment of BE-EAC. We have the opportunity to license and develop biomarkers with the potential to discriminate between NDBE and dysplastic

BE on samples collected with EsoCheck, which we believe would revolutionize NDBE surveillance. When dysplastic BE is identified, endoscopic

esophageal ablation is indicated to cure the BE and halt progression to EAC. EsoCure has certain key features which give it the potential,

once cleared and clinically available, to unseat the dominant RF ablation technology. We intend to pursue these and any other technologies

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

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

EsoCure.

Longer-Term

Strategy

Our

longer-term strategy is to secure a specific indication, based on published guidelines, for BE screening in certain at-risk populations

using EsoGuard on samples collected with EsoCheck. This use of EsoGuard together with EsoCheck as a screening system must be cleared

or approved by the FDA as an IVD, device. In September 2019, we entered into an agreement with a clinical research organization to assist

us with two ongoing clinical trials for EsoGuard as an IVD device, which are actively enrolling patients and consist of a screening study

(ESOGUARD-BE-1) and a case control study (ESOGUARD-BE-2).

The

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

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

EsoGuard is comparing to the gold standard of endoscopy with biopsies. In February 2020, EsoGuard has received Breakthrough Device designation

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

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

FDA

Breakthrough Device

The

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

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

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

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

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

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

Pursuant

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

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

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

be open to including LGD. It also indicated that it would consider study designs with some enrichment and, potentially, interim analysis

and approval to mitigate sample size. We will be working with FDA to finalize an extension of our current screening study to support

such an expanded dysplastic BE indication once FDA resumes Breakthrough Device meetings for IVD devices, which are currently on

hold as the branch works to clear a Covid-19 pandemic related backlog. This study will be a substantial, capital-intensive, but potentially

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

the thousands.

EsoGuard

Clinical Utility Studies

Demonstrating

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

procedure. It does not require demonstrating the performance of the assay, i.e., the negative and positive predictive values.

Our PMA trials are designed and powered to do so. Clinical utility studies need to demonstrate that patients with a positive EsoGuard

test undergoes confirmatory EGD which leads to a specific intervention, e.g., implementation of an NDBE surveillance program or

ablation of dysplastic BE. Ideally, the near-term EGD rate of EsoGuard negative patients should be low. In other words, EsoGuard testing

should be able to triage patient to EGD vs. no EGD, with EGD positive patients receiving an intervention, which would not have happened

if the patient had not been triaged by EsoGuard.

Demonstrating

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

coverage. Our recent advisor board meeting with medical directors of private insurers confirmed this. They strongly indicated that one

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

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

Clinical

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

A recent U.K. study from Dr. Fitzgerald’s team is a good example. They published a large study of GERD patients in a primary care

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

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

non-trivial given the published data on suboptimal Cytosponge/TFF-3 performance. However, the study was useful in convincing U.K. authorities

to initiate mobile testing centers around the country.

We

shortly will launch an EsoGuard Registry study as our primary study to demonstrate clinical utility. Every patient undergoing EsoCheck

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

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

We

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

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

to historical controls also identified from the database. The study would seek to demonstrate that an EsoGuard-guided strategy identifies

more BE-EAC patient than historical practice.

Finally,

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

value of EsoGuard followed by EGD compared to EGD alone and the relative costs of each strategy. The study would seek to demonstrate

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

Eosinophilic

Esophagitis Using EsoCheck

We

are exploring additional EsoCheck applications beyond our core focus of BE-EAC. The application with the greatest potential may be the

monitoring of patients with Eosinophilic Esophagitis (“EoE”). EoE is a rapidly emerging allergy-mediated inflammatory

condition of the esophagus similar to, and often associated with, inflammatory bowel disease (“IBD”). Although underappreciated

by the medical community and frequently confused with GERD, EoE has a prevalence comparable to IBD and exacts a significant burden on

patients. It can lead to swallowing difficulties, esophageal scarring, food impaction and pain. Current treatment includes oral steroids

and an elimination diet. Several anti-inflammatory biologics are being evaluated to treat EoE. Since inflammation can persist despite

resolution of symptoms, treatment courses can be very difficult and costly for patients, requiring multiple and frequent invasive endoscopies

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

In

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

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

cost-effective alternative to endoscopic biopsies in the management of EoE patients. The study, entitled “Pilot Study of EsoCheck

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

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

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

EoE scheduled for a clinically indicated upper endoscopy. The patients underwent esophageal sampling using EsoCheck, with the sample

sent for traditional cytologic analysis, followed by EGD, including brushings and biopsies. The study results have yet to be published

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

We have already initiated discussions with Dr. Falk to lead a larger multicenter follow-up study powered to document EsoCheck’s

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

EsoGuard

and EsoCheck Intellectual Property

Our

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

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

and copyrights, as available through registration in the United States and internationally. Patent protection and other proprietary rights

are thus essential to our Diagnostics business. The EsoCheck and EsoGuard technology is protected by patents in the United States and

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

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

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

in any country requested by us, to the extent such protection is reasonably attainable. We seek patent protection, as appropriate, on:

● the product itself including all embodiments with future commercial potential;

● the methods of using the product; and

● the methods of manufacturing the product.

In

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

the European Union and other countries worldwide. Foreign filings can be cumbersome and expensive, and we will pursue such filings when

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

of the technology.

The

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

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

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

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

delays by the USPTO in granting a patent.

We

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

business in the United States and internationally. Prior to acquiring or licensing a technology from a third party, we will evaluate

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

upon competing rights of others.

We

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

to develop and maintain our competitive position in our Diagnostics business. We intend to protect our proprietary rights through a variety

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

contractors and other entities who may have access to proprietary information. We will generally require employees to assign patents

and other intellectual property to us as a condition of employment with us. All our consulting agreements will pre-emptively assign to

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

EsoGuard

and EsoCheck Competition

The

U.S. market for esophageal cancer (i.e., EAC) and pre-cancer (i.e., BE, with or without dysplasia) screening is large, consisting of

more than 30 million at-risk individuals over the age of 50. Given the large market for pre-cancer screening, we likely will face numerous

competitors, some of which possess significantly greater financial and other resources and development capabilities than us. Our EsoGuard

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

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

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

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

For example, Cytosponge is a small mesh sponge within a soluble gelatin capsule that dissolves in the stomach and then is pulled thru

the targeted region brushing the lining of the esophagus and then later retrieved, although, unlike EsoCheck, it is unprotected from

contamination. Interpace Diagnostics (Nasdaq: IDXG), NeoGenomics (Nasdaq: NEO) and Cernostics (private) are developing progression type

test for known patients with BE aimed at assessing or predicting the likely development of EAC. Our competitors may also be developing

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

Accordingly,

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

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

insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective. We believe that the principal competitive

factors in our markets are:

● diagnostic accuracy and the quality of outcomes for medical conditions;

● acceptance by physicians and the medical device market generally;

● ease of use and reliability;

● technical leadership and superiority;

● effective marketing and distribution;

● speed to market; and

● product price and qualification for coverage and reimbursement.

Most

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

resources. We may be unable to compete effectively against our competitors either because their products and services are superior or

more cost efficient, or because of they have access to greater resources than us. These competitors may have greater name recognition

than we do. Many of these competitors have obtained all desirable FDA or other regulatory approvals, and superior patent protection,

for their products. Certain of our competitors have already commercialized their products, and others may commercialize their products

in advance of our products. In addition, our competitors may make technical advances that render our products obsolete. We may be unable

to respond to such technical advances.

Notwithstanding

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

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

available products and services. When used in combination after achieving FDA approval as an IVD medical device through the PMA process,

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

endoscopy, to screen for BE and EAC. The test may be performed in five minutes, without sedation, in an outpatient ambulatory setting

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

License

Agreement

On

May 12, 2018, we entered into the License Agreement with CWRU, which was amended on November 19, 2019, February 12, 2021 and August 23,

2021. Under the terms of the License Agreement, we acquired an exclusive worldwide right to use the intellectual property rights to the

EsoGuard and EsoCheck technology for the detection of changes in the esophagus. CWRU retains the right to grant licenses to the EsoGuard

technology outside this field of use. The November 2019 amendment to the License Agreement also incorporates technology on sample preservation,

jointly developed by us and CWRU, as licensed technology under the agreement, on mutually agreeable terms and conditions.

CWRU

is entitled to receive royalties based on net sales by us of licensed products utilizing the EsoGuard and EsoCheck technology. When determining

net sales in circumstances where samples collected using a device based on EsoCheck technology are evaluated in a test other than one

based on EsoGuard technology, the unit sales price of the device will be deemed to be 200% of the direct unit manufacturing cost (or

400%, if the test is for the detection of EAC or its precursors). We are required to pay CWRU royalties on net sales of licensed products

as follows:

● 5% of net sales of less than $100 million per year; and

● 8% of net sales greater than $100 million per year.

We

are also required to pay CWRU minimum annual royalty payments as follows:

Minimum

yearly royalty amounts are subject to increase based on the percentage change in the CPI-W Consumer Price Index. The minimum yearly royalty

payment is credited against the royalties otherwise due. We are also required to pay CWRU a specified portion of any other non-royalty

proceeds received by us pursuant to a sublicense of the EsoGuard and EsoCheck technology.

The

License Agreement was subject to four regulatory and commercialization milestones, of which one remains unachieved and unpaid. The remaining

milestone is the FDA PMA submission of a licensed product, upon the achievement of which we will pay CWRU a milestone payment of $200,000.

Under

the License Agreement, we are responsible for the costs incurred by CWRU in preparing, filing and prosecuting any patents related to

the EsoGuard and EsoCheck technology (subject to a provision for cost sharing in the event CWRU grants other non-overlapping licenses

to the technology). CWRU agreed to apply for patent coverage, at our expense, in any country requested by us, to the extent such protection

is reasonably attainable. CWRU also may apply for patent, copyright or trademark rights to the EsoGuard and EsoCheck technology in other

countries, at its option, and we will have no rights under any the patents in such countries unless we reimburse CWRU for its expenses.

In the event of any actual or threatened infringement of any patent in the field of use covered by the License Agreement, we will have

the first right to commence an action against the infringer. We also will have the right to defend against any claims that the EsoGuard

and EsoCheck technology infringes on the intellectual property rights of a third party.

The

License Agreement provides for us to indemnify CWRU and certain related parties for any claims relating to product liability or similar

claims involving acts or omissions by us in connection with the EsoGuard technology and the development, use or sale of products based

on such technology, or relating to our gross negligence or willful misconduct, or relating to our breach of the License Agreement, unless,

in any case, such claim results from the gross negligence or willful misconduct of CWRU.

The

License Agreement terminates upon the expiration of the last-to-expire licensed patent, or on May 12, 2038, in countries where no such

patents exist, or upon expiration of any exclusive marketing rights for a licensed product that have been granted by FDA or other U.S.

government agency, whichever comes later. The EsoGuard patents begin to expire in August 2024. However, we are pursuing applications

of the clinical utility to extend the patent protection with more recently filed families of cases that have a twenty-year term and,