What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-23 · 543 added, 1034 removed, 213 unchanged (88% of the section changed)

2 unchanged sentences

majority-owned subsidiary of PAVmed Inc.)

BALANCE SHEETS

September 30, 2021

CONSOLIDATED BALANCE SHEETS

thousands except number of shares and per share data - unaudited)

March 31, 2022

December 31, 2021

Current assets:

Accounts receivable

1 unchanged sentence

Total current assets

Liabilities, Preferred Stock and Stockholders’ Deficit

Fixed assets, net

Operating lease right-of-use assets

Intangible assets, net

Liabilities, Preferred Stock and Stockholders’ Equity

Current liabilities:

1 unchanged sentence

Accrued expenses and other current liabilities

- Senior Unsecured Promissory Note - Principal

- MSA Fee, operating expenses, and

interest expense

Operating lease liabilities, current portion

Contingent purchase consideration payable

- MSA Fee and operating expenses

Total current liabilities

Long-term liabilities

Operating lease liabilities, less current portion

Total long-term liabilities

Total liabilities

Commitments and contingencies (Note 8)

Stockholders’ Equity (Deficit):

Commitments and contingencies

Stockholders’ Equity:

Preferred stock, $ 0.001 par value, 20,000,000 shares authorized;

no shares issued and outstanding as of September 30, 2021 and December 31, 2020

no shares issued and outstanding as of March 31, 2022 and December 31, 2021

Common stock, $ 0.001 par value, 100,000,000 shares authorized;

14,114,707 shares issued and outstanding as of September 30, 2021 and December 31, 2020

35,171,796 and 34,917,907 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

( 30,598,368 )

( 13,825,975 )

Total Stockholders’ (Deficit)

( 24,134,193 )

( 13,518,339 )

Total Liabilities and Stockholders’ Equity (Deficit)

accompanying notes to the unaudited condensed financial statements.

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

accompanying notes to the unaudited condensed consolidated financial statements.

DIAGNOSTICS INC.

majority-owned subsidiary of PAVmed Inc.)

STATEMENTS OF OPERATIONS

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONSOLIDATED STATEMENTS OF OPERATIONS

thousands except number of shares and per share data - unaudited)

Three Months Ended March 31,

Cost of revenue

Gross profit (loss)

Operating expenses:

Commercial operations

Sales and marketing

General and administrative

2 unchanged sentences

Loss from operations

( 6,509,805 )

( 2,021,677 )

( 16,178,580 )

( 5,548,873 )

Interest expense - Senior Unsecured Promissory Note

Other income (expense):

Change in fair value - contingent consideration payable

Other income (expense), net

Loss before provision for income tax

( 6,956,619 )

( 2,021,677 )

( 16,772,393 )

( 5,548,873 )

Provision for income taxes

( 6,956,619 )

( 2,021,677 )

( 16,772,393 )

( 5,548,873 )

Net loss per share - basic and diluted

Weighted average common shares outstanding,

basic and diluted

accompanying notes to the unaudited condensed financial statements.

DIAGNOSTICS INC.

majority-owned subsidiary of PAVmed Inc.)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

MONTHS ENDED SEPTEMBER 30, 2021 and 2020

Balance as of June 30, 2021

$ ( 23,641,749 )

$ ( 19,949,776 )

Exercise - stock options -

Lucid Diagnostics Inc.

2018 Equity Plan

Exercise - stock options -

Lucid Diagnostics Inc.

2018 Equity Plan, shares

Stock-based compensation -

Lucid Diagnostics Inc.

2018 Equity Plan

Stock-based compensation -

2014 Equity Plan

( 6,956,619 )

Balance as of September 30, 2021

$ ( 30,598,368 )

$ ( 24,134,193 )

Balance as of June 30, 2020

$ ( 9,073,654 )

$ ( 8,798,748 )

Stock-based compensation -

Lucid Diagnostics Inc.

2018 Equity Plan

Stock-based compensation -

2014 Equity Plan

( 2,021,677 )

Balance as of September 30, 2020

$ ( 11,095,331 )

$ ( 10,804,060 )

accompanying notes to the unaudited condensed financial statements.

Weighted average common shares outstanding, basic and diluted

accompanying notes to the unaudited condensed consolidated financial statements.

DIAGNOSTICS INC.

majority-owned subsidiary of PAVmed Inc.)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

MONTHS ENDED SEPTEMBER 30, 2021 and 2020

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

the THREE MONTHS ENDED March 31, 2022 and 2021

thousands except number of shares and per share data - unaudited)

Additional Paid-In

Balance as of December 31, 2021

$ ( 13,825,975 )

$ ( 13,518,339 )

Stock-based compensation -

Lucid Diagnostics Inc.

Exercise - stock options - Lucid Diagnostics Inc.

2018 Equity Plan

Stock-based compensation -

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

( 16,772,393 )

Balance as of September 30, 2021

$ ( 30,598,368 )

$ ( 24,134,193 )

Balance as of December 31, 2019

$ ( 5,546,458 )

$ ( 5,309,280 )

Exercise - stock options -

Lucid Diagnostics Inc.

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

Stock-based compensation -

Lucid Diagnostics Inc.

Balance as of March 31, 2022

Additional Paid-In

Balance as of December 31, 2020

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

Stock-based compensation -

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

( 5,548,873 )

Balance as of September 30, 2020

$ ( 11,095,331 )

$ ( 10,804,060 )

accompanying notes to the unaudited condensed financial statements.

Balance as of March 31, 2021

accompanying notes to the unaudited condensed consolidated financial statements.

DIAGNOSTICS INC.

majority-owned subsidiary of PAVmed Inc.)

STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

CONSOLIDATED STATEMENTS OF CASH FLOWS

thousands except number of shares and per share data - unaudited)

Three Months Ended March 31,

Cash flows from operating activities

$ ( 16,772,393 )

$ ( 5,548,873 )

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation expense

Stock-based compensation expense - Lucid Diagnostics Inc.

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

Stock-based compensation expense - PAVmed Inc.

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

Fair value adjustment to contingent consideration payable

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Prepaid expenses and other current assets

Accounts payable

Accrued expenses and other liabilities

Accrued CWRU License Agreement Fee

Accrued expenses and other current liabilities

- operating expenses paid on-behalf-of Lucid Diagnostics Inc.

- Management Services Agreement Fee

- Interest Expense -

Senior Unsecured Promissory Note

- Employee Related Costs

Net cash flows used in operating activities

( 7,790,943 )

( 3,953,010 )

Cash flows from investing activities

9 unchanged sentences

Cash, end of period

accompanying notes to the unaudited condensed financial statements.

accompanying notes to the unaudited condensed consolidated financial statements.

DIAGNOSTICS INC.

majority-owned subsidiary of PAVmed Inc.)

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

in these accompanying notes are presented in thousands, except number of shares and per-share amounts.)

1 — Summary Description of the Company

accompanying unaudited condensed financial statements are those of Lucid Diagnostics Inc.

(“Lucid Diagnostics” or “the

Company”), which was incorporated in the State of Delaware on May 8, 2018.

accompanying unaudited condensed consolidated financial statements are those of Lucid Diagnostics Inc.

(“Lucid Diagnostics”

or “the Company”), which was incorporated in the State of Delaware on May 8, 2018.

Lucid Diagnostics Inc.

is a majority-owned subsidiary

of PAVmed Inc., as discussed below.

Company operates in one segment as a medical diagnostics technology company focused on the relationship between ubiquitous gastroesophageal

reflux disease - “GERD” - which is also known as chronic heartburn, acid reflux or simply reflux, and highly lethal esophageal

cancer, specifically esophageal adenocarcinoma (EAC).

is a majority-owned

subsidiary of PAVmed Inc., as discussed below.

Company operates in one segment as a commercial-stage medical diagnostics technology company focused on the millions of patients with

gastroesophageal reflux disease - “GERD” - which is also known as chronic heartburn, acid reflux or simply reflux, who are

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

Diagnostics Inc.

14 unchanged sentences

3, Patent License Agreement – Case Western Reserve University, for a discussion of the Amended CWRU License Agreement.

has received 510(k) marketing clearance from the FDA as an esophageal cell collection device in June 2019;

and EsoGuard completed the

certification required by the Clinical Laboratory Improvement Amendment (“CLIA”) and accreditation of the College of American

Pathologists making it commercially available as a Laboratory Developed Test (“LDT”) in December 2019.

EsoGuard ® diagnostic LDT and the EsoCheck ® cell sample 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 and cancer in at-risk GERD patients.

its inception, the Company has advanced the proprietary technologies underlying EsoGuard and EsoCheck from the academic research laboratory

3 unchanged sentences

the communication and education of medical practitioners and clinicians of the EsoGuard LDT;

and establishing “Lucid Diagnostics Test Centers” for the collection of cell samples using EsoCheck and delivery of the collected

cell samples to ResearchDX Inc.

(“RDx”), a CLIA certified commercial laboratory service provider, for the performance of

the EsoGuard LDT.

and establishing “Lucid Diagnostics Test Centers” for the collection of cell samples using EsoCheck Up and until February

25, 2022, delivery of the collected cell samples were sent to ResearchDX Inc.

(“RDx”), a CLIA certified commercial

laboratory service provider, for the performance of the EsoGuard LDT.

See LucidDx Labs, Inc.

and Asset Purchase Agreement-February

Additionally, the Company is conducting two concurrent clinical trials, including each of:

2 unchanged sentences

and the “EsoGuard case control study” (“ESOGUARD-BE-2”), to support

United States Food and Drug Administration (“FDA”) pre-market approval (“PMA”) of the use of EsoGuard and EsoCheck

a United States Food and Drug Administration (“FDA”) pre-market approval (“PMA”) of the use of EsoGuard and EsoCheck

as an in-vitro diagnostic medical device (“IVD”).

Further, the Company is developing expanded clinical evidence to

support recommendation of our products in professional society guidelines.

1 — Summary Description of the Company - continued

Diagnostics Inc.

and Outstanding - September 30, 2021

of September 30, 2021 and December 31, 2020, there were 14,114,707 shares of common stock of Lucid Diagnostics Inc.

issued and outstanding,

of which, PAVmed Inc.

holds 11,552,562 shares, representing a majority ownership equity interest and has a controlling financial interest

in Lucid Diagnostics Inc., and accordingly, Lucid Diagnostics Inc.

is a consolidated majority-owned subsidiary of PAVmed Inc., as of

each such date.

Shares Increase and Stock-Split - October 6, 2021

Subsequent to September

30, 2021, effective October 6, 2021, the Lucid Diagnostics Inc.

board of directors:

increased the authorized shares of common stock of

Lucid Diagnostics Inc.

to 100.0 million shares;

and declared a 1.411-to-1.0 common stock-split with respect to Lucid Diagnostics Inc.

common stock, as discussed below.

Inc Conversion of the Senior Unsecured Promissory Note Principal - October 13, 2021

to September 30, 2021, on October 13, 2021, 15,803,200 shares of common stock of Lucid Diagnostics Inc.

were issued to PAVmed Inc.

the election by PAVmed Inc.

to convert the $ 22.4 million face value principal of a Senior Unsecured Promissory Note, dated June 1, 2021,

under the terms of such note, which was issued to PAVmed Inc.

by Lucid Diagnostics Inc.

Diagnostics Inc.

Initial Public Offering - October 14, 2021

to September 30, 2021, on October 14, 2021, Lucid Diagnostics Inc.

completed an initial public offering (“IPO”) of its common

stock under an effective registration statement on Form S-1 (SEC File No.

333-259721), wherein a total of 5.0 million IPO shares of common

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

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

costs incurred by the Company.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies

of Presentation

accompanying unaudited condensed financial statements are those of Lucid Diagnostics Inc.

on a stand-alone legal entity

Lucid Diagnostics Inc.

(“the Company”) is a majority-owned consolidated subsidiary of PAVmed Inc., which has a majority

equity ownership interest and has financial control of Lucid Diagnostics Inc.

accompanying unaudited condensed financial statements of Lucid Diagnostics Inc.

have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP”), and applicable rules and regulations of the United States

Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

As permitted under SEC rules, certain footnotes

or other financial information normally required by U.S.

GAAP have been condensed or omitted.

The balance sheet as of December 31, 2020

has been derived from the Company’s audited financial statements at such date.

The accompanying unaudited condensed financial statements

have been prepared on the same basis as the Company’s annual financial statements, and in the opinion of management, include all

adjustments, consisting only of routine recurring adjustments, necessary for a fair presentation of the Company’s unaudited condensed

financial information.

October 6, 2021, the Lucid Diagnostics Inc.

board of directors:

increased the authorized shares of common stock to 100.0 million shares;

and declared a 1.411-to-1.0 common stock-split.

All shares of common stock of the Company and per share amounts, for all periods presented,

have been adjusted for the common stock-split, with such adjustment rounded-up to the next whole share in lieu of a fractional share,

with no adjustment to the par value per share, inclusive of:

the number of shares of common stock issued and outstanding (and the corresponding

increase to common stock par value and decrease to additional paid in capital), along with the conversion price per share of the Senior

Unsecured Promissory Note;

basic and diluted weighted-average shares outstanding and the corresponding loss per share;

and applicable

notes to the financial statements, including:

stock options granted, stock option exercise prices, and the number of restricted stock

awards, and the respective fair value per share of the stock options and restricted stock awards, along with all other share and per

share amounts for all periods presented as applicable.

results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected

for the year ending December 31, 2021 or for any other interim period or for any other future periods.

preparing unaudited condensed financial statements in conformity with U.S.

GAAP, management is required to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited

condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period.

Due to inherent

uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates.

an ongoing basis, the Company evaluates its estimates and assumptions.

These estimates and assumptions include the estimated fair value

of stock-based equity awards, and the estimated fair value of financial instruments recognized as liabilities.

In addition, management’s

assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash

inflows and outflows.

Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions.

Company maintains its cash at a major financial institution with high credit quality.

At times, the balance of its cash deposits may

exceed federally insured limits.

The Company has not experienced a loss on deposits with commercial banks and financial institutions

which exceed federally insured limits.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Revenue Recognition

Company recognizes revenue under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

(“ASC”) Topic 606, Revenue from Contracts with Customers , (“ASC 606”).

At its inception, an arrangement

is accounted for under the provisions of ASC 606 as a contract with a customer when there is:

a legally enforceable contract between

the rights of the parties are identified;

the arrangement has commercial substance;

and collectability of the contract consideration

is deemed probable.

To determine revenue recognition for arrangements determined to be within the scope of ASC 606, the Company performs

the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize

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

costs consist of certain legal, accounting, and other advisory fees incurred related to the Company’s efforts to raise debt and

equity capital.

Offering costs in connection with equity financing are recognized as either an offset against the financing proceeds

to the extent the underlying security is equity classified or a current period expense to extent the underlying security is liability

classified or for which the fair value option is elected.

Offering costs, lender fees, and warrants issued in connection with debt financing,

to the extent the fair value option is not elected, are recognized as debt discount, which reduces the reported carrying value of the

debt, with the debt discount amortized as interest expense, generally over the contractual term of the debt agreement, to result in a

constant rate of interest.

Offering costs associated with in-process capital financing are accounted for as deferred offering costs.

As of September 30, 2021 and December 31, 2020, the were no deferred offering costs.

and Development Expenses

and development expenses are recognized as incurred and include the salary and stock-based compensation of employees engaged in product

research and development activities, and the costs related to the Company’s various contract research service providers, suppliers,

engineering studies, supplies, and outsourced testing and consulting fees, as well as depreciation expense and rental costs for equipment

used in research and development activities, and fees incurred for access to certain facilities of contract research service providers.

Costs and Purchased Patent License Rights

related costs in connection with filing and prosecuting patent applications and patents filed by the Company are expensed as incurred

and are included in the line item captioned “general and administrative expenses” in the accompanying consolidated statements

of operations.

Patent fee reimbursement expense incurred under the patent license agreement agreements are included in the line item

captioned “research and development expenses” in the accompanying consolidated statements of operations.

Company has entered into agreements with third parties to acquire technologies for potential commercial development.

Such agreements

generally require an initial payment by the Company when the contract is executed.

The purchase of patent license rights for use in research

and development activities, including product development, are expensed as incurred and are classified as research and development expense.

Additionally, the Company may be obligated to make future royalty payments in the event the Company commercializes the technology and

achieves a certain sales volume.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification

(“ASC”) Topic 730, “ Research and Development ”, (“ASC 730”), expenditures for research and

development, including upfront licensing fees and milestone payments associated with products not yet been approved by the United States

Food and Drug Administration (“FDA”), are charged to research and development expense as incurred.

Future contract milestone

and /or royalty payments will be recognized as expense when achievement of the milestone is determined to be probable and the amount

of the corresponding milestone can be objectively estimated.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

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

Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc.

2018 Equity Plan”) and the PAVmed Inc.

2014 Long-Term Incentive Equity Plan (“PAVmed Inc.

2014 Equity Plan”).

provisions of FASB Accounting Standard Update (“ASU”) 2018-07 (“ASU 2018-07”) amended FASB ASC Topic 718, Stock-Based

Compensation , (“ASC 718”) to align the accounting for stock-based awards granted to nonemployees with the requirements

for accounting for stock-based awards to employees;

and superseded the previous guidance of FASB ASC Topic 505-50, Equity-Based Payments

to Non-Employees (“ASC 505-50”).

The adoption as of January 1, 2020 of the updated provisions of ASC 718, as amended

by ASU 2018-07, had no effect on the Company’s financial statements.

the year ended December 31, 2020, with respect to stock-based awards granted to the board of directors, employees, and non-employees,

the Company recognizes stock-based compensation in accordance with the provisions of ASC 718, as amended by ASU 2018-07, wherein the

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

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

the cumulative expense recognized is at-least equal-to-or-greater-than the estimated fair value of the vested portion of the respective

stock-based award as of the reporting date.

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

Plan and the Lucid Diagnostics Inc.

2018 Equity Plan, which requires the Company to make certain weighted-average valuation estimates

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

expected term of stock options represents the period of time stock options are expected to be outstanding, which is the expected

term derived using the simplified method and, through December 31, 2019 for non-employees was the remaining contractual term (under

the previous provisions of ASC 505-50);

respect to the PAVmed Inc.

2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility

of PAVmed Inc.

common stock and the volatilities of similar entities within the medical device industry over the period commensurate

with the expected term with respect to stock options granted to the board of directors and employees in the years ended December

31, 2020 and 2019;

and for stock options granted to non-employees in the year ended December 31, 2019, the period of volatility was

commensurate with the remaining contractual term of the respective stock option (under the previous provisions ASC 505-50).

respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan, the expected stock price volatility was based

on the historical stock price volatility of similar entities within the medical device industry over the period commensurate with

the expected term with respect to stock options granted to employees in the year ended December 31, 2019;

and for stock options granted

to non-employees in the year ended December 31, 2019, the period of volatility was commensurate with the remaining contractual term

of the respective stock option (under the previous provisions ASC 505-50).

There were no stock options granted under the Lucid Diagnostics

2018 Equity Plan in the year ended December 31, 2020;

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

Treasury securities in effect at the time of grant for a period

commensurate with either the expected term or the remaining contractual term, as applicable, of the stock option;

expected dividend yield is based on annual dividends of $ 0.00 as there have not been dividends paid to-date, and there is no plan

to pay dividends for the foreseeable future.

price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options granted under the PAVmed

2014 Equity Plan is its quoted closing price per share.

The price per share of Lucid Diagnostics Inc.

common stock used in the computation

of estimated fair value of stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan was estimated using a discounted cash

flow method applied to a multi-year forecast of its future cash flows.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Instruments Fair Value Measurements

ASC Topic 820, Fair Value Measurement, (ASC 820) defines fair value as the price which would be received to sell an asset or paid

to transfer a liability in an orderly transaction between market participants at a transaction measurement date.

The ASC 820 three-tier

fair value hierarchy prioritizes the inputs used in the valuation methodologies, as follows:

based on quoted prices for identical assets and liabilities in active markets.

based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities

in active markets, quoted prices for identical or similar assets and liabilities in markets which are not active, or other inputs

observable or can be corroborated by observable market data.

based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made

by other market participants.

These valuations require significant judgment.

Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments potentially

qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging (ASC

The accounting for warrants issued to purchase shares of common stock of the Company is based on the specific terms of the respective

warrant agreement, and are generally classified as equity, but may be classified as a derivative liability if the warrant agreement provides

required or potential full or partial cash settlement.

A warrant classified as a derivative liability, or a bifurcated embedded conversion

or settlement option classified as a derivative liability, is initially measured at its issue-date fair value, with such fair value subsequently

adjusted at each reporting period, with the resulting fair value adjustment recognized as other income or expense.

If upon the occurrence

of an event resulting in the warrant liability or the embedded derivative liability being subsequently classified as equity, or the exercise

of the warrant or the conversion option, the fair value of the derivative liability will be adjusted on such date-of-occurrence, with

such date-of-occurrence fair value adjustment recognized as other income or expense, and then the derivative liability will be derecognized

at such date-of-occurrence fair value.

recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation models,

including the Company’s common stock price, and certain Level 3 inputs, including, the assumptions regarding the estimated volatility

in the value of the Company’s common stock price;

the Company’s dividend yield;

the likelihood and timing of future dilutive

transactions, as applicable, along with the risk-free rates based on U.S.

Treasury security yields.

Changes in these assumptions can

materially affect the estimated fair values.

of September 30, 2021 and December 31, 2020, the carrying values of cash, and accounts payable, approximate their respective fair value

due to the short-term nature of these financial instruments.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards - continued

Accounting Policies - continued

Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes , (ASC

Current tax liabilities or receivables are recognized for estimated income tax payable and/or refundable for the current year.

Deferred tax assets and deferred tax liabilities are recognized for estimated future tax consequences attributable to differences between

the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, along with net operating

loss and tax credit carryforwards.

Deferred tax assets and deferred tax liabilities are measured using enacted tax rates expected to

apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Changes in deferred

tax assets and deferred tax liabilities are recorded in the provision for income taxes.

ASC 740, a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through

their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future

A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when

the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized.

a result of the evaluation of the positive and negative evidence bearing upon the estimated realizability of net deferred tax assets,

and based on a history of operating losses, it is more-likely-than-not the deferred tax assets will not be realized, and therefore a

valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, has been recognized

as a charge to income tax expense as of September 30, 2021 and December 31, 2020.

Company recognizes the benefit of an uncertain tax position it has taken or expects to take on its income tax return if such a position

is more-likely-than-not to be sustained upon examination by the taxing authorities, with the tax benefit recognized being the largest

amount having a greater than 50% likelihood of being realized upon ultimate settlement.

As of September 30, 2021, the Company

have any unrecognized tax benefits resulting from uncertain tax positions.

Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

There were no

amounts accrued for penalties or interest as of September 30, 2021 and December 31, 2020 or recognized during the nine months ended September

30, 2021 nor the year ended December 31, 2020.

The Company is not aware of any issues under review to potentially result in significant

payments, accruals, or material deviations from its position.

Diagnostics Inc.

is included in the consolidated tax returns of PAVmed Inc.

and Subsidiaries.

Notwithstanding, the Lucid Diagnostics

stand-alone legal entity estimated income tax provision was computed on an assumed separate income tax return, wherein, the estimated

income tax provision of Lucid Diagnostics Inc.

is computed as if its income tax returns were filed by Lucid Diagnostics Inc.

on a stand-alone

legal entity basis.

Notwithstanding the absence of a formal tax sharing agreement between PAVmed Inc.

and Lucid Diagnostics Inc., the

Lucid Diagnostics Inc.

stand-alone legal entity current tax expense and /or tax refund, if any, would be settled with PAVmed Inc.

opposed with the respective tax authority).

The deferred tax asset and /or deferred tax liability;

a valuation allowance on the deferred

tax asset, net;

and /or an uncertain tax position, if any;

each as discussed above, is determined based on Lucid Diagnostics Inc.

legal entity assumed filing of separate income tax returns.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards - continued

Accounting Policies - continued

Loss Per Share

net loss per share is computed by dividing each of the respective net loss by the number of “basic weighted average common shares

outstanding” and “diluted weighted average shares outstanding” for the reporting period indicated.

The basic weighted-average

shares common shares outstanding are computed on a weighted average based on the number of days the shares of common stock of the Company

are issued and outstanding during the respective reporting period indicated.

The diluted weighted average common shares outstanding are

the sum of the basic weighted-average common shares outstanding plus the number of common stock equivalents’ incremental shares

on an if-converted basis, computed using the treasury stock method, computed on a weighted average based on the number of days the incremental

shares would potentially be issued and outstanding during the periods indicated, if dilutive.

The Company’s common stock equivalents

include the Senior Unsecured Promissory Note, dated June 1, 2021, and stock options and unvested restricted stock awards granted under

the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan.

Notwithstanding,

as the Company has a net loss for each reporting period presented, only the basic weighted average common shares outstanding are used

to compute the basic and diluted net loss per share for each reporting period presented.

provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40,

Presentation of Financial Statements - Going Concern (“ASC 205-40”) requires management to assess an entity’s

ability to continue as a going concern within one year of the date of the financial statements are issued.

In each reporting period (including

interim periods), an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date

to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance

Under the provisions of ASC 205-40, substantial doubt about an entity’s ability to continue as a going concern exists when

conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet its financial obligations

as they become due within one year after the date the financial statements are issued.

its inception to the date of the Company’s IPO on October 14, 2021, the operations of Lucid Diagnostics Inc.

have been funded by

Further, the Company is developing expanded clinical evidence to support

recommendation of our products in professional society guidelines.

Note 1 — Summary Description of the Company - continued

its inception and through the date of the Company’s IPO on October 14, 2021, the operations of Lucid Diagnostics Inc.

funded by PAVmed Inc.

providing working capital cash advances and the payment by PAVmed Inc.

of certain operating expenses on-behalf-of Lucid Diagnostics

Additionally, the daily operations of Lucid Diagnostics Inc.

continue to be managed by personnel employed by PAVmed Inc., for which

of certain operating expenses on-behalf-of

Lucid Diagnostics Inc.

incurs expense according to the provisions of a Management Services Agreement between Lucid Diagnostics Inc.

Additionally, the daily operations of Lucid Diagnostics Inc.

continue to be managed by personnel employed by PAVmed

Inc., for which Lucid Diagnostics Inc.

incurs expense according to the provisions of a Management Services Agreement between Lucid Diagnostics

and PAVmed Inc.

See Note 5, Related Party Transactions , for information with respect to the Management Services Agreement;

Note 5, Due To PAVmed Inc.

and Note 6, Due To PAVmed Inc.

, for further information with respect to amounts owed to PAVmed Inc.

6 unchanged sentences

Notwithstanding, however, with the cash on-hand

as of the date hereof, of which is inclusive of the cash proceeds resulting from the Company’s IPO, the Company

expects to be able to fund its future operations for one year from the date of the issue of the Company’s unaudited condensed financial

statements, as included herein in this Quarterly Report on Form 10-Q for the period ended September 30, 2021.

Act EGC Accounting Election

as of the date hereof and other debt and equity committed sources of capital with Lucid and its parent company, PAVmed, the Company expects

to be able to fund its future operations for one year from the date of the issue of the Company’s unaudited condensed consolidated

financial statements, as included herein in this Quarterly Report on Form 10-Q for the period ended March 31, 2022.

Diagnostics Inc.

is an “emerging growth company” or “EGC” as defined in the Jumpstart Our Business Startups Act

of 2012 (“JOBS Act”).

Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued after the

enactment of the JOBS Act until such time as those standards apply to private companies.

In this regard, Lucid Diagnostics Inc.

has irrevocably

elected to avail itself of this exemption from new or revised accounting standards, and, therefore, will not be subject to the same new

or revised accounting standards as public companies who are not an EGC.

Initial Public Offering - October 14, 2021

October 14, 2021, Lucid Diagnostics Inc.

completed an initial public offering (“IPO”) of its common stock under an effective

registration statement on Form S-1 (SEC File No.

333-259721), wherein a total of 5.0 million IPO shares of common stock were issued,

with such total IPO shares inclusive of 571,428 IPO shares issued to PAVmed Inc., at an IPO 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 the

LucidDx Labs Inc.

December 2021, Lucid Diagnostics, Inc.

formed a new wholly owned subsidiary, LucidDx Labs Inc., principally to construct and operate

a Company-owned Commercial Lab Improvements Act (“CLIA”) certified, College of American Pathologists (“CAP”)

accredited commercial clinical laboratory.

On February 25, 2022, LucidDx

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

(“RDx”), an unrelated third-party

Under the RDx APA, LucidDx Labs Inc.

acquired certain assets from RDx to be combined with LucidDx Labs Inc.

purchased and leased property and equipment to establish a Company-owned CLIA certified, CAP accredited commercial clinical laboratory

capable of performing the EsoGuard® Esophageal DNA assay, inclusive of DNA extraction, next generation sequencing (“NGS”)

and specimen storage.

See Note 7, Acquisitions - Asset Purchase Agreement - Research Dx Inc.

, for a further discussion of the

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates

Accounting Policies

Company’s significant accounting policies are as disclosed in the Company’s annual report on Form 10-K for the year ended

December 31, 2021 as filed with the SEC on April 6, 2022, except as otherwise noted herein below.

of Presentation

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally

accepted in the United States of America (“U.S.

GAAP”), and applicable rules and regulations of the United States Securities

and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned subsidiary, LucidDx Labs Inc.

All intercompany transactions and balances have been eliminated in consolidation.

Lucid Diagnostics Inc.

(“the Company”)

is a majority-owned consolidated subsidiary of PAVmed Inc., which has a majority equity ownership interest and has financial control

of Lucid Diagnostics Inc.

The Company manages its operations as a single operating segment for the purposes of assessing performance

and making operating decisions.

amounts in the accompanying consolidated financial statements and these notes thereto are presented in thousands of dollars, if not otherwise

noted as being presented in millions of dollars, except for shares and per share amounts.

preparing the unaudited condensed consolidated financial statements in conformity with U.S.

GAAP, management is required to make estimates

and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent losses, as of the date of

the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

estimates in these consolidated financial statements include those related to the estimated fair value of stock-based equity awards and

contingent consideration.

Other significant estimates include the provision or benefit for income taxes and the corresponding

valuation allowance on deferred tax assets.

Additionally, management’s assessment of the Company’s ability to continue as

a going concern involves the estimation of the amount and timing of future cash inflows and outflows.

On an ongoing basis, the Company

evaluates its estimates and assumptions.

The Company bases its estimates on historical experience and on various other assumptions believed

to be reasonable.

Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected

by changes in these estimates.

Consideration

Consideration relates to the potential payment for an acquisition that is contingent upon the achievement of the acquired business meeting

certain milestones.

The Company records contingent consideration at fair value at the date of acquisition based on the consideration

expected to be transferred.

For potential payments related to milestone achievements, the Company estimated the

fair value based on the probability of achievement of such milestones.

The assumptions utilized in the calculation of the acquisition

date fair value include probability of success and the discount rates.

Contingent consideration involves certain assumptions requiring

significant judgment and actual results may differ from assumed and estimated amounts.

Contingent consideration is remeasured each reporting

period, and subsequent changes in fair value, including accretion for the passage of time, are recognized within other income (expense),

net in the Company’s unaudited condensed consolidated statements of operations.

2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Standards Updates

of January 1, 2020, the Company adopted the (amended) guidance of ASC 718, as amended by ASU 2018-07, with respect to the recognition

and measurement of stock-based compensation expense of stock-based awards granted to non-employees, which aligned the accounting

for stock-based payments to nonemployees with the accounting for employees under ASC 718.

The adoption of the amended guidance

of ASC 718 did not have an effect on the Company’s financial statements.

of January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the

Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement.

of ASU 2018-13 did not have an effect on the Company’s financial statements.

of January 1, 2020, the Company adopted the guidance of ASU 2017-11, issued by the FASB in July 2017, Earnings Per Share (Topic 260),

Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) - Part I - Accounting for Certain Financial Instruments

with Down-Round Features, and Part II - Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain

Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.

Principally, ASU 2017-11 amendments

simplify the accounting for certain financial instruments with down-round features.

The amendments require companies to disregard the

down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity

classification.

Companies that provide earnings per share data will adjust their basic earnings per share calculation for the effect

of the down-round feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted

downward because of the down-round feature) and will also recognize the effect of the trigger within equity.

Additionally, ASU 2017-11

also addresses “navigational concerns” within the FASB ASC related to an indefinite deferral available to private companies

with mandatorily redeemable financial instruments and certain noncontrolling interests, which has resulted in the existence of significant

“pending content” in the ASC.

The FASB decided to reclassify the indefinite deferral as a scope exception, which does not

have an accounting effect.

The guidance of ASU 2017-11 is effective for public business entities, as defined in the ASC Master Glossary,

for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

With respect to all other entities,

including the Company under its JOBS Act EGC Accounting Election, as discussed above, the guidance of ASU 2017-11 was effective for fiscal

years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

The adoption of the

ASU 2017-11 guidance as of January 1, 2020 did not have an effect on the Company’s financial statements.

August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and

Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) , (“ASU 2020-06”).

ASU 2020-06 simplifies

the accounting for certain financial instruments with characteristics of liabilities and equity, by eliminating the beneficial conversion

and cash conversion accounting models previously contained in ASC 470-20 that required separate accounting for embedded conversion features.

ASU 2020-06 also simplified the assessment of a financial instruments d settlement to determine whether a contract is an entity’s

own equity qualifies for equity classification by removing certain conditions from ASC 815-4-25.

The ASU 2020-06 amendments are effective

for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal

The Company’s adoption of the ASU 2020-06 guidance as of January 1, 2021 did not have an effect on the Company’s financial

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes:

Simplifying the Accounting for Income Taxes”, (“ASU

The guidance of ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intra-period

allocation, and calculating income taxes in interim periods, and adds revised guidance to reduce complexity in certain areas, including

recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

The Company’s adoption of the

ASU 2019-12 guidance as of January 1, 2021 did not have an effect on the Company’s financial statements.

Accounting Standards Updates

Not Yet Adopted

ASC Topic 842, Leases , (“ASC 842”) (ASU No.

2016-02, Leases , February-2016 - “ASU 2016-02” )

which established a right-of-use (“ROU”) model requiring a lessee to recognize a ROU asset and a lease liability for

all leases with terms greater-than 12 months.

Leases are classified as either finance or operating, with classification affecting the

pattern of expense recognition in the income statement.

The ASC 842 effective date for the Company is December 31, 2022 and for interim quarterly financial statements commencing March 31, 2023.

Accounting Standards Updates Adopted

December 31, 2021, the Company adopted FASB ASC Topic 842, Leases, (“ASC 842”).

ASC 842 established a right-of-use (“ROU”)

model requiring a lessee to recognize a ROU asset and a lease liability for all leases with terms greater-than 12 months.

classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

The Company’s adoption of ASC 842 did not have an effect on the Company’s consolidated financial statements.

3 — Patent License Agreement - Case Western Reserve University

Diagnostics Inc.

entered into a patent license agreement with Case Western Reserve University (“CWRU”), captioned the Amended

and Restated License Agreement, dated August 23, 2021 (“Amended CWRU License Agreement”).

The Amended CWRU License Agreement

is a successor to and replaced in its entirety the previous CWRU License Agreement, dated May 12, 2018.

The Amended CWRU License Agreement

terminates upon the expiration of certain related patents, or on May 12, 2038 in countries where no such patents exist, or upon expiration

of any exclusive marketing rights granted by the FDA or other U.S.

government agency, whichever comes later.

Amended CWRU License Agreement (as did the predecessor CWRU License Agreement) provides for the exclusive worldwide license of the intellectual

property rights for the proprietary technologies of two distinct technology components - the “EsoCheck Cell Collection Device”

referred to as “EsoCheck®”;

and a panel of proprietary methylated DNA biomarkers, a laboratory developed test (“LDT”),

referred to as “EsoGuard®”;

and together are collectively referred to as the “EsoGuard Technology”.

CWRU License Agreement Fee was $ 272,553 , of which $ 50,000 was previously paid in 2018.

On the August 23, 2021 effective date of the Amended

CWRU License Agreement, the remaining balance of $ 222,553 became payable, and such amount was paid in September 2021.

Additionally, also

in September 2021, the Company paid a $ 10,000 amendment fee in connection with the Amended CWRU License Agreement.

Additionally, the

Amended CWRU License Agreement provides for each of patent fees reimbursement payments;

milestone payments;

and royalty payments - each

as discussed below.

Fees Reimbursement

The Company has a patent license

agreement with CWRU which provides for each of patent fees reimbursement payments, milestone payments and royalty payments - each as

discussed below.

For further details of this agreement, see Note 3 of the Company’s Consolidated Financial Statements in the Company’s

Form 10-K for the year ended December 31, 2021.

Diagnostics Inc.

1 unchanged sentence

See Note 5, Related Party Transactions ,

for patent fee reimbursement payments paid to CWRU in the three and nine months ended September 30, 2021 and 2020.

(predecessor) CWRU License Agreement contained milestones, including regulatory milestones with respect to the FDA 501(k) submission

of EsoCheck and the FDA clearance of EsoCheck, respectively regulatory submissions and clearances;

which were achieved in accordance

with the requisite contractual due dates, for which a $ 75,000 research and development expense was recognized and paid with respect to the

achievement of the regulatory milestone related to FDA clearance of EsoCheck.

The CWRU License Agreement was amended effective February

12, 2021, to:

change the achievement date of commercialization milestone from November 2020 to August 2021;

to eliminate the payment

with respect to the commercialization milestone;

and to add a non-refundable $ 100,000 payment to CWRU in consideration for such changes to

the commercialization milestone (“CWRU License Agreement Amendment Fee”), with such fee recognized as general and administrative

expense as of December 31, 2020 and paid in February 2021.

The regulatory milestone related to FDA PMA submission of a licensed product

for patent fee reimbursement payments paid to CWRU in the periods ended March 31, 2022 and 2021.

CWRU License Agreement contained milestones for

research and development expense was recognized

and paid with respect to the achievement of the regulatory milestone related to FDA clearance of EsoCheck.

The CWRU License Agreement

was amended effective February 12, 2021 such that a regulatory milestone related to FDA PMA submission of a licensed product

(“PMA Milestone”) is included in the Amended CWRU License Agreement, and is the sole remaining unachieved milestone, for

which a $ 200,000 milestone payment would be payable to CWRU upon its achievement.

which a $ 200 milestone

payment would be payable to CWRU upon its achievement.

3 — Patent License Agreement - Case Western Reserve University - continued

the Amended CWRU License Agreement.

the Company is required to pay a royalty fee to CWRU with respect to the “Licensed Products”

the Amended CWRU License Agreement, the Company is required to pay a royalty fee to CWRU with respect to the “Licensed Products”

(as defined in the CWRU License Agreement) of a percentage of “Net Sales”, as defined in the Amended CWRU License Agreement,

2 unchanged sentences

subject-to a minimum annual royalty fee.

base minimum annual royalty fee is $ 50,000

commencing January 1 following the first anniversary

of the “First Commercial Sale” of a “Licensed Product” (as such terms are defined in the Amended CWRU License

The minimum annual royalty fee increases to each of:

if the annual “Net Sales” (as defined

in the Amended CWRU License Agreement) exceed $ 25.0

million up to $ 50.0

if annual Net Sales exceed $ 50.0

million up to $ 100.0

and $ 600,000

if annual Net Sales exceed $ 100.0

The Company recognized a 5.0 %

royalty fee payment liability as of September

30, 2021 with respect to the revenue recognized under the EsoGuard Commercialization Agreement, dated August 1, 2021, between Lucid Diagnostics

and Research Dx Inc.

Prior to September 30, 2021, no royalty fee has been incurred under the CWRU license agreements.

Additionally,

the Company is required to pay a royalty fee on (sub-license) “Other Proceeds” (as defined in the Amended CWRU License Agreement)

30 % of sub-license proceeds to extent the sub-license proceeds are realized prior to the first commercial Sale of a Licensed Product;

or 15 % of sub-license proceeds to extent the sub-license proceeds are realized after the first commercial Sale of a Licensed Product.

Agreements with Physician Inventors - Intellectual Property - CWRU License Agreement

Diagnostics Inc.

entered into consulting agreements with each of the three physician inventors of the intellectual property licensed

under the Amended CWRU License Agreement (“Physician Inventors”), with each such consulting agreement providing for compensation

on a contractual rate per hour for consulting services provided, and an expiration date of May 12, 2024, upon each of the respective

the agreements’ renewal effective May 12, 2021.

Additionally, each of the Physician Inventors have been granted stock options and

restricted stock awards under the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan;

and stock options under the PAVmed Inc.

2014 Long-Term Incentive Equity Plan.

See Note 4, Related Party Transactions , with respect to the consulting fee expense

and stock based compensation expense recognized with respect to the Physician Inventors consulting agreements and stock options and restricted

awards discussed above;

and Note 9, Stock-Based Compensation , for information regarding each of the “Lucid Diagnostics

2018 Long-Term Incentive Equity Plan” and the separate “PAVmed Inc.

2014 Long-Term Incentive Equity Plan”.

The Company recorded a royalty expense of $ 10 for the three months ended March 31, 2022

4 — Revenue from Contracts with Customers

is recognized when the satisfaction of the performance obligation occurs, which is when the delivery of product and /or the provision

of service is rendered, and is measured as the amount of estimated consideration expected to be realized.

In the period ended March 31,

2022, the Company recognized revenue under the EsoGuard Commercialization Agreement, dated August 1, 2021, as discussed below.

Commercialization Agreement

Company entered into the EsoGuard Commercialization Agreement, dated August 1, 2021, with its CLIA certified commercial laboratory

service provider, ResearchDX Inc.

(“RDx”), an unrelated third-party.

The EsoGuard Commercialization Agreement initial term

was on a month-to-month basis and was terminated on February 25, 2022 upon the execution of the RDx APA.

See Note 7, Acquisitions

- Asset Purchase Agreement - Research Dx Inc.

, for a further discussion of the RDx APA.

the three months ended March 31, 2022, the Company recognized total revenue of $ 189

under the EsoGuard Commercialization Agreement ,

which represents the minimum fixed monthly fee of

for the period January 1, 2022 to the February

25, 2022 termination date as discussed above.

The monthly fee was deemed to be collectible for such period as RDx has timely

paid the applicable respective monthly fee.

cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement for the period January

1, 2022 to February 25, 2022 totaled $ 369 ,

inclusive of employee related costs of employees engaged in the delivery of the administration to patients of the EsoCheck cell sample

collection procedure, EsoCheck devices and EsoGuard mailers (cell sample shipping costs) distributed to medical practitioners’

locations and the Lucid Test Centers;

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

and royalty fees incurred

under the Amended CWRU License Agreement.

5 — Related Party Transactions

3 unchanged sentences

The expenses incurred with respect to the CWRU License Agreement and the three Physician Inventors, as classified in the accompanying

unaudited condensed consolidated statement of operations for the periods indicated are summarized as follows:

consolidated statement of operations for the periods indicated are summarized as follows:

Schedule of Incurred Expenses of Minority Shareholders

For the three months ended

September 30,

For the nine months ended

September 30,

Three Months Ended March 31,

Cost of Revenue

CWRU – Royalty Fee

Cost of Revenue

General and Administrative Expense

CWRU – License Agreement - Amendment Fee -

Milestone III

Stock-based compensation expense – Physician Inventors’ restricted stock awards

General and Administrative Expense

Research and Development Expense

CWRU License Agreement - reimbursement of patent legal fees

EsoCheck devices provided to CWRU

Fees - Physician Inventors’ consulting agreements

What changed 10-Q

Item 1. Financial Statements