What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-23 · 369 added, 296 removed, 49 unchanged (93% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

are a commercial-stage medical diagnostics technology company focused on the millions of patients with long-standing gastroesophageal

reflux disease (“GERD”) who are at risk of developing esophageal precancer and cancer, specifically highly lethal

esophageal adenocarcinoma (“EAC”), which is expected to lead to approximately 16,000 U.S.

deaths in 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations should be read

together with our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”), as filed with the Securities

and Exchange Commission (the “SEC”).

We are a majority-owned consolidated subsidiary of PAVmed Inc.

the context otherwise requires, references herein to “we”, “us”, and “our”, and to the “Company”

or “Lucid Diagnostics” are to Lucid Diagnostics Inc and its subsidiary LucidDx Labs Inc.

(“LucidDx Labs”).

FORWARD-LOOKING

Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our (unaudited)

condensed consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks

and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-Q, 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 the Form 10-K under the heading “Risk Factors.”

factors that may affect our actual results include:

limited operating history;

financial performance, including our ability to generate revenue;

ability to obtain regulatory approval for the commercialization of our products;

ability of our products to achieve market acceptance;

success in retaining or recruiting, or changes required in, our officers, key employees or

potential ability to obtain additional financing when and if needed;

ability to protect our intellectual property;

ability to complete strategic acquisitions;

ability to manage growth and integrate acquired operations;

potential liquidity and trading of our securities;

and operational risks;

● cybersecurity

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

impact of the material weakness identified by our management;

estimates regarding expenses, future revenue, capital requirements and needs for additional

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.

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-Q and the Form 10-K, and the documents we have filed

as exhibits to this Form 10-Q and the 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.

are a commercial-stage, cancer prevention, medical diagnostics technology company focused on the millions of patients with long-standing

gastroesophageal reflux disease (“GERD”) who are at risk of developing esophageal precancer and cancer, specifically

highly lethal esophageal adenocarcinoma (“EAC”), which is expected to lead to approximately 16,000 U.S.

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

1 unchanged sentence

EAC deaths, through early detection of esophageal precancer in at-risk GERD patients.

is a DNA test performed on surface esophageal cells collected with EsoCheck in a brief noninvasive office procedure which has been

shown to be over 90% sensitive and specific at detecting Barrett’s Esophagus (“BE”), a precancerous condition

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

is a DNA test performed on surface esophageal cells collected with EsoCheck in a brief noninvasive

office procedure which has been shown to be over 90% sensitive and specific at detecting

Barrett’s Esophagus (“BE”), a precancerous condition of the esophagus and

all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova,

Sci Transl Med.

2018 Jan 17;10(424):

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

in a less than five-minute office procedure.

We believe its proprietary Collect+Protect ™ technology makes it the

only noninvasive esophageal cell collection device capable of anatomically targeted and protected sampling to prevent dilution and

contamination during device withdrawal.

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter capable

of sampling surface esophageal cells in a less than five-minute office procedure.

its proprietary Collect+Protect™ technology makes it the only noninvasive esophageal

cell collection device capable of anatomically targeted and protected sampling to prevent

dilution and contamination during device withdrawal.

is commercialized in the U.S.

as a laboratory developed test (“LDT”) performed at our laboratory partner, ResearchDx

Inc., d/b/a PacificDx (“RDx”), located in Irvine, CA.

RDx’s laboratory is certified under the Clinical

Laboratory Improvement Amendments (“CLIA”).

RDx also manufactures our EsoGuard Specimen Kits.

EsoCheck is commercialized

as a 510(k) cleared esophageal cell collection device currently manufactured for us by our contract manufacturing partner,

Sage Product Development Inc., located in Foxborough, MA.

We are in the process of transferring EsoCheck manufacturing to Coastline

International Inc., a high-volume manufacturer headquartered in San Diego, CA with plants in Mexico.

Both EsoGuard and EsoCheck recently

completed the CE Mark certification process.

EsoGuard, used with EsoCheck, was granted FDA Breakthrough Device designation and is the

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

PLA code 0114U secured final Medicare payment determination of $1,938.01, effective January 1, 2021.

as a laboratory developed test (“LDT”).

It was previously performed by our unrelated

third-party commercial clinical laboratory service partner ResearchDx Inc.

(with a d/b/a “Pacific Dx”) (“RDx”),

at their Clinical Laboratory Improvement Amendments (“CLIA”) certified commercial clinical laboratory, located in Irvine,

Beginning in March 2022, the EsoGuard LDT has been performed at our own CLIA-certified commercial clinical laboratory,

located in Lake Forest, CA.

Additionally, RDx also manufactures our EsoGuard Specimen Kits.

EsoCheck is commercialized in the U.S.

a 510(k) cleared esophageal cell collection device currently manufactured for us by our contract manufacturing partner, Sage Product

Development Inc., located in Foxborough, MA.

We are in the process of transferring EsoCheck manufacturing to Coastline International

Inc., a high-volume manufacturer headquartered in San Diego, CA with plants in Mexico.

Both EsoGuard and EsoCheck have completed

the CE Mark certification process.

While EsoGuard and EsoCheck may be marketed separately, they are not presently approved for marketing

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

EsoGuard, used with EsoCheck as an IVD, was granted FDA Breakthrough

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

EsoGuard PLA code 0114U secured final Medicare payment determination of $1,938.01, effective January 1, 2021.

The CLIA certified laboratory

5 unchanged sentences

payment in Europe.

initial EsoGuard commercialization efforts have focused on gastroenterology (“GI”) physicians.

EsoGuard testing has

accelerated as pandemic-related healthcare facility limitations have eased.

We have utilized a hybrid sales model of full-time sales

management supervising senior independent sales representatives and supported by full-time clinical specialists.

We are significantly

expanding our full-time commercial team and currently employ a national director of sales, seven regional business managers, three clinical

specialists and a sales operations manager.

We are contracted with approximately fifty independent sales representatives and are actively

recruiting full-time territory managers in each region to specifically call on either GI or primary care physicians.

are working to expand EsoGuard commercialization across multiple channels by 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 and have recently announced we

have expanded our test centers into Utah, Nevada, and Colorado.

We also are establishing an EsoGuard Telemedicine Program, in partnership

with UpScript, LLC, an independent third-party telemedicine provider, that can accommodate EsoGuard self-referrals from direct-to-consumer

are a majority owned subsidiary of PAVmed Inc.

We are party to an amended and restated patent license agreement

with Case Western Reserve University (“CWRU”), dated August 23, 2021 (“Amended CWRU License Agreement”), which

provides for the exclusive worldwide license of the intellectual property rights for the proprietary technologies underlying EsoCheck

and EsoGuard.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

of the COVID-19 Pandemic

in December 2019, an outbreak of a novel strain of a coronavirus occurred.

The coronavirus spread on a global basis to other countries,

including the United States of America.

On March 11, 2020, the United Nations World Health Organization (“WHO”) declared

a pandemic resulting from the spread of the coronavirus, with such pandemic commonly referred to by its resulting illness, “COVID-19”.

The COVID-19 pandemic is ongoing, and we continue to monitor its continuing impact on the United States national economy, the global

economy, and our business.

are working to expand EsoGuard commercialization across multiple channels by building a direct sales and marketing team targeting

primary care physicians, specialists, institutions and consumers.

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 and have recently expanded our test centers into Utah, Nevada, Colorado, Washington, Oregon and Idaho.

We’ve also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party

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

are a majority owned subsidiary of PAVmed.

We are party to an amended and restated patent license agreement with CWRU, dated August 23,

2021 (“Amended CWRU License Agreement”), which provides for the exclusive worldwide license of the intellectual property

rights for the proprietary technologies underlying EsoCheck and EsoGuard.

Recent Developments

Guideline Update - ACG

April 2022, the American College of Gastroenterology

(“ACG”) updated its clinical guideline to support esophageal precancer (“Barrett’s Esophagus”, “BE”)

screening to prevent highly lethal esophageal cancer (“EAC”) utilizing our EsoGuard® DNA Test on samples collected

with our EsoCheck® Cell Collection Device.

The clinical guideline reiterates the ACG’s long-standing recommendation

for esophageal precancer screening in at-risk patients with gastroesophageal reflux disease (“GERD”), commonly known as chronic

heartburn, acid reflux or simply reflux.

In its Recommendation 5, the ACG suggests a single screening endoscopy in patients with chronic

GERD symptoms and 3 or more additional risk factors for BE, including male sex, age >50 yr, White race, tobacco smoking, obesity,

and family history of BE or EAC in a first-degree relative.

Furthermore, and importantly for the first time, the clinical guideline also

endorses nonendoscopic biomarker screening as an acceptable alternative to costly and invasive endoscopy by stating in its Recommendation

6 that the ACG suggests that a swallowable, nonendoscopic capsule device combined with a biomarker is an acceptable alternative to endoscopy

for screening for BE.

The clinical guideline specifically mentions EsoCheck, along with Lucid’s EsophaCap® device, as such

swallowable, nonendoscopic esophageal cell collection devices, as well as methylated DNA biomarkers such as EsoGuard.

The summary of

evidence for this recommendation cites the seminal NIH-funded multicenter, case-control study published in 2018 in Science Translational

Medicine, which demonstrated that EsoGuard is highly accurate at detecting esophageal precancer and cancer, including on samples collected

with EsoCheck.

Coverage Determination Update - CMS

In April 2022, a proposed

Local Coverage Determination (“LCD”) DL39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia,

Dysplasia, and Neoplasia” was published on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto

The proposed LCD is a further step in Lucid’s efforts to secure Medicare coverage and payment for EsoGuard.

proposed LCD, which the CMS website explicitly characterizes as a “work in progress” for “public review,” outlines

criteria that MolDX expects upper gastrointestinal precancer and cancer molecular diagnostic tests to meet.

These criteria include active

GERD with at least two risk factors, as well as evidence of analytic validity, clinical validity, and clinical utility.

Although it found

that no currently existing test has fulfilled all these criteria, it indicated that it will “monitor the evidence and will provide

coverage based on the pertinent literature and society recommendations.” Notably, the proposed LCD pre-dated, and therefore does

not include consideration of, the most recent ACG clinical guideline update endorsing swallowable, nonendoscopic capsule devices combined

with a biomarker, such as EsoCheck and EsoGuard.

The publication of the proposed LCD included a written comment period that extended

through May 14, 2022.

MolDX held an open meeting on May 10, 2022, during which stakeholders and other interested parties had the opportunity

to address the proposed LCD.

have used the written comment process and the open meeting to bring to MolDX essential information that was not incorporated into the

proposed LCD.

These include:

the updated ACG clinical guideline;

the fact that EsoGuard’s published performance is at or above

accepted performance criteria for detection of lower gastrointestinal cancers in approved and currently effective Medicare coverage determinations;

and data from ongoing clinical utility studies Lucid and clinical investigators are performing.

A final LCD will not be issued until

the MAC has had the opportunity to assess and consider the comments and input from the written comment period and the open meeting.

May 2022 LucidDx Labs, Inc.

entered into a participating provider agreement with MediNcrease Health Plans, LLC (“MediNcrease”).

A national directly-contracted, multi-specialty PPO provider network with over 8 million lives covered through its clients and payers,

which include regional and national health plans, insurance companies, third party administrators, self-insured employer groups, municipalities,

unions and other entities involved in the management of medical claims.

Pursuant to the agreement, persons covered by MediNcrease clients

and payers will have in-network access to Lucid’s EsoGuard® DNA test, the first and only commercially available test capable

of serving as a widespread tool to prevent esophageal cancer deaths through the early detection of esophageal precancer in at-risk chronic

heartburn patients.

The agreement provides rates of reimbursement as a percent of charges for services rendered to such covered persons

by LucidDx Labs, including the performance of the EsoGuard test.

Recent Developments - continued

Business - continued

Lab Acquisition

February 2022, Lucid Diagnostics, Inc.

through its wholly owned subsidiary LucidDx Labs, Inc.

entered into an asset purchase agreement

(“APA”) with ResearchDx, Inc.

(“RDx”) Under the APA, LucidDx Labs acquired certain licenses and other related

assets necessary to operate a CLIA-certified, CAP-accredited clinical laboratory.

The acquired assets, together with certain additional

assets necessary to commence laboratory operations that were separately purchased by LucidDx Labs, will be used by Lucid to perform the

EsoGuard® Esophageal DNA assay.

Intercompany License

April 2022, we entered into an intercompany license between PAVmed and Lucid such that Lucid has been granted the rights to commercialize

EsoCure for treating dysplastic Barrett’s Esophagus, including a royalty arrangement whereby Lucid will pay PAVmed will be obligated

to fund ongoing development costs and cumulative patent expenses.

EsoCure will become part of an integrated suite of Lucid products addressing

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

We have successfully completed a pre-clinical feasibility animal study of EsoCure demonstrating excellent, controlled circumferential

ablation of the esophageal mucosal lining.

We plan to conduct additional development work and animal testing of EsoCure to support a

planned FDA 510(k) submission in the second half of 2022.

Intercompany Assignment

April 2022, following the approval from both the PAVmed and Lucid board of directors, the respective companies entered into an agreement

to transfer 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.

On October 5, 2021, PAVmed Subsidiary Corporation, a wholly-owned

subsidiary of PAVmed Inc., acquired all of the outstanding common stock of CapNostics, LLC (“CapNostics”) for a total (gross)

purchase consideration of approximately $2.1 million of cash, paid at the closing of the transaction.

March 2022, Lucid Diagnostics, Inc.

entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).

Under the terms of the facility, Cantor has committed to purchase up to $50 million of Lucid Diagnostics Inc.

common stock from time

to time at the request of Lucid Diagnostics Inc.

While there are distinct differences, the facility is structured similarly to a traditional

at-the-market equity facility, insofar as it allows Lucid Diagnostics Inc.

to raise primary capital on a periodic basis at prices based

on the existing market price.

of SARS-CoV-2 - COVID-19 Pandemic

in December 2019, there was an outbreak of a novel strain of a coronavirus occurred, with such coronavirus designated by the United Nations

World Health Organization (“WHO”) as the “Severe Acute Respiratory Syndrome Coronavirus 2” - or “SARS-CoV-2”.

The SARS-CoV-2 spread on a global basis to other countries, including the United States.

On March 11, 2020, the WHO declared a pandemic

resulting from SARS-CoV-2, with such pandemic commonly referred to by its resulting illness of coronavirus disease 2019, or “COVID-19”.

The COVID-19 pandemic is ongoing, and we continue to monitor the ongoing impact of the COVID-19 pandemic on the United States national

economy, the global economy, and our business.

COVID-19 pandemic may have an adverse impact on our operations, supply chains, and distribution systems and /or those of our contractors,

of our laboratory partner, and increase our expenses, including as a result of impacts associated with preventive and precautionary measures

being taken, restrictions on travel, quarantine polices, and social distancing.

Such adverse impact may include, for example, the inability

of our employees and/or those of our contractors or laboratory partner to perform their work or curtail their services provided to us.

expect the significance of the COVID-19 pandemic, including the extent of its effect on our financial condition and operational results

and cash flows, to be dictated by the success of United States and global efforts to mitigate the spread of and /or to contain the coronavirus

and the impact of such efforts.

addition, the spread of the coronavirus has disrupted the United States’ healthcare and healthcare regulatory systems which could

divert healthcare resources away from, or materially delay FDA approval with respect to our products.

and increase our expenses, including as a result of impacts associated with preventive and precautionary measures being taken, restrictions

on travel, quarantine polices, and social distancing.

Such adverse impact may include, for example, the inability of our employees and

/or those of our contractors to perform their work or curtail their services provided to us.

expect the significance of the COVID-19 pandemic, including the extent of its effect on our consolidated financial condition and consolidated

operational results and cash flows, to be dictated by the success of United States and global efforts to mitigate the spread of and /or

to contain the SARS-CoV-2 and the impact of such efforts.

addition, the spread of the SARS-CoV-2 has disrupted the United States’ healthcare and healthcare regulatory systems which could

divert healthcare resources away from, or materially delay United States Food and Drug Administration (“FDA”) approval with

respect to our products.

our clinical trials have been and may be further affected by the COVID-19 pandemic, as site initiation and patient enrollment may be

1 unchanged sentence

imposed by governments, and the inability to access clinical test sites for initiation and monitoring.

COVID-19 pandemic may have an adverse impact on the economies and financial markets of many countries, including the United States, resulting

in an economic downturn that could adversely affect demand for our products and services and/or our product candidates.

COVID-19 pandemic may have an adverse impact on the economies and financial markets of many countries, including the USA, resulting in

an economic downturn that could adversely affect demand for our products and services and /or our product candidates.

we are continuing to monitor and assess the effects of the COVID-19 pandemic on our business, the ultimate impact of the COVID-19 pandemic

(or a similar health epidemic) is highly uncertain and subject to change.

Any such effect could have a materially adverse impact

on our consolidated financial condition, consolidated results of operations, and /or consolidated cash flows.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

(or a similar health epidemic) is highly uncertain and subject to change, and therefore, its impact on our consolidated financial condition,

consolidated results of operations, and /or consolidated cash flows, the adverse impact could be material.

of Operations

Revenue is recognized with respect to the EsoGuard Commercialization Agreement,

dated August 1, 2021, between the Company and RDx, CLIA certified commercial laboratory service provider.

The cost of revenue recognized with respect to the revenue recognized under

the EsoGuard Commercialization Agreement is inclusive of:

a royalty fee incurred under the Amended CWRU License Agreement;

(as defined and discussed herein below) allocated to cost of revenue, which is principally employee related costs of PAVmed employees

engaged in the administration to patients of the EsoCheck cell sample collection procedure (principally at the LUCID Test Centers);

EsoCheck devices and EsoGuard mailers (cell sample shipping costs) distributed to medical practitioners locations and the LUCID Test Centers;

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

operations expenses

Commercial operations expenses

consist primarily of the portion of the MSA Fee allocated to commercial operations, which are principally employee related costs of

PAVmed employees engaged in s sales and marketing activities, along with advertising and promotion expenses, and personnel

and fees with respect to third-party payor reimbursement contract negotiation and management.

We anticipate our commercial operations

expenses will increase in the future, as we anticipate an increase in the number of personnel engaged in the introduction and

expansion of our commercial sales and marketing operations as we execute on our business strategy.

was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Company’s majority-owned

subsidiary, Lucid Diagnostics Inc., and ResearchDX Inc.

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

On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon the execution of an Asset Purchase

Agreement between LucidDx Labs Inc., a wholly-owned subsidiary of Lucid Diagnostics Inc.

cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement is inclusive of:

fee incurred under the Amended CWRU License Agreement;

the MSA Fee (as defined and discussed herein below) allocated to cost of revenue,

which is principally employee related costs of PAVmed employees engaged in the administration to patients of the EsoCheck cell sample

collection procedure (principally at the LUCID Test Centers);

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

distributed to medical practitioners locations and the LUCID Test Centers;

and LUCID Test Centers operating expenses, including rent

expense and supplies.

and marketing expenses

and marketing expenses consist primarily of the portion of the MSA Fee allocated to sales and marketing expenses, which are principally

employee related costs of PAVmed employees, as well as advertising and promotion expenses.

We anticipate our sales and marketing expenses

will increase in the future, as we anticipate an increase in payroll and related expenses related to the roll-out of our commercial sales

and marketing operations as we execute on our business strategy.

and administrative expenses

General and administrative expenses consist primarily

of professional fees, accounting and legal services, consultants and expenses associated with obtaining and maintaining patents within

our intellectual property portfolio, along with the portion of the MSA Fee allocated to general and administrative expenses.

We anticipate our general and administrative

expenses will increase in the future, as we anticipate an increase in the MSA Fee allocated to general and administrative

expense, related to continued expansion of our overall business operations.

We also anticipate expenses related to being a public company,

including professional services fees for legal, accounting, tax, audit and regulatory services associated with maintaining compliance

as a public company, along with insurance premiums, investor relations, and other corporate expenses.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations - continued

and administrative expenses consist primarily of professional fees, accounting and legal services, consultants and expenses associated

with obtaining and maintaining patents within our intellectual property portfolio, along with the portion of the MSA Fee allocated to

general and administrative expenses.

anticipate our general and administrative expenses will increase in the future, as we anticipate an increase in the MSA Fee allocated

to general and administrative expense, related to continued expansion of our overall business operations.

We also anticipate expenses

related to being a public company, including professional services fees for legal, accounting, tax, audit, employees involved in third-party

payor reimbursement contract negotiations and regulatory services associated with maintaining compliance as a public company, along with

insurance premiums, investor relations, and other corporate expenses.

Results of Operations - continued

Overview - continued

and Development Expenses

1 unchanged sentence

for the development of our technologies and conducting clinical trials, including:

costs charged to us by various external contract research organizations we contract with to conduct preclinical studies and engineering

costs charged to us by various external contract research organizations we contract with

to conduct preclinical studies and engineering studies;

associated with regulatory filings;

8 unchanged sentences

improvements or extending the utility of the lead products in our pipeline, including EsoCheck and EsoGuard.

Interest expense recognized

is with respect to a Senior Unsecured Promissory Note, dated June 1, 2021, with a face value principal of $22.4 million, an annual interest

rate of 7.875%, and a contractual maturity date of May 18, 2028, issued by us to PAVmed.

The Senior Unsecured Promissory Note

replaced the $22.4 million aggregate outstanding and payable balance of the Due To:

PAVmed Inc., as of June 1, 2021.

The Senior Unsecured

Promissory Note provided for the partial or full repayment of the face value principal and accrued but unpaid interest thereon by the

issue of shares of our common stock, at the election of PAVmed Inc., at a conversion price of $1.42 per share of Lucid Diagnostics

common stock.

Subsequent to September 30,

2021, on October 13, 2021, we issued 15,803,200 shares of our common stock to PAVmed upon the election by PAVmed to convert

the $22.4 million face value principal under the terms of a Senior Unsecured Promissory Note, dated June 1, 2021.

See our accompanying unaudited

condensed financial statements Note 5, Due To:

, for a discussion of the Senior Unsecured Promissory Note dated

June 1, 2021 issued by us to PAVmed.

Authorized Shares Increase

and Stock-Split - October 6, 2021

Subsequent to September 30,

2021, effective October 6, 2021, our 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.

The number of shares of our common stock and the stock options and restricted

stock awards granted under the Lucid Diagnostics Inc.

2018 Equity Plan, and the corresponding stock option exercise price per share;

the fair value per share of the stock options and restricted stock awards;

and the Senior Unsecured Promissory Note conversion price

per share, for all periods presented, as applicable, have been adjusted for such common stock split.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations - continued

Services Agreement (MSA)

We are a majority-owned

subsidiary of PAVmed, which has a majority equity ownership interest and has financial control of Lucid Diagnostics.

Our daily operations

are managed by personnel employed by PAVmed, for which we incur a service fee (the “MSA Fee”), according

to the provisions of a Management Services Agreement (“MSA”) with PAVmed.

The MSA Fee is charged on a quarterly basis and

is subject-to periodic adjustment corresponding with changes in the number of PAVmed.

employees providing services to us, with

the change in the MSA Fee approved by each of the Lucid Diagnostics and PAVmeds board of directors.

The MSA does not have a termination

date, but may be terminated by the Lucid Diagnostics board of directors.

The classification of the MSA Fee

between cost-of-revenue, commercial operations, general and administrative expense, and research and development expense is based on the

PAVmed quarterly classification of employee salary expense.

In this regard, PAVmed classifies employee salary expense as cost-of-revenue

for employees engaged in service delivery under the EsoGuard Commercialization Agreement, and commercial operations for employees performing

sales, marketing, and reimbursement activities and functions, general and administrative, and research and development except for those

employees who are engaged in product and services engineering development and design and /or clinical trials activities, for which such

employee salary is classified as research and development expense.

See our accompanying unaudited

condensed financial statements Note 4, Related Party Transactions - PAVmed Inc.

- Management Services Agreement , for a discussion

of the MSA between Lucid Diagnostics and PAVmed.

Presentation of Dollar Amounts

All dollar amounts in this Management’s

Discussion and Analysis of Financial Condition and Results of Operations are presented in whole dollars, if not otherwise indicated as

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

months ended September 30, 2021 versus September 30, 2020

the three months ended September 30, 2021, revenue was $0.2 million as compared to no revenue in the corresponding period in the prior

The $0.2 million increase principally relates to our EsoGuard Commercialization Agreement, dated August 1, 2021, with RDx (the

EsoGuard Commercialization Agreement”) which resulted in revenue recognition of $0.1 million per month in each of August and

September 2021.

the three months ended September 30, 2021, cost of revenue was approximately $0.1 million as compared to no cost of revenue for the corresponding

period in the prior year.

The $0.1 million increase principally relates to costs associated with our commercialization agreement that

started in August 2021.

operations expenses

the three months ended September 30, 2021, commercial operations costs were approximately $1.0 million as compared to $0.3 million for

the corresponding period in the prior year, with the $0.7 million increase principally resulting from:

approximately

$0.4 million increase with respect to increased commercial operations, including advertising and marketing expenditures;

approximately

$0.1 million of higher stock-based compensation with respect to stock options and restricted stock awards granted to employees of

PAVmed members of the board of directors of Lucid Diagnostics, and the three physician inventors of the intellectual property

licensed under the Amended CWRU License Agreement (the “Physician Inventors”);

approximately

$0.2 million increase in the MSA Fee allocated to commercial operations expenses resulting from increased commercial operations personnel

in sales and payor reimbursement management.

and administrative expenses

the three months ended September 30, 2021, general and administrative costs were approximately $3.4 million as compared to $0.5 million

for the corresponding period in the prior year, with the $2.9 million increase principally related to:

approximately

$1.1 million increase in professional services fees for legal, accounting, and audit services;

approximately

$1.8 million of higher stock-based compensation with respect to stock options and restricted stock awards granted to employees of

PAVmed members of the board of directors of Lucid Diagnostics, and the Physician Inventors.

and development expenses

the three months ended September 30, 2021, research and development costs were approximately $2.2 million, compared to $1.2 million for

the corresponding period in the prior year, with the $1.0 million increase principally related to:

approximately

$0.9 million increase with respect to the EsoGuard clinical trial and EsoCheck development costs and consulting fees;

approximately

$0.1 million increase in the MSA Fee allocated to research and development expense, resulting from higher expenses associated with

increased clinical trial personnel.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

of the nine months ended September 30, 2021 and 2020

the nine months ended September 30, 2021, revenue was $0.2 million as compared to no revenue in the corresponding period in the

Discussion and Analysis of Financial Condition and Results of Operations are presented in thousands of dollars, if not otherwise indicated

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

Months ended March 31, 2022 as

compared to three months ended March 31, 2021

the three months ended March 31, 2022, revenue was $0.2 million as compared to no revenue in the corresponding period in the prior

The $0.2 million increase principally relates to our EsoGuard Commercialization Agreement, dated August 1, 2021, which resulted

in revenue recognition of $0.1 million per month in each of August and September 2021.

the nine months ended September 30, 2021, cost of revenue was approximately $0.1 million as compared to no cost of revenue for

the corresponding period in the prior year.

The $0.1 million increase principally relates to costs associated with the EsoGuard

Commercialization Agreement which commenced in August 2021.

operations expenses

the nine months ended September 30, 2021, commercial operations costs were approximately $2.7 million as compared to $0.7 million for

the corresponding period in the prior year, with the $2.0 million increase principally resulting from:

in revenue recognition of $0.1 million per month beginning August 2021 - through the February 25, 2022 termination date of such agreement.

the three months ended March 31, 2022, cost of revenue was approximately $0.4 million, compared to no cost of revenue in the corresponding

period in the prior year.

The $0.4 million increase principally relates to costs associated with the EsoGuard Commercialization Agreement

and marketing expenses

the three months ended March 31, 2022, sales and marketing costs were approximately $3.3 million, compared to $0.7 million

for the corresponding period in the prior year.

The net increase of $2.6 million was principally related to:

● approximately

$1.1 million in increased commercial operations, including advertising and marketing expenditures;

$2.2 million increase in compensation related costs, including stock-based compensation

of approximately $0.4 million in stock based compensation with respect to restricted stock awards (“RSA”) grants under the Lucid Diagnostics Inc.

2018 Long-Term

Incentive Equity Plan (“Lucid Diagnostics Inc.

2018 Equity Plan”) to Lucid Diagnostics and PAVmed

employees and non-employees, and an increase in stock options granted corresponding with

the increase in the number of employees principally related to an increase in headcount;

● approximately

$0.2 million in travel related expenses;

$0.5 million increase in outside professional services related to EsoCheck, EsoGuard

and consulting and professional services fees.

● approximately

$0.7 million increase in the MSA Fee allocated to general and administrative expense, resulting from higher expenses associated with

increased commercial operations personnel in sales and payor reimbursement management.

$0.1 million decrease in the MSA fee allocation from PAVmed related to the

growth and expansion of Lucid’s business and the services incurred through PAVmed.

and administrative expenses

the nine months ended September 30, 2021, general and administrative expenses were approximately $7.7 million as compared to $1.3 million

for the nine months ended September 30, 2020, with the increase of $6.4 million principally related to:

the three months ended March 31, 2022, general and administrative costs were approximately $5.7 million, compared to $1.2

million for the corresponding period in the prior year.

The net increase of $4.5 million was principally related to:

● approximately

$1.8 million in in professional services fees for legal, accounting, and audit services;

$1.6 million increase in compensation related costs, including stock-based compensation

of approximately $1.4 million in stock based compensation with respect to

RSA grants under the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan (“Lucid

Diagnostics Inc.

2018 Equity Plan”) to Lucid Diagnostics and PAVmed employees

and non-employees, and an increase in stock options granted corresponding with the increase

in the number of employees principally related to an increase in headcount;

● approximately

$4.2 million of higher stock-based compensation with respect to stock options and restricted stock awards granted to employees of

PAVmed Inc., members of the board of directors of Lucid Diagnostics, and the Physician Inventors;

$2.5 million in consulting services related to patents, regulatory compliance, legal

processes for contract review, transition of public relations and investor relations

firms, and public company expenses;

● approximately

$0.4 million increase in the MSA Fee allocated to general and administrative expense, resulting from higher expenses associated with

increased commercial operations personnel in sales and payor reimbursement management.

$0.4 million increase in the MSA fees, after allocation, from PAVmed related to the

growth and expansion of our business and the services incurred through PAVmed.

Three Months ended March 31, 2022 as compared to three months ended

March 31, 2021 - continued

and development expenses

the nine months ended September 30, 2021, general and administrative expenses were approximately $5.8 million as compared to $3.6 million

for the nine months ended September 30, 2020, with the $2.2 million increase principally related to:

the three months ended March 31, 2022, research and development costs were approximately $2.9 million, compared to $1.8

million for the corresponding period in the prior year.

The net increase of $1.1 million was principally related to:

● approximately

$1.9 million increase with respect to the EsoGuard clinical trial and EsoCheck development costs and consulting fees;

$0.8 million increase in development costs, particularly in clinical trial activities

and outside professional and consulting fees with respect to EsoCheck, EsoCure and EsoGuard;

● approximately

$0.3 million increase in the MSA Fee allocated to research and development expense resulting from higher research and development

expenses associated with increased personnel.

See our unaudited condensed

financial statements as of and for the three-month and nine-month periods years ended September 30, 2021 and 2020 for each of:

Related Party Transactions - PAVmed Inc.

, for a discussion of the consulting fee expense and stock based compensation expense

recognized with respect to the Physician Inventors consulting agreements and stock options and restricted awards;

and the MSA between

Lucid Diagnostics and PAVmed;

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

2018 Long-Term Incentive Equity Plan and the PAVmed 2014 Long-Term Incentive Equity Plan.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

$0.1 million increase in compensation related costs and related to expanded clinical

and engineering staff;

● approximately

$0.2 million increase in the MSA fee allocation from PAVmed related to the growth

and expansion of Lucid’s business and the services incurred through PAVmed.

our accompanying unaudited condensed consolidated financial statements for each of:

Note 5 , Related Party Transactions,

for a discussion of the consulting fee expense and stock based compensation expense recognized with respect to the Physician

Inventors consulting agreements and stock options and restricted stock awards;

and the MSA between Lucid Diagnostics and PAVmed;

and Note 11 , Stock-Based Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan

and the PAVmed Inc.

2014 Equity Plan.

and Capital Resources

& Senior Unsecured Promissory Note Issued to PAVmed Inc.

Since inception, our operations

have been funded by PAVmed providing working capital cash advances and the payment by PAVmed of certain operating expenses on-our-behalf.

Additionally, our daily operations are managed by personnel employed by PAVmed, for which we incur a MSA Fee expense according to the

provisions of the MSA discussed above.

As of September 30, 2021, we had

payment obligation liability of an aggregate of approximately $24.2 million, comprised of:

$22.4 million Senior

Unsecured Promissory Note, as discussed below;

approximately $0.6 million of interest expense payable with respect to the Senior Unsecured

Promissory Note;

and approximately $1.2 million of MSA Fee payable.

Subsequent to September 30, 2021,

on October 13, 2021, we issued 15,803,200 shares of our common stock to PAVmed upon the election by PAVmed Inc.

the $22.4 million face value principal under the terms of a Senior Unsecured Promissory Note.

The Senior Unsecured Promissory

Note was issued by us to PAVmed with a face value principal of $22,400,000, an annual interest rate of 7.875%, and a maturity

date of May 18, 2028.

The Senior Unsecured Promissory Note replaced the $22.4 million aggregate outstanding and payable balance of the

PAVmed Inc., as of June 1, 2021.

The Senior Unsecured Promissory

Note provided for the partial or full repayment of the face value principal and accrued but unpaid interest thereon by the issue of shares

of our common stock, at the election of PAVmed, at a conversion price of $1.42 per share of our common stock.

See our accompanying unaudited

condensed financial statements Note 5, Due To:

, for a discussion of the Senior Unsecured Promissory Note dated

June 1, 2021 issued by us to PAVmed and for amounts payable to PAVmed by us as of September 30, 2021.

Lucid Diagnostics Inc.

Public Offering - October 18, 2021

Subsequent to September 30, 2021,

on October 18, 2021, we completed an initial public offering (“IPO”) of our common stock under an effective

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

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

with such total shares inclusive of 571,428 shares issued to PAVmed, 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 us.

Upon the consummation of the IPO, there were a total

of 34,917,907 shares of common stock of our issued and outstanding, of which 27,927,190 were held by PAVmed, 4,428,572 shares

were held by other IPO investors, and the remaining shares held by each of the initial investors in Lucid Diagnostics, as discussed in

our accompanying unaudited condensed financial statements Note 10, Stockholders’ Equity.

We are subject to all of the

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

the commercialization of their initial product and services and ongoing research and development activities and conducting clinical trials.

We expect to continue to experience recurring losses from operations and we will continue to fund our operations with debt and/or equity

financing transactions.

Notwithstanding, however, with the cash on-hand as of the date hereof, of which is inclusive of the cash proceeds

resulting from the as a result of our IPO, we expect to be able to fund its future operations for one year from the date of the issue

of our unaudited condensed financial statements, as included herein in this Quarterly Report on Form 10-Q for the period ended September

Management’s Discussion and Analysis

of Financial Condition and Results of Operations - continued

Accounting Policies

have financed our operations principally through advances from PAVmed and through the issuance of common stock in our initial public

offering (“IPO”).

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

that devote substantially all of their efforts to the commercialization of their initial product and services and ongoing R&D activities

and clinical trials.

We expect to continue to experience recurring losses from operations, and will continue to fund our operations with

debt and/or equity financing transactions.

Notwithstanding, however, with the cash on-hand as of March 31, 2022, we expect to be able

to fund our future operations for one year from the date of the issue of our unaudited condensed consolidated financial statements, as

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

our inception in May 2018 through our IPO in October 2021, our operations were been funded by PAVmed providing

working capital cash advances and the payment by PAVmed of certain operating expenses on-our-behalf.

Additionally, our daily operations

have been and continue to be principally managed by personnel employed by PAVmed, for which we incur a MSA Fee expense according

to the provisions of the MSA discussed above.

of March 31, 2022, we had a Due To:

payment obligation liability of an aggregate of approximately $1.8 million payable

to reimburse for employee related costs and certain operating expenses paid by PAVmed Inc.

on our behalf.

See our accompanying

unaudited condensed consolidated financial statements Note 6, Due To PAVmed Inc.

Diagnostics Inc.

Committed Equity Facility

March 2022, we entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).

terms of the facility, Cantor has committed to purchase up to $50 million in our shares of our common stock from time to time at our

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

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

the initial satisfaction of the conditions to Cantor’s obligation to purchase shares under the facility, including that a registration

statement registering the resale by Cantor of the Shares under the Securities Act is declared effective by the SEC and a final prospectus

relating thereto is filed with the SEC, we will have the right, but not the obligation, from time to time at our sole discretion until

the first day of the month next following the expiration of the 36-month period after the effective date of the registration statement,

to direct Cantor to purchase shares in accordance with the terms of the facility, by delivering written notice to Cantor prior to the

commencement of trading on any trading day, subject to certain maximum amounts.

The purchase price of the shares will be 96% of the volume

weighted average price of the shares of common stock during the trading date on which we have timely delivered written notice to Cantor

directing it to purchase shares under the facility.

will not sell, and Cantor will not purchase, any shares pursuant to the facility, if the aggregate number of shares of common stock issued

pursuant to the facility would exceed 7,482,763 shares of common stock, unless we obtain approval of our stockholders for the sale of

shares in excess of such amount.

In addition, we will not sell, and Cantor will not purchase, any shares pursuant to the facility, which,

when aggregated with all other shares of common stock then beneficially owned by Cantor and its affiliates, would result in the beneficial

ownership by Cantor and its affiliates of more than 4.99% of our outstanding voting power or shares of common stock.

connection with the execution of the agreement for the facility, we agreed to pay Cantor $1.0 million as consideration for its irrevocable

commitment to purchase the shares upon the terms and subject to the satisfaction of the conditions set forth in such agreement.

pursuant to the agreement, e agreed to reimburse Cantor for certain of its expenses.

We also entered into a registration rights agreement

We have the right to terminate the agreement at any time after initial satisfaction of the conditions to Cantor’s

obligation to purchase shares under the facility, at no cost or penalty, upon three trading days’ prior written notice.

Accounting Policies and Significant Judgments and Estimates

discussion and analysis of our (unaudited) financial condition and consolidated results of operations is based on our unaudited condensed

financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America

The preparation of these unaudited condensed financial statements requires us to make estimates and assumptions

affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of contingent assets and liabilities at

the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the corresponding periods.

consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United

States of America (“U.S.

The preparation of these unaudited condensed consolidated financial statements requires

us to make estimates and assumptions affecting the reported amounts of assets, liabilities, and equity, along with the disclosure of

contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of

expenses during the corresponding periods.

In accordance with U.S.

GAAP, we base our estimates on historical experience and on various other assumptions we believe are reasonable

under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

Please see Note 2,

Summary of Significant Accounting Policies and Recent Accounting Standards Updates , of our unaudited condensed consolidated financial

statements included herein in this Form 10-Q, for a summary of significant accounting policies.

GAAP, we base our estimates on historical experience and on various

other assumptions we believe are reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions

or conditions.

Please see Note 2, Summary of Significant Accounting Policies and Recent Accounting Standards Updates , of our unaudited

condensed consolidated financial statements included herein in this Form 10-Q, for a summary of significant accounting policies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis