What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-14 compared with 2022-04-06 · 425 added, 381 removed, 112 unchanged (88% of the section changed)

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

The following discussion

and analysis of our consolidated financial condition and results of operations should be read together with our consolidated financial

statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

Some of the information contained in this discussion

and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy

for our business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together

with the “Forward-Looking Statements” and “Risk Factors” sections of this Annual Report on Form 10-K for a discussion

of important factors which could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

Unless the context otherwise requires, references herein to “we”,

“us”, and “our”, and to the “Company” or “Lucid” are to Lucid Diagnostics Inc.

subsidiaries.

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

risk of developing esophageal precancer and cancer, specifically highly lethal EAC, which is expected to lead to approximately 16,000

deaths in 2021.

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

Device, constitute the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent

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

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.

following discussion and analysis of our consolidated financial condition and results of operations should be read together with our

consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

Some of the information contained

in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our

plans and strategy for our business and related financing, includes forward-looking statements involving risks and uncertainties and

should be read together with the “Forward-Looking Statements” and “Risk Factors” sections of this Annual Report

on Form 10-K for a discussion of important factors which could cause actual results to differ materially from the results described in

or implied by the forward-looking statements contained in the following discussion and analysis.

Unless the context otherwise requires,

references herein to “we”, “us”, and “our”, and to the “Company” or “Lucid”

are to Lucid Diagnostics Inc.

and its subsidiaries LucidDx Labs Inc.

(“LucidDx Labs”) and CapNostics, LLC (“CapNostics”).

Diagnostics Inc.

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

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

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

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

its subsidiaries.

believe that our flagship product, the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell

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

tool to prevent esophageal adenocarcinoma (“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal

reflux disease (“GERD,” also commonly known as chronic heartburn, acid reflux or simply reflux) patients.

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

quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1).

The assay was evaluated in a 408-patient multicenter

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

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

Sci Transl Med.

2018 Jan 17;10(424):

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 commercialized in the U.S.

as a laboratory developed test (“LDT”) previously performed previously at 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, CA.

Starting March 2022, the EsoGuard LDT is performed at our 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.

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.

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

certified laboratory where the EsoGuard assay is performed has begun to submit claims and receive out-of-network private insurance

We are awaiting Medicare local coverage determination.

We are also aggressively pursuing EsoGuard U.S.

private payor

payment and coverage as well as 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.

We 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 marketing.

We are a majority owned subsidiary

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.

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

(UN) 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 of America (“USA” “U.S.”

or “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 “COVID-19” (“coronavirus disease-2019”), and is referred to herein as

the “COVID-19 pandemic”.

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,

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

delayed, for example, due to prioritization of hospital resources toward the virus and /or illness response, as well as travel restrictions

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 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, and therefore, its impact on our consolidated financial condition,

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

EsoGuard is commercially available in the U.S.

as a Laboratory Developed Test (LDT) performed at our

CLIA-certified laboratory.

Cell samples, including those collected with EsoCheck, as discussed below, are sent to our laboratory, for

testing and analyses using our proprietary EsoGuard NGS DNA assay.

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

in a less than five-minute office.

It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from

which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells.

When vacuum suction is applied, the

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

region during device withdrawal.

We believe this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal

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

and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”).

EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly screening test for the early detection of adenocarcinoma

of the esophagus (“EAC”) and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors

to EAC in patients with chronic gastroesophageal reflux (“GERD”).

of Clinical Trials

are currently seeking to accelerate our collection of clinical utility data through a range of trials that can be efficiently executed.

These efforts include a planned investigator-initiated, retrospective analysis of prospectively collected data on the approximately 400

San Antonio fire fighters who underwent testing as part of a community-sponsored cancer awareness event (in

respect of which we expect to publish results in the first half of 2023) ;

an ongoing investigator-initiated, retrospective, single-center,

study with 500 patients (in respect of which we expect to publish results mid-2023), a virtual-patient randomized controlled trial with

intended recruitment of 100-200 physician participants (in respect of which we expect to publish

results this year) ;

a Lucid-sponsored multi-center, prospective, observational study with 500 patients;

and a Lucid-sponsored

registry at existing Lucid Test Centers, whereby all patients undergoing EsoCheck testing will be given the opportunity to provide informed

consent and contribute data about their risk factors, EsoGuard results, and subsequent diagnostic and/or therapeutic journey.

Both Lucid-sponsored

observational/registry studies expect to have preliminary results and/or interim analysis before the end of 2023.

previously disclosed, consequently, we have decided to delay for the time being the two previously commenced clinical trials, the “EsoGuard

screening study” (“BE-1”) and the “EsoGuard case-control study” (“BE-2”), as we are devoting

our clinical resources to the studies cited above, which we expect will more efficiently generate the clinical data we are currently

prioritzing to drive EsoGuard commercialization.

Labs Laboratory Operations Update

February 14, 2023, we and our subsidiary, LucidDx Labs Inc., entered into an agreement (the “MSA Termination Agreement ”)

with RDx, pursuant to which the parties mutually agreed to terminate the MSA-RDx without cause.

The termination was effective as February

Until the termination of the MSA-RDx, RDx had continued to provide certain testing and related services for the Laboratory

in accordance with the terms of the MSA-RDx.

Recently, however, we accelerated the development of internal resources necessary to operate

the Laboratory entirely on its own.

Accordingly, we believe that termination of the MSA-RDx will improve the efficiency of the performance

of the EsoGuard assay.

other things, the MSA Termination Agreement reduces the remaining amounts of the earnout payments and management fees due under the APA-RDx

and the MSA-RDx to $725,000 (from the $3,450,000 that would otherwise have been payable under the APA and MSA if the MSA had remained

in effect through the balance of its stated term), resulting in a net savings to us of $2,725,000.

The payment was satisfied through

the issuance of 553,436 shares of Lucid Diagnostics’ common stock on February 25, 2023.

we were not required to make any cash payments

in connection with the termination.

#CheckYourFoodTube

January 2023, we successfully completed our first #CheckYourFoodTube Precancer Testing Event, in partnership with Rachelle Hamblin, M.D.,

M.P.H., and the San Antonio Fire Department (SAFD), to detect esophageal precancer in at-risk members of the department.

The SAFD testing

event was held over two weekends in January, which has been designated as Firefighter Cancer Awareness Month by the International Association

of Fire Fighters (IAFF).

A total of 391 members, nearly one-quarter of the department, who were deemed by Dr.

Hamblin to be at-risk for

esophageal precancer, underwent a brief, on-site, noninvasive cell collection procedure, performed by our clinical personnel using EsoCheck.

Firefighters with suspected esophageal precancer based on a positive EsoGuard result were identified, including some less than forty

years of age, and will undergo appropriate monitoring and treatment, as indicated by clinical practice guidelines, to prevent progression

to esophageal cancer.

These events, which we look to expand across the country, are an extension of our expanding satellite Lucid Test

Center (sLTC) program, which brings our precancer testing directly to patients—at their physician’s office and now at large

testing day events.

We demonstrated that our nurse practitioners can each perform up to fifty EsoCheck procedures in a day, and our laboratory

team handled over two hundred incoming samples in a day, while maintaining turnaround times at target.

These successes provide an excellent

foundation for future testing events as we continue to drive EsoGuard commercialization using all the tools at our disposal.

and Benefit Expense Reimbursement Agreement

November 30, 2022, PAVmed and we entered into a payroll and benefit expense reimbursement agreement (the “PBERA”).

Historically,

PAVmed has paid for certain payroll and benefit-related expenses in respect of our personnel on our behalf, and we have reimbursed PAVmed

for the same.

Pursuant to the PBERA, PAVmed will continue to pay such expenses, and we will continue to reimburse PAVmed for the same.

The PBERA now provides that the expenses will be reimbursed on a quarterly basis or at such other frequency as the parties may determine,

in cash or, subject to approval by PAVmed’s and our boards of directors, in shares of our common stock, with such shares valued

at the volume weighted average price of such stock during the final ten trading days preceding the later of the two dates on which such

stock issuance is approved by PAVmed’s and our boards of directors (subject to a floor price of $0.40 per share), or in a combination

of cash and shares.

However, in no event shall we issue any shares of our common stock to PAVmed in satisfaction of all or any portion

of the expenses if the issuance of such shares of our common stock would exceed the maximum number of shares of common stock that we

may issue under the rules or regulations of The Nasdaq Stock Market LLC (“Nasdaq”), unless we obtain the approval of our

stockholders as required by the applicable rules of the Nasdaq for issuances of shares of our common stock in excess of such amount.

Series A Preferred Stock Offering

On March 7, 2023, we

entered into subscription agreements for the sale of 13,625 shares of Series A preferred stock (the “ Series A Preferred

Each share of the Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.

terms of the Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to

20% of the number of shares into which such Series A Preferred Stock is convertible, payable on the one-year and two-year

anniversary of the issuance date.

The Series A Preferred Stock is a non-voting security, other than with respect to limited matters

related to changes in terms of the Series A Preferred Stock.

The aggregate gross proceeds from the sale of shares in such offering

were $13.625 million.

Private Placement - Securities Purchase Agreement

Effective as of March 13, 2023,

we entered into a Securities Purchase Agreement (“SPA”) with an accredited institutional investor (“Investor”,

“Lender”, and /or “Holder”), pursuant to which we agreed to sell, and the Investor agreed to purchase a Senior

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

issuance of the March 2023 Senior Convertible Note is subject to customary closing conditions.

The March 2023 Senior Secured Convertible Note would have a 7.875% annual

stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common stock (subject to standard adjustments

in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual

maturity date of the two-year anniversary of the date of issuance.

The March 2023 Senior Convertible Note would be convertible into or

otherwise paid in shares of the Company’s common stock.

Under the March 2023

Senior Convertible Note, the Company would be subject to certain customary affirmative and negative covenants regarding the

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

in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions

with affiliates, among other customary matters.

Under the March 2023 Senior Convertible Note, the Company would also be subject to

financial covenants requiring that (i) the amount of our available cash equal or exceed $5.0 million at all times, (ii) the ratio of

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

late charges to (b) the Company’s average market capitalization over the prior ten trading days, not exceed 30%, and (iii)

that the Company’s market capitalization shall at no time be less than an amount to be agreed upon.

Committed Equity Facility and ATM Facility

In March 2022, we 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 our common stock from time to time upon our request.

While there are distinct differences, the facility

is structured similarly to a traditional at-the-market equity facility, insofar as it allows us to raise primary capital on a periodic

basis at prices based on the existing market price.

Through December 31, 2022, 680,263 shares of our common stock were issued under this

facility for total proceeds of $1.8 million.

In November 2022, Lucid Diagnostics also entered into an “at-the-market

offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between

Lucid Diagnostics and Cantor Fitzgerald & Co.

In the year ended December 31, 2022, there were no Lucid Diagnostics shares sold through

their at-the-market equity facility.

Subsequent to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through

its at-the-market equity facility for approximately $0.3 million.

of Operations

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”), CLIA certified commercial laboratory service provider.

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

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

Additionally, revenue was recognized with respect to the EsoGuard

Commercialization Agreement, dated August 1, 2021, between the Company and 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

the Company’s wholly-owned subsidiary of LucidDx Labs Inc.

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

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

We incur expenses for tests

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

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

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

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

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

8 unchanged sentences

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 marketing expenses consist primarily of salaries and related costs for employees engaged in sales and marketing activities, as well

as the portion of the MSA Fee allocated to sales and marketing expenses, which are principally employee related costs of PAVmed employees

who are performing services for the Company.

We anticipate our sales and marketing expenses will increase in the future, as we anticipate

an increase in payroll and related expenses related to our commercial sales and marketing operations as we execute on our business strategy.

and administrative expenses

2 unchanged sentences

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.

anticipate our general and administrative expenses will increase in the future related to continued expansion of our overall business

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.

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 clinical and preclinical studies and engineering design and development;

associated with regulatory filings;

4 unchanged sentences

Fee allocated to research and development, as such MSA Fee are discussed below.

plan to incur research and development expenses for the foreseeable future as we continue

the development of our existing products as well as new innovations.

Our research and development

activities are focused principally on obtaining FDA approvals and developing product improvements

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

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.

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.

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.

our accompanying consolidated financial statements Note 6, Due To PAVmed Inc.

, for a discussion of the Senior Unsecured Promissory

Note dated June 1, 2021 issued by us to PAVmed.

Shares Increase and Stock-Split - October 6, 2021

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.

Services Agreement (MSA)

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

daily operations are managed by personnel employed by PAVmed, for which we incur the MSA Fee, according to the provisions of the

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 PAVmed’s

board of directors.

The MSA does not have a termination date, but may be terminated by the Lucid Diagnostics board of directors.

classification of the MSA Fee between cost-of-revenue, sales and marketing expense, 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 sales and marketing expenses 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.

our accompanying unaudited condensed financial statements Note 5 , Related Party Transactions - PAVmed Inc.

- Management Services

Agreement , for a discussion of the MSA between Lucid Diagnostics and PAVmed.

plan to incur research and development expenses for the foreseeable future as we continue the development of our existing products as

well as new innovations.

Our research and development activities, including our clinical trials, are focused principally on obtaining

FDA approvals, facilitating insurer reimbursement, encouraging physician adoption and developing product improvements or extending the

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

of Operations - continued

of Dollar Amounts

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.

ended December 31, 2021 versus December 31, 2020

the year ended December 31, 2021, revenue was $0.5 million as compared to no revenue in the corresponding period in the prior year.

$0.5 million increase principally relates to our EsoGuard Commercialization Agreement, dated August 1, 2021, which resulted in revenue

recognition of $0.1 million per month beginning August 2021.

the year ended December 31, 2021, cost of revenue was approximately $0.6 million, compared to no cost of revenue in the corresponding

period in the prior year.

The $0.6 million increase principally relates to costs associated with our commercialization agreement that

started in August 2021.

dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars

in millions, except for per share amounts.

year ended December 31, 2022 as compared to the year ended December 31, 2021

the year ended December 31, 2022, revenue was $0.4 million as compared to $0.5 million in the prior year.

The $0.1 million decrease principally

relates to the termination of the EsoGuard Commercialization Agreement with RDx, as the Company transitioned to its own laboratory operations

effective February 25, 2022.

The decrease was partially offset by revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA

laboratory for the year ended December 31, 2022.

the year ended December 31, 2022, cost of revenue was approximately $3.6 million as compared to $0.6 million in the prior year.

million increase principally related to:

● approximately

$0.6 million increase in compensation related costs as a result of an increase in headcount;

● approximately

$0.7 million increase in EsoCheck and EsoGuard supplies usage costs;

● approximately

$1.7 million increase in laboratory operations costs.

and marketing expenses

the year ended December 31, 2021, sales and marketing costs were approximately $5.3 million, compared to $1.3 million for the corresponding

period in the prior year.

the year ended December 31, 2022, sales and marketing costs were approximately $16.1 million, compared to $5.3 million in the prior year.

The net increase of $10.8 million was principally related to:

● approximately

$1.9 million increase in compensation related costs principally related to an increase in headcount;

$8.1 million increase in compensation related costs principally as a result of an increase

in headcount;

● approximately

$1.2 million increase in outside professional services related to EsoCheck, EsoGuard and consulting and professional services

$1.4 million increase in stock-based compensation from RSA grants to Lucid and PAVmed employees

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

in headcount;

● approximately

$0.9 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.

$1.5 million increase in consulting and outside professional services fees and for EsoCheck

and EsoGuard;

● approximately

$0.2 million increase general business expenses;

● approximately

$0.4 million decrease in the MSA fee allocation from PAVmed due to less sales and marketing

related activities incurred through PAVmed.

and administrative expenses

the year ended December 31, 2021, general and administrative costs were approximately $12.8 million, compared to $1.5 million for the

corresponding period in the prior year.

the year ended December 31, 2022, general and administrative costs were approximately $23.7 million, compared to $12.8 million in the

The net increase of $10.9 million was principally related to:

● approximately

$6.1 million increase in stock based compensation from RSA grants to Lucid and PAVmed employees and non-employees, and an increase

in stock options granted corresponding with the increase in the number of employees;

$0.6 million increase in compensation related costs principally as a result of an increase

in headcount;

● approximately

$4.5 million in consulting services related to patents, regulatory compliance, legal processes for contract review, transition

of PR and IR firms, and public company expenses;

$2.0 million increase in stock-based compensation from RSA grants to Lucid and PAVmed employees

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

in headcount;

● approximately

$0.6 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.

$5.0 million increase 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

$1.8 million increase in the MSA fee allocation from PAVmed related to the growth and expansion

of our business and the services incurred through PAVmed;

● approximately

$1.5 million increase in general business expenses.

of Operations - continued

year ended December 31, 2022 as compared to the year ended December 31, 2021 - continued

and development expenses

the year ended December 31, 2021, research and development costs were approximately $9.3 million, compared to $5.4 million for the corresponding

period in the prior year.

the year ended December 31, 2022, research and development costs were approximately $11.5 million, compared to $9.3 million in the prior

The net increase of $2.2 million was principally related to:

● approximately

$3.2 million increase in development costs, particularly in clinical trial activities and outside professional and consulting fees

with respect to EsoCheck, EsoCure and EsoGuard;

$1.4 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 compensation related costs and related to expanded clinical and engineering staff;

$0.2 million increase in compensation related costs and related to expanded clinical and

engineering staff;

● approximately

$0.4 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 consolidated financial statements as of and for the years ended December 31, 2021 and 2020 for each of:

Note 5, 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 12, Stock-Based Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan and the

$0.6 million increase in the MSA fee allocation from PAVmed related to the growth and expansion

of our business and the services incurred through PAVmed.

our accompanying 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 for a discussion of the MSA between Lucid Diagnostics and PAVmed;

and Note 14 , Stock-Based Compensation ,

for information regarding each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed Inc.

2014 Equity Plan.

of Acquired Intangible Assets

the year ended December 31, 2022, the amortization of acquired intangible assets was approximately $1.6 million as compared to no intangible

asset amortization in the prior year.

The increase was principally related to the purchase of laboratory licenses and certifications

and laboratory information management software in Q1 2022 and the amortization of a defensive asset.

and Capital Resources

& Senior Unsecured Promissory Note Issued to PAVmed Inc.

inception, prior to our IPO discussed below, 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.

of December 31, 2021, we had a Due To:

payment obligation liability of an aggregate of approximately $1.6 million

payable to reimburse for employee related costs and payments PAVmed Inc.

made on behalf of Lucid Diagnostics.

our accompanying consolidated financial statements Note 6, Due To PAVmed Inc .

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.

current operational activities are principally focused on the commercialization of EsoGuard.

We are expanding commercialization across

multiple sales channels, including:

the communication to and education of medical practitioners and clinicians regarding EsoGuard;

the establishment of Lucid Diagnostics Test Centers for the collection of cell samples using EsoCheck.

Additionally, we are developing

expanded clinical evidence to support insurance reimbursement adoption by government and private insurers.

Further, as resources permit,

the Company also intends to pursue development of other products and services, including EsoCure, an Esophageal Ablation Device.

ability to generate revenue depends upon our ability to successfully advance the commercialization of EsoGuard, while also completing

the clinical studies, product and service development, and necessary regulatory approval thereof.

There are no assurances, however, we

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

and services.

to our initial public offering (“IPO”) of our common stock in October 2021, our operations were funded by PAVmed, inclusive

of providing working capital cash advances and the payment of certain operating expenses on our behalf.

Additionally, certain of our

operations continue to be managed by PAVmed personnel, for which we incur expense according to the provisions of a MSA between us and

See Note 5 , Related Party Transactions, for a discussion of the MSA.

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

1 unchanged sentence

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 consolidated financial statements, as included herein in this Annual Report on Form 10-K

for the year ended December 31, 2021.

Diagnostics Inc.

Committed Equity Facility – Subsequent to December 31, 2021

to December 31, 2021, in March 2022, we entered into a committed equity facility with an affiliate of Cantor.

Under the 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 request.

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

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.

In addition, pursuant

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

We also entered into a registration rights agreement with

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.

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

with debt and equity financing transactions.

Notwithstanding, however, with our cash on-hand as of the date hereof and committed equity

sources of financing, the Company expects to be able to fund its operations and meet its financial obligations as they become due for

the one year period from the date of the issue of the Company’s consolidated financial statements, as included herein in this Form

Series A Preferred Stock Offering

On March 7, 2023, we

entered into subscription agreements for the sale of 13,625 shares of Series A preferred stock (the “ Series A Preferred

Each share of the Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.

terms of the Series A Preferred Stock also include a one times preference on liquidation and a right to receive dividends equal to

20% of the number of shares into which such Series A Preferred Stock is convertible, payable on the one-year and two-year

anniversary of the issuance date.

The Series A Preferred Stock is a non-voting security, other than with respect to limited matters

related to changes in terms of the Series A Preferred Stock.

The aggregate gross proceeds from the sale of shares in such offering

were $13.625 million.

Private Placement - Securities Purchase Agreement

Effective as of March 13, 2023,

we entered into a Securities Purchase Agreement (“SPA”) with an accredited institutional investor (“Investor”,

“Lender”, and /or “Holder”), pursuant to which we agreed to sell, and the Investor agreed to purchase a Senior

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

issuance of the March 2023 Senior Convertible Note is subject to customary closing conditions.

The March 2023 Senior Secured

Convertible Note would have a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s

common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or

other similar transaction), and a contractual maturity date of the two-year anniversary of the date of issuance.

The March 2023 Senior

Convertible Note would be convertible into or otherwise paid in shares of the Company’s common stock.

Under the March 2023 Senior Convertible Note, the Company

would be subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence

of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions,

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

Under the March 2023 Senior Convertible Note, the Company

would also be subject to financial covenants requiring that (i) the amount of our available cash equal or exceed $5.0 million

at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and unpaid interest thereon

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

30%, and (iii) that the Company’s market capitalization shall at no time be less than an amount to be agreed upon.

Committed Equity Facility and ATM Facility

In March 2022, we entered into

a committed equity facility with Cantor.

Under the terms of the committed equity facility, Cantor has committed to purchase up to $50

million of our common stock from time to time at our request.

While there are distinct differences, the committed equity facility is structured

similarly to a traditional at-the-market equity facility, insofar as it allows us to raise primary equity capital on a periodic basis

at prices based on the existing market price.

As of December 31, 2022, under the committed equity facility, a total of 680,263 shares

of common stock of the Company were issued for proceeds of approximately $1.8 million.

In November 2022, Lucid Diagnostics also entered into an “at-the-market

offering” for up to $6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between

Lucid Diagnostics and Cantor Fitzgerald & Co.

In the year ended December 31, 2022, there were no shares sold through their at-the-market

equity facility.

Subsequent to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market

equity facility for approximately $0.3 million.

our inception in May 2018 through our IPO in October 2021, our operations were 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.

The MSA Fee is charged on a monthly basis

and is subject-to periodic adjustment corresponding with changes in the services provided by PAVmed Inc.

personnel to the Company, with

any such change in the MSA Fee being subject to approval of the Lucid Diagnostics Inc.

and PAVmed Inc.

boards of directors.

In this regard,

in August 2022, the boards of directors of Lucid Diagnostics Inc.

and PAVmed Inc.

approved a sixth amendment to the MSA to increase the

MSA Fee to $550 per month from $390 per month, with such increase effective on a prospective basis commencing July 1, 2022.

to the sixth amendment, the parties agreed PAVmed Inc.

may elect to receive payment of the monthly MSA Fee in cash or in shares of our

common stock, with such shares valued at the volume weighted average price (“VWAP”) during the final ten trading days of

the applicable month (subject to a floor price of $0.70 per share).

However, in no event will PAVmed Inc.

be entitled to receive under

the MSA, as amended, more than 7,709,836 shares of our common stock (representing 19.99% of our outstanding shares of common stock as

of immediately prior to the execution of the sixth amendment).

The shares that may be issued under the MSA, as amended, are being offered

and sold in transactions exempt from registration under the Securities Act of 1933, as amended, in reliance on the exemption afforded

under Section 4(a)(2) thereof.

accordance with the MSA, on November 30, 2022 PAVmed has elected to receive payment of $1.65 million in aggregated monthly fees under

the MSA through the issuance of 750,818 shares of Lucid Diagnostics Inc.

Common Stock.

November 30, 2022, the Company and PAVmed entered into a payroll and benefit expense reimbursement agreement (the “PBERA”).

Historically, PAVmed has paid for certain payroll and benefit-related expenses in respect of the Company’s personnel on behalf

of the Company, and the Company has reimbursed PAVmed for the same.

Pursuant to the PBERA, PAVmed will continue to pay such expenses,

and the Company will continue to reimburse PAVmed for the same.

The PBERA now provides that the expenses will be reimbursed on a quarterly

basis or at such other frequency as the parties may determine, in cash or, subject to approval by the board of directors of each of PAVmed

and the Company, in shares of the Company’s common stock, with such shares valued at the volume weighted average price of such

stock during the final ten trading days preceding the later of the two dates on which such stock issuance is approved by the board of

directors of each of PAVmed and the Company (subject to a floor price of $0.40 per share), or in a combination of cash and shares.

in no event shall the Company issue any shares of its common stock to PAVmed in satisfaction of all or any portion of the expenses if

the issuance of such shares of its common stock would exceed the maximum number of shares of common stock that the Issuer may issue under

the rules or regulations of The Nasdaq Stock Market LLC (“Nasdaq”), unless the Company obtains the approval of its stockholders

as required by the applicable rules of the Nasdaq for issuances of shares of its common stock in excess of such amount.

In accordance

with the PBERA, on November 30, 2022, PAVmed elected for the Company to reimburse PAVmed for $2.7 million in accrued and unreimbursed

payroll and benefit-related expenses paid by PAVmed on behalf of the Company through the third quarter of 2022 through the issuance of

1,479,326 shares of the Company’s common stock.

previously disclosed, on October 5, 2021, PAVmed Subsidiary Corp., a wholly owned subsidiary of PAVmed (“PAVmed Sub”), acquired

100% of the outstanding membership interest of CapNostics, LLC from a third party, for a purchase price of approximately $2.1 million.

Also as previously disclosed, effective as of April 1, 2022, pursuant to an assignment agreement (as amended and supplemented to date,

the “CapNostics Assignment Agreement”) between PAVmed Sub and the Company, PAVmed Sub assigned the interests to the Company

and, in consideration for the interests, the Company agreed to pay to PAVmed Sub an amount in cash equal to the purchase price paid by

PAVmed Sub to the third party.

On November 30, 2022, pursuant to a supplement to the CapNostics Assignment Agreement, the Company, PAVmed

Sub and PAVmed agreed that the Company would pay the price for the interests through the issuance to PAVmed of 1,145,086 shares of the

Company’s common stock.

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

payment obligation liability of an aggregate of approximately $5.0 million payable

for the reimbursement of employee related costs and certain operating expenses paid by PAVmed on our behalf.

See our accompanying consolidated

financial statements Note 6 , Due To PAVmed Inc.

Accounting Policies and Significant Judgments and Estimates

13 unchanged sentences

financial statements.

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.

and Development Expenses

7 unchanged sentences

2014 Equity Plan.

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.

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.

3 unchanged sentences

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, 2021 and 2020;

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, 2022 and 2021;

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, 2021;

There were no stock options

granted under the Lucid Diagnostics Inc.

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

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 years ended December 31, 2022 and 2021;

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 and restricted stock

awards granted under the PAVmed Inc.

2014 Equity Plan is its quoted closing price per share.

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 Lucid Diagnostics Inc.

7 unchanged sentences

various exit scenarios and an estimation of the return to the common stockholders under each scenario.

and (iii) as of December 31, 2020,

it was estimated using a discounted cash flow analysis applied to a multi-year forecast of its future cash flows.

Company adopted FASB ASC Topic 842, Leases , (“ASC 842”) effective December 31, 2021, with such adoption not having

an effect on the Company’s consolidated financial statements.

All significant lease agreements and contractual agreements with

embedded lease agreements are accounted for under the provisions of ASC 842, wherein, if the contractual arrangement:

involves the use

of a distinct identified asset;

provides for the right to substantially all the economic benefits from the use of the asset throughout

the contractual period;

and, provides for the right to direct the use of the asset.

A lease agreement is accounted for as either a finance

lease (generally with respect real estate) or an operating lease (generally with respect to equipment).

Under both a finance lease and

an operating lease, the Company recognizes as of the lease commencement date a lease right-of-use (“ROU”) asset and a corresponding

lease payment liability.

lease ROU asset represents the Company’s right to use an underlying asset for the lease term, and the lease liability represents

its contractual obligation to make lease payments.

The lease ROU asset is measured at the lease commencement date as the present value

of the future lease payments plus initial direct costs incurred.

The Company recognizes lease expense of the amortization of the lease

ROU asset for an operating lease on a straight-line basis over the lease term;

and for financing leases on a straight-line basis unless

another basis is more representative of the pattern of economic benefit.

The lease liability is measured at the lease commencement date

with the discount rate generally based on the Company’s incremental borrowing rate (to the extent the lease implicit rate is not

known nor determinable), with interest expense recognized using the interest method for financing leases.

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

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 December 31, 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 December 31, 2021, the Company does not

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 December 31, 2021 and December 31, 2020 or recognized during the year ended December

31, 2021 and 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.

October 14, 2021, Lucid Diagnostics Inc.

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

holds a majority-interest equity ownership and has a controlling financial interest, its ownership interest was reduced from 81.8477%

before the IPO to 79.9796% after the IPO.

Accordingly, Lucid Diagnostics Inc.

is included in the PAVmed Inc and Subsidiaries

consolidated income tax returns through October 13, 2021, and effective October 14, 2021, Lucid Diagnostics Inc.

its income tax returns on a stand-alone legal entity basis.

The Lucid Diagnostics Inc.

stand-alone legal entity estimated income

tax provision was computed on an assumed separate income tax return for the periods presented through October 13, 2021, wherein,

the estimated income tax provision of Lucid Diagnostics Inc.

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

on a stand-alone legal entity basis.

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

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.

(as opposed with the respective tax authority) through October 13, 2021.

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.

stand-alone legal entity assumed filing of separate income tax returns.

price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options and restricted stock awards

granted under the PAVmed Inc.

2014 Equity Plan is its quoted closing price per share.

Accounting Standards Updates Adopted

22 unchanged sentences

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

Act EGC Accounting Election

Company is an “emerging growth company” or “EGC”, as defined in the Jumpstart Our Business Startups Act of 2012

(the “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.

The Company 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.

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.

sheet arrangements

do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure About Market Risk

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

What changed 10-K

Item 7. Management’s Discussion and Analysis