What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 265 added, 226 removed, 235 unchanged (68% of the section changed)

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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.

significantly from those expressed or implied in the forward-looking statements.

Factors that might cause such differences include, but are

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● cybersecurity

related to the COVID-19 pandemic;

related to the COVID-19 pandemic and other health-related emergencies;

related to our relationship with PAVmed;

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

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

the early detection of esophageal precancer, including Barrett’s Esophagus (“BE”), in at-risk GERD patients.

Early detection of esophageal precancer allows patients to undergo

appropriate monitoring and treatment, as indicated by clinical practice guidelines, in an effort to prevent progression to esophageal

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

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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.

testing and analyses using EsoGuard.

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

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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 EAC and

Barrett’s Esophagus (“BE”), including dysplastic BE and related precursors to EAC in patients with chronic GERD.

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

including dysplastic BE and related precursors to EAC in patients with chronic GERD.

of Clinical Trials

is currently seeking to accelerate its 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);

a virtual-patient randomized controlled trial with intended recruitment of at least 100

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.

Labs Laboratory Operations Update

February 14, 2023, Lucid and its subsidiary, LucidDx Labs, entered into an agreement (the “MSA Termination Agreement”) with

RDx, pursuant to which the parties mutually agreed to terminate the management service agreement between them (the “MSA-RDx”)

without cause.

The termination was effective as of February 10, 2023.

Until the termination of the MSA-RDx, RDx had provided certain

testing and related services for our laboratory in accordance with the terms of the MSA-RDx.

In anticipation of the termination of the

MSA-RDx, however, Lucid accelerated the development of internal resources necessary to operate its laboratory entirely on its own.

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 MSA-RDx

and the related asset purchase agreement (the “APA-RDx”) to $0.7 million (from the $3.4 million that would otherwise have

been payable under the MSA-RDx and APA-RDX, if the MSA-RDx had remained in effect through the balance of its stated term), resulting

in a net savings to Lucid of $2.7 million.

The payment was satisfied through the issuance of 553,436 shares of Lucid’s common stock

on February 25, 2023.

Lucid was not required to make any cash payments in connection with the termination.

is currently seeking to accelerate its collection of clinical utility data through a range of trials that can be efficiently

These efforts include a planned investigator-initiated, retrospective analysis of prospectively collected data on the 391

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

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

a virtual-patient randomized controlled trial with intended

recruitment of at least 100 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 submitted for peer review before the end

#CheckYourFoodTube

January 2023, we completed our first #CheckYourFoodTube Precancer Testing Event, with the San Antonio Fire Department (the “SAFD”)

January 2023, Lucid completed its first #CheckYourFoodTube Precancer Testing Event, with the San Antonio Fire Department (the “SAFD”)

during Firefighter Cancer Awareness Month as designated by the International Association of Fire Fighters (IAFF).

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to prevent progression to esophageal cancer.

then, an additional screening event was hosted with the SAFD and four similar events have been held with fire departments in Athens,

GA, Barnstable, MA, Gainesville, FL, and Orange County, CA.

These events, which Lucid continues to expand across the country, are an

extension of Lucid’s expanding satellite Lucid Test Center (“sLTC”) program, which brings Lucid precancer testing

directly to patients—at their physician’s office and now at large testing day events.

then, additional testing events have been hosted with the SAFD, and similar events have been held with fire departments throughout the

These events are ongoing and are an extension of Lucid’s satellite Lucid Test Center (“sLTC”) program,

which brings Lucid precancer testing directly to patients—at their physician’s office and now at testing day events.

of EsoGuard #CheckYourFoodTube Mobile Testing Unit

June 2023, Lucid launched its first EsoGuard #CheckYourFoodTube Mobile Test Unit (“mobile testing unit”),

with the inaugural mobile testing unit event being held in Sarasota, Florida.

The mobile testing unit is another channel

by which we are bringing EsoGuard testing to at-risk patients.

of Direct Contracting Strategic Initiative

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that have deployed similar strategies.

Seventh Amendment to Management Services Agreement

As discussed, above, the Company’s

daily operations are also managed in part by personnel employed by PAVmed, for which the Company incurs a service fee, referred to as

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

2023, the Company and PAVmed entered into a seventh amendment to the MSA to increase the MSA Fee to $0.75 million per month, effective

January 1, 2023.

In August 2023, the company announced it had contracted with the Ancira Automotive Group as a result of

this initiative, providing access to esophageal precancer testing for its employees at all 12 San Antonio locations.

New Revenue Cycle Management Provider

In May 2023, Lucid began to transition claims submission responsibility to a new revenue cycle management provider

that offered more robust capabilities for, among other things, claims processing and appeals.

The provider upgrade has been completed

and claim submissions resumed in June 2023.

Since completing the transition, the upgrade has demonstrated an improvement in speed of collections,

turnaround time to claim submission, percentage of claims paid, and actionable data for appeals.

A Preferred Stock Offering

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The Series A Preferred Stock is convertible into shares of our common stock at any time at the option

of the holder from and after the six-month anniversary of its issuance, and automatically converts into shares of our common stock on

of the holder from and after the six-month anniversary of its issuance (or, if later, the effective date of an increase in our authorized share capital or the effective date of a registration

statement covering the resale of the underlying shares), and automatically converts into shares of our common stock on

the second anniversary of its issuance.

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Placement - Securities Purchase Agreement

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

as of March 13, 2023, we entered into a Securities Purchase Agreement (“SPA”) with an accredited institutional investor, 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”).

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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 is also 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 as of the last day of any fiscal quarter commencing with September 30, 2023 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 $30 million.

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

In the three months ended March 31, 2023, we sold 230,068 shares through our at-the-market

equity facility for net proceeds of approximately $0.3 million, after payment of 3% commissions.

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 is also 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 as of the

last day of any fiscal quarter commencing with September 30, 2023 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 $30 million.

November 2022, Lucid Diagnostics 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 six months ended June 30, 2023, we sold 230,068 shares through our at-the-market equity facility for net proceeds of approximately

$0.3 million, after payment of 3% commissions.

No shares were sold through our at-the-market equity facility during the three months ended June 30, 2023.

of Operations

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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:

fee incurred under the Amended CWRU License Agreement (as defined in Note 4, Related Party Transactions , to our accompanying unaudited

condensed consolidated financial statements);

the cost of 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

the previously terminated EsoGuard Commercialization Agreement in February 2022, the cost of revenue recognized is inclusive of:

royalty fee incurred under the Amended CWRU License Agreement (as defined in Note 4, Related Party Transactions , to our

accompanying unaudited condensed consolidated financial statements);

the cost of EsoCheck devices and EsoGuard mailers (cell sample

shipping costs);

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

and marketing expenses

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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.

We anticipate our sales and marketing expenses will increase in the

future, to the extent we expand our commercial sales and marketing operations

as resources permit and insurance reimbursement coverage for our EsoGuard test expands.

and administrative expenses

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 (as defined

in Note 4, Related Party Transactions , to our accompanying unaudited condensed consolidated financial statements) allocated to

general and administrative 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 administrative expenses consist primarily of professional fees for accounting, tax, audit and legal services (including those fees

incurred as a result of our being a public company), consulting fees, expenses associated with obtaining and maintaining patents within

our intellectual property portfolio, and certain employee costs, along with the portion of the MSA Fee (as defined in Note 4, Related

Party Transactions , to our accompanying unaudited condensed consolidated financial statements) allocated to general and administrative

anticipate our general and administrative expenses will increase in the future to the extent our business operations grow.

Furthermore, we anticipate continued expenses related to being a public

company, including fees and expenses for audit, legal, regulatory, tax-related services, insurance premiums and investor relations costs

associated with maintaining compliance as a public company.

and development expenses

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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 clinical and preclinical studies

and engineering design and development;

associated with regulatory filings;

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of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes;

design engineering studies;

associated with conducting clinical trials for our EsoGuard diagnostic assay;

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

Fee allocated to research and development.

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

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

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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.

months ended March 31, 2023 as compared to three months ended March 31, 2022

the three months ended March 31, 2023, revenue was $0.4 million as compared to $0.2 million for the corresponding period in the

The $0.2 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA

laboratory, as compared to revenue from the EsoGuard Commercialization Agreement with RDx, in the prior year period, which was terminated

on February 25, 2022 as the Company transitioned to its own laboratory operations.

the three months ended March 31, 2023, cost of revenue was approximately $1.3 million as compared to $0.4 million for the corresponding

in millions, except for share and per share amounts.

months ended June 30, 2023 as compared to three months ended June 30, 2022

the three months ended June 30, 2023, revenue was $0.2 million as compared to $0.0 million for the corresponding period in the prior

The $0.2 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory,

as compared to revenue from the EsoGuard Commercialization Agreement with RDx, in the prior year period, which was terminated on February

25, 2022 when the Company transitioned to its own laboratory operations.

the three months ended June 30, 2023, cost of revenue was approximately $1.5 million as compared to $0.0 million for the corresponding

period in the prior year.

The $0.9 million increase principally related to:

The $1.5 million increase was principally related to:

● approximately

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● approximately

$0.3 million increase in EsoCheck and EsoGuard supplies usage costs;

$0.5 million increase in EsoCheck and EsoGuard supplies costs;

● approximately

$0.2 million increase in compensation related costs as a result of an increase in headcount.

$0.4 million increase in compensation related costs.

and marketing expenses

the three months ended March 31, 2023, sales and marketing costs were approximately $4.1 million as compared to $3.3 million for

the three months ended June 30, 2023, sales and marketing costs were approximately $4.0 million as compared to $3.9 million for

the corresponding period in the prior year.

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● approximately

$1.4 million increase in compensation related costs principally as a result of an increase in headcount;

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

in headcount;

● approximately

$0.6 million decrease in consulting and outside professional services fees.

$0.1 million increase in facility costs;

● approximately

$0.6 million decrease in third party marketing expenses.

and administrative expenses

the three months ended March 31, 2023, general and administrative costs were approximately $6.5 million as compared to $5.9 million

the three months ended June 30, 2023, general and administrative costs were approximately $3.8 million as compared to $6.7 million

for the corresponding period in the prior year.

The net decrease of $2.8 million was principally related to:

● approximately

$0.9 million increase related to the amended MSA with PAVmed due to the growth

and expansion of our business and the services incurred through PAVmed;

● approximately

$2.5 million decrease in stock-based compensation from RSA and stock option grants to Lucid

employees and non-employees;

● approximately

$1.2 million decrease related to the termination of the MSA-RDx and lower general business expenses

primarily related to reduced insurance premiums and reduced third-party consulting fees and

professional recruiting services.

of Operations - continued

months ended June 30, 2023 as compared to three months ended June 30, 2022 - continued

and development expenses

the three months ended June 30, 2023, research and development costs were approximately $1.8 million, compared to $3.4 million for

the corresponding period in the prior year.

The net decrease of $1.6 million was principally related to:

● approximately

$1.8 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees with respect to EsoCure;

● approximately

$0.2 million increase in compensation related costs.

of Acquired Intangible Assets

amortization of acquired intangible assets remained relatively level in the three months ended June 30, 2023, as compared to the

corresponding period in the prior year.

Income and Expense

in fair value of convertible debt

the three months ended June 30, 2023, the change in the fair value of our convertible note was approximately $0.3 million of income,

related to the March 2023 Senior Convertible Note.

The March 2023 Convertible Note was initially measured at its issue-date estimated

fair value and subsequently remeasured at estimated fair value as of the reporting period date.

The Company initially recognized a $0.8

million fair value non-cash expense on the issue date.

Note 11 , Debt, to our accompanying unaudited condensed consolidated financial statements, for additional information with respect

to the March 2023 Senior Convertible Note.

of Operations - continued

months ended June 30, 2023 as compared to six months ended June 30, 2022

the six months ended June 30, 2023, revenue was $0.6 million as compared to $0.2 million for the corresponding period in the prior

The $0.4 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory,

as compared to revenue from the EsoGuard Commercialization Agreement with RDx, in the prior year period, which was terminated on February

25, 2022 when the Company transitioned to its own laboratory operations.

the six months ended June 30, 2023, cost of revenue was approximately $2.9 million as compared to $0.4 million for the corresponding

period in the prior year.

The $2.5 million increase was principally related to:

● approximately

$1.1 million increase in laboratory facility and operations costs;

● approximately

$0.9 million increase in EsoCheck and EsoGuard supplies costs;

● approximately

$0.5 million increase in compensation related costs.

and marketing expenses

the six months ended June 30, 2023, sales and marketing costs were approximately $8.2 million as compared to $7.2 million for the

corresponding period in the prior year.

The net increase of $1.0 million was principally related to:

● approximately

$0.9 million increase related to the updated MSA Fee allocation from PAVmed due to the growth and expansion of our business and the

services incurred through PAVmed;

$1.9 million increase in compensation related costs principally as a result of an increase

in headcount;

● approximately

$0.6 million increase in third-party professional services related to legal services, accounting and audit services, outsourced information

technology services, investor relations expenses, and public company expenses;

$0.9 million decrease in third party marketing expenses.

and administrative expenses

the six months ended June 30, 2023, general and administrative costs were approximately $10.3 million as compared to $12.6 million

for the corresponding period in the prior year.

The net decrease of $2.3 million was principally related to:

● approximately

$0.6 million decrease in stock-based compensation from RSA and stock option grants to Lucid employees and non-employees;

$1.8 million increase related to the amended MSA with PAVmed due to the growth

and expansion of our business and the services incurred through PAVmed;

● approximately

$0.3 million decrease in general business expenses related to favorable renewal of corporate insurance policies.

$3.1 million decrease in stock-based compensation from RSA and stock option grants to Lucid

employees and non-employees;

● approximately

$1.0 million decrease related to the termination of the MSA-RDx and lower general business expenses primarily related to reduced

insurance premiums and reduced third-party consulting fees and professional recruiting services.

of Operations - continued

months ended March 31, 2023 as compared to three months ended March 31, 2022 - continued

months ended June 30, 2023 as compared to six months ended June 30, 2022 - continued

and development expenses

the three months ended March 31, 2023, research and development costs were approximately $2.3 million, compared to $2.9 million

for the corresponding period in the prior year.

the six months ended June 30, 2023, research and development costs were approximately $4.1 million, compared to $6.3 million for

the corresponding period in the prior year.

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

● approximately

$1.2 million decrease in development costs, particularly in clinical trial activities and outside professional and consulting fees

with respect to EsoCure;

$2.9 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees with respect to EsoCure;

● approximately

$0.4 million increase related to clinical activities performed by CWRU;

$0.5 million increase related to the amended MSA with PAVmed due to the

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

● approximately

$0.2 million increase related to the updated MSA Fee allocation from PAVmed related to the growth and expansion of our business and

the services incurred through PAVmed.

our accompanying unaudited condensed consolidated financial statements for each of:

Note 4 , 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;

12 , Stock-Based Compensation , for information regarding each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity

$0.2 million increase in compensation related costs.

of Acquired Intangible Assets

the three months ended March 31, 2023, the amortization of acquired intangible assets was approximately $0.5 million as compared

to no intangible asset amortization in the corresponding period 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

amortization of acquired intangible assets remained relatively level in the six months ended June 30, 2023, as compared to the

corresponding period in the prior year.

Income and Expense

in fair value of convertible debt

the three months ended March 31, 2023, the non-cash expense recognized for the change in the fair value of our convertible notes

was approximately $0.8 million, related to the March 2023 Senior Convertible Note.

The March 2023 Convertible Note was initially measured

at it’s issue-date estimated fair value and subsequently remeasured at estimated fair value as of the reporting period date.

Company initially recognized a $0.8 million fair value non-cash expense on the issue-dates.

There was no change in fair value upon remeasurement

through March 31, 2023.

the six months ended June 30, 2023, the change in the fair value of our convertible note was approximately $0.5 million of

expense, related to the March 2023 Senior Convertible Note.

The March 2023 Convertible Note was initially measured at its issue date

estimated fair value and subsequently remeasured at estimated fair value as of the reporting period date.

The Company initially

recognized a $0.8 million fair value non-cash expense on the issue date.

on Issue and Offering Costs - Senior Secured Convertible Note

the three months ended March 31, 2023, in connection with the issue of the March 2023 Senior Convertible Notes, we recognized a

total of approximately $1.2 million of lender fee and offering costs paid by us.

the six months ended June 30, 2023, in connection with the issue of the March 2023 Senior Convertible Note, we recognized a total

of approximately $1.2 million of lender fee and offering costs paid by us.

Note 11 , Debt, to our accompanying unaudited condensed consolidated financial statements, for additional information with respect

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

We are expanding commercialization across

We are pursuing 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 4 , Related Party Transactions, to our accompanying unaudited condensed consolidated financial statements, 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 all of their efforts to the commercialization of their initial product and services and ongoing research and

development activities and conducting clinical trials.

We experienced a net loss of approximately $16.2 million and used

approximately $7.0 million of cash in operations for the three months ended March 31, 2023.

Financing activities provided $24.1

million of cash during the three months ended March 31, 2023.

We ended the quarter with cash on-hand of $39.5 million as of March

We expect to continue to experience recurring losses and negative cash flow 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 the committed equity sources of financing described below, 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 unaudited

condensed consolidated financial statements, as included herein in this Form 10-Q.

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

the launch of the mobile testing unit;

ongoing #CheckYourFoodTube testing days;

and our direct contracting strategic initiative.

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, including

significantly expanding insurance reimbursement coverage, 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.

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 experienced a net loss of approximately $27.6 million and used approximately $14.1 million of cash in

operations for the six months ended June 30, 2023.

Financing activities provided $24.2 million of cash during the six months ended

June 30, 2023.

We ended the quarter with cash on-hand of $32.6 million as of June 30, 2023.

We expect to continue to experience

recurring losses and negative cash flow 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 the committed equity sources of financing described below,

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 unaudited condensed consolidated financial statements, as included herein in this Form 10-Q.

A Preferred Stock Offering

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The Series A Preferred Stock is convertible into shares

of our common stock at any time at the option of the holder from and after the six-month anniversary of its issuance, and automatically

of our common stock at any time at the option of the holder from and after the six-month anniversary of its issuance (or, if later, the effective date of an increase in our authorized share capital or the effective date of a registration

statement covering the resale of the underlying shares), and automatically

converts into shares of our common stock on the second anniversary of its issuance.

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Placement - Securities Purchase Agreement

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”).

as of March 13, 2023, we entered into the SPA with an accredited institutional investor, pursuant to which we agreed to sell, and the investor agreed to purchase the March 2023 Senior

Secured Convertible Note with a face value principal of $11.1 million.

the March 2023 Senior Convertible Note on March 21, 2023 pursuant to the SPA.

The Lucid March 2023 Senior Convertible Note proceeds were

The March 2023 Senior Convertible Note proceeds were

$9.925 million after deducting a $1.186 million lender fee and offering costs.

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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, as of the last day of any fiscal quarter commencing with September 30, 2023 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 $30 million (the "Financial Tests").

As of March 31, 2023, the Company was in compliance with the Financial Tests.

In addition, the Company presently is in compliance with the Financial Tests.

principal amount of the notes issued under the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges, as of the

last day of any fiscal quarter commencing with September 30, 2023 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 $30 million

(the “Financial Tests”).

As of June 30, 2023, the Company was in compliance, and as of the date hereof, the

Company is in compliance, with the Financial Tests.

Equity Facility and ATM Facility

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Cumulatively a total of 680,263

shares of common stock of the Company were issued for net proceeds of approximately $1.8 million, after payment of 4% commissions, as

of March 31, 2023.

shares of common stock of the Company were issued for net proceeds of approximately $1.8 million, after a 4% discount, as

of June 30, 2023.

No shares were sold through this facility during the three months ended June 30, 2023.

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.

months ended March 31, 2023, we sold 230,068 shares through our at-the-market equity facility for net proceeds of approximately

months ended June 30, 2023, we sold 230,068 shares through our at-the-market equity facility for net proceeds of approximately

$0.3 million, after payment of 3% commissions.

No shares were sold through our at-the-market equity facility during the three months

ended June 30, 2023.

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.

and by PAVmed paying 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 May 2023, the respective companies’ boards of directors approved a seventh amendment to the MSA to increase the MSA Fee to $750

per month, effective January 1, 2023.

Pursuant to the MSA, as amended by the seventh amendment, the parties agreed PAVmed 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).

in no event will PAVmed 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).

conducted in part by personnel employed by PAVmed, for which we incur an 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 personnel to the Company, with any such

change in the MSA Fee being subject to approval of the Company and PAVmed boards of directors.

In this regard, in May 2023, the respective

companies’ boards of directors approved a seventh amendment to the MSA to increase the MSA Fee to $750 per month, effective January

Pursuant to the MSA, as amended by the seventh amendment, the parties agreed PAVmed 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 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).

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

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

of March 31, 2023, we had a Due To:

payment obligation liability of an aggregate of approximately $7.6 million payable

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

of June 30, 2023, we had a Due To:

payment obligation liability of approximately $10.7 million, which liability is

primarily comprised of our obligations under the PBERA and the MSA, as well other operating expenses paid by PAVmed on our

See our accompanying unaudited condensed consolidated financial statements Note 5 , Due To PAVmed Inc.

Accounting Policies and Significant Judgments and Estimates

discussion and analysis of our financial condition and results of operations is based on our unaudited condensed 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 that affect the amounts reporting in our unaudited condensed consolidated financial statements and

accompanying notes.

On an ongoing basis, we evaluate our estimates and judgements.

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

that affect the amounts reporting in our unaudited condensed consolidated financial statements and accompanying notes.

On an ongoing

basis, we evaluate our estimates and judgements.

In accordance with U.S.

GAAP, we base our

estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances.

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

Our critical accounting policies are as disclosed

in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 14, 2023,

except as otherwise noted in “Fair Value Option (“FVO”) Election” subsection of Note 2, Summary of

Significant Accounting Policies , to our unaudited condensed consolidated financial statements included herein in this Form 10-Q

with respect to our Senior Convertible Notes issued in March 2023.

We determined upon the issuance of our March 2023 Senior

Convertible Note to elect the fair value option.

At issuance, the carrying value of the March 2023 Senior Convertible Note was

recorded at estimated fair value.

GAAP, we base our estimates on historical experience and on

various other factors that are believed to be appropriate under the circumstances.

Actual results may differ from these estimates under

different assumptions or conditions.

Our critical accounting policies are as disclosed in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2022 as filed with the SEC on March 14, 2023, except as otherwise noted in “Fair Value Option (“FVO”)

Election” subsection of Note 2, Summary of Significant Accounting Policies , to our unaudited condensed consolidated financial

statements included herein in this Form 10-Q with respect to the March 2023 Senior Convertible Note.

We determined upon the issuance

of our March 2023 Senior Convertible Note to elect the fair value option.

At issuance, the carrying value of the March 2023 Senior Convertible

Note was recorded at estimated fair value.

The estimated fair values reported utilized Lucid’s common stock price along with certain

Level 3 inputs, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation

The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses,

including the Company’s common stock price, the Company’s dividend yield, the risk-free rates based on U.S.

security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the

Company’s common stock price.

We remeasure the March 2023 Senior Convertible Note to its estimated fair value at each

reporting period using valuation techniques similar to those applied at issuance.

The change in the fair value is recognized as

other income (expense) in the statement of operations.

A significant change in the volatility could

have a material impact to the carrying value of the Senior Convertible Note as well as the amount of change recognized during the

Level 3 inputs, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models.

The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses, including the Company’s

common stock price, the Company’s dividend yield, the risk-free rates based on U.S.

Treasury security yields, and certain other

Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s common stock price.

the March 2023 Senior Convertible Note to its estimated fair value at each reporting period using valuation techniques similar to those

applied at issuance.

The change in the fair value is recognized as other income (expense) in the statement of operations.

A significant

change in the volatility could have a material impact to the carrying value of the March 2023 Senior Convertible Note as well as the

amount of change recognized during the period.

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