Lucid Diagnostics Inc. 10-Q

Item 1. Financial Statements LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and per share data - unaudited) September 30, 2023 December 31, 2022 Assets: Current assets: Cash $ 24,050 $ 22,474 Accounts receivable 21 17 Prepaid expenses, deposits, and other current assets 3,232 1,865 Total current assets 27,303 24,356 Fixed assets, net 1,284 1,592 Operating lease right-of-use assets 1,594 2,008 Intangible assets, net 1,929 3,445 Other assets 1,134 1,108 Total assets $ 33,244 $ 32,509 Liabilities, Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 994 $ 1,056 Accrued expenses and other current liabilities 3,326 1,447 Operating lease liabilities, current portion 1,128 962 Senior Secured Convertible Note - at fair value 14,490 — Due To: PAVmed Inc. - MSA Fee and operating expenses 10,286 4,960 Total current liabilities 30,224 8,425 Operating lease liabilities, less current portion 464 1,037 Total liabilities 30,688 9,462 Commitments and contingencies - - Stockholders’ Equity: Preferred stock, $ 0.001 par value, 20,000,000 shares authorized; Series A Convertible Preferred Stock, issued and outstanding 13,625 at September 30, 2023 and no shares issued and outstanding at December 31, 2022 13,625 — Common stock, $ 0.001 par value, 200,000,000 shares authorized; 42,329,864 and 40,518,792 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 42 41 Additional paid-in capital 128,800 121,081 Accumulated deficit ( 139,911 ) ( 98,075 ) Total Stockholders’ Equity 2,556 23,047 Total Liabilities and Stockholders’ Equity $ 33,244 $ 32,509 See accompanying notes to the unaudited condensed consolidated financial statements. 1 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except number of shares and per share data - unaudited) 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ 783 $ 76 $ 1,388 $ 265 Operating expenses: Cost of revenue 1,634 1,626 4,522 1,996 Sales and marketing 3,837 3,930 11,996 11,121 General and administrative 4,320 5,688 15,049 18,465 Amortization of acquired intangible assets 505 505 1,516 1,144 Research and development 1,615 2,704 5,334 8,815 Total operating expenses 11,911 14,453 38,417 41,541 Operating loss ( 11,128 ) ( 14,377 ) ( 37,029 ) ( 41,276 ) Other income (expense): Interest income 116 28 330 33 Interest expense ( 149 ) — ( 405 ) — Change in fair value - Senior Secured Convertible Note ( 3,021 ) — ( 3,520 ) — Loss on issue and offering costs - Senior Secured Convertible Note — — ( 1,186 ) — Debt extinguishments loss - Senior Secured Convertible Note ( 26 ) — ( 26 ) — Other income (expense), net ( 3,080 ) 28 ( 4,807 ) 33 Loss before provision for income tax ( 14,208 ) ( 14,349 ) ( 41,836 ) ( 41,243 ) Provision for income taxes — — — — Net loss $ ( 14,208 ) $ ( 14,349 ) $ ( 41,836 ) $ ( 41,243 ) Net loss per share - basic and diluted $ ( 0.34 ) $ ( 0.39 ) $ ( 1.01 ) $ ( 1.15 ) Weighted average common shares outstanding, basic and diluted 41,862,805 36,405,945 41,558,979 35,767,857 See accompanying notes to the unaudited condensed consolidated financial statements. 2 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the THREE AND NINE MONTHS ENDED September 30, 2023 (in thousands except number of shares and per share data - unaudited) Shares Amount Shares Amount Capital Deficit Total Preferred Stock Common Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance as of June 30, 2023 13,625 13,625 41,853,603 $ 42 $ 127,107 $ ( 125,703 ) $ 15,071 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan — — — — 1,032 — 1,032 Stock-based compensation - PAVmed Inc. 2014 Equity Plan — — — — 220 — 220 Vest - restricted stock awards — — 84,660 — — — — Conversions - Senior Secured Convertible Note — — 115,388 — 166 — 166 Purchase - Employee Stock Purchase Plan — — 276,213 — 275 — 275 Net loss — — — — — ( 14,208 ) ( 14,208 ) Balance as of September 30, 2023 13,625 $ 13,625 42,329,864 $ 42 $ 128,800 $ ( 139,911 ) $ 2,556 Preferred Stock Common Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance as of December 31, 2022 — $ — 40,518,792 $ 41 $ 121,081 $ ( 98,075 ) $ 23,047 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan — — — — 5,014 — 5,014 Stock-based compensation - PAVmed Inc. 2014 Equity Plan — — — — 845 — 845 Vest - restricted stock awards — — 303,980 — — — — Conversions - Senior Secured Convertible Note — — 115,388 — 166 — 166 APA-RDx - Termination payment — — 553,436 — 713 — 713 Issuance - At-The-Market Facility, net of deferred financing charges — — 230,068 1 283 — 284 Purchase - Employee Stock Purchase Plan — — 508,200 — 551 — 551 Issuance - Series A Preferred Stock 13,625 13,625 — — — — 13,625 Issue common stock - vendor service agreement — — 100,000 147 — 147 Net loss — — — — — ( 41,836 ) ( 41,836 ) Balance as of September 30, 2023 13,625 $ 13,625 42,329,864 $ 42 $ 128,800 $ ( 139,911 ) $ 2,556 3 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the THREE AND NINE MONTHS ENDED September 30, 2022 (in thousands except number of shares and per share data - unaudited) Shares Amount Capital Deficit Total Common Stock Additional Paid-In Accumulated Shares Amount Capital Deficit Total Balance as of June 30, 2022 35,994,667 $ 36 $ 105,003 $ ( 68,798 ) $ 36,241 Exercise - stock options - Lucid Diagnostics Inc. 2018 Equity Plan 5,327 — 6 — 6 Stock-based compensation - Lucid Diagnostics Inc. — — 3,280 — 3,280 Stock-based compensation - PAVmed Inc. — — 291 — 291 Vest - restricted stock awards 169,320 — — — — APA-RDx - Installment Payment 82,618 — 188 — 188 Issuance - Committed Equity Facility, net of deferred financing charges 680,263 1 1,766 — 1,767 Purchase - Employee Stock Purchase Plan 84,030 — 109 — 109 Net loss — — — ( 14,349 ) ( 14,349 ) Balance as of September 30, 2022 37,016,225 $ 37 $ 110,643 $ ( 83,147 ) $ 27,533 Common Stock Additional Paid-In Accumulated Shares Amount Capital Deficit Total Balance as of December 31, 2021 34,917,907 $ 35 $ 96,608 $ ( 41,904 ) $ 54,739 Balance 34,917,907 $ 35 $ 96,608 $ ( 41,904 ) $ 54,739 Exercise - stock options - Lucid Diagnostics Inc. 2018 Equity Plan 964,716 1 693 — 694 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan — — 10,371 — 10,371 Stock-based compensation - PAVmed Inc. 2014 Equity Plan — — 880 — 880 Vest - restricted stock awards 169,320 — — — — CapNostics, LLC — — ( 211 ) — ( 211 ) APA-RDx - Installment Payment 199,989 — 427 — 427 Issuance - Committed Equity Facility, net of deferred financing charges 680,263 1 1,766 — 1,767 Purchase - Employee Stock Purchase Plan 84,030 — 109 — 109 Net loss — — — ( 41,243 ) ( 41,243 ) Balance as of September 30, 2022 37,016,225 $ 37 $ 110,643 $ ( 83,147 ) $ 27,533 Balance 37,016,225 $ 37 $ 110,643 $ ( 83,147 ) $ 27,533 See accompanying notes to the unaudited condensed consolidated financial statements. 4 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands except number of shares and per share data - unaudited) 2023 2022 Nine Months Ended September 30, 2023 2022 Cash flows from operating activities Net loss $ ( 41,836 ) $ ( 41,243 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 1,870 1,321 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan 5,014 10,371 Stock-based compensation - PAVmed Inc. 2014 Equity Plan 845 880 Change in fair value - Senior Secured Convertible Note 3,520 — Loss on issue - Senior Secured Convertible Note 1,111 — Debt extinguishment loss - Senior Secured Convertible Note 26 — APA-RDx: Issue common stock - settle termination payment 713 427 Issue common stock - vendor service agreement 23 — Changes in operating assets and liabilities: Accounts receivable ( 4 ) 169 Prepaid expenses and other current assets ( 1,262 ) 171 Accounts payable ( 62 ) ( 388 ) Accrued expenses and other current liabilities 1,878 16 Due To: PAVmed Inc. - operating expenses, employee related costs, MSA Fee 5,326 2,849 Net cash flows used in operating activities ( 22,838 ) ( 25,427 ) Cash flows from investing activities Purchase of equipment ( 46 ) ( 705 ) Asset acquisition — ( 3,200 ) Net cash flows used in investing activities ( 46 ) ( 3,905 ) Cash flows from financing activities Proceeds – issue of preferred stock 13,625 — Proceeds – issue of Senior Convertible Note 10,000 — Proceeds – issue of common stock – Committed Equity Facility — 1,807 Proceeds – issue of common stock – At-The-Market Facility 284 — Proceeds – exercise of stock options — 694 Proceeds – issue common stock – Employee Stock Purchase Plan 551 109 Net cash flows provided by financing activities 24,460 2,610 Net increase (decrease) in cash 1,576 ( 26,722 ) Cash, beginning of period 22,474 53,656 Cash, end of period $ 24,050 $ 26,934 See accompanying notes to the unaudited condensed consolidated financial statements. 5 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.) Note 1 — The Company Description of the Business Lucid Diagnostics Inc. (“Lucid”, “Lucid Diagnostics” or the “Company”) 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”). Lucid is a majority-owned subsidiary of PAVmed Inc. (“PAVmed”). The Company believes that its 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 tool for the early detection of esophageal precancer 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 cancer. EsoGuard is a bisulfite-converted next-generation sequencing (NGS) DNA assay performed on surface esophageal cells collected with EsoCheck. 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. EsoCheck is a FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells in a less than a five-minute office procedure. 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, when inflated, 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. The Company believes that this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected sampling. EsoGuard and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”). EsoGuard and EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly test for the early detection of EAC and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors to EAC in patients with chronic GERD. Liquidity The Company is 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. The Company expects to continue to experience recurring losses from operations and will continue to fund its operations with debt and equity financing transactions, including current obligations on the Company’s existing convertible debt which in accordance with management’s plans may include conversions to equity and refinancing our existing debt obligations to extend the maturity date. Notwithstanding, however, with the cash on-hand as of the date hereof and committed equity sources of financing, conversion and refinancing of existing convertible notes, 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 Quarterly Report on Form 10-Q for the period ended September 30, 2023. 6 Note 2 — Summary of Significant Accounting Policies Significant Accounting Policies The Company’s significant 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 herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company is a majority-owned consolidated subsidiary of PAVmed, which has a majority equity ownership interest and has financial control of the Company. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. As permitted under SEC rules, certain footnotes or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2022 has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair statement of the Company’s unaudited condensed consolidated financial information. The consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2023 or for any other interim period or for any other future periods. The accompanying unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023. All amounts in the accompanying unaudited condensed consolidated financial statements and the notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts. Use of Estimates In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and the determination of corresponding carrying value reserves, if any, and liabilities and the disclosure of contingent losses, as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these unaudited condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards and intangible assets. Other significant estimates include the estimated incremental borrowing rate, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. Additionally, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. Revenue Recognition Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. The Company’s revenue is primarily generated by its laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services are completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. 7 Note 2 — Summary of Significant Accounting Policies - continued The key aspects considered by the Company include the following: Contracts —The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company establishes a contract with a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and a patient specimen has been returned to the laboratory for testing. Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable reimbursement contracts established between the Company and payers. However, when a patient is considered self-pay, the Company requires payment from the patient prior to the commencement of the Company’s performance obligations. The Company’s consideration can be deemed variable or fixed depending on the structure of specific payer contracts, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. Performance obligations —A performance obligation is a promise in a contract to transfer a distinct good or service (or a bundle of goods or services) to the customer. The Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the release of a patient’s test result to the ordering healthcare provider. The Company elects the practical expedient related to the disclosure of unsatisfied performance obligations, as the duration of time between providing testing supplies, the receipt of a sample, and the release of a test result to the ordering healthcare provider is far less than one year. Transaction price —The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration expected to be collected from a contract with a customer may include fixed amounts, variable amounts, or both. If the consideration derived from the contracts is deemed to be variable, the Company estimates the amount of consideration to which it will be entitled in exchange for the promised goods or services. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of patient EsoGuard test results to the ordering healthcare provider. As such, the Company recognizes revenue up to the amount of variable consideration not subject to a significant reversal until additional information is obtained or the uncertainty associated with additional payments or refunds, if any, is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in estimated expected variable consideration, with the change in estimate recognized in the period of such revised estimate. With respect to a contracted service arrangement, the fixed consideration revenue is recognized on an as-billed basis upon delivery of the laboratory test report with realization of such fixed consideration deemed probable based upon actual historical experience. Allocate transaction price —The transaction price is allocated entirely to the performance obligation contained within the contract with a customer on the basis of the relative standalone selling prices of each distinct good or service. Practical Expedients —The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less. Financial Instruments Fair Value Measurements FASB ASC Topic 820, Fair Value Measurement, (ASC 820) defines fair value as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a transaction measurement date. The ASC 820 three-tier fair value hierarchy prioritizes the inputs used in the valuation methodologies, as follows: Level 1 Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets which are not active, or other inputs observable or can be corroborated by observable market data. Level 3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments potentially qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging (ASC 815). 8 Note 2 — Summary of Significant Accounting Policies - continued The recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation models, including the Company’s common stock price, and certain Level 3 inputs, including, the assumptions regarding the estimated volatility in the value of the Company’s common stock price; the Company’s dividend yield; the likelihood and timing of future dilutive transactions, as applicable, along with the risk-free rates based on U.S. Treasury security yields. Changes in these assumptions can materially affect the estimated fair values. As of September 30, 2023 and December 31, 2022, the carrying values of cash, and accounts payable, approximate their respective fair value due to the short-term nature of these financial instruments. Fair Value Option (“FVO”) Election Under a Securities Purchase Agreement dated March 13, 2023, the Company issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “March 2023 Senior Convertible Note”, which is accounted under the “fair value option election” as discussed below. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging , (“ASC 815”), a financial instrument containing embedded features and/or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date. Alternatively, FASB ASC Topic 825, Financial Instruments , (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the March 2023 Senior Convertible Note is presented in a single line item within other income (expense) in the accompanying consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the March 2023 Senior Convertible Note). See Note 10, Financial Instruments Fair Value Measurements, with respect to the FVO election; and Note 11, Debt, for a discussion of the March 2023 Senior Convertible Note. Reclassifications Certain prior-year amounts have been reclassified to conform to the current year presentation, which includes presenting costs of revenue within operating expenses on the statements of operations, in the unaudited condensed consolidated financial statements and accompanying notes to the unaudited condensed consolidated financial statements. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The guidance was adopted by the Company on January 1, 2023. The adoption of the ASU did not have an impact on the Company’s unaudited condensed consolidated financial statements. Note 3 — Revenue from Contracts with Customers EsoGuard Commercialization Agreement The Company entered into the EsoGuard Commercialization Agreement, dated August 1, 2021, with its former commercial laboratory service provider, ResearchDx Inc. (“RDx”), an unrelated third-party. The EsoGuard Commercialization Agreement was on a month-to-month basis and was terminated on February 25, 2022 upon the execution of an asset purchase agreement (“APA”) dated February 25, 2022, between LucidDx Labs Inc., a wholly-owned subsidiary of the Company, and RDx, with such agreement further discussed in Note 6, Asset Purchase Agreement and Management Services Agreement . 9 Note 3 — Revenue from Contracts with Customers - continued Revenue Recognized In the three and nine months ended September 30, 2023, the Company recognized revenue of $ 783 and $ 1,388 , respectively, resulting from the delivery of patient EsoGuard test results. Revenue recognized from customer contracts deemed to include a variable consideration transaction price is limited to the unconstrained portion of the variable consideration. The Company’s revenue for the three months ended September 30, 2022 was $ 76 , resulting from the delivery of patient EsoGuard test results. The Company’s revenue for the nine months ended September 30, 2022 was $ 265 , and includes the activity described for the three months ended September 30, 2022, along with the revenue recognized under the EsoGuard Commercialization Agreement, which represented the minimum fixed monthly fee of $ 100 for the period January 1, 2022 to the February 25, 2022 termination date as discussed above. The monthly fee was deemed to be collectible for such period as RDx has timely paid the applicable respective monthly fee. Cost of Revenue The cost of revenues principally includes the costs related to the Company’s laboratory operations (excluding estimated costs associated with research activities), the costs related to the EsoCheck cell collection device, cell sample mailing kits and license royalties. In the three and nine months ended September 30, 2023, the cost of revenue was $ 1,634 and $ 4,522 , respectively, and was primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the three months ended September 30, 2022 was $ 1,626 and was primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the nine months ended September 30, 2022 was $ 1,996 , and includes the activity described for the three months ended September 30, 2022, along with the costs attributable to delivering the services under the EsoGuard Commercialization Agreement for the period January 1, 2022 to February 25, 2022. Note 4 — Related Party Transactions Case Western Reserve University and Physician Inventors - Amended CWRU License Agreement Case Western Reserve University (“CWRU”) and each of the three physician inventors (“Physician Inventors”) of the intellectual property licensed under the amended and restated patent license agreement with CWRU, dated August 23, 2021 (the “Amended CWRU License Agreement”), each hold a minority equity ownership interest in Lucid Diagnostics Inc. The expenses incurred with respect to the Amended CWRU License Agreement and the three Physician Inventors, as classified in the accompanying unaudited condensed consolidated statement of operations for the periods indicated are summarized as follows: Schedule of Incurred Expenses of Minority Shareholders 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of Revenue CWRU – Royalty Fees $ 42 $ 4 $ 76 $ 13 General and Administrative Expense Amended CWRU – License Agreement - reimbursement of patent legal fees 343 — 732 209 Stock-based compensation expense – Physician Inventors’ restricted stock awards — 275 180 819 Research and Development Expense Fees - Physician Inventors’ consulting agreements 5 15 15 32 Sponsored research agreement — 4 — 6 Stock-based compensation expense – Physician Inventors’ stock options 52 52 157 151 Total Related Party Expenses $ 442 $ 350 $ 1,160 $ 1,230 As of September 30, 2023, the Company had an outstanding payable of $ 820 . 10 Note 4 — Related Party Transactions - continued PAVmed Inc. - Management Services Agreement 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. The MSA does not have a termination date, but may be terminated by the Company’s board of directors. 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 boards of directors of each of the Company and PAVmed. 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, which was entered into by PAVmed and the Company on May 9, 2023. During the three months ended September 30, 2022, MSA fees were $ 550 per month. During the six months ended June 30, 2022, MSA Fees were $ 390 per month. The MSA Fee expense classification in the unaudited condensed consolidated statement of operations for the periods noted is as follows: Schedule of MSA Fee Expense Classification in Statements of Operations 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Sales & Marketing 109 330 327 713 General & Administrative 1,621 891 4,729 2,175 Research & Development 520 429 1,694 1,102 Total MSA Fee $ 2,250 $ 1,650 $ 6,750 $ 3,990 The classification of the MSA Fee as presented above is based on the PAVmed classification of employee salary expense and other operating expenses. In this regard, PAVmed classifies employee salary expense as 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. Note 5 — Due To PAVmed Inc. The aggregate Due To: PAVmed Inc. for the periods indicated is summarized as follows: Schedule of Due To: PAVmed Inc. MSA Fees Employee- Related Costs PAVmed Inc. OBO Payments Total Balance - December 31, 2022 $ 1,650 $ 3,026 $ 284 $ 4,960 MSA fees 6,750 — — 6,750 ERC - Payroll & Benefits — 1,382 — 1,382 On Behalf Of (OBO) activities — — 841 841 Cash payments to PAVmed Inc. ( 2,250 ) ( 309 ) ( 1,088 ) ( 3,647 ) Balance - September 30, 2023 $ 6,150 $ 4,099 $ 37 $ 10,286 11 Note 6 — Asset Purchase Agreement and Management Services Agreement Asset Purchase Agreement and Management Services Agreement - ResearchDx Inc. Through its wholly-owned subsidiary, LucidDx Labs Inc. (“LucidDx Labs”), the Company entered into an asset purchase agreement (“APA”) dated February 25, 2022, with ResearchDx, Inc. (“RDx”), an unrelated third-party - “APA-RDx”. Under the APA-RDx, LucidDx Labs Inc. acquired certain assets from RDx which were combined with other property and equipment to establish a Company-owned CLIA certified, CAP accredited commercial clinical laboratory capable of performing the EsoGuard® Esophageal DNA assay, inclusive of DNA extraction, next generation sequencing (“NGS”) and specimen storage. Prior to February 25, 2022, RDx provided such laboratory services at its owned CLIA-certified, CAP-accredited clinical laboratory. In connection with the execution and delivery of the APA-RDx, LucidDx Labs Inc. and RDx entered into a separate management services agreement (“MSA-RDx”), dated and effective February 25, 2022, pursuant to which RDx provided certain testing and related services for the Laboratory. The total purchase price consideration payable under the APA-RDx is a face value of $ 3,200 comprised of three contractually specified periodic payments. The APA-RDx is being accounted for as an asset acquisition, with the recognition of an intangible asset of approximately $ 3,200 , which is included in “Intangible assets, net” on the accompanying unaudited condensed consolidated balance sheet, as further discussed in Note 9, Intangible Assets, net. Termination of Management Services Agreement and Modification of Other Payment Obligations - ResearchDx Inc. On February 14, 2023, through LucidDx Labs Inc, the Company 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 10, 2023. Until the termination of the management service agreement with RDx, RDx had continued to provide certain testing and related services for the Laboratory in accordance with the terms of the MSA-RDx. 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 $ 713 . The payment was satisfied through the issuance of 553,436 shares of the Company’s common stock in February 2023. The Company was not required to make any cash payments in connection with the termination. Note 7 — Prepaid Expenses, Deposits, and Other Current Assets Prepaid expenses and other current assets consisted of the following as of: Schedule of Prepaid Expenses and Other Current Assets September 30, 2023 December 31, 2022 Advanced payments to service providers and suppliers $ 273 $ 371 Prepaid insurance 44 52 Deposits 2,725 1,331 EsoCheck cell collection supplies 190 59 EsoGuard mailer supplies — 52 Total prepaid expenses, deposits and other current assets $ 3,232 $ 1,865 Note 8 — Leases During the nine months ended September 30, 2023, the Company entered into additional lease agreements that have commenced and are classified as operating leases and short-term leases for additional Lucid Test Centers. The Company’s future lease payments as of September 30, 2023, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows: Schedule Of Future Lease Payments Of Operating Lease Liabilities 2023 (remainder of year) $ 313 2024 1,161 2025 127 2026 63 2027 24 Total lease payments $ 1,688 Less: imputed interest ( 96 ) Present value of lease liabilities $ 1,592 12 Note 8 — Leases - continued Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows: Schedule Of Cash Flow Supplemental Information Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 894 $ 689 Non-cash investing and financing activities Right-of-use assets obtained in exchange for new operating lease liabilities $ 380 $ 2,567 Weighted-average remaining lease term - operating leases (in years) 1.58 2.24 Weighted-average discount rate - operating leases 7.875 % 7.875 % As of September 30, 2023 and December 31, 2022, the Company’s right-of-use assets from operating leases were $ 1,594 and $ 2,008 , respectively, which are reported in operating lease right-of-use assets in the unaudited condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the Company had outstanding operating lease obligations of $ 1,592 and $ 1,999 , respectively, of which $ 1,128 and $ 962 , respectively, are reported in operating lease liabilities, current portion and $ 464 and $ 1,037 , respectively, are reported in operating lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the financing terms the Company would likely receive on the open market. Note 9 — Intangible Assets, net Intangible assets, less accumulated amortization, consisted of the following as of: Schedule of Intangible Assets Estimated Useful Life September 30, 2023 December 31, 2022 Defensive technology 60 months $ 2,105 $ 2,105 Laboratory licenses and certifications and laboratory information management software 24 months 3,200 $ 3,200 Total Intangible assets 5,305 5,305 Less Accumulated Amortization ( 3,376 ) ( 1,860 ) Intangible Assets, net $ 1,929 $ 3,445 The defensive technology intangible asset of $ 2.1 million (and approximately $ 0.2 million of accumulated amortization) was recognized by the Company as of the April 1, 2022 effective date of the transfer of CapNostics, LLC (“CapNostics”) to the Company from PAVmed Subsidiary Corp (a wholly-owned subsidiary of PAVmed). The transfer was accounted for as entities under common control. The defensive technology intangible asset was recognized by PAVmed Subsidiary Corp upon its acquisition of CapNostics, an unrelated third-party, for total purchase consideration paid on the October 5, 2021 acquisition date of approximately $ 2.1 million in cash. The CapNostics transaction was accounted for as an asset acquisition, resulting in the recognition of the defensive technology intangible asset. The defensive technology intangible asset is being amortized on a straight-line basis over an expected useful life 60 months commencing on the acquisition date. As noted in Note 6, Asset Purchase Agreement and Management Services Agreement , the asset purchase agreement between the Company and ResearchDx Inc. (“APA-RDx”), is being accounted for as an asset acquisition. The intangible assets recognized under the APA-RDx are the laboratory licenses and certifications (inclusive of a CLIA certification, CAP accreditation, and clinical laboratory licenses for five (5) U.S. States transferred to the Company from RDx), and a laboratory information management software perpetual-use royalty-free license granted under the APA-RDx, with such intangible asset having a useful life of twenty-four months commencing on the APA-RDx February 25, 2022 transaction date. Amortization expense of the intangible assets discussed above was $ 505 and $ 505 for the three month periods ended September 30, 2023 and 2022, respectively, and $ 1,516 and $ 1,144 for the nine month periods ended September 30, 2023 and 2022, respectively, and is included in amortization of acquired intangible assets in the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2023, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows: Schedule of Future Amortization Expense 2023 (remainder of year) $ 505 2024 688 2025 421 2026 315 Total $ 1,929 13 Note 10 — Financial Instruments Fair Value Measurements Recurring Fair Value Measurements The fair value hierarchy table for the reporting date noted is as follows: Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis Fair Value Measurement on a Recurring Basis at Reporting Date Using 1 Level-1 Inputs Level-2 Inputs Level-3 Inputs Total September 30, 2023 March 2023 Senior Convertible Note $ — $ — $ 14,490 $ 14,490 Totals $ — $ — $ 14,490 $ 14,490 1 There were no transfers between the respective Levels during the period ended September 30, 2023. As discussed in Note 11, Debt , the Company issued a Senior Secured Convertible Note dated March 21, 2023 with a $ 11.1 million face value principal (“March 2023 Senior Convertible Note”). The convertible note is accounted for under the ASC 825-10-15-4 fair value option (“FVO”) election, wherein, the financial instrument is initially measured at its issue date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value of the financial instruments classified within the Level 3 category was determined using both observable inputs and unobservable inputs. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs. The estimated fair value of the March 2023 Senior Convertible Note as of each of March 21, 2023 and September 30, 2023 were computed using a Monte Carlo simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate-of-return, using the following assumptions: Schedule of Fair Value Assumption Used March 2023 Senior Convertible Note: March 21, 2023 March 2023 Senior Convertible Note: September 30, 2023 Fair Value $ 11,900 $ 14,490 Face value principal payable $ 11,111 $ 11,019 Required rate of return 11.00 % 11.10 % Conversion Price $ 5.00 $ 5.00 Value of common stock $ 1.54 $ 1.17 Expected term (years) 2.00 1.47 Volatility 75.00 % 65.00 % Risk free rate 4.09 % 5.13 % Dividend yield — % — % The estimated fair values reported utilized the Company’s common stock price along with certain Level 3 inputs (as discussed in the table above), 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. Changes in these assumptions can materially affect the estimated fair values. 14 Note 11 — Debt The fair value and face value principal outstanding of the March 2023 Senior Convertible Note as of the dates indicated are as follows: Summary of Outstanding Debt Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value March 2023 Senior Convertible Note March 21, 2025 7.875 % $ 5.00 $ 11,019 $ 14,490 Balance as of September 30, 2023 $ 11,019 $ 14,490 The changes in the fair value of debt during the three and nine months ended September 30, 2023 is as follows: Schedule of Changes in Fair Value of Debt March 2023 Senior Convertible Note Other Income (expense) Fair Value - June 30, 2023 $ 11,610 $ — Face value principal – issue date Fair value adjustment – issue date Installment repayments – common stock ( 92 ) — Non-installment payments – common stock ( 49 ) — Change in fair value 3,021 ( 3,021 ) Fair Value at September 30, 2023 $ 14,490 - Other Income (Expense) - Change in fair value – three months ended September 30, 2023 $ ( 3,021 ) March 2023 Senior Convertible Note Other Income (expense) Fair Value - December 31, 2022 $ — $ — Fair Value - Beginning balance $ — $ — Face value principal – issue date 11,111 $ — Fair value adjustment – issue date 789 ( 789 ) Installment repayments – common stock ( 92 ) — Non-installment payments – common stock ( 49 ) — Change in fair value 2,731 ( 2,731 ) Fair Value at September 30, 2023 $ 14,490 - Fair Value - Ending balance $ 14,490 - Other Income (Expense) - Change in fair value – nine months ended September 30, 2023 $ ( 3,520 ) March 2023 Senior Secured Convertible Note Lucid Diagnostics entered into a Securities Purchase Agreement (“SPA”) dated March 13, 2023, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein Lucid agreed to sell, and the Investor agreed to purchase, an aggregate of $ 11.1 million face value principal of debt. Under the SPA, Lucid issued in a registered direct offering under its effective shelf registration statement a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “March 2023 Senior Convertible Note”, with such note having a $ 11.1 million face value principal, 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 March 21, 2025 . The March 2023 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election. The March 2023 Senior Convertible Note proceeds were $ 9.925 million after deducting a $ 1.186 million lender fee and offering costs. The lender fee and offering costs were recognized as of the March 21, 2023 issue date as a current period expense in other income (expense) in the Company’s unaudited condensed consolidated statement of operations. During the period from March 21, 2023 to September 20, 2023, Lucid is required to pay interest expense only (on the $ 11.1 million face value principal), at 7.875 % per annum, computed on a 360 day year. The Company paid in cash interest expense of $ 148 and $ 391 for the three and nine months ended September 30, 2023, respectively. 15 Note 11 — Debt - continued Commencing September 21, 2023, and then on each of the successive first and tenth trading day of each month thereafter through to and including March 14, 2025 (each referred to as an “Installment Date”); and on the March 21, 2025 maturity date, the Company will be required to make a principal repayment of $ 292 together with accrued interest thereon, with such 38 payments referred to herein as the “Installment Amount”, settled in shares of common stock of the Company, subject to customary equity conditions, including minimum share price and volume thresholds, or at the election of the Company, in cash, in whole or in part. In addition to the Installment Amount repayments, the Holder may elect to accelerate the conversion of future Installment Amount repayments, and interest thereon, subject to certain restrictions, as defined, utilizing the then current conversion price of the most recent Installment Date conversion price. The payment of all amounts due and payable under this senior convertible note is guaranteed by all of Lucid Diagnostics’ subsidiaries; and the obligations under this senior convertible note are secured by all of the assets of Lucid Diagnostics and its subsidiaries. Lucid is subject to certain customary affirmative and negative covenants regarding the rank of the note, along with the incurrence of further 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. Lucid is subject to financial covenants requiring: (i) a minimum of $5.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the total senior convertible notes outstanding, 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, as of the last day of any fiscal quarter commencing with September 30, 2023, to not exceed 30%; and (iii) the Company’s market capitalization to at no time be less than $30 million . As of September 30, 2023, the Company was in compliance, and as of the date hereof, the Company is in compliance, with the Financial Tests. In the nine months ended September 30, 2023, approximately $ 92 of principal repayments along with approximately $ 48 of interest expense thereon, were settled through the issuance of 115,388 shares of common stock of the Company, with such shares having a fair value of approximately $ 166 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). The conversions resulted in a debt extinguishment loss of $ 26 in the three and nine months ended September 30, 2023. Note 12 — Stock-Based Compensation Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics 2018 Equity Plan”) is separate and apart from the PAVmed 2014 Equity Plan discussed below. The Lucid Diagnostics 2018 Equity Plan is designed to enable Lucid Diagnostics to offer employees, officers, directors, and consultants, an opportunity to acquire shares of common stock of Lucid Diagnostics. The types of awards that may be granted under the Lucid Diagnostics 2018 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the Lucid Diagnostics compensation committee. A total of 11,644,000 shares of common stock of Lucid Diagnostics are reserved for issuance under the Lucid Diagnostics 2018 Equity Plan, with 3,929,301 shares available for grant as of September 30, 2023. The share reservation is not diminished by a total of 423,300 stock options and 50,000 restricted stock awards granted outside the Lucid Diagnostics 2018 Equity Plan, as of September 30, 2023. 16 Note 12 — Stock-Based Compensation - continued Lucid Diagnostics Stock Options Lucid Diagnostics stock options granted under the Lucid Diagnostics 2018 Equity Plan and stock options granted outside such plan are summarized as follows: Schedule of Stock Options Issued and Outstanding Activities Number of Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Intrinsic Value (2) Outstanding stock options at December 31, 2022 2,565,377 $ 3.14 8.3 $ 428 Granted (1) 2,982,500 $ 1.32 Exercised — $ — Forfeited ( 590,662 ) $ 2.70 Outstanding stock options at September 30, 2023 (3) 4,957,215 $ 2.10 8.6 $ 347 Vested and exercisable stock options at September 30, 2023 1,439,442 $ 2.77 7.0 $ 347 (1) Stock options granted under the Lucid Diagnostics 2018 Equity Plan and those granted outside such plan generally vest one-third in one year then ratably over the next eight quarters, and have a ten-year contractual term from date-of-grant. (2) The intrinsic value is computed as the difference between the quoted price of the Lucid Diagnostics common stock on each of September 30, 2023 and December 31, 2022 and the exercise price of the underlying Lucid Diagnostics stock options, to the extent such quoted price is greater than the exercise price. (3) The outstanding stock options presented in the table above, are inclusive of 423,300 stock options granted outside the Lucid Diagnostics 2018 Equity Plan, as of September 30, 2023 and December 31, 2022. See Note 4, Related Party Transactions , for a summary of the stock-based compensation expense recognized with respect to the stock options granted under the Lucid Diagnostics 2018 Equity Plan to the Physician Inventors. Subsequent to September 30, 2023, on November 6, 2023, the company granted to employees 500,000 stock options under the Lucid Diagnostics Inc 2018 Equity Plan with a weighted average exercise price of $ 1.29 for which will generally vest one-third after one year then ratably over the next eight quarters. Lucid Diagnostics Restricted Stock Awards Lucid Diagnostics restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan and restricted stock awards granted outside such plan are summarized as follows: Schedule of Restricted Stock Award Activity Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested restricted stock awards as of December 31, 2022 (1) 2,091,420 $ 11.44 Granted — — Vested ( 303,980 ) 11.95 Forfeited — — Unvested restricted stock awards as of September 30, 2023 1,787,440 $ 11.36 (1) The unvested restricted stock awards presented in the table above, are inclusive of 50,000 restricted stock awards granted outside the Lucid Diagnostics 2018 Equity Plan as of December 31, 2022. These 50,000 restricted stock awards were fully vested during the period ended September 30, 2023. Subsequent to September 30, 2023, on November 6, 2023, 550,000 restricted stock awards were granted under the Lucid Diagnostics Inc 2018 Equity Plan, with such restricted stock awards vesting one third each year for the next three years with the final vesting date on November 6, 2026, and an aggregate grant date fair value of approximately $ 0.7 million, measured as the grant date closing price of Lucid Diagnostics Inc. common stock, with such aggregate estimated fair value recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. PAVmed Inc. 2014 Equity Plan The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed 2014 Equity Plan”), is separate and apart from the Lucid Diagnostics 2018 Equity Plan (as such equity plan is discussed above). 17 Note 12 — Stock-Based Compensation - continued Stock-Based Compensation Expense The stock-based compensation expense recognized by the Company for both the Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity Plan, for the periods indicated, was as follows: Schedule of Stock-Based Compensation Expense 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Lucid Diagnostics 2018 Equity Plan – cost of revenue $ 16 $ 9 $ 44 $ 9 Lucid Diagnostics 2018 Equity Plan – sales and marketing 228 253 697 733 Lucid Diagnostics 2018 Equity Plan - general and administrative 721 2,990 4,069 9,504 Lucid Diagnostics 2018 Equity Plan - research and development 67 28 204 125 PAVmed 2014 Equity Plan - cost of revenue 10 — 26 — PAVmed 2014 Equity Plan - sales and marketing 106 161 359 497 PAVmed 2014 Equity Plan - general and administrative 7 78 170 224 PAVmed 2014 Equity Plan - research and development 97 52 290 159 Total stock-based compensation expense $ 1,252 $ 3,571 $ 5,859 $ 11,251 The stock-based compensation expense, as presented above, is inclusive of: stock options and restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan to employees of PAVmed, the Physician Inventors, and members of the board of directors of Lucid Diagnostics, as well as the stock options granted under the PAVmed 2014 Equity Plan to the Physician Inventors. As of September 30, 2023, unrecognized stock-based compensation expense and weighted average remaining requisite service period with respect to stock options and restricted stock awards issued under each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity Plan, as discussed above, is as follows: Schedule of Unrecognized Compensation Expense and Weighted Average Remaining Service Period Unrecognized Expense Weighted Average Remaining Service Period (Years) Lucid Diagnostics 2018 Equity Plan Stock Options $ 3,620 2.1 Restricted Stock Awards $ 633 1.0 PAVmed 2014 Equity Plan Stock Options $ 608 1.9 Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 0.88 per share and $ 1.61 per share during the periods ended September 30, 2023 and 2022, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions: Schedule of Stock-based Compensation Valuation Assumptions 2023 2022 Nine Months Ended September 30, 2023 2022 Expected term of stock options (in years) 5.6 5.8 Expected stock price volatility 75 % 72 % Risk free interest rate 3.7 % 3.2 % Expected dividend yield — % — % Lucid Diagnostics Inc Employee Stock Purchase Plan (“Lucid ESPP”) A total of 231,987 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 276 on March 31, 2023 under the Lucid ESPP. A total of 276,213 and 84,030 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 275 and $ 109 on September 30, 2023 and 2022, respectively, under the Lucid ESPP. The Lucid ESPP has a total reservation of 1,000,000 shares of common stock of which 407,770 shares are available-for-issue as of September 30, 2023. In January 2023, the number of shares available-for-issue was increased by 500,000 in accordance with the evergreen provisions of the plan. 18 Note 13 — Stockholders’ Equity Series A Preferred Stock Offering On March 7, 2023, the Company issued 13,625 shares of newly designated Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”), to accredited investors at a purchase price of $ 1,000 per share, for aggregate gross proceeds to the Company of $ 13.625 million. In connection with the issuance the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”). The key terms of the Series A Preferred Stock are as follows: Each share of Series A Preferred Stock is convertible at the option of the holder, subject to certain beneficial ownership limitations into such number of shares of the Company’s common stock, equal to the number of Series A Preferred Shares to be converted, multiplied by the stated value of $ 1,000 (the “Stated Value”), divided by the conversion price in effect at the time of the conversion. The initial conversion price is $ 1.394 , subject to adjustment in the event of stock splits, stock dividends, and similar transactions. 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 March 7, 2025, the second anniversary of its issuance. The Series A Preferred Stock will be senior to the Common Stock and any other class of the Company’s capital stock that is not by its terms senior to or pari passu with the Series A Preferred Stock. The holders of Series A Preferred Stock will be entitled to dividends payable as follows: (i) a number of shares of Common Stock equal to 20% of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock then held by such Holder on March 7, 2024, and (ii) a number of shares of Common Stock equal to 20% of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock then held by such Holder on March 7, 2025. A holder that converts its Series A Preferred Stock prior to March 7, 2024 or March 7, 2025, as the case may be, will not receive the dividend that accrues on such date with respect to such converted Series A Preferred Stock. The holders of the Series A Preferred Stock also will be entitled to dividends equal, on an as-if-converted to shares of Common Stock basis, to and in the same form as dividends actually paid on shares of the Common Stock when, as, and if such dividends are paid on shares of the Common Stock . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (or any Deemed Liquidation Event as defined in the Certificate of Designation), the holders of shares of Series A Preferred Stock then outstanding will be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock immediately prior to such event. 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 Company will not effect any conversion of the Series A Preferred Stock, and a holder will not have the right to receive dividends or convert any portion of the Series A Preferred Stock, to the extent that, after giving effect to the receipt of dividends or the conversion, the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of the holder’s affiliates) would beneficially own in excess of 4.99% of the Company’s outstanding common stock (or, upon election of the holder, 9.99% of the Company’s outstanding common stock) . The Company and the investors in the offering also executed a registration rights agreement (the “Series A Registration Rights Agreement”), pursuant to which the Company agreed to file a registration statement covering the resale of the shares of Common Stock issuable pursuant to the Series A Preferred Stock. Series A-1 Preferred Stock Offering Subsequent to September 30, 2023, on October 17, 2023, the Company issued 5,000 shares of newly designated Lucid Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Stock”). The terms of the Series A-1 Preferred Stock are substantially identical to the terms of the Series A Preferred Stock, except that the Series A-1 Preferred Stock has a conversion price of $ 1.2592 . The aggregate gross proceeds from the sale of shares in such offering were $ 5.0 million. The Company and the investors in the offering also executed a registration rights agreement (the “Series A-1 Registration Rights Agreement”), pursuant to which the Company agreed to file a registration statement covering the resale of the shares of Common Stock issuable pursuant to the Series A-1 Preferred Stock. Lucid Diagnostics Common Stock In June 2023, the Company received shareholder approval to issue up to 200 million shares of its common stock, an increase of 100 million shares. As of September 30, 2023 and December 31, 2022 there were 42,329,864 and 40,518,792 shares of common stock issued and outstanding, respectively. As of September 30, 2023, PAVmed holds 31,302,420 shares, representing a majority-interest equity ownership and PAVmed has a controlling financial interest in the Company. 19 Note 13 — Stockholders’ Equity - continued Committed Equity Facility and ATM Facility On March 28, 2022, the Company entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”). Under the terms of the committed equity facility, Cantor has committed to purchase up to $ 50 million of the Company’s common stock from time to time at the request of the Company. While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity facility, insofar as it allows the Company to raise primary equity capital on a periodic basis at prices based on the existing market price. Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $ 1.8 million, after a 4 % discount, as of September 30, 2023. In November 2022, the Company entered into an “at-the-market offering” (“ATM”) for up to $ 6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between the Company and Cantor Fitzgerald & Co. In the nine months ended September 30, 2023, the Company sold 230,068 shares through the at-the-market equity facility for net proceeds of approximately $ 0.3 million, after payments of 3 % commissions. No shares were sold under the at-the-market equity facility during the three months ended September 30, 2023. Note 14 — Net Loss Per Share The Net loss per share basic and diluted for the respective periods indicated is as follows: Schedule of Net Loss Per Share Basic and Diluted 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator Net loss $ ( 14,208 ) $ ( 14,349 ) $ ( 41,836 ) $ ( 41,243 ) Denominator Weighted average common shares outstanding, basic and diluted 41,862,805 36,405,945 41,558,979 35,767,857 Net loss per share Net loss per share - basic and diluted $ ( 0.34 ) $ ( 0.39 ) $ ( 1.01 ) $ ( 1.15 ) Basic weighted-average number of shares of common stock outstanding for the periods ended September 30, 2023 and 2022 include the shares of the Company issued and outstanding during such periods, each on a weighted average basis. The basic weighted average number of shares common stock outstanding excludes common stock equivalent incremental shares, while diluted weighted average number of shares outstanding includes such incremental shares. However, as the Company was in a loss position for all periods presented, basic and diluted weighted average shares outstanding are the same, as the inclusion of the incremental shares would be anti-dilutive. The common stock equivalents excluded from the computation of diluted weighted average shares outstanding are as follows: Schedule of Common Stock Equivalents Excluded from Computation of Diluted Earnings Per Share 2023 2022 September 30, 2023 2022 Stock options 4,957,215 2,633,089 Unvested restricted stock awards 1,787,440 2,091,420 Preferred stock 13,683,647 — Total 20,428,302 4,724,509 20