What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-25 compared with 2023-03-14 · 884 added, 983 removed, 536 unchanged (78% of the section changed)

18 unchanged sentences

internal control over financial reporting includes those policies and procedures that:

to the maintenance of records, in reasonable detail, accurately and fairly reflect our transactions

and dispositions of our assets;

reasonable assurance our transactions are recorded as necessary to permit preparation of

our financial statements in accordance with accounting principles generally accepted in the

U.S., and our receipts and expenditures are being made only in accordance with authorizations

to the maintenance of records, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with

accounting principles generally accepted in the U.S., and our receipts and expenditures are being made only in accordance with authorizations

of our management and our directors;

reasonable assurance regarding prevention or timely detection of unauthorized acquisition,

use, or disposition of our assets could have a material effect on the financial statements.

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets could

have a material effect on the financial statements.

to its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not

15 unchanged sentences

Other Information

Rule 10b5-1 Trading Plans

During the fiscal quarter ended

December 31, 2023, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule

10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

30 unchanged sentences

Incorporation

Purchase Agreement, dated as of February 25, 2022, by and among LucidDx Labs Inc., Lucid Diagnostics Inc.

Asset Purchase Agreement, dated as of February 25, 2022, by and among LucidDx Labs Inc., Lucid Diagnostics Inc.

and ResearchDx, Inc.

and Restated Certificate of Incorporation

Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock

8-K (Preferred Offering)

and Restated Bylaws

of Registrant’s Securities

Stock Certificate

Amended and Restated Certificate of Incorporation

Amendment to Amended and Restated Certificate of Incorporation

Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock

Amended and Restated Bylaws

Description of Registrant’s Securities

Common Stock Certificate

Form of Senior Secured Convertible Note

Lucid Diagnostics Inc.

Amended and Restated 2018 Long-Term Incentive Equity Plan.

and Restated License Agreement, dated as of August 23, 2021, by and between Case Western Reserve University and Lucid Diagnostics

Agreement, dated as of May 20, 2019, by and between PAVmed Inc.

Amended and Restated License Agreement, dated as of August 23, 2021, by and between Case Western Reserve University and Lucid Diagnostics Inc.

License Agreement, dated as of May 20, 2019, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Services Agreement, dated as of May 12, 2018, by and between PAVmed Inc.

Management Services Agreement, dated as of May 12, 2018, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

to Management Services Agreement, dated as of March 1, 2019, by and between PAVmed Inc.

Amendment to Management Services Agreement, dated as of March 1, 2019, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Amendment to Management Services Agreement, dated as of June 5, 2019, by and between PAVmed Inc.

Second Amendment to Management Services Agreement, dated as of June 5, 2019, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Amendment to Management Services Agreement, dated as of July 20, 2020, by and between PAVmed Inc.

Third Amendment to Management Services Agreement, dated as of July 20, 2020, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Amendment to Management Services Agreement, dated as of February 1, 2021, by and between PAVmed Inc.

Fourth Amendment to Management Services Agreement, dated as of February 1, 2021, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

3 unchanged sentences

and Lucid Diagnostics Inc.

Seventh Amendment to Management Services Agreement, dated as of May 9, 2023, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Eighth Amendment to Management Services Agreement, dated as of March 22, 2024, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Payroll and Benefit Expense Reimbursement Agreement, dated as of November 30, 2022, by and between PAVmed Inc.

and Lucid Diagnostics Inc.

Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc.

and Sanford Markowitz, M.D.

Incorporation

Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc.

and Amitabh Chak, M.D.

Consulting Agreement, dated as of May 12, 2021, by and between Lucid Diagnostics Inc.

and Joseph Willis, M.D.

Form of Stock Option Agreement.

of Indemnification Agreement.

& Manufacturing Master Services Agreement, dated as of September 1, 2021, by and between Coastline International, Inc.

Diagnostics Inc.

of Restricted Stock Agreement.

Agreement with Lishan Aklog, M.D.

Agreement with Dennis M.

Agreement with Shaun O’Neil

Form of Indemnification Agreement.

Quality & Manufacturing Master Services Agreement, dated as of September 1, 2021, by and between Coastline International, Inc.

and Lucid Diagnostics Inc.

Form of Restricted Stock Agreement.

Employment Agreement with Lishan Aklog, M.D.

Employment Agreement with Dennis M.

Employment Agreement with Shaun O’Neil

Amendment to Employment Agreement with Shaun O’Neil

Employment Agreement with Michael Gordon

Services Agreement, dated as of February 25, 2022, by and between LucidDx Labs Inc.

and ResearchDx, Inc.

Termination Agreement, dated as of February 10, 2023, by and among Lucid Diagnostics Inc., LucidDx Labs Inc.

and ResearchDx, Inc.

Common Stock Purchase Agreement, dated as of March 28, 2022, by and between CF Principal Investments LLC and Lucid Diagnostics Inc.

2 unchanged sentences

and Lucid Diagnostics Inc.

Registration Rights Agreement, dated as of March 7, 2023, by and between Lucid Diagnostics Inc.

and the purchasers of Series A Preferred Stock party thereto

8-K (Preferred Offering)

Diagnostics Inc.

Form of Securities Purchase Agreement

Form of Guaranty

Form of Registration Rights Agreement

Exchange Agreement, dated as of March 13, 2023, by and between Lucid Diagnostics Inc.

and the purchasers of Series B Preferred Stock party thereto

Registration Rights Agreement Agreement, dated as of March 13, 2023, by and between Lucid Diagnostics Inc.

and the purchasers of Series B Preferred Stock party thereto

Lucid Diagnostics Inc.

Employee Stock Purchase Plan

of Subsidiaries

of Marcum LLP

Certification

of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Principal Executive Officer pursuant to 18 U.S.C.

Code of Ethics

List of Subsidiaries

Consent of Marcum LLP

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification

of Principal Financial and Accounting Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley

Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Form of Compensation Clawback Policy

XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements

6 unchanged sentences

Certain exhibits and schedules have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

The registrant hereby undertakes to furnish a copy of any omitted exhibit or schedule upon request by the Securities and Exchange Commission.

The registrant hereby undertakes to furnish

a copy of any omitted exhibit or schedule upon request by the Securities and Exchange Commission.

Form 10-K Summary

2 unchanged sentences

Diagnostics Inc.

Dennis M McGrath

and Chief Financial Officer

Financial Officer

Financial and Accounting Officer)

19 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm (PCAOB ID # 688 )

Balance Sheets as of December 31, 2022 and 2021

Statements of Operations for the years ended December 31, 2022 and 2021

Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021

Statements of Cash Flows for the years ended December 31, 2022 and 2021

to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID # 688 )

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Shareholders and Board of Directors of

the Stockholders and Board of Directors of

Diagnostics, Inc.

8 unchanged sentences

ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant

working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in

regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

25 unchanged sentences

thousands except number of shares and per share data)

expenses, deposits, and other current assets

December 31, 2023

December 31, 2022

Current assets:

lease right-of-use assets

Preferred Stock and Stockholders’ Equity

expenses and other current liabilities

lease liabilities, current portion

- MSA Fee and operating expenses

Accounts receivable

Prepaid expenses, deposits, and other current assets

Total current assets

Fixed assets, net

Operating lease right-of-use assets

Intangible assets, net

Liabilities, Preferred Stock and Stockholders’ Equity (Deficit)

Current liabilities:

lease liabilities, less current portion

and contingencies

Stockholders’

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

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

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

40,518,792 and 34,917,907 shares issued and outstanding as of December 31,

2022 and December 31, 2021, respectively

paid-in capital

Accounts payable

Accrued expenses and other current liabilities

Operating lease liabilities, current portion

Senior Secured Convertible Note - at fair value

- MSA Fee and operating expenses

Total current liabilities

Operating lease liabilities, less current portion

Total liabilities

Commitments and contingencies

Stockholders’ Equity:

Liabilities and Stockholders’ Equity

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

Series A and Series A-1 Convertible Preferred Stock, issued and outstanding 18,625 at December 31, 2023 and no shares issued and outstanding at December 31, 2022

Common stock, $ 0.001 par value, 200,000,000 shares authorized;

42,329,864 and 40,518,792 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

Total Stockholders’ Equity (Deficit)

Total Liabilities and Stockholders’ Equity (Deficit)

accompanying notes to the consolidated financial statements.

3 unchanged sentences

thousands except number of shares and per share data)

Ended December 31,

and marketing

and administrative

of acquired intangible assets

and development

Operating expenses:

loss from operations

income (expense):

expense - Senior Unsecured Promissory Note

income (expense), net

before provision for income tax

for income taxes

loss per share - basic and diluted

average common shares outstanding, basic and diluted

Cost of revenue

Sales and marketing

General and administrative

Amortization of acquired intangible assets

Research and development

Total operating expenses

Operating loss

Other income (expense):

Interest income

Interest expense

Change in fair value - Senior Secured Convertible Note

Loss on issue and offering costs - Senior Secured Convertible Note

Debt extinguishments loss - Senior Secured Convertible Note

Other income (expense), net

Loss before provision for income tax

Provision for income taxes

Net loss per share - basic and diluted

Weighted average common shares outstanding, basic and diluted

accompanying notes to the consolidated financial statements.

4 unchanged sentences

thousands except number of shares and per share data)

Paid-In Capital

as of December 31, 2020

of common stock - conversion of Senior Unsecured Promissory Note

of common stock - IPO, net of fees

compensation - Lucid Diagnostics Inc.

Preferred Stock

Additional Paid-In

Balance as of December 31, 2021

Exercise - stock options - Lucid Diagnostics Inc.

2018 Equity Plan

compensation - PAVmed Inc.

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

as of December 31, 2021

- stock options - Lucid Diagnostics Inc.

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

compensation - Lucid Diagnostics Inc.

Vest - restricted stock awards

CapNostics, LLC transfer

Issuance common stock - APA-RDx - Termination payment

Issuance - Committed Equity Facility, net of financing charges

Purchase - Employee Stock Purchase Plan

Issuance - Due To:

Settlement in Common Stock

Balance as of December 31, 2022

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

compensation - PAVmed Inc.

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

- restricted stock awards

- Installment Payment

- Committed Equity Facility, net of financing charges

- Employee Stock Purchase Plan

Settlement in Common Stock

as of December 31, 2022

Vest - restricted stock awards

Conversions - Senior Secured Convertible Note

Issuance common stock - APA-RDx - Termination payment

Issuance - At-The-Market Facility, net of financing charges

Purchase - Employee Stock Purchase Plan

Issuance - Series A and Series A-1 Preferred Stock

Issue common stock - vendor service agreement

Balance as of December 31, 2023

$ ( 150,741 )

accompanying notes to the consolidated financial statements.

3 unchanged sentences

thousands except number of shares and per share data)

Ended December 31,

flows from operating activities

to reconcile net loss to net cash used in operating activities

and amortization expense

compensation - Lucid Diagnostics Inc.

Years Ended December 31,

Cash flows from operating activities

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

Depreciation and amortization expense

Stock-based compensation - Lucid Diagnostics Inc.

2018 Equity Plan

compensation - PAVmed Inc.

Stock-based compensation - PAVmed Inc.

2014 Equity Plan

Issue common stock - settle installment payment

in operating assets and liabilities:

expenses and other current assets

expenses and other current liabilities

CWRU License Agreement Fee

Change in fair value - Senior Secured Convertible Note

Loss on issue - Senior Secured Convertible Note

Debt extinguishment loss - Senior Secured Convertible Note

Issue common stock - termination payment

Issue common stock - vendor service agreement

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Accounts payable

Accrued expenses and other current liabilities

- operating expenses, employee related costs, MSA Fee

cash flows used in operating activities

flows from investing activities

Net cash flows used in operating activities

Cash flows from investing activities

Purchase of equipment

Asset acquisition

cash flows used in investing activities

flows from financing activities

– issue of common stock – initial public offering

– issue of common stock – Committed Equity Facility

– offering costs – initial public offering

exercise of stock options

– issue common stock – Employee Stock Purchase Plan

- working capital cash advances

cash flows provided by financing activities

increase (decrease) in cash

beginning of period

end of period

Net cash flows used in investing activities

Cash flows from financing activities

Proceeds – issue of preferred stock

Proceeds – issue of Senior Convertible Note

Proceeds – issue of common stock – Committed Equity Facility

Proceeds – issue of common stock – At-The-Market Facility

Proceeds – exercise of stock options

Proceeds – issue common stock – Employee Stock Purchase Plan

Net cash flows provided by financing activities

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

accompanying notes to the consolidated financial statements.

3 unchanged sentences

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

1 — Summary Description of the Company

Diagnostics Inc.

and Subsidiaries, referred to herein as “Lucid Diagnostics” or the “Company” is comprised of

Lucid Diagnostics Inc.

and its wholly-owned subsidiaries, inclusive of LucidDx Labs, Inc.

and CapNostics LLC.

Lucid Diagnostics Inc.

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

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

gastroesophageal reflux disease (“GERD”), 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”).

Diagnostics Inc.

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

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

The Amended CWRU License Agreement

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

The Amended CWRU License Agreement

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

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

government agency, whichever comes later.

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

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

referred to as “EsoCheck®”;

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

referred to as “EsoGuard®”;

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

4, Patent License Agreement - Case Western Reserve University, for a further discussion of the Amended CWRU License Agreement.

EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell Collection Device, constitutes the first

and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent esophageal adenocarcinoma

(“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal reflux disease (“GERD,”

also commonly known as chronic heartburn, acid reflux or simply reflux) patients.

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

laboratory to commercial diagnostic tests and devices with scalable manufacturing capacity.

The Company is presently focused on

expanding commercialization across multiple sales channels, including:

the communication and education of medical practitioners and

clinicians of EsoGuard;

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

Recently, the American Gastroenterological Association (“AGA”) and the American College of Gastroenterology

(“ACG”) updated its clinical practice guidelines to now support Lucid’s EsoCheck Cell Collection Device and

EsoGuard Esophageal DNA Test as an acceptable alternative to endoscopy.Both guidelines expand the addressable market opportunity for

these products to now affirmatively include screening women.

The AGA updated guideline further expands the target population for the

first time to include asymptomatic patients who otherwise present with the certain risk factors.

Additionally, the Company is

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

resources permit, the Company also intends to pursue development of other products and services, including EsoCure™, an esophageal

ablation device.

1 — The Company

of the Business

Diagnostics Inc.

Initial Public Offering - October 14, 2021

October 14, 2021, Lucid Diagnostics Inc.

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

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

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

with such total IPO shares inclusive of 571,428 IPO shares issued to PAVmed Inc., at an IPO price of $ 14.00 per share, resulting gross

proceeds of $ 70.0 million, before underwriting fees of $ 4.9 million, and approximately $ 0.7 million of offering costs incurred by the

(“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.

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

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

samples, including those collected with EsoCheck, as discussed below, are sent to our laboratory, for testing and analyses using our

proprietary EsoGuard NGS DNA assay.

is 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.

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.

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 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.

Note 2 — Liquidity and Going Concern

The Company’s management is

required to assess an entity’s ability to continue as a going concern within one year of the date of the financial statements being

In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable

as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within

one year from the financial statement issuance date.

Substantial doubt about an entity’s ability to continue as a going concern

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

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

The Company has financed its operations

principally through public and private issuances of its common stock, preferred stock, and debt.

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 generated $ 2.4 million of revenues for the year ended December 31, 2023, however the Company does not expect to generate

positive cash flows from operating activities in the near future.

The Company incurred a net loss

of approximately $ 52.7 million and had net cash flows used in operating activities of approximately $ 32.8 million for the year ended December 31,

As of December 31, 2023, the Company had negative working capital of approximately $ 7.3 million, with such working capital

inclusive of the Senior Secured Convertible Note classified as a current liability of an aggregate of approximately $ 14.0 million and

approximately $ 18.9 million of cash.

The Company’s ability to continue operations beyond March 2025, will depend upon generating substantial

revenue that is conditioned upon obtaining positive third-party reimbursement coverage for its EsoGuard Esophageal DNA Test from both

government and private health insurance providers, increasing revenue through contracting directly with self-insured employers, and on

its ability to raise additional capital through various potential sources including equity and/or debt financings or refinancing existing

debt obligations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year

after the date the accompanying consolidated financial statements are issued.

3 — Summary of Significant Accounting Policies

6 unchanged sentences

All intercompany transactions and balances have been eliminated in consolidation.

Lucid Diagnostics Inc.

(“the Company”)

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

of Lucid Diagnostics Inc.

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

and making operating decisions.

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.

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

5 unchanged sentences

Significant estimates in these

consolidated financial statements include those related to the estimated fair value of 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.

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

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

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

In each reporting period (including

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

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

Substantial doubt about an entity’s ability to continue as a going concern exists when

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

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

to its initial public offering (“IPO”) of its common stock, the operations of the Company were funded by PAVmed Inc., inclusive

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

Additionally, certain

operations of Lucid Diagnostics Inc.

continue to be managed by personnel of PAVmed Inc., for which Lucid Diagnostics Inc.

incurs expense

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

and PAVmed Inc.

See Note 5, Related

Party Transactions , for information with respect to the Management Services Agreement;

and Note 6, Due To PAVmed Inc.

further information with respect to amounts owed to PAVmed Inc.

by Lucid Diagnostics Inc.

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.

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

committed equity sources of financing, the Company expects to be able to fund its operations and meet its financial obligations as they

become due for the one year period from the date of the issue of the Company’s consolidated financial statements, as included herein

in this Annual Report on Form 10-K for the period ended December 31, 2022.

See Note 18, Subsequent Events , for a discussion of

the certain financing activities following December 31, 2022.

Note 2 — Summary of Significant Accounting

Policies - continued

consolidated financial statements include those related to the estimated fair value of stock-based equity awards, intangible assets and

estimate of fair value of debt obligations.

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.

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

3 unchanged sentences

which exceed federally insured limits.

3 — Summary of Significant Accounting Policies - continued

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

63 unchanged sentences

inception, the Company expects the collection cycle to be one year or less.

Note 2 — Summary of Significant Accounting

Policies - continued

3 — Summary of Significant Accounting Policies - continued

The Company carries test supply

inventories to support our laboratory activities.

The inventories are carried at the lower of weighted average cost and net realizable

value and expensed through cost of sales as the supplies are used.

assets are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives.

10 unchanged sentences

A lease agreement

is accounted for as either a finance lease (generally with respect real estate) or an operating lease (generally with respect to equipment).

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

asset and a corresponding lease payment liability.

is accounted for as either a finance lease or an operating lease.

Under both a finance lease and an operating lease, the Company recognizes

as of the lease commencement date a lease right-of-use (“ROU”) asset and a corresponding lease payment liability.

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

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to such evaluation.

3 — Summary of Significant Accounting Policies - continued

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

Lucid Diagnostics Inc.

2018 Equity Plan and the PAVmed Inc.

2014 Equity Plan.

Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity Plan.

The Company accounts for stock-based compensation in accordance with

the provisions of FASB ASC Topic 718, Stock Compensation (“ASC 718”).

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

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stock-based award as of the reporting date.

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

Plan and the Lucid Diagnostics Inc.

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

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

respect to the PAVmed Inc.

2014 Equity Plan, the expected stock price volatility is based

on the historical stock price volatility of PAVmed Inc.

common stock and the volatilities

of similar entities within the medical device industry over the period commensurate with

the expected term with respect to stock options granted to the board of directors and employees

in the years ended December 31, 2022 and 2021;

Note 2 — Summary of Significant Accounting

Policies - continued

respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan, the expected

stock price volatility was based on the historical stock price volatility of similar entities

within the medical device industry over the period commensurate with the expected term with

respect to stock options granted to employees in the years ended December 31, 2022 and 2021;

Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed 2014 Equity

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

assumptions for stock-based awards, principally as follows:

respect to the PAVmed 2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility of

PAVmed common stock over the period commensurate with the expected term with respect to stock options granted to the board of

directors and employees in the years ended December 31, 2023 and 2022;

respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan, the expected stock price volatility is based on the

historical stock price volatility of Lucid Diagnostics common stock and the volatilities of similar entities within the medical device

industry over the period commensurate with the expected term with respect to stock options granted to employees in the years ended

December 31, 2023 and 2022;

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

Treasury securities

in effect at the time of grant for a period commensurate with either the expected term or

the remaining contractual term, as applicable, of the stock option;

expected dividend yield is based on annual dividends of $ 0.00 as there have not been dividends

paid to-date, and there is no plan to pay dividends for the foreseeable future.

price per share of Lucid Diagnostics Inc.

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

stock awards granted under the Lucid Diagnostics Inc.

2018 Equity Plan is as follows:

(i) for the period October 14, 2021 to December

31, 2022 it is its quoted closing price per share;

and (ii) for the period January 1, 2021 to October 14, 2021, it was estimated using

a probability-weighted average expected return methodology (“PWERM”), which involves the determination of equity value under

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

price per share of PAVmed Inc.

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

granted under the PAVmed Inc.

2014 Equity Plan is its quoted closing price per share.

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

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

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

to pay dividends for the foreseeable future.

price per share of Lucid Diagnostics common stock used in the computation of estimated fair value of stock options and restricted stock

awards granted under the Lucid Diagnostics 2018 Equity Plan is its quoted closing price per share.

price per share of PAVmed common stock used in the computation of estimated fair value of stock options and restricted stock awards granted

under the PAVmed 2014 Equity Plan is its quoted closing price per share.

Instruments Fair Value Measurements

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

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

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

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

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

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

or can be corroborated by observable market data.

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

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

observable or can be corroborated by observable market data.

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

1 unchanged sentence

These valuations require significant judgment.

of December 31, 2022 and December 31, 2021, the carrying values of cash, and accounts payable, approximate their respective fair value

of December 31, 2023 and 2022, the carrying values of cash, and accounts payable, approximate their respective fair value

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

3 — Summary of Significant Accounting Policies - continued

Value Option (“FVO”) Election

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.

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”)

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 12, Financial Instruments Fair Value Measurements , with respect to the FVO election;

and Note 13, Debt , for a discussion

of the March 2023 Senior Convertible Note.

and Development Expenses

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milestone can be objectively estimated.

Note 2 — Summary of Significant Accounting

Policies - continued

3 — Summary of Significant Accounting Policies - continued

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

26 unchanged sentences

deviations from its position.

October 14, 2021, Lucid Diagnostics Inc.

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

holds a majority-interest equity ownership and has a controlling financial interest, its ownership interest was reduced to below

80% after the IPO.

Accordingly, Lucid Diagnostics Inc.

is included in the PAVmed Inc and Subsidiaries consolidated income tax returns

through October 13, 2021, and effective October 14, 2021, Lucid Diagnostics Inc.

will file its income tax returns on a stand-alone legal

entity basis.

The Lucid Diagnostics Inc.

stand-alone legal entity estimated income tax provision was computed on an assumed separate

income tax return for the periods presented through October 13, 2021, wherein, the estimated income tax provision of Lucid Diagnostics

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

on a stand-alone legal entity basis.

Notwithstanding

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

and Lucid Diagnostics Inc., the Lucid Diagnostics Inc.

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

(as opposed with the respective tax authority)

through October 13, 2021.

The deferred tax asset and /or deferred tax liability;

a valuation allowance on the deferred tax asset, net;

and /or an uncertain tax position, if any;

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

stand-alone legal entity

assumed filing of separate income tax returns.

Loss Per Share

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

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

The basic weighted-average

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

are issued and outstanding during the respective reporting period indicated.

The diluted weighted average common shares outstanding are

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

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

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

The Company’s common stock equivalents

include stock options and unvested restricted stock awards granted under the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan.

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

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

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

common stock of the Company are issued and outstanding during the respective reporting period indicated.

The diluted weighted

average common shares outstanding are the sum of the basic weighted-average common shares outstanding plus the number of common

stock equivalents’ incremental shares on an if-converted basis, computed using the treasury stock method, computed on a

weighted average based on the number of days the incremental shares would potentially be issued and outstanding during the periods

indicated, if dilutive.

The Company’s common stock equivalents include convertible preferred stock, stock options and unvested

restricted stock awards granted under the Lucid Diagnostics 2018 Long-Term Incentive Equity Plan.

Notwithstanding,

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as public companies who are not an EGC.

Note 2 — Summary of Significant Accounting

Policies - continued

3 — Summary of Significant Accounting Policies - continued

Reclassifications

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 consolidated financial statements and accompanying notes to the consolidated

financial statements.

The impact of the reclassifications made to prior year amounts is not material and did not affect net loss.

Accounting Standards Updates Adopted

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

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

ASU 2020-06 simplifies the accounting

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

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

also simplified the assessment of a financial instrument settlement to determine whether a contract is an entity’s own equity qualifies

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

The ASU 2020-06 amendments are effective for fiscal years

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

Early adoption is permitted, but no earlier than fiscal

years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company’s adoption of the ASU

2020-06 guidance as of January 1, 2021 did not have an effect on the Company’s consolidated financial statements.

prior-year amounts have been reclassified to conform to the current year presentation, which includes presenting interest income and

classification of certain general and administrative expenses and research and development expenses within operating expenses on the

statements of operations, in the consolidated financial statements and accompanying notes to the consolidated financial statements.

impact of the reclassifications made to prior year amounts is not material and did not affect net loss.

Recently Adopted Accounting Pronouncements

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

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

consolidated financial statements.

Accounting Standards Updates Not Yet Adopted

December 2023, the FASB issued ASU No.

2019-12, “Income Taxes:

Simplifying the Accounting for Income Taxes”, (“ASU

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

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

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

Adoption of the guidance of ASU

2019-12 is required for annual and interim financial statements beginning after December 15, 2020.

The Company’s adoption of the

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

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

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

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

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

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

2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”),

which is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 provide

for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

is effective for the Company prospectively to all annual periods beginning after December 15, 2024.

Early adoption is permitted.

currently evaluating the impact this update will have on our consolidated financial statements and disclosures.

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU

2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim

basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently

required annually.

The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The guidance is applied retrospectively to all periods

presented in the financial statements, unless it is impracticable.

We are currently evaluating the impact this update will have on our

consolidated financial statements and disclosures.

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements:

Codification Amendments in Response to

the SEC’s Disclosure Update and Simplification Initiative.

This update modifies the disclosure or presentation requirements of a

variety of topics in the Accounting Standards Codification to conform with certain SEC amendments in Release No.

33-10532, Disclosure

Update and Simplification.

The amendments in this update should be applied prospectively, and the effective date for each amendment will

be the date on which the SEC’s removal of that related disclosure from Regulation S-X or S-K becomes effective.

However, if the

SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification

and not become effective.

Early adoption is prohibited.

The Company is currently evaluating the potential impact of this guidance on its

consolidated financial statements.

4 — Revenue from Contracts with Customers

5 unchanged sentences

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 Lucid Diagnostics Inc., and RDx, with such agreement further discussed in Note

7, Asset Purchase Agreement and Management Services Agreement .

the years ended December 31, 2022 and December 31, 2021, the Company recognized total revenue of $ 377 and $ 500 , respectively.

recognized revenue of $ 188 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.

In addition, the Company’s revenue for the year ended December 31, 2022, includes $ 189 of 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.

In the year ended December 31, 2021, the Company recognized total revenue of $ 500 under the EsoGuard Commercialization

between LucidDx Labs, a wholly-owned subsidiary of the Company, and RDx, with such agreement further discussed in Note 6, Asset Purchase

Agreement and Management Services Agreement .

the year ended December 31, 2023, the Company recognized revenue of $ 2,428 , 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 year ended December 31, 2022 was $ 377 , resulting from the

delivery of patient EsoGuard test results, 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.

monthly fee was deemed to be collectible for such period as RDx has timely paid the applicable respective monthly fee.

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.

the year ended December 31, 2022, the cost of revenue was $ 3,614 and was primarily related to costs for our laboratory operations and

EsoCheck device supplies, however also includes $ 369 reflecting costs attributable to delivering the services under the EsoGuard Commercialization

Agreement for the period January 1, 2022 to February 25, 2022.

In the year ended December 31, 2021, the cost of revenue was $ 585 , which

solely related to the EsoGuard Commercialization Agreement.

4 — Patent License Agreement - Case Western Reserve University

Diagnostics Inc.

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

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

The Amended CWRU License Agreement

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

The Amended CWRU License Agreement terminates upon the expiration of certain related patents, or on May 12, 2038 in countries

where no such patents exist, or upon expiration of any exclusive marketing rights granted by the FDA or other U.S.

government agency,

whichever comes later.

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

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

referred to as “EsoCheck®”;

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

referred to as “EsoGuard®”;

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

CWRU License Agreement Fee was $ 273 .

On the August 23, 2021 effective date of the Amended CWRU License Agreement, the remaining balance

of $ 223 became payable, and such amount was paid in September 2021.

Additionally, also in September 2021, the Company paid a $ 10 amendment

fee in connection with the Amended CWRU License Agreement.

Additionally, the Amended CWRU License Agreement provides for each of patent

fees reimbursement payments;

milestone payments;

and royalty payments - each as discussed below.

Fees Reimbursement

Diagnostics Inc.

is responsible for reimbursement of certain CWRU billed patent fees.

See Note 5, Related Party Transactions ,

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

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

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

which were achieved in accordance

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

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

The CWRU License Agreement was amended effective February

12, 2021, to:

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

to eliminate the payment

with respect to the commercialization milestone;

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

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

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

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

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

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

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

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

5.0% of Net Sales up to $100.0 million per year;

and 8.0% of Net Sales of $100.0 million or greater per year, with such amounts

subject-to a minimum annual royalty fee.

base minimum annual royalty fee is $ 50

commencing January 1 following the first anniversary of the “First Commercial Sale” of a “Licensed Product”

(as such terms are defined in the Amended CWRU License Agreement).

The minimum annual royalty fee increases to each of:

if the annual “Net Sales” (as defined in the Amended CWRU License Agreement) exceed $ 25.0

million up to $ 50.0

if annual Net Sales exceed $ 50.0

million up to $ 100.0

if annual Net Sales exceed $ 100.0

The Company recognized a 5.0 %

royalty fee payment liability as of December 31, 2022 and 2021 with respect to the revenue recognized under the EsoGuard

Commercialization Agreement, dated August 1, 2021, between Lucid Diagnostics Inc.

and Research Dx Inc.

The Company recorded a

royalty expense of $ 23

and $ 25 for the

years ended December 31, 2022 and 2021, respectively.

Additionally,

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

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

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

Agreements with Physician Inventors - Intellectual Property - CWRU License Agreement

Diagnostics Inc.

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

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

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

the agreements’ renewal effective May 12, 2021.

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

restricted stock awards under the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan;

and stock options under the PAVmed Inc.

2014 Long-Term Incentive Equity Plan.

See Note 5, Related Party Transactions, with respect to the consulting fee expense and stock

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

awards discussed above;

and Note 14, Stock-Based Compensation , for information regarding each of the “Lucid Diagnostics

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

2014 Long-Term Incentive Equity Plan”.

the year ended December 31, 2023, the cost of revenue was $ 5,979 , primarily related to costs for our laboratory operations and EsoCheck

device supplies.

The Company’s cost of revenue for the year ended December 31, 2022 was $ 3,614 , primarily related to costs for

our laboratory operations and EsoCheck device supplies, along with the costs attributable to delivering the services under the EsoGuard

Commercialization Agreement for the period January 1, 2022 through its termination on February 25, 2022.

5 — Related Party Transactions

Western Reserve University and Physician Inventors - Amended CWRU License Agreement

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 consolidated statement of

operations for the periods indicated are summarized as follows:

of Incurred Expenses of Minority Shareholders

Ended December 31,

– Royalty Fees

and Administrative Expense

CWRU – License Agreement - reimbursement of patent legal fees

compensation expense – Physician Inventors’ restricted stock awards

and Development Expense

CWRU – License Agreement - reimbursement of patent legal fees

- Physician Inventors’ consulting agreements

research agreement

compensation expense – Physician Inventors’ stock options

Related Party Expenses

- Management Services Agreement

Company’s daily operations are managed by personnel employed by PAVmed Inc., for which Lucid Diagnostics Inc.

incurs a service

fee, referred to as the “MSA Fee”, according to the provisions of a Management Services Agreement (“MSA”) with

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

board of directors.

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 Lucid

Diagnostics Inc.

and PAVmed Inc.

On August 11, 2022, the respective Company’s boards of directors approved a sixth amendment to

the MSA to increase the MSA Fee to $ 550 per month from $ 390 per month, with such increase effective on a prospective basis that commenced

July 1, 2022.

Pursuant to the sixth amendment, the parties agreed PAVmed Inc.

may elect to receive payment of the monthly MSA Fee in

cash or in shares of common stock of the Company, with such shares valued at the volume weighted average price (“VWAP”) during

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

However, in no event will PAVmed Inc.

be entitled to receive under the MSA, as amended, more than 7,709,836 shares of common stock the Company (representing 19.99% of our

outstanding shares of common stock as of immediately prior to the execution of the sixth amendment).

The shares that may be issued under

the MSA, as amended, are being offered and sold in transactions exempt from registration under the Securities Act of 1933, as amended,

in reliance on the exemption afforded under Section 4(a)(2) thereof.

accordance with the MSA, on November 30, 2022 PAVmed elected to receive payment of $ 1,650 in aggregate monthly fees under the MSA through

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

Common Stock.

aggregate Due To:

for the periods indicated is summarized as follows:

Schedule of Due To:

Employee-Related Costs

Balance - December 31, 2022

ERC - Benefits

On Behalf Of (OBO) activities

Cash payments to PAVmed Inc.

Balance - December 31, 2023

5 — Related Party Transactions - continued

- Management Services Agreement

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 an 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 six months ended December 31, 2022, MSA

fees were $ 550 per month.

During the six months ended June 30, 2022, MSA Fees were $ 390 per month.

to December 31, 2023, in March 2024, we entered into an eighth amendment to the MSA.

the amendment, the monthly fee due from the Company to PAVmed was increased from $ 750 to $ 833 .

Subsequent to December 31, 2023, on January

26, 2024, PAVmed elected to receive payment of $ 4,675 of fees and reimbursements due from Lucid, through the issuance of 3,331,771 shares

of Lucid Diagnostics common stock.

MSA Fee expense classification in the consolidated statement of operations for the periods noted is as follows:

of MSA Fee Expense Classification in Statements of Operations

Ended December 31,

& Administrative

& Development

classification of the MSA Fee as presented above is based on the PAVmed Inc.

classification of employee salary expense.

In this regard,

classifies employee salary expense as cost-of-revenue for employees engaged in service delivery under the EsoGuard Commercialization

Agreement, and sales and marketing expenses for employees performing sales, marketing, and reimbursement activities and functions, general

and administrative, and research and development except for those employees who are engaged in product and services engineering development

and design and /or clinical trials activities, for which such employee salary is classified as research and development expense.

Related Party Transactions

Diagnostics Inc.

previously entered into a consulting agreement with Stanley N.

Lapidus, effective June 2020 with such consulting agreement

providing for compensation on a contractual rate per hour for consulting services provided.

In July 2021, Mr.

Lapidus was appointed as

Vice Chairman of the Board of Directors of Lucid Diagnostics Inc.

Lucid Diagnostics Inc.

recognized general and administrative expense

of $ 21 in the year ended December 31, 2021 in connection with the consulting agreement.

6 — Due To PAVmed Inc.

aggregate Due To:

for the periods indicated is summarized as follows:

of Senior Unsecured Promissory Note

Senior Unsecured Promissory Note

Unsecured Senior Promissory Note

Capital Cash Advances

- December 31, 2020

Behalf Of (OBO) activities

- Payroll & Benefits

Note Issuance

of Promissory Note to LUCD Common Stock

on Promissory Note

payments to PAVmed Inc.

to PAVmed Inc.

settled in LUCD stock

- December 31, 2021

Behalf Of (OBO) activities

- Payroll & Benefits

payments to PAVmed Inc.

to PAVmed Inc.

settled in LUCD stock

- December 31, 2022

October 5, 2021, PAVmed Subsidiary Corp, a wholly-owned subsidiary of PAVmed Inc., acquired 100 % of the outstanding membership interest

of CapNostics, LLC (“CapNostics”), an unrelated third-party, for total (gross) purchase consideration of approximately $ 2.1

million in cash, paid at the closing of the transaction.

Subsequently, effective April 1, 2022, PAVmed Subsidiary Corp and the Company

entered into an agreement pursuant to which PAVmed Subsidiary Corp assigned to Lucid Diagnostics Inc.

100 % of the membership interest

in CapNostics, LLC, resulting in the recognition by the Company principally of an acquired defensive technology intangible asset, and

a $ 2.1 million payment obligation Due To:

Additionally, Lucid Diagnostics Inc.

was also assigned on a prospective basis effective

April 1, 2022, the consulting agreement with the previous principal owner of CapNostics, LLC.

The transfer was accounted for as entities

under common control.

See Note 11, Intangible Assets, net, with respect to the transferred intangible asset.

November 30, 2022, pursuant to a supplement to the CapNostics Assignment Agreement, the Company, PAVmed Sub and PAVmed agreed that the

Company would pay the price for the interests through the issuance to PAVmed of 1,145,086 shares of the Company’s common stock.

and Benefit Expense Reimbursement Agreement (“PBERA”)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In accordance

with the PBERA, on November 30, 2022, PAVmed elected for the Company to reimburse PAVmed for $ 2,719 in accrued and unreimbursed payroll

and benefit-related expenses paid by PAVmed on behalf of the Company through the third quarter of 2022 through the issuance of 1,479,326

shares of the Company’s common stock.

Note 6 — Due To PAVmed Inc.

Services Agreement

accordance with the MSA, on November 30, 2022 PAVmed has elected to receive payment of $ 1,650 in monthly fees under the MSA through the

issuance of 750,818 shares of Lucid Diagnostics Inc.

Common Stock.

For further information about the MSA, see Note 5, Related Party

Transactions.

License Agreement with PAVmed Inc.

has been in development as an esophageal ablation device by PAVmed Inc., with the intent to allow a clinician to treat dysplastic BE

before it can progress to EAC, a highly lethal esophageal cancer, and to do so without the need for complex and expensive capital equipment.

In April 2022, following the approval from both the Company’s and PAVmed Inc.’s boards of directors, the companies entered

into an intercompany license agreement (“EsoCure License Agreement”), pursuant to which the Company was granted the rights

to commercialize EsoCure, a technology under development intended for the treatment of dysplastic Barrett’s Esophagus.

License Agreement, includes a royalty arrangement whereby the Company will pay PAVmed Inc.

a 5 % royalty on all EsoCure sales up to $ 100

million per calendar year, and an 8.0 % royalty on annual sales in excess of $ 100 million per calendar year.

The Company is obligated

to reimburse PAVmed Inc.

for any ongoing development costs and cumulative patent expenses associated with the licensed technology.

Unsecured Promissory Note

October 13, 2021, Lucid Diagnostics Inc.

issued 15,803,200 shares of its common stock to PAVmed Inc.

upon the election by PAVmed Inc.

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

Unsecured Promissory Note was issued by Lucid Diagnostics Inc.

to PAVmed Inc.

with a face value principal of $ 22.4 million, which replaced

the aggregate outstanding and payable balance of the Due To:

as of June 1, 2021, had an annual interest rate of 7.875 % , a

contractual maturity date of May 18, 2028 , and, at the election of PAVmed Inc., provided for the partial or full repayment of the face

value principal and accrued but unpaid interest thereon by the issue of shares of Lucid Diagnostics Inc.

common stock at a conversion

price of $ 1.42 per share of Lucid Diagnostics Inc.

common stock.

Sales & Marketing

General & Administrative

Research & Development

Total MSA Fee

classification of the MSA Fee as presented above is based on the PAVmed classification of employee salary expense and other operating

In this regard, PAVmed classifies employee salary expense as sales and marketing expenses for employees performing sales, sales

support and marketing activities, research and development expenses for those employees who are engaged in product and services engineering

development and design and /or clinical trials activities, and other employees and activities classified as general and administrative.

6 — Asset Purchase Agreement and Management Services Agreement

Purchase Agreement - ResearchDx Inc.

its wholly-owned subsidiary, LucidDx Labs Inc., the Company entered into an asset purchase agreement (“APA”) dated February

25, 2022, with ResearchDx, Inc.

Purchase Agreement and Management Services Agreement - ResearchDx Inc.

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

acquired certain assets from RDx which were combined with LucidDx Labs Inc.

purchased and leased property and equipment to establish

a Company-owned CLIA certified, CAP accredited commercial clinical laboratory capable of performing the EsoGuard® Esophageal DNA

assay, inclusive of DNA extraction, next generation sequencing (“NGS”) and specimen storage.

Prior to February 25, 2022,

RDx provided such laboratory services at its owned CLIA-certified, CAP-accredited clinical laboratory.

Under the APA-RDx,

LucidDx Labs 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.

total purchase price consideration payable under the APA-RDx is a face value of $ 3,200 comprised of three contractually specified periodic

2 unchanged sentences

10, Intangible Assets, net.

In the year ended December 31, 2022, a total of $ 3,200 of cash was paid with respect to the periodic

Additionally,

the APA-RDx requires the Company to pay a total of $ 3,000 to be paid as twelve (12) equal installment payments commencing May 25, 2022

and then on each three month anniversary thereof, inclusive of a final installment payment on February 25, 2025, with such installment

payments recognized as current period expense as incurred.

In the year ended December 31, 2022, as provided for in the APA-RDx, installment

payments were settled with the issuances of 326,701 shares of common stock of Lucid Diagnostics Inc., with such shares having fair values

of $ 653 (with the fair value measured as the quoted closing price on the dates the shares were issued), which was recognized as a current

period expense included in general and administrative expenses in the accompanying consolidated statement of operations.

APA-RDx provides for each of an acceleration and a cancellation of the remaining unpaid installment payments, summarized as follows:

payment of the remaining unpaid installment payments will be accelerated as immediately due

and payable as of the date the “MSA-RDx” (as such agreement is discussed below)

is either terminated by LucidDx Labs Inc.

without cause or if it is terminated by mutual

agreement between the Company and RDx.

payment of the remaining unpaid installment payments will be cancelled if the MSA-RDx is

terminated by LucidDx Labs Inc.

for cause, defined as the occurrence of any one of:

material breach by RDx which is not cured within thirty days of LucidDx Labs Inc.

(ii) RDx becomes insolvent and /or bankrupt;

or (ii) RDx fails to comply with applicable

statutes, is barred from participating in federal health care programs, or by action of changes

in law or regulation, or by action of judicial interpretation of law, or by judicial civil

proceedings decisions.

Note 7 — Asset Purchase Agreement and Management

Services Agreement - continued

Services Agreement - Research Dx Inc

and RDx entered into a separate management services agreement (“MSA-RDx”), dated and effective February 25, 2022,

with such agreement having a term of three years commencing on the agreement’s effective date, and an initial fee of $ 150 per quarter.

The MSA-RDx provides for the cancellation of the remaining unpaid installment payments upon termination of the MSA-RDx for any reason

or no reason by either party thereto.

of Management Services Agreement and Modification of Other Payment Obligations - ResearchDx Inc.

2 unchanged sentences

The termination was effective as February

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

in accordance with the terms of the MSA-RDx.

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.

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

3 unchanged sentences

expenses and other current assets consisted of the following as of:

of Prepaid Expenses and Other Current Assets

payments to service providers and suppliers

cell collection supplies

mailer supplies

prepaid expenses, deposits and other current assets

Schedule of Prepaid Expenses and Other Current Assets

December 31, 2023

December 31, 2022

Advanced payments to service providers and suppliers

Prepaid insurance

Total prepaid expenses, deposits and other current assets

8 — Fixed Assets

1 unchanged sentence

of Fixed Assets

and office equipment

under construction

Accumulated Depreciation

Fixed Assets, net

(1) Lesser of remaining

lease term or estimated useful life.

Estimated Useful Life

December 31, 2023

December 31, 2022

Computer and office equipment

Laboratory equipment

Furniture and fixtures

Leasehold improvements

Total Fixed Assets

Less Accumulated Depreciation

Total Fixed Assets, net

of remaining lease term or estimated useful life.

expense of $ 478 and $ 287 for the years ended December 31, 2023 and 2022, respectively, is included in general and administrative expenses

1 unchanged sentence

the year ended December 31, 2023, the Company entered into additional lease agreements that have commenced and are classified as operating

leases and short-term leases, including for each of:

a commercial clinical laboratory and additional Lucid Test Centers.

leases and short-term leases for additional Lucid Test Centers.

components of lease expense were as follows:

of Components of Lease Expense

Ended December 31,

Years Ended December 31,

Operating lease cost

Short-term lease cost

Variable lease cost

Total lease cost

Company’s future lease payments as of December 31, 2023, which are presented as operating lease liabilities, current portion and

1 unchanged sentence

of Future Lease Payments of Operating Lease Liabilities

lease payments

Total lease payments

imputed interest

value of lease liabilities

Present value of lease liabilities

disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows:

of Cash Flow Supplemental Information

Ended December 31,

Cash paid for amounts

included in the measurement of lease liabilities

cash flows from operating leases

investing and financing activities

assets obtained in exchange for new operating lease liabilities

Weighted-average

remaining lease term - operating leases (in years)

Weighted-average

discount rate - operating leases

of December 31, 2022, the Company’s right-of-use assets from operating leases are $ 2,008 , which are reporting in right-of-use assets

- operating leases in the consolidated balance sheets.

As of December 31, 2022, the Company has outstanding operating lease obligations

of $ 1,999 , of which $ 962 is reported in operating lease liabilities, current portion and $ 1,037 is reporting in operating lease liabilities

Years Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

Non-cash investing and financing activities

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted-average remaining lease term - operating leases (in years)

Weighted-average discount rate - operating leases

of December 31, 2023 and 2022, the Company’s right-of-use assets from operating leases were $ 1,307 and $ 2,008 , respectively,

which are reported in operating lease right-of-use assets in the consolidated balance sheets.

As of December 31, 2023 and 2022, the Company had outstanding operating lease obligations of $ 1,305 and $ 1,999 , respectively, of which $ 1,106 and $ 962 , respectively,

are reported in operating lease liabilities, current portion and $ 199 and $ 1,037 , respectively, are reported in operating lease liabilities

less current portion in the Company’s consolidated balance sheets.

The Company did not have operating leases as of December 31,

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.

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

10 — Intangible Assets, net

assets, less accumulated amortization, consisted of the following as of:

of Intangible Assets Accumulated Amortization

licenses and certifications and laboratory information management software

Intangible assets

Accumulated Amortization

Schedule of Intangible Assets

Estimated Useful Life

December 31, 2023

December 31, 2022

Defensive technology

Laboratory licenses and certifications and laboratory information management software

Total Intangible assets

Less Accumulated Amortization

Intangible Assets, net

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 to the Company from PAVmed Subsidiary

Corp (a wholly-owned subsidiary of PAVmed Inc.).

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, LLC, 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 LLC transaction

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.

10 unchanged sentences

APA-RDx February 25, 2022 transaction date.

expense of the intangible assets discussed above was $ 1,649 and $ 0 for the years ended December 31, 2022 and 2021, respectively, and

is included in amortization of acquired intangible assets in the accompanying consolidated statements of operations.

expense of the intangible assets discussed above was $ 2,021 and $ 1,649 for the years ended December 31, 2023 and 2022, respectively,

and is included in amortization of acquired intangible assets in the accompanying consolidated statements of operations.

As of December

2022, 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:

of Future Amortization Expense

31, 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

11 — Accrued Expenses and Other Current Liabilities

1 unchanged sentence

Schedule of Accrued Expenses and Other Current Liabilities

and Employee Benefits

Amended License Agreement - Royalty fee

accrued expenses and other current liabilities

Note 4, Patent License Agreement - Case Western Reserve University , for a discussion of the CWRU License Agreement.

13 — Commitment and Contingencies

the ordinary course of our business, particularly as it begins commercialization of its products, the Company may be subject to certain

other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from

time to time.

Except as otherwise noted herein, the Company does not believe it is currently a party to any other pending legal proceedings.

Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome could include monetary damages,

and excessive verdicts can result from litigation, and as such, could result in a material adverse impact on the Company’s business,

financial position, results of operations, and /or cash flows.

Additionally, although the Company has specific insurance for certain

potential risks, the Company may in the future incur judgments or enter into settlements of claims which may have a material adverse

impact on the Company’s business, financial position, results of operations, and /or cash flows.

December 31, 2023

December 31, 2022

Compensation and Employee Benefits

CWRU Amended License Agreement - Royalty fee

Operating expenses

Total accrued expenses and other current liabilities

12 — Financial Instruments Fair Value Measurements

Fair Value Measurements

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

December 31, 2023

March 2023 Senior Convertible Note

1 There were no transfers

between the respective Levels during the year ended December 31, 2023.

discussed in Note 13, 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.

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.

estimated fair value of the March 2023 Senior Convertible Note as of each of March 21, 2023 (date of issuance) and December 31, 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:

December 31, 2023

Face value principal payable

Required rate of return

Conversion Price

Value of common stock

Expected term (years)

Risk free rate

Dividend yield

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 and the volatility of similar entities within the medical device industry.

Changes in these assumptions can materially affect the estimated fair values.

fair value and face value principal outstanding of the March 2023 Senior Convertible Note as of the dates indicated are as follows:

of Outstanding Debt

Contractual Maturity Date

Stated Interest Rate

Conversion Price per Share

Face Value Principal Outstanding

March 2023 Senior Convertible Note

March 21, 2025

Balance as of December 31, 2023

changes in the fair value of debt during the year ended December 31, 2023 is as follows:

of Changes in Fair Value of Debt

Other Income (expense)

Fair Value - December 31, 2022

Face value principal – issue date

Fair value adjustment – issue date

Installment repayments – common stock

Non-installment payments – common stock

Change in fair value

Fair Value at December 31, 2023

Other Income (Expense) - Change in fair value – year ended December 31, 2023

2023 Senior Secured Convertible Note

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.

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.

March 2023 Senior Convertible Note proceeds were $ 9.925 million after deducting a $ 1.186 million lender fee and offering costs.

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 consolidated statement of operations.

the period from March 21, 2023 to September 20, 2023, the Company was 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 $ 391 for the year ended

December 31, 2023.

13 — Debt - continued

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.

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.

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.

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.

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 December 31, 2023, the Company was in compliance, and as of the date hereof, the Company is in compliance, with

the Financial Tests.

March 2023 Senior Convertible Note installment payments may be made in shares of Lucid Diagnostics common stock at a conversion price

that is the lower of the contractual conversion price and 82.5 % of the two lowest VWAPs during the last 10 trading days preceding the

date of conversion, subject to a conversion price floor of $ 0.30 .

The notes are also subject to certain provisions that may require redemption

upon the occurrence of an event of default, a change of control, or certain equity issuances.

the year ended December 31, 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 year ended December 31, 2023.

Subsequent to December 31, 2023, as of March 21,

2024, approximately $ 260 of interest expense thereon, was settled

through the issuance of 242,390 shares of common stock of the Company, with such shares having a fair value of approximately $ 359

(with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).

14 — Stock-Based Compensation

Diagnostics Inc.

2018 Long-Term Incentive Equity Plan

Diagnostics 2018 Long-Term Incentive Equity Plan

Lucid Diagnostics Inc.

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

2018 Equity Plan”) is separate and apart

from the PAVmed Inc.

2014 Equity Plan discussed below.

The Lucid Diagnostics Inc.

2018 Equity Plan is designed to enable Lucid Diagnostics

to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares of common stock of Lucid

Diagnostics Inc.

The types of awards that may be granted under the Lucid Diagnostics Inc.

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 Inc.

board of directors.

total of 9,144,000 shares of common stock of Lucid Diagnostics Inc.

are reserved for issuance under the Lucid Diagnostics Inc.

Plan, with 3,821,139 shares available for grant as of December 31, 2022.

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 Inc.

2018 Equity Plan, as of December 31, 2022.

In January 2023, the number of shares available for grant was increased by 2,500,000 in accordance with the evergreen provisions of the

Diagnostics Inc.

Stock Options

Diagnostics Inc.

stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan and stock options granted outside such plan

are summarized as follows:

of Stock Options Issued and Outstanding Activities

of Stock Options

Average Exercise Price

Contractual Term (Years)

stock options at December 31, 2020

stock options at December 31, 2021

stock options at December 31, 2022 (3)

and exercisable stock options at December 31, 2022

options granted under the Lucid Diagnostics Inc.

2018 Equity Plan and those granted outside

such plan generally vest ratably over twelve quarters, with the vesting commencing with the

grant date quarter-end, and have a ten-year contractual term from date-of-grant.

intrinsic value is computed as the difference between the quoted price of the Lucid Diagnostics

common stock on each of December 31, 2022 and December 31, 2021 and the exercise price

of the underlying Lucid Diagnostics Inc.

stock options, to the extent such quoted price is

greater than the exercise price.

outstanding stock options presented in the table above, are inclusive of 423,300 stock options

granted outside the Lucid Diagnostics Inc.

2018 Equity Plan, as of December 31, 2022 and

December 31, 2021.

Note 5, Related Party Transactions , for a summary of the stock-based compensation expense recognized with respect to the stock

options granted under the Lucid Diagnostics Inc.

2018 Equity Plan to the Physician Inventors.

to December 31, 2022, in January and February 2023, the company granted 2,672,500 stock options with a weighted average exercise price

of $ 1.31 which will generally vest one-third after one year then ratably over the next eight quarters.

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.

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.

total of 11,644,000 shares of common stock of Lucid Diagnostics are reserved for issuance under the Lucid Diagnostics 2018 Equity Plan,

with 2,832,133 shares available for grant as of December 31, 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 December 31, 2023.

2024, the number of shares available for grant was increased by 2,680,038 in accordance with the evergreen provisions of the plan.

14 — Stock-Based Compensation - continued

Diagnostics Inc.

Restricted Stock Awards

Diagnostics Inc.

restricted stock awards granted under the Lucid Diagnostics Inc.

2018 Equity Plan and restricted stock awards granted

outside such plan are summarized as follows:

Diagnostics Stock Options

Diagnostics stock options granted under the Lucid Diagnostics 2018 Equity Plan and stock options granted outside such plan are summarized

of Stock Options Issued and Outstanding Activities

Stock Options

Exercise Price

Intrinsic Value (2)

Outstanding stock options at December 31, 2021

Outstanding stock options at December 31, 2022

Outstanding stock options at December 31, 2023 (3)

Vested and exercisable stock options at December 31, 2023

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.

intrinsic value is computed as the difference between the quoted price of the Lucid Diagnostics common stock on each of December

31, 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.

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 December 31, 2023 and December 31, 2022.

to December 31, 2023 ,

on February 22, 2024, the company granted 2,895,000 stock options to employees and directors under the Lucid Diagnostics Inc 2018

Equity Plan with a weighted average exercise price of $ 1.25 for which will generally vest one-third

after one year then ratably over the next eight quarters.

Diagnostics Restricted Stock Awards

Diagnostics restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan and restricted stock awards granted outside

such plan are summarized as follows:

of Restricted Stock Award Activity

of Restricted Stock Awards

Average Grant Date Fair Value

Unvested restricted

stock awards as of December 31, 2020

restricted stock awards as of December 31, 2021 (1)

Unvested restricted

stock awards as of December 31, 2021

restricted stock awards as of December 31, 2022 (1)

unvested restricted stock awards presented in the table above, are inclusive of 50,000 restricted

stock awards granted outside the Lucid Diagnostics Inc.

2018 Equity Plan as of December 31,

2022 and December 31, 2021.

January 7, 2022, 320,000 restricted stock awards were granted under the Lucid Diagnostics Inc 2018 Equity Plan, with such restricted

stock awards having a single vesting date on January 7, 2025, and an aggregate grant date fair value of approximately $ 1.4 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.

Number of Restricted

Weighted Average

Grant Date Fair Value

Unvested restricted stock awards as of December 31, 2021

Unvested restricted stock awards as of December 31, 2022 (1)

Unvested restricted stock awards as of December 31, 2023

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 year

ended December 31, 2023.

2014 Equity Plan

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

2014 Equity Plan”), is separate and apart from the Lucid

Diagnostics Inc.

PAVmed 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).

1 unchanged sentence

Compensation Expense

stock-based compensation expense recognized by the Company for both the Lucid Diagnostics Inc.

2018 Equity Plan and the PAVmed Inc.

Equity Plan, for the periods indicated, was as follows:

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:

of Stock-Based Compensation Expense

Ended December 31,

Diagnostics Inc 2018 Equity Plan – cost of revenue

Diagnostics Inc 2018 Equity Plan – sales and marketing expenses

Diagnostics Inc 2018 Equity Plan - general and administrative expenses

Diagnostics Inc 2018 Equity Plan - research and development expenses

Inc 2014 Equity Plan - cost of revenue

Inc 2014 Equity Plan - sales and marketing expenses

Inc 2014 Equity Plan - general and administrative expenses

Inc 2014 Equity Plan - research and development expenses

stock-based compensation expense

Lucid Diagnostics 2018 Equity Plan – cost of revenue

Lucid Diagnostics 2018 Equity Plan – sales and marketing

Lucid Diagnostics 2018 Equity Plan - general and administrative

Lucid Diagnostics 2018 Equity Plan - research and development

PAVmed 2014 Equity Plan - cost of revenue

PAVmed 2014 Equity Plan - sales and marketing

PAVmed 2014 Equity Plan - general and administrative

PAVmed 2014 Equity Plan - research and development

Total stock-based compensation expense

stock-based compensation expense, as presented above, is inclusive of:

stock options and restricted stock awards granted under the Lucid

Diagnostics Inc.

2018 Equity Plan to employees of PAVmed Inc., the Physician Inventors, and members of the board of directors of Lucid

Diagnostics Inc., as well as the stock options granted under the PAVmed Inc.

2014 Equity Plan to the Physician Inventors.

Diagnostics 2018 Equity Plan to employees of PAVmed, the physician inventors of the technology licensed under the Amended CWRU License

Agreement, 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.

of December 31, 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 Inc.

2018 Equity Plan and the PAVmed Inc.

Equity Plan, as discussed above, is as follows:

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:

of Unrecognized Compensation Expense and Weighted Average Remaining Service Period

Average Remaining Service Period (Years)

Diagnostics Inc.

2018 Equity Plan

2014 Equity Plan

compensation expense recognized with respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan was based on

a weighted average estimated fair value of such stock options of $ 2.30 per share and $ 5.13 per share during the periods ended December

Weighted Average

Remaining Service

Period (Years)

Lucid Diagnostics 2018 Equity Plan

Stock Options

Restricted Stock Awards

PAVmed 2014 Equity Plan

Stock Options

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 $ 2.30 per share during the years ended December 31, 2023

and 2022, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:

Schedule of Stock-based Compensation Valuation Assumptions

Ended December 31,

term of stock options (in years)

stock price volatility

free interest rate

dividend yield

14 — Stock-Based Compensation - continued

Diagnostics, Inc Employee Stock Purchase Plan (“ESPP”)

Lucid Diagnostics Inc Employee Stock Purchase Plan (“Lucid Diagnostics Inc ESPP”), initial six-month stock purchase period

was April 1, 2022 to September 30, 2022.

A total of 84,030 shares of common stock of Lucid Diagnostics Inc were purchased for proceeds

of approximately $ 109 on September 30, 2022 under the Lucid Diagnostics Inc.

The Lucid Diagnostics Inc.

ESPP has a total reservation

of 500,000 shares of common stock of which 415,970 shares are available-for-issue as of December 31, 2022.

In January 2023, the number

of shares available-for-issue was increased by 500,000 in accordance with the evergreen provisions of the plan.

of Stock-based Compensation Valuation Assumptions

Years Ended December 31,

Expected term of stock options (in years)

Expected stock price volatility

Risk free interest rate

Expected dividend yield

Diagnostics Inc Employee Stock Purchase Plan (“Lucid ESPP”)

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

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 December 31, 2023.

In January 2024, our board authorized an increase in the number of shares available

for issue by 500,000 .

15 — Stockholders’ Equity

Diagnostics Inc.

of December 31, 2022 and December 31, 2021 there were 40,518,792 and 34,917,907 shares of common stock issued and outstanding, respectively.

As of December 31, 2022, PAVmed Inc.

holds 31,302,420 shares, representing a majority-interest equity ownership and PAVmed Inc.

controlling financial interest in Lucid Diagnostics Inc.

A Preferred Stock Offering

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:

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.

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.

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.

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.

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.

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).

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.

A-1 Preferred Stock Offering

October 17, 2023, the Company issued 5,000 shares of newly designated 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.

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.

Subsequent to December 31, 2023, on March 13, 2024, the Company issued an additional 5,670 shares of Series A-1 Preferred

Stock, all of which was subsequently exchanged for Series B Preferred Stock (as described below).

Series B Preferred Stock Offering and Exchange

to December 31, 2023, on March 13, 2024, the Company issued 44,285

shares of newly designated Series B Convertible Preferred Stock (the “Series B Preferred Stock”).

The terms of the

Series B Preferred Stock are substantially identical to the terms of the Series A Preferred Stock, except that the Series B

Preferred Stock has a conversion price of $ 1.2444 ,

and the Series B Preferred Stock is a voting security (subject to applicable ownership limitations).

In addition, the Series B

Preferred Stock issued in exchange for Series A Preferred Stock and Series A-1 Preferred Stock may be converted, at the election of

the Company at any time after the six-month anniversary of the issuance of such shares of Series B Preferred Stock, upon written

notice given to the holders of such shares, if the volume weight average price of our common stock has been at least $ 8.00

per share (subject to adjustment in the event of stock splits, stock dividends, and similar transactions) on 20 out of 30

consecutive trading days ending within 15 trading days prior to the date on which such notice is given (subject to certain limited

The aggregate gross proceeds from the sale of shares in such offering were $ 18.1

As a result of 100% of the then-outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock being

exchanged for shares of Series B Preferred Stock in the Series B Preferred Stock Offering and Exchange, no shares of Series A Preferred

Stock or Series A-1 Preferred Stock remain outstanding.

Diagnostics Common Stock

June 2023, the Company received shareholder approval to issue up to 200 million shares of its common stock, an increase of 100 million

of December 31, 2023 and 2022 there were 42,329,864 and 40,518,792 shares of common stock issued and outstanding, respectively.

As of December 31, 2023, PAVmed holds 31,302,420 shares, representing a majority-interest equity ownership and PAVmed has a controlling

financial interest in the Company.

15 — Stockholders’ Equity - continued

to December 31, 2023, on January 26, 2024 PAVmed elected to receive payment of $ 4,675

of fees and reimbursements due from Lucid, through the issuance of 3,331,771

shares of Lucid Diagnostics common stock.

Substantially all of such shares were distributed by PAVmed to its shareholders on

February 15, 2024.

Following such distribution PAVmed holds 31,302,444

shares of Lucid Diagnostics common stock.

Equity Facility and ATM Facility

March 28, 2022, Lucid Diagnostics, Inc.

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 Lucid Diagnostics Inc.

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.

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

common stock of the Company were issued for proceeds of approximately $ 1,807 .

connection with the execution of the agreement for the committed equity facility, the Company paid Cantor $ 1.0 million as consideration

for its irrevocable commitment to purchase the shares upon the terms and subject to the satisfaction of the conditions set forth in such

In addition, pursuant to the agreement, we agreed to reimburse Cantor for certain of its expenses.

The Company also entered

into a registration rights agreement with Cantor.

The Company has the right to terminate the agreement at any time after initial satisfaction

of the conditions to Cantor’s obligation to purchase shares under the facility, at no cost or penalty, upon three trading days’

prior written notice.

In November 2022, the Company 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 the Company and Cantor Fitzgerald &

March 28, 2022, the Company entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”).

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 December 31, 2023.

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.

In the year ended December

31, 2022, there were no shares sold through the at-the-market equity facility.

Subsequent to

December 31, 2022, through March 9, 2023, we sold 230,068 shares through its at-the-market equity facility for

approximately $ 0.3 million.

31, 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.

16 — Income Taxes

1 unchanged sentence

of Income Tax (Benefit) Expense

Ended December 31,

Years Ended December 31,

Federal, State and Local

State and Local

and Deferred tax (benefit) expense

Current and Deferred tax (benefit) expense

Valuation allowance reserve

tax (benefit) expense

Income tax (benefit) expense

reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as follows:

of Reconciliation of Federal Statutory Income Tax Rate

Ended December 31,

Years Ended December 31,

federal statutory rate

state and local income taxes, net of federal benefit

Permanent differences

Revaluation of state deferred taxes

Federal deferred true-up

State deferred true-up

Valuation allowance

Effective tax rate

tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:

of Net Deferred Tax Assets

Ended December 31,

operating loss

compensation expense

& amortization

Years Ended December 31,

Deferred Tax Assets

Net operating loss

Debt issue costs

Stock-based compensation expense

Accrued expenses

Depreciation & amortization

Research and development expenditures

and development tax credit carryforwards

Tax Liabilities

tax assets, net of deferred tax liabilities

Research and development tax credit carryforwards

Deferred tax assets

Deferred Tax Liabilities

Deferred tax assets, net of deferred tax liabilities

valuation allowance

tax assets, net after valuation allowance

Deferred tax assets, net after valuation allowance

16 — Income Taxes - continued

3 unchanged sentences

the tax rate is recognized as income or expense in the period the change in tax rate is enacted.

required by FASB ASC Topic 740, Income Taxes, (“ASC 740), a “more-likely-than-not” criterion is applied when assessing

the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred

tax asset for tax credit carryforward, to reduce future tax expense.

A valuation allowance is established, when necessary, to reduce

deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount

of the net deferred tax asset will not be realized.

Accordingly, the Company evaluated the positive and negative evidence bearing upon

the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses, concluded it

is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve equal to

the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2022 and 2021.

Diagnostics Inc.

has federal and state net operating loss (“NOL”) carryforwards, available to reduce future taxable income,

if any, as of December 31, 2022 and 2021, as follows:

required by FASB ASC Topic 740, Income Taxes, (“ASC 740”), a “more-likely-than-not” criterion is applied when

assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect

to a deferred tax asset for tax credit carryforward, to reduce future tax expense.

A valuation allowance is established, when necessary,

to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or

partial amount of the net deferred tax asset will not be realized.

Accordingly, the Company evaluated the positive and negative evidence

bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses,

concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve

equal to the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2023 and 2022.

Diagnostics has federal and state net operating loss (“NOL”) carryforwards, available to reduce future taxable income, if

any, as of December 31, 2023 and 2022, as follows:

federal NOL carryforward of approximately $ 103.5 million and $ 65.1 million, respectively,

6 unchanged sentences

Section 382 (provided there was a greater than 50% ownership change, as computed under such IRC Section 382).

discussed herein, on October 14, 2021, Lucid Diagnostics Inc.

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

discussed herein, on October 14, 2021, Lucid Diagnostics completed its initial public offering (“IPO”) of its common stock.

While PAVmed Inc.

holds a majority-interest equity ownership and has a controlling financial interest, its ownership interest

was reduced from 81.8477% before the IPO to 79.9796% after the IPO.

Accordingly, Lucid Diagnostics Inc.

is included in the PAVmed Inc

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

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

The Lucid Diagnostics Inc.

stand-alone legal entity estimated income

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

estimated income tax provision of Lucid Diagnostics Inc.

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

on a stand-alone legal entity basis.

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

and Lucid Diagnostics

Inc., the Lucid Diagnostics Inc.

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

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

The deferred tax asset and /or deferred tax liability;

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

from 81.8477% before the IPO to 79.9796% after the IPO.

Accordingly, Lucid Diagnostics is included in the PAVmed consolidated income

tax returns through October 13, 2021, and effective October 14, 2021, Lucid Diagnostics will file its income tax returns on a stand-alone

legal entity basis.

The Lucid Diagnostics stand-alone legal entity estimated income tax provision was computed on an assumed separate

income tax return for the periods presented through October 13, 2021, wherein, the estimated income tax provision of Lucid Diagnostics

is computed as if its income tax returns were filed by Lucid Diagnostics on a stand-alone legal entity basis.

Notwithstanding the absence

of a formal tax sharing agreement between PAVmed and Lucid Diagnostics, the Lucid Diagnostics stand-alone legal entity current tax expense

and /or tax refund, if any, would be settled with PAVmed(as opposed with the respective tax authority) through October 13, 2021.

deferred tax asset and /or deferred tax liability;

a valuation allowance on the deferred tax asset, net;

and /or an uncertain tax position, if any;

each as discussed above, is determined

based on Lucid Diagnostics Inc.

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

and /or an uncertain tax position,

each as discussed above, is determined based on Lucid Diagnostics stand-alone legal entity assumed filing of separate income

Company files income tax returns in the United States in federal and applicable state and local jurisdictions.

5 unchanged sentences

or interest related to its income tax provision.

In August 2022, the U.S.

Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book

earnings of 15%, an excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives.

adoption of a corporate minimum tax of 15% is not expected to impact Lucid’s effective tax rate.

The excise tax of 1% on corporate

share buybacks will not have an impact on the Company’s effective tax rate.

August 2022, the U.S.

Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book earnings of 15%, an

excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives.

The adoption of a corporate

minimum tax of 15% is not expected to impact Lucid’s effective tax rate.

The excise tax of 1% on corporate share buybacks will

not have an impact on the Company’s effective tax rate.

17 — Net Loss Per Share

Net loss per share basic and diluted for the respective periods indicated is as follows:

Schedule of Basic and Fully Diluted Net Loss Per Share

Ended December 31,

average common shares outstanding, basic and diluted

loss per share

loss per share - basic and diluted

weighted-average number of shares of common stock outstanding for the years ended December 31, 2022 and 2021 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 Anti-dilutive Securities Excluded from Computation of Diluted Earnings Per Share

restricted stock awards

18 — Subsequent Events

A Preferred Stock Offering

March 7, 2023, we entered into subscription agreements for the sale of 13,625 shares of Series A preferred stock (the

“ Series A Preferred Stock ”).

Each share of the Series A Preferred Stock has a stated value of $ 1,000

and a conversion price of $ 1.394 .

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

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

anniversary of the issuance date .

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

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

The aggregate gross proceeds from the sale of shares in such

offering were $ 13.625 million.

Private Placement - Securities Purchase Agreement

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”).

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

As of the date hereof, the March 2023 Senior Convertible Note has not yet been issued.

of Net Loss Per Share Basic and Diluted

Weighted average common shares outstanding, basic and diluted

Net loss per share (1)

Net loss per share - basic and diluted

(1) - Convertible Preferred

Stock would potentially be considered a participating security under the two-class method of calculating net loss per share.

the Company has incurred net losses to-date, and as such holders are not contractually obligated to share in the losses, there is no

impact on the Company’s net loss per share calculation for the periods indicated.

weighted-average number of shares of common stock outstanding for the years ended December 31, 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 years 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:

of Common Stock Equivalents Excluded from Computation of Diluted Earnings Per Share

Stock options

Unvested restricted stock awards

Preferred stock

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

What changed 10-K

Item 9A. Controls and Procedures