What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-13 compared with 2023-11-13 · 278 added, 362 removed, 167 unchanged (79% of the section changed)

33 unchanged sentences

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

risk that the FDA will cease to exercise enforcement discretion with respect to LDTs, like EsoGuard;

risk that the FDA will cease to exercise enforcement discretion with respect to LDTs, like

ability of our products to achieve market acceptance;

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

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

potential ability to obtain additional financing when and if needed;

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related to our relationship with PAVmed;

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

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

addition, our forward-looking statements do not reflect the potential impact of any future financings, acquisitions, mergers, dispositions,

joint ventures or investments we may make.

may not actually achieve the plans, intentions, and/or expectations disclosed in our forward-looking statements, and you should not place

may not actually achieve the results, plans and/or objectives disclosed in our forward-looking statements, and the intended or expected

developments and/or other events disclosed in our forward-looking statements may not actually occur, and accordingly you should not place

undue reliance on our forward-looking statements.

You should read this Form 10-Q, the documents we have filed as exhibits to this Form

10-Q, and the Form 10-K completely and with the understanding our actual future results may be materially different from what we expect.

We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise,

except as required by applicable law.

You should read this Form 10-Q and the documents we have filed as exhibits to this

Form 10-Q and the Form 10-K completely and with the understanding our actual future results may be materially different from what we

We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events

or otherwise, except as required by applicable law.

are a commercial-stage medical diagnostics technology company focused on the millions of patients who are at risk of developing esophageal

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in an effort to prevent progression to esophageal cancer.

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

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

The assay was evaluated in a 408-patient multicenter

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

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

Sci Transl Med.

2018 Jan 17;10(424):

EsoGuard is commercially available in the U.S.

as a LDT performed at our CLIA-certified laboratory.

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

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

cells in a less than 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 to gently swab surface esophageal cells.

suction is applied, the balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by

cells outside of the targeted region during device withdrawal.

We believe this proprietary Collect+Protect™ technology makes

EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected

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

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

Analytical validation tests of

EsoGuard demonstrated approximately 97% analytical sensitivity, 95% analytical specificity, approximately 98% analytical accuracy,

and 100% inter-assay and intra-assay precision.

Two independent clinical validation case control studies funded by the National

Institute of Health utilized were performed using upper endoscopy with biopsies as the diagnostic comparator and confirmed EsoGuard

accurately identifies BE.

A pooled analysis of both studies demonstrated 84% sensitivity (95% confidence interval (“CI”)

76-90%), for detection of BE, and 86% specificity (95% CI 81-91%).

Positive predictive value (“PPV”) and negative

predictive value (“NPV”) were calculated using a BE prevalence of 10.6% published in a meta-analysis of U.S patients

with gastroesophageal reflux disease (“GERD”).

This resulted in a PPV of approximately 42% and NPV of around

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

in a less than five-minute office 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 to gently swab surface esophageal cells.

When vacuum suction is applied,

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

region during device withdrawal.

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

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

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

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

dysplastic BE and related precursors to EAC in patients with chronic gastroesophageal reflux disease (“GERD”), commonly known

as chronic heart burn, acid reflux, or just reflux.

of Clinical Trials and Publications

continues to accelerate its collection and publication of clinical utility data through a range of trials.

These efforts include an investigator-initiated,

retrospective analysis of prospectively collected data on San Antonio firefighters who underwent testing as part of a community-sponsored

cancer awareness event described below;

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

participants;

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

and two Lucid-sponsored registries,

in which Lucid collects real-world clinical utility and clinical validity data on EsoGuard Esophageal DNA testing for the detection of

esophageal precancer in two distinct populations.

regard to the two registries, the Prospective REView of Esophageal Precancer DetectioN in AT-Risk Patients (PREVENT) Registry collects

data on EsoGuard testing in the commercial increased-risk population, while the PREVENT-Fire Fighters (PREVENT-FF) Registry focuses exclusively

on increased-risk firefighters.

Complete data for the San Antonio firefighter study has been accepted for peer review publication in

Journal of Gastrointestinal & Digestive System (ISSN:

Combined early interim results from the PREVENT and PREVENT-FF

registries focusing on provider decision impact has also been accepted for peer review publication in Journal of Gastroenterology &

Digestive Systems (ISSN:

results for the Lucid-sponsored observational study have been posted in preprint on medRxiv and are undergoing journal peer review.

for the Lucid-sponsored observational study is expected to be completed by the end of the year.

Similarly, results for the Lucid-sponsored

virtual-patient study are expected to be ready for analysis before the end of 2023.

#CheckYourFoodTube

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

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

A total of 391 members

who were deemed to be at-risk for esophageal precancer, underwent a brief, on-site, noninvasive cell collection procedure, performed

by our clinical personnel using EsoCheck.

Firefighters with suspected esophageal precancer based on a positive EsoGuard result were identified,

including some less than 40 years of age, and will undergo appropriate monitoring and treatment, as indicated by clinical practice guidelines,

to prevent progression to esophageal cancer.

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

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

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

of Direct Contracting Strategic Initiative

March 2023, we launched a Direct Contracting Strategic Initiative (“DCSI”) to engage directly with large Administrative Services

Only (“ASO”) self-insured employers, unions and other entities, seeking to replicate the successes of other cancer screening

diagnostic companies that have deployed similar strategies.

In August 2023, the company announced it had contracted with the Ancira Automotive

Group as a result of this initiative, providing access to esophageal precancer testing for its employees at all 12 San Antonio locations.

Revenue Cycle Management Provider

May 2023, Lucid began to transition claims submission responsibility to a new revenue cycle management provider that offered more robust

capabilities for, among other things, claims processing and appeals.

The provider upgrade has been completed and claim submissions resumed

in June 2023.

Since completing the transition, the upgrade has continued to demonstrate an improvement in speed of collections, turnaround

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

Personnel Update

Effective on November 6, 2023, Lucid’s

board of directors appointed Shaun M.

O’Neil as the President of Lucid.

O’Neil, who is 41 years old, also continues to

serve as the Chief Operating Officer of PAVmed and as the Chief Operating Officer of Lucid.

For additional biographical information about

O’Neil, please refer to Lucid’s definitive proxy statement on Schedule 14A filed on May 1, 2023, which information is

incorporated herein by reference.

Other than in connection with his service as an officer of PAVmed and Lucid, Mr.

O’Neil has not

engaged in any transactions with Lucid that are required to be reported pursuant to Item 404(a) of Regulation S-K.

A Preferred Stock Offering

March 7, 2023, we sold 13,625 shares of Series A convertible preferred stock, par value $0.001 per share (the “Series A Preferred

Stock”), solely to accredited investors.

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

dysplastic BE and related precursors to EAC in patients with GERD, commonly known as chronic heart burn, acid reflux, or just reflux.

Agreements with PAVmed

March 22, 2024, PAVmed and the Company entered into an eighth amendment to the the management services agreement between PAVmed and

Lucid (“MSA”) to increase the monthly fee thereunder from $0.75 million per month to $0.83 million per month, effective

as of January 1, 2024.

The amendment also reset the maximum number of shares issuable under the agreement to 19.99% of the shares

outstanding as of the date of the amendment.

January 26, 2024, in accordance with the MSA and the payroll, benefits and expense reimbursement agreement between PAVmed and Lucid

(“PBERA”), PAVmed elected to receive payment of approximately $4.7 million of fees and reimbursements accrued under the

MSA and the PBERA through the issuance of 3,331,771 shares of Lucid’s common stock.

Enforcement Discretion

April 2024, FDA published the final rule under which FDA intends to phase out its general enforcement discretion approach for LDTs so

that IVDs manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs (the proposed rule was

published in October 2023).

In the final rule, FDA has expanded the categories of LDTs that will be eligible for continued enforcement

discretion, which categories include LDTs first marketed prior to May 6, 2024 and LDTs approved by New York State’s Clinical Laboratory

Evaluation Program (NYS CLEP).

As EsoGuard was marketed prior to the cutoff date, and is also NYS CLEP-approved, EsoGuard will remain

under continued enforcement discretion from FDA’s premarket review requirements and quality systems requirements (except for record-keeping).

As such, there is no immediate impact from the final rule on Lucid’s regulatory strategy.

of Dennis Matheis to Board of Directors

May 6, 2024, the board of directors of the Company appointed Dennis Matheis as a Class A director of the Company.

In connection with

his appointment, the Company will be entering into its standard form of indemnification agreement with Mr.

In connection with his joining the board, Mr.

Matheis received a grant of an option to acquire 241,500 shares of

the Company’s common stock pursuant to the Company’s Amended and Restated 2018 Long-Term Incentive Equity Plan in accordance with the Company’s

existing compensation policy for non-employee directors.

B and Series B-1 Preferred Stock Offerings

March 13, 2024, we entered into subscription agreements (each, a “Series B Subscription Agreement”) and exchange

agreements (each, a “Series B Exchange Agreement”) with certain accredited investors (collectively, the “Series B

Investors”), which agreements provided for (i) the sale to the Series B Investors of 12,495 shares of our newly designated

Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), at a purchase price

of $1,000 per share, and (ii) the exchange by the Series B Investors of 13,625 shares of our Series A Convertible Preferred Stock,

par value $0.001 per share (the “Series A Preferred Stock”), and 10,670 shares of our Series A-1 Convertible Preferred

Stock, par value $0.001 per share (the “Series A-1 Preferred Stock”), held by them for 31,790 shares of Series B

Preferred Stock (collectively, the “Series B Offering and Exchange”).

Prior to the execution of the Series B

Subscription Agreements and the Series B Exchange Agreements, we entered into subscription agreements with certain of the Series B

Investors providing for the sale to such investors of 5,670 shares of Series A-1 Preferred Stock, at a purchase price of $1,000 per

share, which shares the investors immediately agreed to exchange for shares of Series B Preferred Stock pursuant to the Series B

Exchange Agreements (and are included in the 10,670 shares of Series A-1 Preferred Stock set forth above).

Each share of the Series

B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444.

The terms of the Series B Preferred Stock also

include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of our common

stock into which such Series B Preferred Stock is convertible, payable on the one-year and two-year anniversary of the issuance

The holders of the Series B 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 Series B Preferred Stock is a voting security.

The aggregate gross proceeds of these

transactions were $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Series A-1 Preferred

Stock that was immediately exchanged for Series B Preferred Stock in the transactions).

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 Offering and Exchange, no shares of Series A Preferred Stock or Series A-1 Preferred Stock

remain outstanding.

to March 31, 2024, on May 6, 2024, the Company issued approximately 11,634 shares of newly designated Series B-1

Convertible Preferred Stock (the “Series B-1 Preferred Stock”).

The terms of the Series B-1 Preferred Stock are

substantially identical to the terms of the Series B Preferred Stock, except that the Series B-1 Preferred Stock has a conversion

price of $0.7228.

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 (or, if later, the effective date of a registration statement covering the resale

of the underlying shares), and automatically converts into shares of our common stock on the second anniversary of its issuance.

terms of the Series A Preferred Stock also include a 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 each of the one-year and two-year anniversary of the issuance

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 $11.6 million.

A-1 Preferred Stock Offering

October 17, 2023, we sold 5,000 shares of Series A-1 convertible preferred stock, par value $0.001 per share (the “Series A-1 Preferred

Stock”), solely to accredited investors.

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.

Placement - Securities Purchase Agreement

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

pursuant to which we agreed to sell, and the investor agreed to purchase, a Senior Secured Convertible Note with a face value principal

of $11.1 million (the “March 2023 Note”).

We issued the March 2023 Note on March 21, 2023 pursuant to the SPA.

from the sale of the March 2023 Note were $9.925 million after deducting a $1.186 million lender fee and offering costs.

March 2023 Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common

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

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

The principal of the March

2023 Note and accrued interest thereon is convertible at the option of the holder into the Company’s common stock at the contractual

conversion price.

In addition, the principal of the March 2023 Note amortizes over 18 months commencing six months after its issuance.

The amortization payments and accrued interest on the March 2023 Note are payable in shares of the Company’s common stock (subject

to the satisfaction of certain customary equity conditions and except for interest payable prior to September 21, 2023), at prices based

on the then current market price.

November 2022, Lucid Diagnostics entered into an “at-the-market offering” for up to $6.5 million of its common stock that

may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor Fitzgerald & Co.

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

$0.3 million, after payment of 3% commissions.

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

ended September 30, 2023.

The aggregate gross

proceeds from the issuances of the Series B Preferred Stock and Series B-1 Preferred Stock were approximately $29.8 million.

the Company has concluded its Board-approved offering of $30 million of preferred stock.

of Operations

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

Additionally, in the three months ended March 31, 2022, revenue

was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Company and RDx, a CLIA certified

commercial laboratory service provider.

On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon our acquisition,

pursuant to the APA-RDx, of certain assets necessary to operate our own CLIA certified laboratory.

For a fuller description of the APA-RDx,

see Note 6, Asset Purchase Agreement and Management Services Agreement , to our accompanying unaudited condensed consolidated financial

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

5 unchanged sentences

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

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

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

condensed consolidated financial statements);

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

Test Centers operating expenses, including rent expense and supplies.

and marketing expenses

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

as the portion of the MSA Fee (as defined in Note 4, Related Party Transactions , to our accompanying unaudited condensed consolidated

financial statements) allocated to sales and marketing expenses, which are principally costs related to PAVmed employees who are performing

services for the Company.

We anticipate our sales and marketing expenses will increase in the future, to the extent we expand our commercial

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

and marketing expenses consist primarily of salaries and related costs for employees engaged in sales, sales support and marketing

activities, as well as the portion of the MSA Fee (as defined in Note 5, Related Party Transactions , to our accompanying

unaudited condensed consolidated financial statements) allocated to sales and marketing expenses, which are principally costs

related to PAVmed employees who are performing services for the Company.

We anticipate our sales and marketing expenses will

increase in the future, to the extent we expand our commercial sales and marketing operations as resources permit and insurance

reimbursement coverage for our EsoGuard test expands.

and administrative expenses

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in our pipeline, including EsoCheck and EsoGuard.

Income and Expense, net

income and expense, net, consists principally of changes in fair value of our convertible note and losses on extinguishment of debt upon

repayment of such convertible note.

of Dollar Amounts

2 unchanged sentences

of Operations - continued

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

the three months ended September 30, 2023, revenue was $0.8 million as compared to $0.1 million for the corresponding period in the prior

The $0.7 million increase principally relates to the increase in volume of our EsoGuard Esophageal DNA Tests performed in our own

CLIA laboratory for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Tests.

the three months ended September 30, 2023, cost of revenue remained relatively level, at approximately $1.6 million, as compared to the

corresponding period in the prior year.

The factors contributing to cost of revenue remaining relatively level were as follows:

approximately

$0.3 million decrease in laboratory facility and operations costs;

approximately

$0.2 million increase in compensation related costs;

approximately

$0.1 million increase in EsoCheck and EsoGuard supplies costs.

and marketing expenses

the three months ended September 30, 2023, sales and marketing costs were approximately $3.8 million as compared to $3.9 million for

the corresponding period in the prior year.

The net decrease of $0.1 million was principally related to:

approximately

$0.2 million decrease related to the amended MSA with PAVmed;

approximately

$0.4 million increase in compensation related costs, including stock-based compensation;

approximately

$0.3 million decrease in third party marketing, corporate information technology and consulting expenses.

and administrative expenses

the three months ended September 30, 2023, general and administrative costs were approximately $4.3 million as compared to $5.7 million

for the corresponding period in the prior year.

The net decrease of $1.4 million was principally related to:

approximately

$2.3 million decrease in stock-based compensation from RSA and stock option grants to Lucid employees and non-employees;

approximately

$0.7 million increase related to the amended MSA with PAVmed due to the growth and expansion of our business and the services incurred

through PAVmed;

approximately

$0.2 million increase related to compensation related costs.

and development expenses

the three months ended September 30, 2023, research and development costs were approximately $1.6 million, compared to $2.7 million for

the corresponding period in the prior year.

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

approximately $1.4 million decrease in development costs, particularly

in clinical trial activities and outside professional and consulting fees with respect to EsoCure;

approximately $0.3 million increase in compensation related

costs, including stock-based compensation.

of Acquired Intangible Assets

amortization of acquired intangible assets remained relatively level, at approximately $0.5 million, in the three months ended September

30, 2023, as compared to the corresponding period in the prior year.

Income and Expense

in fair value of convertible debt

the three months ended September 30, 2023, the change in the fair value of our convertible note was approximately $3.0 million of income,

related to the March 2023 Note.

The March 2023 Note was initially measured at its issue-date estimated fair value and subsequently remeasured

at estimated fair value as of each reporting period date.

The Company initially recognized a $0.8 million fair value non-cash expense

on the issue date.

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

to the March 2023 Note.

of Operations - continued

nine months ended September 30, 2023 as compared to nine months ended September 30, 2022

the nine months ended September 30, 2023, revenue was $1.4 million as compared to $0.3 million for the corresponding period in the prior

three months ended March 31, 2024 as compared to three months ended March 31, 2023

the three months ended March 31, 2024, revenue was $1.0 million as compared to $0.4 million for the corresponding period in the prior

The $0.6 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory.

as compared to revenue from the EsoGuard Commercialization Agreement with RDx, recognized in first two months of the prior year period,

which was terminated on February 25, 2022 when Lucid Diagnostics transitioned to its own laboratory operations.

the nine months ended September 30, 2023, cost of revenue was approximately $4.5 million as compared to $2.0 million for the corresponding

the three months ended March 31, 2024, cost of revenue was approximately $1.7 million as compared to $1.3 million for the corresponding

period in the prior year.

3 unchanged sentences

● approximately

$0.7 million increase in laboratory facility and operations costs;

approximately

$0.7 million increase in compensation related costs.

$0.2 million increase in compensation related costs, including stock-based compensation.

and marketing expenses

the nine months ended September 30, 2023, sales and marketing costs were approximately $12.0 million as compared to $11.1 million for

the corresponding period in the prior year.

the three months ended March 31, 2024, sales and marketing costs were approximately $4.2 million as compared to $4.1 million for the

corresponding period in the prior year.

The net increase of $0.1 million was principally related to:

● approximately

$2.1 million increase in compensation related costs principally as a result of an increase in headcount, including stock-based compensation;

approximately

$1.2 million decrease in third party marketing expenses.

$0.1 million increase in compensation related costs principally as a result of changes in

headcount and bonus structure and travel expenses.

and administrative expenses

the nine months ended September 30, 2023, general and administrative costs were approximately $15.0 million as compared to $18.5 million

for the corresponding period in the prior year.

the three months ended March 31, 2024, general and administrative costs were approximately $4.1 million as compared to $6.9 million for

the corresponding period in the prior year.

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

2 unchanged sentences

● approximately

$2.6 million increase related to the amended MSA with PAVmed due to the growth and expansion of our business and the services incurred

through PAVmed;

$0.9 million decrease in third-party professional fees and expenses related to legal services

and consulting fees;

● approximately

$0.6 million decrease related to outside professional services and facility related costs.

$0.3 million increase related to the amended MSA with PAVmed due to the growth and expansion

of our business and the services incurred through PAVmed;

● approximately

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

in headcount.

and development expenses

the nine months ended September 30, 2023, research and development costs were approximately $5.3 million, compared to $8.8 million for

the corresponding period in the prior year.

the three months ended March 31, 2024, research and development costs were approximately $1.5 million, compared to $1.9 million for the

corresponding period in the prior year.

The net decrease of $0.4 million was principally related to:

● approximately

$4.8 million decrease in development costs, particularly in clinical trial activities and outside professional and consulting fees

with respect to EsoCure;

approximately

$0.6 million increase related to the amended MSA with PAVmed due to the growth and expansion of our business and the services incurred

through PAVmed;

approximately

$0.7 million increase in compensation related costs, including stock-based compensation.

$0.4 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees with respect to EsoCure.

of Acquired Intangible Assets

amortization of acquired intangible assets increased to $1.5 million in the nine months ended September 30, 2023, as compared to $1.1

million in the corresponding period in the prior year.

The increase of $0.4 million in the current period was due to the timing

of the acquired intangible assets in 2022.

amortization of acquired intangible assets was approximately $0.4 million in the three months ended March 31, 2024, as compared to $0.5

million for the corresponding period in the prior year.

The decrease of $0.1 million in the current period was due to certain acquired

intangible assets being fully amortized in February 2024.

Income and Expense

in fair value of convertible debt

the nine months ended September 30, 2023, the change in the fair value of our convertible note was approximately $3.5 million of expense,

related to the March 2023 Note.

The March 2023 Note was initially measured at its issue date estimated fair value and subsequently remeasured

at estimated fair value as of each reporting period date.

The Company initially recognized a $0.8 million fair value non-cash expense

on the issue date.

on Issue and Offering Costs - Senior Secured Convertible Note

the nine months ended September 30, 2023, in connection with the issue of the March 2023 Note, we recognized a total of approximately

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

the three months ended March 31, 2024, the change in the fair value of our convertible note was approximately $0.3 million of

income, related to the March 2023 Senior Convertible Note (as defined in Note 10, Debt , to our accompanying unaudited

condensed consolidated financial statements).

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

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

The Company initially

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

of Operations - continued

nine months ended September 30, 2023 as compared to nine months ended September 30, 2022 - continued

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

to the March 2023 Note.

three months ended March 31, 2024 as compared to three months ended March 31, 2023 - continued

on Issue and Offering Costs - Senior Secured Convertible Note

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

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

The Company did not incur lender fees and offering costs in

the three months ended March 31, 2024 .

on Debt Extinguishment

the three months ended March 31, 2024, a debt extinguishment loss in the aggregate of approximately $0.2 million was recognized in connection

with our March 2023 Senior Convertible Note as discussed below.

the three months ended March 31, 2024, approximately $0.1 million of principal repayments along with approximately $0.4 million of

interest expense thereon, were settled through the issuance of 543,298 shares of common stock of the Company, with such shares

having a fair value of approximately $0.7 million (with such fair value measured as the quoted closing price of the common stock of

the Company on the respective conversion date).

The conversions resulted in a debt extinguishment loss of $0.2 million in the three months ended March 31, 2024.

Company did not incur debt extinguishment loss in the three months ended March 31, 2023.

Note 10 , Debt , to our accompanying unaudited condensed consolidated financial statements, for additional information with

respect to the March 2023 Senior Convertible Note.

Dividend on Series A and Series A-1 Convertible Preferred Stock Exchange Offer

fair value of the consideration given in the form of the issue of 44,285 shares of Series B Convertible Preferred Stock, with such

fair value recognized as the carrying value of such issued shares of Series B Convertible Preferred Stock, as compared to both the

newly issued Series B Convertible Preferred Stock (fair value of $12.5 million) and the carrying value of the extinguished Series A

and Series A-1 Convertible Preferred Stock (carrying value of $24.3 million) ,

resulting in an excess of fair value of $7.5 million recognized as a deemed dividend charged to accumulated deficit in the unaudited

condensed consolidated balance sheet on March 13, 2024, with such deemed dividend included as a component of net loss attributable

to common stockholders, summarized as follows:

Series B Convertible Preferred Stock Issuance and Series A/A-1 Exchange Offer

March 13, 2024

Fair Value - 44,285 shares of Series B Preferred Stock issued

Fair value related to newly issued Series B Preferred Stock (of 12,495 shares)

Carrying value related to Series A and Series A-1 Preferred Stock

Exchanged for Series B Preferred Stock (of 24,295 shares)

Deemed Dividend Charged to Accumulated Deficit

and Capital Resources

3 unchanged sentences

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

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

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

the launch of the mobile testing unit;

ongoing #CheckYourFoodTube testing days;

#CheckYourFoodTube testing days;

and our direct contracting strategic initiative.

Additionally, we are developing expanded clinical

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

Further, as resources permit, the Company also

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

Additionally, we are developing expanded clinical evidence

to support insurance reimbursement adoption by government and private insurers.

Further, as resources permit, the Company also intends

to pursue development of other products and services.

ability to generate revenue depends upon our ability to successfully advance the commercialization of EsoGuard, including significantly

7 unchanged sentences

We experienced a net loss of approximately $10.6 million and used

approximately $22.8 million of cash in operations for the nine months ended September 30, 2023.

approximately $12.6 million of cash in operations during the three month period ended March 31, 2024.

Financing activities provided

million of cash during the nine months ended September 30, 2023.

We ended the quarter with cash on-hand of $24.1 million as of

September 30, 2023.

$18.5 million of cash during the three month period ended March 31, 2024.

We ended the quarter with cash on-hand of $24.8 million as

of March 31, 2024.

We expect to continue to experience recurring losses and negative cash flow from operations, and will continue to

fund our operations with debt and equity financing transactions including current obligations on our existing convertible debt which in accordance with management’s plans

may include conversions to equity and refinancing our existing debt obligations to extend the maturity date.

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

hereof and the committed equity sources of financing, described below, and conversion and refinancing of existing convertible notes, the Company expects to be able to fund its operations and meet

its financial obligations as they become due for the one year period from the date of the issue of the Company’s unaudited

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

A Preferred Stock Offering

March 7, 2023, we sold 13,625 shares of Series A Preferred Stock, solely to accredited investors.

Each share of the Series A Preferred

Stock has a stated value of $1,000 and a conversion price of $1.394.

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 (or, if later, the effective date

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

on the second anniversary of its issuance.

The terms of the Series A Preferred Stock also include a 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 each of

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.

A-1 Preferred Stock Offering

October 17, 2023, we sold 5,000 shares of Series A-1 Preferred Stock, solely to accredited investors.

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.

fund our operations with debt and/or equity financing transactions, including current obligations on our existing convertible debt

which in accordance with management’s plans may include conversions to equity and refinancing our existing debt obligations to

extend the maturity date.

The Company’s ability to continue operations 12 months beyond the issuance of the financial statements will depend upon generating

substantial revenue that is conditioned on 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 raising 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 unaudited condensed consolidated financial statements are

Liquidity and Capital Resources - continued

Stock Offerings

March 13, 2024, we entered into the Series B Subscription Agreements and Series B Exchange Agreements with the Series B Investors,

which agreements provided for (i) the sale to the Series B Investors of 12,495 shares of our newly designated Series B Preferred

Stock, at a purchase price of $1,000 per share, and (ii) the exchange by the Series B Investors of 13,625 shares of our Series A

Preferred Stock and 10,670 shares of our Series A-1 Preferred Stock held by them for 31,790 shares of Series B Preferred Stock.

Prior to the execution of the Series B Subscription Agreements and the Series B Exchange Agreements, we entered into subscription

agreements with certain of the Series B Investors providing for the sale to such investors of 5,670 shares of Series A-1 Preferred

Stock, at a purchase price of $1,000 per share, which shares the investors immediately agreed to exchange for shares of Series B

Preferred Stock pursuant to the Series B Exchange Agreements (and are included in the 10,670 shares of Series A-1 Preferred Stock

set forth above).

Each share of the Series B Preferred Stock has a stated value of $1,000 and a conversion price of $1.2444.

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

20% of the number of shares of our common stock into which such Series B Preferred Stock is convertible, payable on the one-year and

two-year anniversary of the issuance date.

The holders of the Series B 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 Series B Preferred Stock is a voting security.

The aggregate gross proceeds of these

transactions were $18.16 million (inclusive of $5.67 million of aggregate gross proceeds from the sale of the Series A-1 Preferred

Stock that was immediately exchanged for Series B Preferred Stock in the transactions).

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 Offering and Exchange, no shares of Series A Preferred Stock or Series A-1 Preferred Stock

remain outstanding.

Subsequent to

March 31, 2024, on May 6, 2024, the Company issued approximately 11,634 shares

of newly designated Series B-1 Preferred Stock.

The terms of the Series

B-1 Preferred Stock are substantially identical to the terms of the Series B Preferred Stock, except that the Series B-1 Preferred

Stock has a conversion price of $0.7228.

The aggregate gross proceeds from the sale of shares in such offering were $11.6

Placement - Securities Purchase Agreement

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

investor agreed to purchase the March 2023 Note with a face value principal of $11.1 million.

We issued the March 2023 Note on March

21, 2023 pursuant to the SPA.

The March 2023 Note proceeds were $9.925 million after deducting a $1.186 million lender fee and offering

March 2023 Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the Company’s common

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

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

The principal of the March

2023 Note and accrued interest thereon is convertible at the option of the holder into the Company’s common stock at the contractual

conversion price.

In addition, the principal of the March 2023 Note amortizes over 18 months commencing six months after its issuance.

The amortization payments and accrued interest on the March 2023 Note are payable in shares of the Company’s common stock (subject

to the satisfaction of certain customary equity conditions and except for interest payable prior to September 21, 2023), at prices based

on the then current market price.

investor agreed to purchase the March 2023 Senior Convertible Note with a face value principal of $11.1 million.

We issued the March

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

The March 2023 Senior Convertible Note proceeds were $9.925 million

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

March 2023 Senior Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the

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

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

The principal of

the March 2023 Senior Convertible Note and accrued interest thereon is convertible at the option of the holder into the Company’s

common stock at the contractual conversion price.

In addition, the principal of the March 2023 Senior Convertible Note amortizes over

18 months commencing six months after its issuance.

The amortization payments and accrued interest on the March 2023 Senior Convertible

Note are payable in shares of the Company’s common stock (subject to the satisfaction of certain customary equity conditions and

except for interest payable prior to September 21, 2023), at prices based on the then current market price.

the March 2023 Senior Convertible Note, the Company is subject to certain customary affirmative and negative covenants regarding the

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

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

affiliates, among other customary matters.

Under the March 2023 Senior Convertible Note, the Company is also subject to financial covenants

requiring that (i) the amount of the Company’s available cash shall equal or exceed $5.0 million at all times, (ii) the ratio of

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

charges, as of the last day of any fiscal quarter commencing with September 30, 2023 to (b) the Company’s average market capitalization

over the prior ten trading days, shall not exceed 30%, and (iii) the Company’s market capitalization shall at no time be less than

$30 million (the “Financial Tests”).

As of March 31, 2024, the Company was in compliance, and as of the date hereof, the

Company is in compliance, with the Financial Tests.

the three month period ended March 31, 2024, approximately $0.1 million of principal repayments along with approximately $0.4 million

of interest expense thereon, were settled through the issuance of 543,298 shares of common stock of the Company, with such shares having

a fair value of approximately $0.7 million (with such fair value measured as the respective conversion date quoted closing price of the

common stock of the Company).

and Capital Resources - continued

the March 2023 Note, the Company is subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness,

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

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

Under the March 2023 Note, the Company is also subject to financial covenants requiring that (i) the amount of the Company’s available

cash shall equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under

the SPA, accrued and unpaid interest thereon and accrued and unpaid late charges, as of the last day of any fiscal quarter commencing

with September 30, 2023 to (b) the Company’s average market capitalization over the prior ten trading days, shall not exceed 30%,

and (iii) the Company’s market capitalization shall at no time be less than $30 million (the “Financial Tests”).

of September 30, 2023, the Company was in compliance, and as of the date hereof, the Company is in compliance, with the Financial Tests.

the nine months ended September 30, 2023, approximately $92 of principal repayments along with approximately $48 of interest expense

thereon, were settled through the issuance of 115,388 shares of common stock of the Company, with such shares having a fair value of

approximately $166 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).

In the three months ended September 30, 2023, 115,388 shares of common stock of the Company were issued in satisfaction of a portion

of this debt.

Equity Facility and ATM Facility

6 unchanged sentences

Cumulatively, a total of 680,263

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

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

shares of common stock of the Company were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of March 31,

November 2022, Lucid Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock

that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.

In the nine months ended

September 30, 2023, we sold 230,068 shares through our at-the-market equity facility for net proceeds of approximately $0.3 million,

after payment of 3% commissions.

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

Cumulatively, a total

of 230,068 shares of the Company were issued through our at-the-market equity facility for net proceeds of approximately $0.3 million,

after payment of 3% commissions, as of March 31, 2024.

Agreements with PAVmed

our inception in May 2018 through our IPO in October 2021, our operations were funded by PAVmed providing working capital cash advances

5 unchanged sentences

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

In this regard, in May 2023, the respective companies’

boards of directors approved a seventh amendment to the MSA to increase the MSA Fee to $750 per month, effective January 1, 2023.

to the MSA, as amended by the seventh amendment, the parties agreed PAVmed may elect to receive payment of the monthly MSA Fee in cash

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

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

However, in no event will PAVmed be entitled

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

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

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

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

reimbursed PAVmed for the same.

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

for the same.

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

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

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

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

or in a combination of cash and shares.

However, in no event will we issue any shares of our common stock to PAVmed in satisfaction of

all or any portion of the expenses if the issuance of such shares of our common stock would exceed the maximum number of shares of common

stock that we may issue under the rules or regulations of Nasdaq, unless we obtain the approval of our stockholders as required by the

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

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

In this regard, in January 2024, the respective companies’

boards of directors approved an eighth amendment to the MSA to increase the MSA Fee to $0.83 million per month, effective January 1, 2024.

The eighth amendment to the MSA was executed on March 22, 2024.

Pursuant to the MSA, as amended by the eighth amendment, the parties

agreed PAVmed may elect to receive payment of the monthly MSA Fee in cash or in shares of our common stock, with such shares valued at

the volume weighted average price (“VWAP”) during the final ten trading days of the applicable month (subject to a floor

price of $0.70 per share).

However, in no event will PAVmed be entitled to receive under the MSA, as amended, from and after the date of the eighth amendment to the MSA, more than 9,644,135 shares of our common stock (representing 19.99% of our outstanding shares

of common stock as of immediately prior to the execution of the eighth amendment).

of March 31, 2024, we had a Due To:

payment obligation liability of approximately $1.9 million, which liability is primarily

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

comprised of our obligations under a payroll and benefit expense reimbursement agreement (the “PBERA”) and the MSA, as well other operating expenses paid by PAVmed on our behalf.

See our accompanying

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

Accounting Policies and Significant Judgments and Estimates

unaudited condensed consolidated financial statements Note 5 , Related Party Transactions.

In accordance with the MSA and the PBERA,

on January 26, 2024, PAVmed elected to receive payment of approximately $4.7 million of fees and reimbursements accrued under the MSA

and the PBERA through the issuance of 3,331,771 shares of the Company’s common stock.

Accounting Estimates

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

10 unchanged sentences

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

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

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

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

We determined upon the issuance of our March 2023 Note

to elect the fair value option.

At issuance, the carrying value of the March 2023 Note was recorded at estimated fair value.

The estimated

fair values reported utilized Lucid’s common stock price along with certain Level 3 inputs, in the development of Monte Carlo simulation

models, discounted cash flow analyses, and /or Black-Scholes valuation 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.

We remeasure the March 2023 Note to its estimated fair

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

The change in the fair value is recognized

as other income (expense) in the statement of operations.

A significant change in the volatility could have a material impact to the

carrying value of the March 2023 Note as well as the amount of change recognized during the period.

for the year ended December 31, 2023 as filed with the SEC on March 25, 2024.

There have been no material changes to our critical accounting

policies and estimates in the three months ended March 31, 2024.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis