Lucid Diagnostics Inc. 10-Q

Item 1. Financial Statements LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and per share data - unaudited) March 31, 2024 December 31, 2023 Assets: Current assets: Cash $ 24,769 $ 18,896 Accounts receivable 49 45 Inventory 410 278 Prepaid expenses, deposits, and other current assets 2,355 2,854 Total current assets 27,583 22,073 Fixed assets, net 1,242 1,334 Operating lease right-of-use assets 1,039 1,307 Intangible assets, net 1,052 1,424 Other assets 1,132 1,132 Total assets $ 32,048 $ 27,270 Liabilities, Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 969 $ 1,146 Accrued expenses and other current liabilities 3,136 3,841 Operating lease liabilities, current portion 861 1,106 Senior Secured Convertible Note - at fair value 13,140 13,950 Due To: PAVmed Inc. - MSA Fee and operating expenses 1,871 9,339 Total current liabilities 19,977 29,382 Operating lease liabilities, less current portion 177 199 Total liabilities 20,154 29,581 Commitments and contingencies - - Stockholders’ Equity: Preferred stock, $ 0.001 par value, 20,000,000 shares authorized; Series B Convertible Preferred Stock, issued and outstanding 44,285 at March 31, 2024 and Series A and Series A-1 Convertible Preferred Stock, shares issued and outstanding 18,625 at December 31, 2023 44,285 18,625 Common stock, $ 0.001 par value, 200,000,000 shares authorized; 46,747,062 and 42,329,864 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 47 42 Additional paid-in capital 136,411 129,763 Accumulated deficit ( 168,849 ) ( 150,741 ) Total Stockholders’ Equity (Deficit) 11,894 ( 2,311 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 32,048 $ 27,270 See accompanying notes to the unaudited condensed consolidated financial statements. 1 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except number of shares and per share data - unaudited) Three Months Ended March 31, 2024 2023 Revenue $ 1,001 $ 446 Operating expenses: Cost of revenue 1,656 1,338 Sales and marketing 4,194 4,127 General and administrative 4,070 6,900 Amortization of acquired intangible assets 372 505 Research and development 1,501 1,893 Total operating expenses 11,793 14,763 Operating loss ( 10,792 ) ( 14,317 ) Other income (expense): Interest income 68 78 Interest expense ( 12 ) ( 33 ) Change in fair value - Senior Secured Convertible Note 291 ( 789 ) Loss on issue and offering costs - Senior Secured Convertible Note — ( 1,186 ) Debt extinguishments loss - Senior Secured Convertible Note ( 167 ) — Other income (expense), net 180 ( 1,930 ) Loss before provision for income tax ( 10,612 ) ( 16,247 ) Provision for income taxes — — Net loss attributable to Lucid Diagnostics Inc. $ ( 10,612 ) $ ( 16,247 ) Less: Deemed dividend on Series A and Series A-1 Convertible Preferred Stock ( 7,496 ) — Net loss attributable to Lucid Diagnostics Inc. common stockholders $ ( 18,108 ) $ ( 16,247 ) Net loss per share attributable to Lucid Diagnostics Inc. common stockholders - basic and diluted $ ( 0.40 ) $ ( 0.40 ) Weighted average common shares outstanding, basic and diluted 45,014,410 40,970,504 See accompanying notes to the unaudited condensed consolidated financial statements. 2 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the THREE MONTHS ENDED March 31, 2024 and 2023 (in thousands except number of shares and per share data - unaudited) Preferred Stock Common Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance as of December 31, 2023 18,625 $ 18,625 42,329,864 $ 42 $ 129,763 $ ( 150,741 ) $ ( 2,311 ) Exercise - stock options - Lucid Diagnostics Inc. 2018 Equity Plan — — 3,333 — 4 — 4 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan — — — — 744 — 744 Stock-based compensation - PAVmed Inc. 2014 Equity Plan — — — — 189 — 189 Vest - restricted stock awards — — 26,912 — — — — Conversions - Senior Secured Convertible Note — — 543,298 1 687 — 688 Purchase - Employee Stock Purchase Plan — — 511,884 1 352 — 353 Issuance - Series A-1 Preferred Stock 5,670 5,670 — — — — 5,670 Exchange - Series A and Series A-1 Preferred Stock ( 24,295 ) ( 24,295 ) — — — ( 7,496 ) ( 31,791 ) Issuance - Series B Preferred Stock 44,285 44,285 — — — — 44,285 Issuance - Due To: PAVmed Inc. Settlement in Common Stock — — 3,331,771 3 4,672 — 4,675 Net loss — — — — — ( 10,612 ) ( 10,612 ) Balance as of March 31, 2024 44,285 $ 44,285 46,747,062 $ 47 $ 136,411 $ ( 168,849 ) $ 11,894 Preferred Stock Common Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance as of December 31, 2022 — $ — 40,518,792 $ 41 $ 121,081 $ ( 98,075 ) $ 23,047 Balance — $ — 40,518,792 $ 41 $ 121,081 $ ( 98,075 ) $ 23,047 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan — — — — 2,817 — 2,817 Stock-based compensation - PAVmed Inc. 2014 Equity Plan — — — — 391 — 391 Vest - restricted stock awards — — 219,320 — — — — Issuance common stock - APA-RDx - Termination payment — — 553,436 — 713 — 713 Issuance - At-The-Market Facility, net of financing charges — — 230,068 1 283 — 284 Purchase - Employee Stock Purchase Plan — — 231,987 — 276 — 276 Issuance - Series A Preferred Stock 13,625 13,625 — — — — 13,625 Net loss — — — — — ( 16,247 ) ( 16,247 ) Balance as of March 31, 2023 13,625 $ 13,625 41,753,603 $ 42 $ 125,561 $ ( 114,322 ) $ 24,906 Balance 13,625 $ 13,625 41,753,603 $ 42 $ 125,561 $ ( 114,322 ) $ 24,906 See accompanying notes to the unaudited condensed consolidated financial statements. 3 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands except number of shares and per share data - unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities Net loss $ ( 10,612 ) $ ( 16,247 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 501 612 Stock-based compensation - Lucid Diagnostics Inc. 2018 Equity Plan 743 2,817 Stock-based compensation - PAVmed Inc. 2014 Equity Plan 189 391 Change in fair value - Senior Secured Convertible Note ( 291 ) 789 Loss on issue - Senior Secured Convertible Note — 1,111 Debt extinguishment loss - Senior Secured Convertible Note 167 — APA-RDx: Issue common stock - termination payment — 713 Issue common stock - vendor service agreement 23 — Changes in operating assets and liabilities: Accounts receivable ( 4 ) ( 10 ) Prepaid expenses and other current assets 345 ( 275 ) Accounts payable ( 176 ) ( 431 ) Accrued expenses and other current liabilities ( 704 ) 743 Due To: PAVmed Inc. - operating expenses, employee related costs, MSA Fee ( 2,793 ) 2,667 Net cash flows used in operating activities ( 12,612 ) ( 7,120 ) Cash flows from investing activities Purchase of equipment ( 37 ) ( 17 ) Net cash flows used in investing activities ( 37 ) ( 17 ) Cash flows from financing activities Proceeds – issue of preferred stock 18,165 13,625 Proceeds – issue of Senior Convertible Note — 10,000 Proceeds – issue of common stock – At-The-Market Facility — 284 Proceeds – exercise of stock options 4 — Proceeds – issue common stock – Employee Stock Purchase Plan 353 276 Net cash flows provided by financing activities 18,522 24,185 Net increase (decrease) in cash 5,873 17,048 Cash, beginning of period 18,896 22,474 Cash, end of period $ 24,769 $ 39,522 See accompanying notes to the unaudited condensed consolidated financial statements. 4 LUCID DIAGNOSTICS INC. and SUBSIDIARIES (a majority-owned subsidiary of PAVmed Inc.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.) Note 1 — The Company Description of the Business Lucid Diagnostics Inc. (“Lucid”, “Lucid Diagnostics” or the “Company”) is a commercial-stage medical diagnostics technology company focused on the millions of patients with gastroesophageal reflux disease (“GERD”), also known as chronic heartburn, acid reflux or simply reflux, who are at risk of developing esophageal precancer and cancer, specifically highly lethal esophageal adenocarcinoma (“EAC”). Lucid is a majority-owned subsidiary of PAVmed Inc. (“PAVmed”). The Company believes that its flagship product, the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell Collection Device, constitutes the first and only commercially available diagnostic test capable of serving as a widespread testing tool for the early detection of esophageal precancer in at-risk GERD patients. EsoGuard is a bisulfite-converted next-generation sequencing (NGS) DNA assay performed on surface esophageal cells collected with EsoCheck. Cell samples, including those collected with EsoCheck. EsoCheck is a FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal cells in a less than a five-minute office procedure. It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone catheter from which a soft silicone balloon with textured ridges emerges, when inflated, to gently swab surface esophageal cells. When vacuum suction is applied, the balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by cells outside of the targeted region during device withdrawal. The Company believes that this proprietary Collect+Protect™ technology makes EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected sampling. EsoGuard and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”). EsoGuard and EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly test for the early detection of EAC and Barrett’s Esophagus (“BE”), including dysplastic BE and related precursors to EAC in patients with chronic GERD. 5 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 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 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 $ 1.0 million of revenues for the three month period ended March 31, 2024, however the Company does not expect to generate positive cash flows from operating activities in the near future. The Company incurred a net loss attributable to Lucid Diagnostics Inc common stockholders of approximately $ 18.1 million and had net cash flows used in operating activities of approximately $ 12.6 million for the three month period ended March 31, 2024. As of March 31, 2024, the Company had working capital of approximately $ 7.6 million, with such working capital inclusive of the Senior Secured Convertible Note classified as a current liability of approximately $ 13.1 million and approximately $ 24.8 million of cash. 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 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 unaudited condensed consolidated financial statements are issued. Note 3 — Summary of Significant Accounting Policies Significant Accounting Policies The Company’s significant accounting policies are as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 25, 2024, except as otherwise noted herein below. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”), and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company is a majority-owned consolidated subsidiary of PAVmed, which has a majority equity ownership interest and has financial control of the Company. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. As permitted under SEC rules, certain footnotes or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2023 has been derived from audited consolidated financial statements at such date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements, and in the opinion of management, include all adjustments, consisting only of routine recurring adjustments, necessary for a fair statement of the Company’s unaudited condensed consolidated financial information. The unaudited condensed consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the consolidated results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future periods. The accompanying unaudited condensed consolidated financial statements and related unaudited condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 25, 2024. All amounts in the accompanying unaudited condensed consolidated financial statements and the notes thereto are presented in thousands of dollars, if not otherwise noted as being presented in millions of dollars, except for shares and per share amounts. 6 Note 3 — Summary of Significant Accounting Policies - continued Use of Estimates In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and the determination of corresponding carrying value reserves, if any, and liabilities and the disclosure of contingent losses, as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates in these unaudited condensed consolidated financial statements include those related to the estimated fair value of debt obligations, stock-based equity awards and intangible assets. Other significant estimates include the estimated incremental borrowing rate, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. Additionally, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates and assumptions. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. Revenue Recognition Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. The Company’s revenue is primarily generated by its laboratory testing services utilizing its EsoGuard Esophageal DNA tests. The services are completed upon release of a patient’s test result to the ordering healthcare provider. Revenue recognized is inclusive of both variable consideration in connection with an individual patient’s third-party insurance coverage policy and fixed consideration in connection with a contracted services arrangement with an unrelated third party legal entity. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The key aspects considered by the Company include the following: Contracts —The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company establishes a contract with a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and a patient specimen has been returned to the laboratory for testing. Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable reimbursement contracts established between the Company and payers. However, when a patient is considered self-pay, the Company requires payment from the patient prior to the commencement of the Company’s performance obligations. The Company’s consideration can be deemed variable or fixed depending on the structure of specific payer contracts, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. Performance obligations —A performance obligation is a promise in a contract to transfer a distinct good or service (or a bundle of goods or services) to the customer. The Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the release of a patient’s test result to the ordering healthcare provider. The Company elects the practical expedient related to the disclosure of unsatisfied performance obligations, as the duration of time between providing testing supplies, the receipt of a sample, and the release of a test result to the ordering healthcare provider is far less than one year. Transaction price —The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration expected to be collected from a contract with a customer may include fixed amounts, variable amounts, or both. If the consideration derived from the contracts is deemed to be variable, the Company estimates the amount of consideration to which it will be entitled in exchange for the promised goods or services. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of patient EsoGuard test results to the ordering healthcare provider. As such, the Company recognizes revenue up to the amount of variable consideration not subject to a significant reversal until additional information is obtained or the uncertainty associated with additional payments or refunds, if any, is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in estimated expected variable consideration, with the change in estimate recognized in the period of such revised estimate. With respect to a contracted service arrangement, the fixed consideration revenue is recognized on an as-billed basis upon delivery of the laboratory test report with realization of such fixed consideration deemed probable based upon actual historical experience. Allocate transaction price —The transaction price is allocated entirely to the performance obligation contained within the contract with a customer on the basis of the relative standalone selling prices of each distinct good or service. Practical Expedients —The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less. 7 Note 3 — Summary of Significant Accounting Policies - continued Fair Value Option (“FVO”) Election Under a Securities Purchase Agreement dated March 13, 2023, the Company issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “March 2023 Senior Convertible Note”, which is accounted under the “fair value option election” as discussed below. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging , (“ASC 815”), a financial instrument containing embedded features and/or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date. Alternatively, FASB ASC Topic 825, Financial Instruments , (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. The estimated fair value adjustment of the March 2023 Senior Convertible Note is presented in a single line item within other income (expense) in the accompanying unaudited condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the March 2023 Senior Convertible Note). See Note 9, Financial Instruments Fair Value Measurements, with respect to the FVO election; and Note 10, Debt, for a discussion of the March 2023 Senior Convertible Note. Reclassifications Certain prior-year amounts have been reclassified to conform to the current year presentation, which includes presenting costs of revenue within operating expenses on the statements of operations, in the unaudited condensed consolidated financial statements and accompanying notes to the unaudited condensed consolidated financial statements. The impact of the reclassifications made to prior year amounts is not material and did not affect net loss. Recent Accounting Standards Updates Not Yet Adopted In December 2023, the FASB issued ASU No. 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. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the standard to have a significant impact on its consolidated financial statements. In 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. The Company does not expect the standard to have a significant impact on its consolidated financial statements. 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 impact this update will have on its unaudited condensed consolidated financial statements and disclosures. 8 Note 4 — Revenue from Contracts with Customers Revenue Recognized In the three month period ended March 31, 2024, the Company recognized revenue of $ 1,001 , resulting from the delivery of patient EsoGuard test results. Revenue recognized from customer contracts deemed to include a variable consideration transaction price is limited to the unconstrained portion of the variable consideration. The Company’s revenue for the three month period ended March 31, 2023 was $ 446 , resulting from the delivery of patient EsoGuard test results. Cost of Revenue The cost of revenues principally includes the costs related to the Company’s laboratory operations (excluding estimated costs associated with research activities), the costs related to the EsoCheck cell collection device, cell sample mailing kits and license royalties. In the three month period ended March 31, 2024, the cost of revenue was $ 1,656 , primarily related to costs for our laboratory operations and EsoCheck device supplies. The Company’s cost of revenue for the three month period ended March 31, 2023 was $ 1,338 , primarily related to costs for our laboratory operations and EsoCheck device supplies. Note 5 — Related Party Transactions The aggregate Due To: PAVmed Inc. for the periods indicated is summarized as follows: Schedule of Due To: PA Vmed Inc MSA Fees Employee-Related Costs PAVmed Inc. OBO Payments Total Balance - December 31, 2023 $ 6,150 $ 3,163 $ 26 $ 9,339 MSA fees 2,500 — — 2,500 ERC - Benefits — 455 — 455 On Behalf Of (OBO) activities — — 159 159 Cash payments to PAVmed Inc. ( 5,333 ) ( 461 ) ( 113 ) ( 5,907 ) Payment to PAVmed Inc. settled in LUCD stock ( 1,650 ) ( 3,025 ) — ( 4,675 ) Balance - March 31, 2024 $ 1,667 $ 132 $ 72 $ 1,871 PAVmed - Management Services Agreement The Company’s daily operations are also managed in part by personnel employed by PAVmed, for which the Company incurs a service fee, referred to as the “MSA Fee”, according to the provisions of a Management Services Agreement (“MSA”) with PAVmed. The MSA does not have a termination date, but may be terminated by the Company’s board of directors. The MSA Fee is charged on a monthly basis and is subject-to periodic adjustment corresponding with changes in the services provided by PAVmed personnel to the Company, with any such change in the MSA Fee being subject to approval of the boards of directors of each of the Company and PAVmed. The respective companies’ boards of directors approved an amendment to the MSA to increase the MSA Fee to $ 833 per month, effective January 1, 2024. During three months ended March 31, 2023, MSA fees were $ 750 per month. 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. The MSA Fee expense classification in the unaudited condensed consolidated statement of operations for the periods noted is as follows: Schedule of MSA Fee Expense Classification in Statements of Operations Three Months Ended March 31, 2024 2023 Sales & Marketing $ 126 $ 109 General & Administrative 1,804 1,554 Research & Development 570 587 Total MSA Fee $ 2,500 $ 2,250 The classification of the MSA Fee as presented above is based on the PAVmed classification of employee salary expense and other operating expenses. In this regard, PAVmed classifies employee salary expense as sales and marketing expenses for employees performing sales, 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. 9 Note 6 — Prepaid Expenses, Deposits, and Other Current Assets Prepaid expenses and other current assets consisted of the following as of: Schedule of Prepaid Expenses and Other Current Assets March 31, 2024 December 31, 2023 Advanced payments to service providers and suppliers $ 228 $ 266 Prepaid insurance 395 607 Deposits 1,732 1,981 Total prepaid expenses, deposits and other current assets $ 2,355 $ 2,854 Note 7 — Leases During the three months ended March 31, 2024, the Company entered into additional lease agreements that have commenced and are classified as operating leases. The Company’s future lease payments as of March 31, 2024, which are presented as operating lease liabilities, current portion and operating lease liabilities, less current portion on the Company’s unaudited condensed consolidated balance sheets are as follows: Schedule of Future Lease Payments of Operating Lease Liabilities 2024 (remainder of year) $ 855 2025 133 2026 69 2027 30 2028 1 Total lease payments $ 1,088 Less: imputed interest ( 50 ) Present value of lease liabilities $ 1,038 10 Note 7 — Leases - continued Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows: Schedule of Cash Flow Supplemental Information Three Months Ended March 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 305 $ 285 Non-cash investing and financing activities Right-of-use assets obtained in exchange for new operating lease liabilities $ 22 $ 125 Weighted-average remaining lease term - operating leases (in years) 1.28 1.77 Weighted-average discount rate - operating leases 7.875 % 7.875 % As of March 31, 2024 and December 31, 2023, the Company’s right-of-use assets from operating leases were $ 1,039 and $ 1,307 , respectively, which are reported in operating lease right-of-use assets in the unaudited condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the Company had outstanding operating lease obligations of $ 1,038 and $ 1,305 , respectively, of which $ 861 and $ 1,106 , respectively, are reported in operating lease liabilities, current portion and $ 177 and $ 199 , respectively, are reported in operating lease liabilities less current portion in the Company’s unaudited condensed consolidated balance sheets. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the financing terms the Company would likely receive on the open market. Note 8 — Intangible Assets, net Intangible assets, less accumulated amortization, consisted of the following as of: Schedule of Intangible Assets Estimated Useful Life March 31, 2024 December 31, 2023 Defensive technology 60 months $ 2,105 $ 2,105 Laboratory licenses and certifications and laboratory information management software 24 months 3,200 $ 3,200 Total Intangible assets 5,305 5,305 Less Accumulated Amortization ( 4,253 ) ( 3,881 ) Intangible Assets, net $ 1,052 $ 1,424 Amortization expense of the intangible assets discussed above was $ 372 and $ 505 for the three month periods ended March 31, 2024 and 2023, respectively, and is included in amortization of acquired intangible assets in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2024, 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 2024 (remainder of year) $ 316 2025 421 2026 315 Total $ 1,052 11 Note 9 — Financial Instruments Fair Value Measurements Recurring Fair Value Measurements The fair value hierarchy table for the reporting date noted is as follows: Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis Fair Value Measurement on a Recurring Basis at Reporting Date Using 1 Level-1 Inputs Level-2 Inputs Level-3 Inputs Total March 31, 2024 March 2023 Senior Convertible Note $ — $ — $ 13,140 $ 13,140 Totals $ — $ — $ 13,140 $ 13,140 Level-1 Inputs Level-2 Inputs Level-3 Inputs Total December 31, 2023 March 2023 Senior Convertible Note $ — $ — $ 13,950 $ 13,950 Totals $ — $ — $ 13,950 $ 13,950 1 There were no transfers between the respective Levels during the three months ended March 31, 2024. As discussed in Note 10, Debt , the Company issued a Senior Secured Convertible Note dated March 21, 2023 with a $ 11.1 million face value principal (“March 2023 Senior Convertible Note”). The convertible note is accounted for under the ASC 825-10-15-4 fair value option (“FVO”) election, wherein, the financial instrument is initially measured at its issue date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value of the financial instruments classified within the Level 3 category was determined using both observable inputs and unobservable inputs. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs. The estimated fair value of the March 2023 Senior Convertible Note as of each of March 31, 2024 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 31, 2024 March 2023 Senior Convertible Note: December 31, 2023 Fair Value $ 13,140 $ 13,950 Face value principal payable $ 10,936 $ 11,019 Required rate of return 9.80 % 10.00 % Conversion Price $ 5.00 $ 5.00 Value of common stock $ 0.81 $ 1.41 Expected term (years) 0.97 1.22 Volatility 55.00 % 60.00 % Risk free rate 4.93 % 4.56 % Dividend yield — % — % The estimated fair values reported utilized the Company’s common stock price along with certain Level 3 inputs (as discussed in the table above), in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models. The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses, including the Company’s common stock price, the Company’s dividend yield, the risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s common stock price and the volatility of similar entities within the medical device industry. Changes in these assumptions can materially affect the estimated fair values. 12 Note 10 — Debt The fair value and face value principal outstanding of the March 2023 Senior Convertible Note as of the dates indicated are as follows: Summary of Outstanding Debt Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value March 2023 Senior Convertible Note March 21, 2025 7.875 % $ 5.00 $ 10,936 $ 13,140 Balance as of March 31, 2024 $ 10,936 $ 13,140 Contractual Maturity Date Stated Interest Rate Conversion Price per Share Face Value Principal Outstanding Fair Value March 2023 Senior Convertible Note March 21, 2025 7.875 % $ 5.00 $ 11,019 $ 13,950 Balance as of December 31, 2023 $ 11,019 $ 13,950 The changes in the fair value of debt during the three month period ended March 31, 2024 is as follows: Schedule of Changes in Fair Value of Debt March 2023 Senior Convertible Note Other Income (expense) Fair Value - December 31, 2023 $ 13,950 $ — Face value principal – issue date Fair value adjustment – issue date Installment repayments – common stock ( 83 ) — Non-installment payments – common stock ( 436 ) — Change in fair value ( 291 ) 291 Fair Value at March 31, 2024 $ 13,140 - Other Income (Expense) - Change in fair value – three months ended March 31, 2024 $ 291 The changes in the fair value of debt during the three month period ended March 31, 2023 is as follows: March 2023 Senior Convertible Note Other Income (expense) Fair Value - December 31, 2022 $ — $ — Fair Value - Beginning Balance $ — $ — Face value principal – issue date 11,111 $ — Fair value adjustment – issue date 789 ( 789 ) Fair Value at March 31, 2023 $ 11,900 - Fair Value - Ending Balance $ 11,900 - Other Income (Expense) - Change in fair value – three months ended March 31, 2023 $ ( 789 ) March 2023 Senior Secured Convertible Note Lucid Diagnostics entered into a Securities Purchase Agreement (“SPA”) dated March 13, 2023, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein Lucid agreed to sell, and the Investor agreed to purchase, an aggregate of $ 11.1 million face value principal of debt. Under the SPA, Lucid issued in a registered direct offering under its effective shelf registration statement a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “March 2023 Senior Convertible Note”, with such note having a $ 11.1 million face value principal, a 7.875 % annual stated interest rate, a contractual conversion price of $ 5.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of March 21, 2025 . The March 2023 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election. 13 Note 10 — Debt - continued The March 2023 Senior Convertible Note proceeds were $ 9.925 million after deducting a $ 1.186 million lender fee and offering costs. The lender fee and offering costs were recognized as of the March 21, 2023 issue date as a current period expense in other income (expense) in the Company’s unaudited condensed consolidated statement of operations. During the period from March 21, 2023 to September 20, 2023, 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 $ 24 for the three months ended March 31, 2023. Commencing September 21, 2023, and then on each of the successive first and tenth trading day of each month thereafter through to and including March 14, 2025 (each referred to as an “Installment Date”); and on the March 21, 2025 maturity date, the Company will be required to make a principal repayment of $ 292 together with accrued interest thereon, with such 38 payments referred to herein as the “Installment Amount”, settled in shares of common stock of the Company, subject to customary equity conditions, including minimum share price and volume thresholds, or at the election of the Company, in cash, in whole or in part. In addition to the Installment Amount repayments, the Holder may elect to accelerate the conversion of future Installment Amount repayments, and interest thereon, subject to certain restrictions, as defined, utilizing the then current conversion price of the most recent Installment Date conversion price. The payment of all amounts due and payable under this senior convertible note is guaranteed by all of Lucid Diagnostics’ subsidiaries; and the obligations under this senior convertible note are secured by all of the assets of Lucid Diagnostics and its subsidiaries. Lucid is subject to certain customary affirmative and negative covenants regarding the rank of the note, along with the incurrence of further indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. Lucid is subject to financial covenants requiring: (i) a minimum of $5.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the total senior convertible notes outstanding, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, as of the last day of any fiscal quarter commencing with September 30, 2023, to not exceed 30%; and (iii) the Company’s market capitalization to at no time be less than $30 million. As of March 31, 2024, the Company was in compliance, and as of the date hereof, the Company is in compliance, with the Financial Tests. The 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. In the three month period ended March 31, 2024, approximately $ 83 of principal repayments along with approximately $ 436 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 $ 686 (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 $ 167 in the three month period ended March 31, 2024. Subsequent to March 31, 2024, as of May 9, 2024, approximately $ 612 of principal repayments along with approximately $ 110 of interest expense thereon, were settled through the issuance of 1,139,851 shares of common stock of the Company, with such shares having a fair value of approximately $ 1,037 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). Note 11 — Stock-Based Compensation Lucid Diagnostics 2018 Long-Term Incentive Equity Plan The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics 2018 Equity Plan”) is separate and apart from the PAVmed 2014 Equity Plan discussed below. The Lucid Diagnostics 2018 Equity Plan is designed to enable Lucid Diagnostics to offer employees, officers, directors, and consultants, an opportunity to acquire shares of common stock of Lucid Diagnostics. The types of awards that may be granted under the Lucid Diagnostics 2018 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. All awards are subject to approval by the Lucid Diagnostics compensation committee. A total of 14,324,038 shares of common stock of Lucid Diagnostics are reserved for issuance under the Lucid Diagnostics 2018 Equity Plan, with 2,680,508 shares available for grant as of March 31, 2024. 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 March 31, 2024. In January 2024, the number of shares available for grant was increased by 2,680,038 in accordance with the evergreen provisions of the plan. 14 Note 11 — Stock-Based Compensation - continued Lucid Diagnostics Stock Options Lucid Diagnostics stock options granted under the Lucid Diagnostics 2018 Equity Plan and stock options granted outside such plan are summarized as follows: Schedule of Stock Options Issued and Outstanding Activities Number of Stock Options Weighted Average Exercise Price Remaining Contractual Term (Years) Intrinsic Value (2) Outstanding stock options at December 31, 2023 5,504,383 $ 2.00 8.5 $ 765 Granted (1) 3,000,000 $ 1.25 Exercised ( 3,333 ) $ 1.31 Forfeited ( 168,337 ) $ 1.57 Outstanding stock options at March 31, 2024 (3) 8,332,713 $ 1.74 8.8 $ 195 Vested and exercisable stock options at March 31, 2024 2,655,413 $ 2.29 7.6 $ 195 (1) Stock options granted under the Lucid Diagnostics 2018 Equity Plan and those granted outside such plan generally vest one-third in one year then ratably over the next eight quarters, and have a ten-year contractual term from date-of-grant. (2) The intrinsic value is computed as the difference between the quoted price of the Lucid Diagnostics common stock on each of March 31, 2024 and December 31, 2023 and the exercise price of the underlying Lucid Diagnostics stock options, to the extent such quoted price is greater than the exercise price. (3) The outstanding stock options presented in the table above are inclusive of 423,300 stock options granted outside the Lucid Diagnostics 2018 Equity Plan, as of March 31, 2024 and 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 . Each option will vest one-third after one year then ratably over the next eight quarters. Lucid Diagnostics Restricted Stock Awards Lucid Diagnostics restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan and restricted stock awards granted outside such plan are summarized as follows: Schedule of Restricted Stock Award Activity Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested restricted stock awards as of December 31, 2023 2,337,440 $ 8.99 Granted — — Vested ( 26,912 ) 4.56 Forfeited ( 13,088 ) 4.56 Unvested restricted stock awards as of March 31, 2024 2,297,440 $ 9.07 Subsequent to March 31, 2024, in May 2024, a total of 1,600,000 restricted stock awards were granted to management under the Lucid Diagnostics 2018 Equity Plan, with such restricted stock awards having an aggregate fair value of approximately $ 1.5 million, which was measured using the grant date quoted closing price per share of Lucid Diagnostics Inc. common stock, with the 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 vesting of the restricted stock awards vest on a single vest date of May 20, 2026. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. PAVmed Inc. 2014 Equity Plan The 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). 15 Note 11 — Stock-Based Compensation - continued Stock-Based Compensation Expense The stock-based compensation expense recognized by the Company for both the Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity Plan, for the periods indicated, was as follows: Schedule of Stock-Based Compensation Expense Three Months Ended March 31, 2024 2023 Lucid Diagnostics 2018 Equity Plan – cost of revenue $ 25 $ 12 Lucid Diagnostics 2018 Equity Plan – sales and marketing 271 223 Lucid Diagnostics 2018 Equity Plan - general and administrative 328 2,512 Lucid Diagnostics 2018 Equity Plan - research and development 120 70 PAVmed 2014 Equity Plan - cost of revenue 11 7 PAVmed 2014 Equity Plan - sales and marketing 79 133 PAVmed 2014 Equity Plan - general and administrative 2 156 PAVmed 2014 Equity Plan - research and development 97 95 Total stock-based compensation expense $ 933 $ 3,208 The stock-based compensation expense, as presented above, is inclusive of: stock options and restricted stock awards granted under the Lucid Diagnostics 2018 Equity Plan to employees of PAVmed, the physician inventors 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. As of March 31, 2024, unrecognized stock-based compensation expense and weighted average remaining requisite service period with respect to stock options and restricted stock awards issued under each of the Lucid Diagnostics 2018 Equity Plan and the PAVmed 2014 Equity Plan, as discussed above, is as follows: Schedule of Unrecognized Compensation Expense and Weighted Average Remaining Service Period Unrecognized Expense Weighted Average Remaining Service Period (Years) Lucid Diagnostics 2018 Equity Plan Stock Options $ 5,282 2.3 Restricted Stock Awards $ 941 2.0 PAVmed 2014 Equity Plan Stock Options $ 239 2.0 Stock-based compensation expense recognized with respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan was based on a weighted average estimated fair value of such stock options of $ 0.84 per share and $ 0.87 per share during the three month periods ended March 31, 2024 and 2023, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions: Schedule of Stock-based Compensation Valuation Assumptions Three Months Ended March 31, 2024 2023 Expected term of stock options (in years) 5.7 5.6 Expected stock price volatility 74 % 75 % Risk free interest rate 4.3 % 3.7 % Expected dividend yield — % — % Lucid Diagnostics Inc Employee Stock Purchase Plan (“Lucid ESPP”) A total of 511,884 shares and 231,987 shares of common stock of Lucid Diagnostics were purchased for proceeds of approximately $ 353 and $ 276 on March 31, 2024 and 2023, respectively, under the Lucid ESPP. The Lucid ESPP has a total reservation of 1,500,000 shares of common stock of which 395,886 shares are available for issue as of March 31, 2024. In January 2024, our board authorized an increase in the number of shares available for issue by 500,000 . 16 Note 12 — Stockholders’ Equity Series B Preferred Stock Offering and Exchange On March 13, 2024, the Company issued 44,285 shares of newly designated Series B Convertible Preferred Stock, par value $ 0.001 (the “Series B Preferred Stock”), to accredited investors at a purchase price of $ 1,000 per share, for aggregate gross proceeds to the Company of $ 18.1 million. In connection with the offering, 100% of the then-outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock were exchanged for shares of Series B Preferred Stock in the Series B Preferred Stock Offering and Exchange. As a result, no shares of Series A Preferred Stock or Series A-1 Preferred Stock remain outstanding. In connection with the issuance the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”). The key terms of the Series B Preferred Stock are as follows: Each share of Series B 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 B 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 $ 1.2444 , subject to adjustment in the event of stock splits, stock dividends, and similar transactions. The Series B 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 13, 2026, the second anniversary of its issuance at 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 exceptions) (a “VWAP-Based Mandatory Conversion”). The Series B 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 B Preferred Stock. The holders of Series B 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 B Preferred Stock then held by such Holder on March 13, 2025, 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 B Preferred Stock then held by such Holder on March 13, 2026. A holder that voluntarily converts its Series B Preferred Stock prior to March 13, 2025 or March 13, 2026, as the case may be, will not receive the dividend that accrues on such date with respect to such converted Series B Preferred Stock. 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. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (or any Deemed Liquidation Event as defined in the Certificate of Designation), the holders of shares of Series B 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 B Preferred Stock been converted into Common Stock immediately prior to such event. The Series B Preferred Stock is a voting security (subject to applicable ownership limitations). The Company will not effect any conversion of the Series B Preferred Stock, and a holder will not have the right to receive dividends or convert any portion of the Series B Preferred Stock, to the extent that, after giving effect to the receipt of dividends or the conversion, the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of the holder’s affiliates) would beneficially own in excess of 4.99% of the Company’s outstanding common stock (or, upon election of the holder, 9.99% of the Company’s outstanding common stock). The Company and the investors in the offering also executed a registration rights agreement (the “Series B 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 B Preferred Stock. Series B-1 Preferred Stock Offering Subsequent 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 and are not subject to a VWAP-Based Mandatory Conversion. The aggregate gross proceeds from the sale of shares in such offering were $ 11.6 million. Series A Preferred Stock Offering On March 7, 2023, the Company issued 13,625 shares of newly designated Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”). The terms of the Series A Preferred Stock were substantially identical to the terms of the Series B-1 Preferred Stock, except that the Series A Preferred Stock had a conversion price of $ 1.394 and was not a voting security. The aggregate gross proceeds from the sale of shares in such offering were $ 13.6 million. As noted above, on March 13, 2024, 100% of the then-outstanding shares of Series A Preferred Stock were exchanged for shares of Series B Preferred Stock in the Series B Preferred Stock Offering and Exchange. As a result, no shares of Series A Preferred Stock remain outstanding. Series A-1 Preferred Stock Offering On 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 were 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. On March 13, 2024, the Company issued an additional 5,670 shares of Series A-1 Preferred Stock. 17 Note 12 — Stockholders’ Equity - continued As noted above, on March 13, 2024, 100% of the then-outstanding shares of Series A-1 Preferred Stock were exchanged for shares of Series B Preferred Stock in the Series B Preferred Stock Offering and Exchange. As a result, no shares of Series A-1 Preferred Stock remain outstanding. Deemed Dividend on Series A and Series A-1 Convertible Preferred Stock Exchange Offer The 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 $ 12,495 ) and the carrying value of the extinguished Series A and Series A-1 Convertible Preferred Stock (carrying value of $ 24,295 ), 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: Schedule of Net Loss Attributable to Common Stockholders 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 $ 44,285 Less: Fair value related to newly issued Series B Preferred Stock (of 12,495 shares) ( 12,495 ) Less: Carrying value related to Series A and Series A-1 Preferred Stock Exchanged for Series B Preferred Stock (of 24,295 shares) ( 24,295 ) Deemed Dividend Charged to Accumulated Deficit $ 7,495 Lucid Diagnostics Common Stock As of March 31, 2024 and December 31, 2023 there were 46,747,062 and 42,329,864 shares of common stock issued and outstanding, respectively. As of March 31, 2024, PAVmed holds 31,302,444 shares, representing a majority-interest equity ownership and PAVmed has a controlling financial interest in the Company. 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. Committed Equity Facility and ATM Facility On March 28, 2022, the Company entered into a committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”). Under the terms of the committed equity facility, Cantor has committed to purchase up to $ 50 million of the Company’s common stock from time to time at the request of the Company. While there are distinct differences, the facility is structured similarly to a traditional at-the-market equity facility, insofar as it allows the Company to raise primary equity capital on a periodic basis at prices based on the existing market price. Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $ 1.8 million, after a 4 % discount, as of March 31, 2024. In November 2022, the Company entered into an “at-the-market offering” (“ATM”) for up to $ 6.5 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between the Company and Cantor. Cumulatively a total of 230,068 shares of Lucid Diagnostics’ common stock were issued through the at-the-market equity facility for net proceeds of approximately $ 0.3 million, after payments of 3 % commissions, as of March 31, 2024. 18 Note 13 — Net Loss Per Share The Net loss per share basic and diluted for the respective periods indicated is as follows: Schedule of Net Loss Per Share Basic and Diluted Three Months Ended March 31, 2024 2023 Numerator Net loss $ ( 10,612 ) $ ( 16,247 ) Deemed dividend on Series A and Series A-1 Convertible Preferred Stock ( 7,496 ) — Net loss attributable to Lucid Diagnostics Inc. common stockholders $ ( 18,108 ) $ ( 16,247 ) Denominator Weighted average common shares outstanding, basic and diluted 45,014,410 40,970,504 Net loss per share (1) Net loss per share - basic and diluted $ ( 0.40 ) $ ( 0.40 ) (1) - Convertible Preferred Stock would potentially be considered a participating security under the two-class method of calculating net loss per share. However, 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. Basic weighted-average number of shares of common stock outstanding for the three month periods ended March 31, 2024 and 2023 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: Schedule of Common Stock Equivalents Excluded from Computation of Diluted Earnings Per Share March 31, 2024 2023 Stock options 8,332,713 5,052,458 Unvested restricted stock awards 2,297,440 1,872,100 Preferred stock 35,587,314 13,695,850 Total 46,217,467 20,620,408 19