What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-13 · 265 added, 188 removed, 257 unchanged (64% of the section changed)

63 unchanged sentences

in an effort to prevent progression to esophageal cancer.

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

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

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”).

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 were

performed using upper endoscopy with biopsies as the diagnostic comparator and confirmed EsoGuard accurately identifies BE.

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 98% .

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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 GERD, commonly known as chronic heart burn, acid reflux, or just reflux.

dysplastic BE and related precursors to EAC in patients with GERD, commonly known as chronic heartburn, 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.

August 6, 2024, PAVmed and the Company entered into a ninth amendment to the management services agreement between PAVmed and Lucid

(“MSA”) to increase the monthly fee thereunder from $0.83 million per month to $1.05 million per month, effective as of July

March 22, 2024, PAVmed and the Company entered into an eighth amendment to the 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

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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.

May 6, 2024, the board of directors of the Company appointed Dennis Matheis as a Class C director of the Company (and he was subsequently

re-elected to the board, together with the incumbent Class C directors of the Company, at the Company’s annual shareholders meeting

held on July 23, 2024).

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.

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.

Developments - continued

June 21, 2024, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30 consecutive

business days (through June 20, 2024), the closing bid price of the Company’s common stock had been below the minimum of $1 per

share required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

The notification letter stated

that the Company would be afforded 180 calendar days (until December 18, 2024) to regain compliance, and that the Company could be eligible

for additional time.

The Company intends to consider all available options to regain compliance with the Nasdaq listing standards.

Shares Increase

July 23, 2024, the Company filed an amendment to its Certificate of Incorporation to effectuate an increase in its authorized shares

from 200,000,000 to 300,000,000, in accordance with the shareholder approval of the same.

Such approval was granted at the annual meeting

of the Company’s stockholders held the same day.

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.

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

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 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

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).

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

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.

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 aggregate gross proceeds from the sale of shares

in such offering were $11.6 million.

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

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

of Operations

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and marketing expenses

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 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

and administrative expenses

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of Operations - continued

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

three months ended June 30, 2024 as compared to three months ended June 30, 2023

the three months ended June 30, 2024, revenue was $1.0 million as compared to $0.2 million for the corresponding period in the prior

The $0.8 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 June 30, 2024, cost of revenue were approximately $1.6 million as compared to $1.5 million for the corresponding

period in the prior year.

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

● approximately

$0.1 million increase in the CLIA laboratory supplies required to perform the EsoGuard Esophageal

DNA tests and royalty costs.

and marketing expenses

the three months ended June 30, 2024, sales and marketing costs were approximately $4.2 million as compared to $4.0 million for the corresponding

period in the prior year.

The net increase of $0.2 million was principally related to:

● approximately

$0.2 million increase in compensation related costs.

and administrative expenses

the three months ended June 30, 2024, general and administrative costs were approximately $4.9 million as compared to $3.8 million for

the corresponding period in the prior year.

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

● approximately

$0.7 million increase in third-party professional services related to investor relations

and legal services;

● approximately

$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

$0.3 million increase related to compensation related costs;

● approximately

$0.2 million decrease in stock-based compensation from RSA and stock option grants to Lucid

employees and non-employees.

and development expenses

the three months ended June 30, 2024, research and development costs were approximately $1.4 million, compared to $1.8 million for the

corresponding period in the prior year.

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

● approximately

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

outside professional and consulting fees.

of Acquired Intangible Assets

amortization of acquired intangible assets was approximately $0.1 million in the three months ended June 30, 2024, as compared to $0.5

million for the corresponding period in the prior year.

The decrease of $0.4 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 three months ended June 30, 2024, the change in the fair value of our convertible note was approximately $0.6 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 non-cash expense

on the issue date.

of Operations - continued

three months ended June 30, 2024 as compared to three months ended June 30, 2023 - continued

on Debt Extinguishment

the three months ended June 30, 2024, a debt extinguishment loss in the aggregate of approximately $0.5 million was recognized in connection

with our March 2023 Senior Convertible Note as discussed below.

the three months ended June 30, 2024, approximately $1.1 million of principal repayments

along with approximately $0.2 million of interest expense thereon, were settled through the

issuance of 2,117,883 shares of common stock of the Company, with such shares having a fair

value of approximately $1.9 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 $0.5 million in the three months ended June 30,

The Company did not incur debt extinguishment loss in the three months ended June 30,

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

to the March 2023 Senior Convertible Note.

six months ended June 30, 2024 as compared to six months ended June 30, 2023

the six months ended June 30, 2024, revenue was $2.0 million as compared to $0.6 million for the corresponding period in the prior year.

The $1.4 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory

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

for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Test.

the six months ended June 30, 2024, cost of revenue was approximately $3.3 million as compared to $2.9 million for the corresponding

period in the prior year.

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● approximately

$0.2 million increase in EsoCheck and EsoGuard supplies costs;

$0.2 million increase in the CLIA laboratory supplies required to perform the EsoGuard Esophageal

DNA tests and royalty costs;

● approximately

1 unchanged sentence

and marketing expenses

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 six months ended June 30, 2024, sales and marketing costs were approximately $8.4 million as compared to $8.2 million for the corresponding

period in the prior year.

The net increase of $0.2 million was principally related to:

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and administrative expenses

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

the six months ended June 30, 2024, general and administrative costs were approximately $8.9 million as compared to $10.7 million for

the corresponding period in the prior year.

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● approximately

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

and consulting fees;

● approximately

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

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● approximately

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

in headcount.

$0.3 million increase in third-party professional fees and expenses related to investor relations

services and consulting fees.

and development expenses

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

the six months ended June 30, 2024, research and development costs were approximately $2.9 million, compared to $3.7 million for the

corresponding period in the prior year.

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$0.9 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees with respect to EsoCure.

outside professional and consulting fees;

● approximately

$0.1 million increase in stock-based compensation.

of Acquired Intangible Assets

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

amortization of acquired intangible assets was approximately $0.5 million in the six months ended June 30, 2024, as compared to $1.0

million for the corresponding period in the prior year.

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intangible assets being fully amortized in February 2024.

of Operations - continued

six months ended June 30, 2024 as compared to six months ended June 30, 2023 - continued

Income and Expense

in fair value of convertible debt

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

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

the six months ended June 30, 2024, the change in the fair value of our convertible note was approximately $0.9 million of income, related

to the March 2023 Senior Convertible Note (as defined in Note 10 , Debt , to our accompanying unaudited condensed consolidated financial

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.

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 .

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

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

The Company did not incur lender fees and offering costs in the

six months ended June 30, 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

the six months ended June 30, 2024, a debt extinguishment loss in the aggregate of approximately $0.7 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.

the six months ended June 30, 2024, approximately $1.2 million of principal repayments along

with approximately $0.7 million of interest expense thereon, were settled through the issuance

of 2,661,181 shares of common stock of the Company, with such shares having a fair value

of approximately $2.5 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 $0.7 million in the six months ended June 30, 2024.

Company did not incur debt extinguishment loss in the six months ended June 30, 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 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:

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

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

Carrying value related to Series A and Series A-1 Preferred Stock Exchanged for Series B Preferred Stock (of 24,295 shares)

Dividend Charged to Accumulated Deficit

and Capital Resources

4 unchanged sentences

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

the launch of the mobile testing unit;

#CheckYourFoodTube testing days;

use of our mobile testing unit;

ongoing #CheckYourFoodTube

testing days;

and our direct contracting strategic initiative.

Additionally, we are developing expanded clinical evidence

to support insurance reimbursement adoption by government and private insurers.

Further, as resources permit, the Company also intends

to pursue development of other products and services.

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

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for the long-term commercialization and development of our products and services.

are subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies that devote

substantially all of their efforts to the commercialization of their initial product and services and ongoing research and

development activities and conducting clinical trials.

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

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

Financing activities provided

$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/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

are subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies that devote substantially

all of their efforts to the commercialization of their initial product and services and ongoing research and development activities and

conducting clinical trials.

We experienced a net loss of approximately $21.6 million and used approximately $24.1 million of cash in

operations during the six month period ended June 30, 2024.

Financing activities provided $30.2 million of cash during the six month

period ended June 30, 2024.

We ended the quarter with cash on-hand of $24.9 million as of June 30, 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/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 issued.

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.

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.

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 date.

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

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).

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

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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

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 million.

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

as of March 13, 2023, we entered into a Securities Purchase Agreement (the “SPA”) with an accredited institutional investor, pursuant to which we agreed to sell, and the

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

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

and Capital Resources - continued

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

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$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

As of June 30, 2024, the Company was in compliance, and as of the date hereof, the Company

is in compliance, with the Financial Tests.

the six month period ended June 30, 2024, approximately $1.2 million of principal repayments along with approximately $0.7 million of

interest expense thereon, were settled through the issuance of 2,661,181 shares of common stock of the Company, with such shares having

a fair value of approximately $2.5 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

Equity Facility and ATM Facility

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Cumulatively, a total of 680,263

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

shares of common stock of the Company were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of June 30,

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

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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.

after payment of 3% commissions, as of June 30, 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

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

and by PAVmed paying certain operating expenses on our behalf.

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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:

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).

to June 30, 2024, in August 2024, the respective companies’ boards of directors approved the Company to enter into a ninth amendment

Under this amendment, the monthly fee due from the Company to PAVmed was increased from $0.83 million to $1.05 million, effective July 1,

of June 30, 2024, we had a Due To:

payment obligation liability of approximately $0.3 million, which liability is primarily

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 , 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.

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 , 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

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There have been no material changes to our critical accounting

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

policies and estimates in the six months ended June 30, 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