What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-12 · 254 added, 412 removed, 180 unchanged (79% of the section changed)

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FORWARD-LOOKING

Quarterly Report on Form 10-Q (this “Form 10-Q”), including the following discussion and analysis of our unaudited condensed

consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-Q, including statements regarding our future results

of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking

The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,”

“could,” “intends,” “target,” “projects,” “contemplates,” “believes,”

“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or

other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these

identifying words.

Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ

significantly from those expressed or implied in the forward-looking statements.

Factors that might cause such differences include, but

are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.”

Quarterly Report on Form 10-Q (this “Form 10-Q”), including the discussion and analysis of our unaudited condensed consolidated

financial condition and results of operations, contains forward-looking statements that involve

substantial risks and uncertainties.

All statements, other than statements of historical facts, contained in this Form 10-Q, including

statements regarding our future results of operations and financial position, business strategy and plans and objectives of management

for future operations, are forward-looking statements.

The words “may,” “will,” “should,” “expects,”

“plans,” “anticipates,” “could,” “intends,” “target,” “projects,”

“contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue”

or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking

statements contain these identifying words.

Forward-looking statements are not guarantees of future performance and the Company’s

actual results may differ significantly from those expressed or implied in the forward-looking statements.

Factors that might cause such

differences include, but are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading “Risk Factors.”

factors that may affect our actual results include:

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

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

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

ability of our products to achieve market acceptance;

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

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

potential ability to obtain additional financing when and if needed;

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related to our relationship with PAVmed;

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

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

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

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

joint ventures or investments we may make.

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

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

undue reliance on our forward-looking statements.

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

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

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

or otherwise, except as required by applicable law.

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

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

should not place undue reliance on our forward-looking statements.

You should read this Quarterly Report on Form 10-Q and the

documents we have filed as exhibits to this Form 10-Q and the Form 10-K completely and with the understanding our actual future

results may be materially different from what we expect.

We do not assume any obligation to update any forward-looking statements,

whether as a result of new information, future events or otherwise, except as required by applicable law.

are a commercial-stage, cancer prevention medical diagnostics technology company focused on the millions of patients who are at risk

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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 gastroesophageal reflux disease (“GERD”), commonly known as chronic heartburn, acid reflux, or just reflux.

American Journal of Gastroenterology Publication

On November 7, 2024, the Company

announced that its manuscript for its multi-center ESOGUARD BE-1 study has been accepted for publication in The American Journal of Gastroenterology,

the official journal of the American College of Gastroenterology (ACG).

This is the fourth publication presenting clinical validation

data for the Company’s EsoGuard® Esophageal DNA Test, and the second to demonstrate its performance in an intended-use screening

Consistent with previous studies, EsoGuard showed high sensitivity and negative predictive value in detecting esophageal precancer

(Barrett’s Esophagus or BE).

With the acceptance for publication, the Company believes we now have a complete clinical evidence package

to submit our data to the MolDX program and formally seek Medicare coverage.

The prospective, multi-center study

presented data from a cohort of patients who met ACG guideline criteria for esophageal precancer screening and underwent non-endoscopic

EsoGuard testing followed by traditional upper endoscopy.

EsoGuard sensitivity and negative predictive value for detecting BE were approximately

88% and 99%, respectively.

Specificity and positive predictive value were approximately 81% and 30%, respectively.

No serious adverse

events were reported.

Agreements with PAVmed

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 1, 2024.

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

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

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

published in October 2023).

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

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

Evaluation Program (“NYS CLEP”).

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

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

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

of Dennis Matheis to Board of Directors

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

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

chronic heartburn, acid reflux, or just reflux.

2025 Confidentially Marketed Public Offering

April 11, 2025, the Company closed on the sale of 14,375,000 shares of its common stock at a price of $1.20 per share (the

“April 2025 Offering”).

The net proceeds of the April 2025 Offering, after deducting the estimated placement

agent’s fees and other expenses of $1.2 million, was approximately $16.1 million.

The Company intends to use the net proceeds from the April 2025 Offering for working capital and other general corporate

March 2025 Registered Direct Offering

On March 5, 2025, the Company closed on the sale of 13,939,331 shares of its common stock at a price of $1.10

per share (the “Offering”).

The net proceeds

of the Offering, after deducting the estimated placement agent’s fees and other expenses of $0.4 million, was approximately

$14.9 million.

The Company intends to use the net proceeds from the Offering for working capital and other general

corporate purposes.

November 2024, we submitted to MolDx our complete clinical evidence package in support of a request for reconsideration of the non-coverage

language in the LCD to secure Medicare coverage for EsoGuard.

The EsoGuard clinical evidence package included six new peer-reviewed publications:

three clinical validation studies (two in the intended use population, one case control), two clinical utility studies, and one analytical

validation study.

The current LCD provides clear coverage criteria consistent with the American College of Gastroenterology (ACG) guidelines

for esophageal precancer testing.

The package was submitted as part of a request for reconsideration of the non-coverage language in

the LCD to secure Medicare coverage for EsoGuard.

Clinical Practice Guidelines Update

March 2025, we announced that a recent update to the National Comprehensive Cancer Network® (NCCN) Clinical Practice Guidelines in

Oncology (NCCN Guidelines®) focused on Esophageal and Esophagogastric Junction Cancers (Version 1.2025) has added a new section on

BE screening.

The NCCN Guidelines® now reference professional society guidelines on BE screening, including the most recent ACG clinical

guideline discussed above, which recommends non-endoscopic biomarker testing, such as EsoGuard performed on samples collected with EsoCheck,

as an acceptable alternative to invasive upper endoscopy to detect esophageal precancer.

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.

Such increase was approved at the annual meeting

of the Company’s stockholders held the same day.

Lucid IP Matters

On October 15, 2024, the Company

announced that it received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for a patent application covering

its proprietary method of using methylation of the cyclin-A1 (CCNA1) gene to help detect esophageal precancer and cancer, a key component

of its EsoGuard® Esophageal DNA Test.

EsoGuard utilizes next-generation

sequencing (NGS) to assess DNA methylation at 31 sites on two genes, vimentin (VIM) and cyclin-A1 (CCNA1).

Such methylation has been shown

to be strongly associated with conditions along the spectrum from early esophageal precancer (non-dysplastic Barrett’s Esophagus or BE),

to late precancer (dysplastic BE), to cancer (esophageal adenocarcinoma).

Although VIM methylation had been previously associated with

gastrointestinal neoplasias, the association of CCNA1 methylation with esophageal neoplasia is novel and appears to be more specific.

2023 Senior Convertible Note Refinancing

November 8, 2024, the Company gave notice to the holder of the March 2023 Senior Convertible Note that it was exercising its right pursuant

to such note to redeem the same for the redemption price specified in such note (the “Optional Redemption Price”).

to the terms of the March 2023 Senior Convertible Note, the Company has not less than ten business days, and not more than twenty business

days, from the date of the notice (the “Optional Redemption Notice Period”) to pay the Optional Redemption Price.

finance the payment of the Optional Redemption Price, the Company has entered into a securities purchase agreement with certain accredited

investors (the “2024 Note Investors”).

Under the agreement, subject to customary closing conditions, the Company has agreed

to issue, and each 2024 Note Investor has agreed to purchase, 12.0% senior secured convertible notes due 2029 (collectively, the “November

2024 Senior Convertible Notes”).

As of the date hereof, the aggregate commitments of the 2024 Note Investors exceed the Optional

Redemption Price.

Company expects to complete the issuance of the November 2024 Senior Convertible Notes and the redemption of the March 2023 Senior Convertible Note on or prior

to the end of the

Optional Redemption Notice Period, although there can be no assurance that such issuance and redemption will be completed

during such period, if at all.

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

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

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

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

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

remain outstanding.

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.

Study Publications

March 18, 2025, the Company announced that its ENVET-BE clinical utility study has been accepted for publication in Gastroenterology

& Hepatology—the fifth peer-reviewed publication of clinical utility data for Lucid’s EsoGuard® Esophageal DNA Test,

and the second to present findings from a real-world screening population.

The manuscript, entitled “Enhancing the Diagnostic Yield

of EGD for Diagnosis of Barrett’s Esophagus Through Methylated DNA Biomarker Triage,” demonstrates that confirmatory upper

endoscopy (EGD) performed in EsoGuard-positive patients had a substantially higher diagnostic yield for detecting esophageal precancer

(Barrett’s Esophagus or BE) than the expected yield of screening EGD alone in at-risk patients.

The ENVET-BE study reviewed real-world

data from a cohort of 199 EsoGuard-positive patients who completed confirmatory EGD.

The overall positive diagnostic yield for BE was

2.4-fold higher than the expected yield of screening EGD alone, based on disease prevalence within an at-risk population.

The yield was

nearly three-fold higher in patients meeting American College of Gastroenterology (ACG) screening criteria.

Reimbursement Approval

March 13, 2025, the Company announced that Highmark Blue Cross Blue Shield, an independent licensee of the Blue Cross and Blue Shield

Association, has issued a positive coverage policy for non-invasive screening of esophageal precancer and cancer in New York state.

new policy will cover EsoGuard in patients who meet established criteria for esophageal precancer testing consistent with professional

society guidelines.

NIH Grant Related to EsoGuard and EsoCheck

February 27, 2025, the Company announced that principal investigators from Case Western Reserve University (CWRU) and University Hospitals

(UH), were awarded an $8 million National Institutes of Health (NIH) R01 grant to conduct a five-year clinical study designed to evaluate

esophageal precancer detection using EsoCheck and EsoGuard among at-risk individuals without symptoms of chronic gastroesophageal reflux

disease (GERD).

The study, “A Clinical Trial of Cancer Prevention by Biomarker Based Detections of Barrett’s Esophagus and

Its Progression,” aims to evaluate the effectiveness of EsoCheck and EsoGuard in detecting esophageal precancer (Barrett’s

Esophagus or BE) to prevent esophageal cancer (EAC) within a non-GERD at-risk population.

To accomplish this aim, 800 patients without

GERD symptoms who meet the American Gastroenterological Association’s (AGA) risk criteria for screening will be recruited across

five participating research centers:

University Hospitals, University of Colorado, Johns Hopkins University, University of North Carolina,

and Cleveland Clinic.

of Operations

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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

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

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

services for the Company.

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

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

and administrative expenses

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for the development of our technologies and conducting clinical trials, including:

associated with regulatory filings;

license fees;

associated with submission of regulatory filings;

of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes;

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in millions, except for share and per share amounts.

of Operations - continued

three months ended September 30, 2024 as compared to the three months ended September 30, 2023

the three months ended September 30, 2024, revenue was $1.2 million as compared to $0.8 million for the corresponding period in the prior

The $0.4 million increase principally relates to the increase in volume of our EsoGuard Esophageal DNA Tests performed in our CLIA laboratory for the period and the consideration received for the performance of the EsoGuard Esophageal DNA Tests.

the three months ended September 30, 2024, the cost of revenue was approximately $1.7 million as compared to $1.6 million for the corresponding

three months ended March 31, 2025 as compared to three months ended March 31, 2024

the three months ended March 31, 2025, revenue was $0.8 million as compared to $1.0 million for the corresponding period in the prior

The $0.2 million decrease principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our CLIA laboratory

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

the three months ended March 31, 2025, the cost of revenue was approximately $1.6 million as compared to $1.7 million for the corresponding

period in the prior year.

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

● approximately

$0.2 million decrease in manufacturing costs associated with the EsoCheck devices and EsoGuard

Esophageal DNA Tests;

The $0.1 million decrease was principally related to:

● approximately

$0.2 million increase in third party professional and IT related expenses;

$0.3 million decrease in the manufacturing costs associated with the EsoCheck devices and

EsoGuard Esophageal DNA Tests;

● approximately

$0.1 million increase in compensation and stock-based compensation costs.

$0.2 million increase in compensation related costs.

and marketing expenses

the three months ended September 30, 2024, sales and marketing costs were approximately $4.1 million as compared to $3.8 million for

the corresponding period in the prior year.

The net increase of $0.3 million was principally related to:

● approximately

$0.3 million increase in compensation and stock-based compensation costs.

and administrative expenses

the three months ended September 30, 2024, general and administrative costs were approximately $5.4 million as compared to $4.3 million

for the corresponding period in the prior year.

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

the three months ended March 31, 2025, sales and marketing costs were approximately $4.1 million as compared to $4.2 million for the

corresponding period in the prior year.

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

● approximately

$0.6 million increase related to the amended MSA with PAVmed due to the growth and expansion

of our business and the services incurred through PAVmed;

$0.1 million decrease related to third-party professional marketing and information technology

● approximately

$0.4 million increase in compensation related costs;

$0.1 million decrease in stock-based compensation;

● approximately

$0.1 million increase in third-party professional services related to investor relations

and other third-party professional services.

and development expenses

the three months ended September 30, 2024, research and development costs were approximately $1.7 million, compared to $1.6 million for

$0.1 million increase in cash compensation costs.

and administrative expenses

the three months ended March 31, 2025, general and administrative costs were approximately $6.2 million as compared to $4.1 million for

the corresponding period in the prior year.

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● approximately

$0.1 million increase 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 September 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 September 30, 2024, the change in the fair value of our convertible note was approximately $0.3 million of expense,

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

on Debt Extinguishment

the three months ended September 30, 2024, a debt extinguishment loss in the aggregate of approximately $0.4 million was recognized in

connection with our March 2023 Senior Convertible Note as discussed below.

the three months ended September 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 2,116,717 shares of common stock of the Company, with such shares having a fair

value of approximately $1.8 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 $0.4 million in the three months ended September

The Company incurred less than $0.1 million of debt extinguishment losses in the

three months ended September 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.

nine months ended September 30, 2024 as compared to nine months ended September 30, 2023

the nine months ended September 30, 2024, revenue was $3.1 million as compared to $1.4 million for the corresponding period in the prior

The $1.7 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our CLIA laboratory

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

the nine months ended September 30, 2024, the cost of revenue was approximately $5.0 million as compared to $4.5 million for the corresponding

period in the prior year.

The $0.5 million increase was principally related to:

● approximately

$0.3 million decrease in manufacturing costs associated with the EsoCheck devices and EsoGuard

Esophageal DNA Tests;

● approximately

$0.3 million increase in compensation related costs, including stock-based compensation;

● approximately

$0.3 million increase in third party professional fees and IT services;

● approximately

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

DNA tests and in royalty costs for the test.

and marketing expenses

the nine months ended September 30, 2024, sales and marketing costs were approximately $12.5 million as compared to $12.0 million for

the corresponding period in the prior year.

The net increase of $0.5 million was principally related to:

$1.2 million increase related to financing related costs;

● approximately

$0.4 million increase in compensation related costs principally as a result of changes in

headcount and bonus structure and travel expenses;

$0.4 million increase in compensation and stock-based compensation costs;

● approximately

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of our business and the services incurred through PAVmed;

and administrative expenses

the nine months ended September 30, 2024, general and administrative costs were approximately $14.3 million as compared to $15.0 million

for the corresponding period in the prior year.

The net decrease of $0.7 million was principally related to:

● approximately

$2.6 million decrease in stock-based compensation;

$0.1 million increase in third-party professional fees, including expenses related to investor

and development expenses

the three months ended March 31, 2025, research and development costs were approximately $1.4 million, compared to $1.5 million for the

corresponding period in the prior year.

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

● approximately

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● approximately

$0.9 million increase in compensation costs;

● approximately

$0.1 million decrease in third-party professional fees, expenses related to the termination

of the management services agreement with our former laboratory provider, and expenses for finance and legal services.

and development expenses

the nine months ended September 30, 2024, research and development costs were approximately $4.5 million, compared to $5.3 million for

the corresponding period in the prior year.

The net decrease of $0.8 million was principally related to:

$0.2 million decrease in development costs, particularly in clinical trial activities;

● approximately

$0.8 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees.

$0.1 million decrease in stock-based compensation.

of Operations - continued

nine months ended September 30, 2024 as compared to nine months ended September 30, 2023 - continued

three months ended March 31, 2025 as compared to three months ended March 31, 2024 - continued

of Acquired Intangible Assets

amortization of acquired intangible assets was approximately $0.6 million in the nine months ended September 30, 2024, as compared to

amortization of acquired intangible assets was approximately $0.1 million in the three months ended March 31, 2025, as compared to $0.4

million for the corresponding period in the prior year.

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in fair value of convertible debt

the nine months ended September 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 remeasurement

as a non-cash expense on the issue date.

on Issue and Offering Costs - Senior Secured Convertible Note

the nine months ended September 30, 2023, in connection with the issue of the March 2023 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 nine months ended September 30, 2024 .

the three months ended March 31, 2025 and 2024, the change in the fair value of our convertible note was approximately $14.5 million

of expense and $0.3 million of income, respectively, related to the 2024 Convertible Notes and the March 2023 Senior Convertible

Note (as defined in Note 10 , Debt , to our accompanying unaudited condensed consolidated financial statements).

Convertible Notes and March 2023 Senior Convertible Note were 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 Debt Extinguishment

the nine months ended September 30, 2024, a debt extinguishment loss in the aggregate of approximately $1.1 million was recognized in

connection with our March 2023 Senior Convertible Note as discussed below.

the nine months ended September 30, 2024, approximately $2.4 million of principal repayments

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

with our March 2023 Senior Convertible Note as discussed below.

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

along with approximately $0.4 million of interest expense thereon, were settled through the

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The conversions

resulted in a debt extinguishment loss of $1.1 million in the nine months ended September

The Company incurred less than $0.1 million of debt extinguishment losses in the

nine months ended September 30, 2023.

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

The Company did not incur debt extinguishment loss.in the three months ended March

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

to the March 2023 Senior Convertible Note.

to the 2024 Convertible Notes and 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 31,790 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 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:

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

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

5 unchanged sentences

current operational activities are principally focused on the commercialization of EsoGuard.

We are pursuing commercialization

across multiple sales channels, including:

the communication to and education of medical practitioners and clinicians regarding

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

We are pursuing commercialization across

multiple sales channels, including:

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

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

use of our mobile testing unit;

ongoing #CheckYourFoodTube testing days;

ongoing #CheckYourFoodTube

testing days;

and our direct contracting strategic initiative (including in the concierge medicine and employer markets sectors).

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.

as resources permit, the Company also intends to pursue development of other products and services.

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

7 unchanged sentences

We experienced a net loss of approximately $26.9 million and used

approximately $34.3 million of cash in operations during the nine month period ended September 30, 2024.

Financing activities

provided $30.2 million of cash during the nine month period ended September 30, 2024.

We ended the quarter with cash on-hand of

$14.5 million as of September 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, which in accordance with management’s

plans may include conversions of our existing debt to equity and refinancing our existing debt obligations to extend the maturity

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 upon 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

approximately $12.5 million of cash in operations during the quarter ended March 31, 2025.

Financing activities provided $15.4

million of cash during the quarter ended March 31, 2025.

We ended the quarter with cash on-hand of $25.2 million as of March 31,

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, which in accordance with management’s plans may include conversions

of our existing debt 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

upon 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.

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