What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-25 compared with 2023-03-14 · 550 added, 498 removed, 125 unchanged (89% of the section changed)

7 unchanged sentences

from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

the context otherwise requires, references herein to “we”, “us”, and “our”, and to the “Company”

or “PAVmed” are to PAVmed Inc.

and Subsidiaries, including its majority-owned subsidiaries, including Lucid Diagnostics Inc.

(“Lucid Diagnostics” or “LUCID”) and Veris Health Inc.

(“Veris Health” or “VERIS”).

is a highly differentiated, multi-product, commercial-stage medical technology company organized to advance a broad pipeline of innovative

medical technologies from concept to commercialization, employing a business model focused on capital efficiency and speed to market.

current central focus is predominantly on commercial expansion and execution including the acceleration of EsoGuard and Veris Cancer

Care Platform commercialization.

As resources permit, we will continue to explore internal and external innovations that fulfill our

project selection criteria without limiting ourselves to any target specialty or condition.

More broadly, we strive to maintain balance

within our pipeline with shorter-term, lower-risk projects with the prospect for rapid commercialization and revenue generation supporting

development of longer-term projects.

At the same time, we are continuously re-assessing each project’s long-term commercial potential

relative to other projects in our pipeline, accelerating or decelerating the project and reallocating resources accordingly.

Company operates in one segment as a medical technology company, with the following lines of business:

Diagnostics, Medical Devices and

Digital Health.

Above in Part I, Item 1 - Business is a summary of each of our key products within these sectors, including in

particular EsoGuard and the Veris Cancer Care Platform, currently our two leading products.

We are also pursuing a number of research

and development project and product opportunities across these three lines of business, which have either been developed internally or

have been presented to us by clinician innovators and academic medical institutions for consideration..

of Lucid Clinical Trials

is currently seeking to accelerate its collection of clinical utility data through a range of trials that can be efficiently executed.

These efforts include a planned investigator-initiated, retrospective analysis of prospectively collected data on the approximately 400

San Antonio fire fighters who underwent testing as part of a community-sponsored cancer awareness event (in

respect of which we expect to publish results in the first half of 2023) ;

an ongoing investigator-initiated, retrospective, single-center,

study with 500 patients (in respect of which we expect to publish results mid-2023), a virtual-patient randomized controlled trial with

intended recruitment of 100-200 physician participants (in respect of which we expect to publish

results this year) ;

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

and a Lucid-sponsored

registry at existing Lucid Test Centers, whereby all patients undergoing EsoCheck testing will be given the opportunity to provide informed

consent and contribute data about their risk factors, EsoGuard results, and subsequent diagnostic and/or therapeutic journey.

Both Lucid-sponsored

observational/registry studies expect to have preliminary results and/or interim analysis before the end of 2023.

previously disclosed, consequently, Lucid has decided to delay for the time being the two previously commenced clinical trials, the “EsoGuard

screening study” (“BE-1”) and the “EsoGuard case-control study” (“BE-2”), as Lucid is devoting

our clinical resources to the studies cited above, which we expect will more efficiently generate the clinical data Lucid is currently

prioritzing to drive EsoGuard commercialization.

Labs Laboratory Operations Update

February 14, 2023, Lucid Diagnostics and LucidDx Labs Inc.

entered into an agreement (the “MSA Termination Agreement ”)

with RDx, pursuant to which the parties mutually agreed to terminate the MSA-RDx without cause.

The termination was effective as February

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

in accordance with the terms of the MSA-RDx.

Recently, however, Lucid accelerated the development of internal resources necessary to

operate the Laboratory entirely on its own.

Accordingly, the Company believes that termination of the MSA-RDx will improve the efficiency

of the performance of the EsoGuard assay.

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

and the MSA-RDx to $725,000 (from the $3,450,000 that would otherwise have been payable under the APA and MSA if the MSA had remained

in effect through the balance of its stated term), resulting in a net savings to Lucid Diagnostics of $2,725,000.

The payment was satisfied

through the issuance of 553,436 shares of Lucid Diagnostics’ common stock on February 25, 2023.

Lucid Diagnostics was not required

to make any cash payments in connection with the termination.

#CheckYourFoodTube

January 2023, Lucid successfully completed its first #CheckYourFoodTube Precancer Testing Event, in partnership with Rachelle Hamblin,

M.D., M.P.H., and the San Antonio Fire Department (SAFD), to detect esophageal precancer in at-risk members of the department.

testing event was held over two weekends in January, which has been designated as Firefighter Cancer Awareness Month by the International

Association of Fire Fighters (IAFF).

A total of 391 members, nearly one-quarter of the department, who were deemed by Dr.

be at-risk for esophageal precancer, underwent a brief, on-site, noninvasive cell collection procedure, performed by Lucid clinical personnel

using its EsoCheck ® Esophageal Cell Collection Device.

Firefighters with suspected esophageal precancer based on a positive

EsoGuard result were identified, including some less than forty years of age, and will undergo appropriate monitoring and treatment,

as indicated by clinical practice guidelines, to prevent progression to esophageal cancer.

These events, which Lucid looks to expand

across the country, are an extension of Lucid’s recently introduced and expanding satellite Lucid Test Center (sLTC) program, which

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

demonstrated that its nurse practitioners can each perform up to fifty EsoCheck procedures in a day, and its laboratory team handled

over two hundred incoming samples in a day, while maintaining turnaround times at target.

These successes provide an excellent foundation

for future testing events as we continue to drive EsoGuard commercialization using all the tools at our disposal.

Health Commercialization Update

December 2022, Veris Health signed a license agreement for the Veris CCP software with its first customer, New Jersey Cancer Care.

Veris Health onboarded the first cohort of patients of that practice onto the Veris CCP as well, and has signed license agreements with

two additional cancer centers.

These successes lay the groundwork for Veris Health’s expansion plans with respect to the Veris

CCP software as it seeks to onboard cancer centers and patients across the country.

December 29, 2022, the Company received a notice from the Listing Qualifications Department of Nasdaq stating that, for the prior 30

consecutive business days (through December 28, 2022), 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 June 27, 2023) to regain compliance.

In order to regain compliance,

the closing bid price of the Company’s common stock must be at least $1 for a minimum of ten consecutive business days.

2023, the Company distributed a proxy statement for a special meeting of shareholders to be held on March 31, 2023 (the “Special

Meeting”), at which the Company will be seeking approval of an amendment to the Company’s Certificate of Incorporation, to

effect, at any time prior to the one-year anniversary date of the Special Meeting, (i) a reverse split of the Company’s outstanding

shares of common stock at a specific ratio, ranging from 1-for-5 to 1-for-15, to be determined by the board of directors of the Company

in its sole discretion, and (ii) an associated reduction in the number of shares of common stock the Company is authorized to issue,

from 250,000,000 shares to 50,000,000 shares.

If the proposed reverse stock split is approved and implemented, the Company anticipates

it will regain compliance with the Nasdaq requirements for continued listing.

Payroll and Benefit Expense Reimbursement Agreement

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

Historically,

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

Lucid has reimbursed PAVmed for the same.

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

reimburse PAVmed for the same.

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

as the parties may determine, in cash or, subject to approval by the board of directors of each of PAVmed and Lucid, in shares of Lucid’s

common stock, with such shares valued at the volume weighted average price of such stock during the final ten trading days preceding

the later of the two dates on which such stock issuance is approved by the board of directors of each of PAVmed and Lucid (subject to

a floor price of $0.40 per share), or in a combination of cash and shares.

However, in no event shall Lucid issue any shares of its common

stock to PAVmed in satisfaction of all or any portion of the expenses if the issuance of such shares of its common stock would exceed

the maximum number of shares of common stock that the Issuer may issue under the rules or regulations of The Nasdaq Stock Market LLC

(“Nasdaq”), unless Lucid obtains the approval of its stockholders as required by the applicable rules of the Nasdaq for issuances

of shares of its common stock in excess of such amount.

Purchase Agreement - March 31, 2022 - Senior Secured Convertible Note - April 4, 2022 and Senior Secured Convertible Note - September

as of March 31, 2022, we entered into a Securities Purchase Agreement (“SPA”) with an accredited institutional investor (“Investor”,

“Lender”, and /or “Holder”), pursuant to which we agreed to sell, and the Investor agreed to purchase an aggregate

of $50.0 million face value principal of Senior Secured Convertible Notes.

The SPA provided for the sale to the Investor of an initial

Senior Secured Convertible Note with a face value principal of $27.5 million, which closed on April 4, 2022 (the “April 2022 Senior

Convertible Note”).

The SPA also provided for sales of additional Senior Secured Convertible Notes in one or more additional closings

(upon the satisfaction of certain conditions), with an aggregate face value principal of up to an additional $22.5 million.

2022 Senior Convertible Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the Company’s offering costs

of approximately $0.6 million, inclusive primarily of $0.5 million placement agent fees.

September 8, 2022, we completed an additional closing under the SPA, in which we sold to the Investor an additional Senior Secured Convertible

Note with a face value principal of $11.25 million (the “September 2022 Senior Convertible Note”).

The September 2022 Senior

Convertible Note proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s offering costs of approximately

$0.2 million, inclusive primarily of placement agent fees.

Note 14, Debt , to the Financial Statements for further discussion of the SPA dated March 31, 2022 and the senior convertible notes.

Diagnostics Inc.

- Committed Equity Facility and ATM Facility

March 2022, our majority-owned subsidiary, Lucid Diagnostics, entered into a committed equity facility with an affiliate of Cantor Fitzgerald

Under the terms of the facility, Cantor committed to purchase up to $50 million of Lucid Diagnostics common stock

from time to time upon the request of Lucid Diagnostics.

While there are distinct differences, the facility is structured similarly to

a traditional at-the-market equity facility, insofar as it allows Lucid Diagnostics to raise primary capital on a periodic basis at prices

based on the existing market price.

Through December 31, 2022, 680,263 shares of common stock of Lucid Diagnostics were issued under

this facility for total proceeds of approximately $1.8 million.

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

of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor Fitzgerald

In the year ended December 31, 2022, there were no Lucid Diagnostics shares sold through their at-the-market equity facility.

Subsequent to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility

for approximately $0.3 million.

Diagnostics - Series A Preferred Stock Offering

March 7, 2023, Lucid entered into subscription agreements for the sale of 13,625 shares (the “ Lucid Series A

Preferred Stock ”).

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

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

dividends equal to 20% of the number of shares of Lucid common stock into which such Lucid Series A Preferred Stock is convertible,

payable on the one-year and two-year anniversary of the issuance date.

The Lucid Series A Preferred Stock is a non-voting security,

other than with respect to limited matters related to changes in terms of the Lucid Series A Preferred Stock.

the context otherwise requires, (i) “we”, “us”, and “our”, and the “Company” and “PAVmed”

refer to PAVmed Inc.

and its subsidiaries, including its majority-owned subsidiary Lucid Diagnostics Inc.

(“Lucid Diagnostics”

or “Lucid”) and its majority-owned subsidiary Veris Health Inc.

(“Veris Health” or “Veris”), (ii)

“FDA” refers to the Food and Drug Administration, (iii) “510(k)” refers to a premarket notification, submitted

to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) “CLIA”

refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, and (v) “LDT”

refers to a diagnostic test, defined by the FDA as “an IVD that is intended for clinical use and designed, manufactured and used

within a single laboratory,” which is generally subject only to self-certification of analytical validity under the CMS CLIA program.

is structured to be a multi-product life sciences company organized to advance a pipeline of innovative healthcare technologies.

by a team of highly skilled personnel with a track record of bringing innovative products to market, PAVmed is focused on

innovating, developing, acquiring, and commercializing novel products that target unmet needs with large addressable market

opportunities.

Leveraging our corporate structure—a parent company that will establish distinct subsidiaries for each financed

asset—we have the flexibility to raise capital at the PAVmed level to fund product development, or to structure financing

directly into each subsidiary in a manner tailored to the applicable product, the latter of which is our current strategy given

prevailing market conditions.

current focus is multi-fold.

We continue to pursue commercial expansion and execution of EsoGuard, which is the flagship product of

our majority-owned subsidiary Lucid Diagnostics Inc.

LUCD) (“Lucid” or “Lucid Diagnostics”).

addition, through a separate majority-owned subsidiary, Veris Health Inc.

(“Veris” or “Veris Health”), we are focused on entering into

strategic partnership opportunities with leading academic oncology systems to expand access to the Veris Platform.

In terms of other

existing products and technologies, we have created an incubator-type platform where we are looking to obtain financing on a

product-by-product basis as necessary to advance each asset to a meaningful inflection point along its path to commercialization.

Finally, as resources permit, we will continue to explore external innovations that fulfill our project selection criteria without

limiting ourselves to any target sector, specialty or condition.

Part I, Item 1, Business above for a more detailed summary of the medical device, diagnostics, and digital health sectors and

our key products, including in particular EsoGuard and the Veris Platform, which are currently our two leading products.

Recent Developments

Series Z Warrant Modification

On December 4, 2023, the Company

announced the extension of the Company’s Series Z Warrants, by 12 months, to April 30, 2025.

In addition, as a result of the

reverse stock split, described below, the Series Z Warrants became exercisable to purchase one whole share of common stock of the Company

at an exercise price of $24.00, which exercise price per whole share was further reduced to $23.48 as described below under the heading

“ PAVmed Distribution of Lucid Diagnostics Common Stock to Shareholders ”.

The Company recognized the incremental value

associated with the Series Z Warrants modification for the term extension as a deemed dividend charge of $1.8 million and as an increase

of net loss available to common stockholders on the consolidated statements of operations in 2023.

Reverse Stock Split

On December 7, 2023, the Company

implemented a 1-for-15 reverse stock split of its common stock and reduced its authorized shares from 250,000,000 to 50,000,000, each

in accordance with shareholder approval granted at a March 31, 2023 special meeting of the Company’s stockholders.

The Company filed

an amended Certificate of Incorporation reflecting the reduction in authorized shares.

The purpose of the reverse stock

split was to regain compliance with the $1 minimum bid price requirement for continued listing on the Nasdaq Capital Market.

January 7, 2024, the Company received a letter from the Listing Qualifications Department of Nasdaq, stating the Company had regained

compliance with such requirement.

Management Services Agreement/Payroll Benefits

and Expense Reimbursement Agreement with Lucid Diagnostics

On March 22, 2024, PAVmed and Lucid 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.

On 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.

PAVmed Distribution of Lucid Diagnostics Common

Stock to Shareholders

On February 15, 2024, the Company

distributed by special dividend to the Company stockholders 3,331,747 shares of Lucid Diagnostics common stock held by the Company.

such date, each PAVmed shareholder as of the January 15, 2024 record date received a stock dividend of approximately 38 shares of Lucid

common stock for every 100 shares of PAVmed common stock they held as of such date.

The shares distributed were approximately equal to

the number of shares of common stock that Lucid issued to PAVmed on or about January 26, 2024 in satisfaction of certain intercompany

obligations due to Lucid from PAVmed, as discussed above.

This distribution constituted an

“Extraordinary Dividend” as defined in the warrant agreement that governs the Company’s Series Z Warrants.

pursuant to the warrant agreement, the exercise price under the Series Z Warrants per full share of PAVmed common stock was automatically

decreased by $0.52 (the fair market value of 0.37709668 of a share of Lucid Diagnostics’ common stock) to $23.48 per share.

Nasdaq Notice

On March 7, 2024, the Company

received a notice from the Nasdaq Listing Qualifications Department stating that, for the preceding 30 consecutive business days (through

March 6, 2024), the market value of the Company’s listed securities (“MVLS”) had been below the minimum of $35 million

required for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).

The notification letter stated that

the Company would be afforded 180 calendar days (until September 3, 2024) to regain compliance.

In order to regain compliance, the Company’s

MVLS must close at $35 million or more for a minimum of ten consecutive business days.

The notification letter also states that in the

event the Company does not regain compliance prior to the expiration of the 180-day period, the Company will receive written notification

that its securities are subject to delisting.

The Nasdaq notification has no effect at this time on the listing of the Company’s

common stock or Series Z warrants, and the stock and warrants will continue to trade uninterrupted under the symbol “PAVM”

and “PAVMZ”, respectively.

Incubator Program

On March 21, 2024, the Company announced

that it has launched a wholly owned incubator, PMX, to complete development and commercialization of existing portfolio technologies,

including PortIO, EsoCure and CarpX.

PMX and Hatch Medical, L.L.C.

(“Hatch Medical”), a medical device incubator and technology

brokerage firm, have executed a joint venture agreement to advance the technologies.

Pursuant to the joint venture agreement,

PAVmed will assign PortIO, EsoCure and CarpX to its wholly owned incubator, PMX.

Starting with PortIO, the Company will seek to independently

finance a separate subsidiary of the incubator to develop and commercialize each technology.

Hatch Medical will provide strategic advisory

and brokerage services to the subsidiary to advance the technology through key milestones and, subsequently, seek to engage a strategic

partner to acquire, license or distribute the commercial product.

Securities Purchase Agreement - March 31, 2022

- Senior Secured Convertible Note - April 4, 2022 and Senior Secured Convertible Note - September 8, 2022

Effective as of March 12, 2024,

the Company entered into an amendment and waiver (the “Note Amendment and Waiver”) with the holder of the April 2022 Senior

Convertible Note and the September 2022 Senior Convertible Note (each such term as defined below).

Pursuant to the Note Amendment and

Waiver, the maturity date of the April 2022 Senior Convertible Note was extended to April 4, 2025 and the maturity date of the September

2022 Senior Convertible Note was extended to September 8, 2025, in each case subject to further extension in certain circumstances.

holder of the such note also waived, for the period commencing on December 1, 2023 and ending on August 31, 2024, the financial covenant

contained in such notes requiring that the ratio of (a) the outstanding principal amount of the notes, 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, not exceed

30%, and that the Company’s market capitalization not be less than $75 million.

In consideration of the Note Amendment and Waiver,

the Company agreed to pay the holder of the notes $2,000,000 in cash (or in such other form as may be mutually agreed in writing) by April

See our accompanying consolidated

financial statements Note 13, Debt , for further discussion of the SPA dated March 31, 2022 and the senior convertible notes.

Financing - continued

Lucid Diagnostics - Preferred Stock Offerings

On March 13, 2024, Lucid entered

into subscription agreements (each, a “Series B Subscription Agreement”) and exchange agreements (each, an “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 Lucid’s newly designated Series B Convertible Preferred Stock, par value

$0.001 per share (the “Lucid 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 Lucid’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Lucid

Series A Preferred Stock”), and 10,670 shares of Lucid’s Series A-1 Convertible Preferred Stock, par value $0.001 per share

(the “Lucid Series A-1 Preferred Stock”), held by them for 31,790 shares of Lucid Series B Preferred Stock (collectively,

the “Lucid Series B Offering and Exchange”).

Prior to the execution of the Series B Subscription Agreements and the Exchange

Agreements, Lucid entered into subscription agreements with certain of the Series B Investors providing for the sale to such investors

of 5,670 shares of Lucid 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 Lucid Series B Preferred Stock pursuant to the Exchange Agreements (and are included in the 10,670 shares of

Lucid Series A-1 Preferred Stock set forth above).

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

conversion price of $1.2444.

The terms of the Lucid 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 Lucid common stock into which such Lucid Series B Preferred Stock is

convertible, payable on the one-year and two-year anniversary of the issuance date.

The Lucid Series B Preferred Stock is a voting security.

The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds

from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).

As a result of 100% of the then-outstanding

shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged for shares of Lucid Series B Preferred Stock

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

On October 17, 2023, Lucid sold

5,000 shares of Lucid Series A-1 Preferred Stock, solely to accredited investors (all of which were including in the 10,670 shares of

Lucid Series A-1 Preferred exchanged for Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange).

The aggregate gross

proceeds from the sale of shares in such offering were $13.625

Diagnostics - Private Placement - Securities Purchase Agreement

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

institutional investor (“Lucid Investor”, “Lucid Lender”, and /or “Lucid Holder”), pursuant to

which Lucid agreed to sell, and the Lucid Investor agreed to purchase a Senior Secured Convertible Note with a face value principal

of up to $11.1 million (the “March 2023 Lucid Senior Convertible Note”).

The issuance of the March 2023 Lucid Senior

Convertible Note is subject to customary closing conditions.

March 2023 Lucid Senior Secured Convertible Note would have a 7.875% annual stated interest rate, a contractual conversion price of $5.00

per share of Lucid’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination,

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

The March 2023 Lucid Senior Convertible Note would be convertible into or otherwise paid in shares of Lucid’s common stock.

the March 2023 Lucid Senior Convertible Note, Lucid is and would be subject to certain customary affirmative and

negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of

investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of

other indebtedness, and transactions with affiliates, among other customary matters.

Under the March 2023 Lucid Senior Convertible Note, Lucid would also be subject to financial

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

outstanding principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid

late charges to (b) Lucid’s average market capitalization over the prior ten trading days, not exceed 30%, and (iii) that

Lucid’s market capitalization shall at no time be less than an amount to be agreed upon.

proceeds to Lucid of this offering was $5.0 million.

In December 2021, we entered into

an “at-the-market offering” for up to $50 million of our common stock that may be offered and sold under a Controlled Equity

Offering Agreement between us and Cantor.

In March 2023, the “at-the-market offering” became subject to General Instruction

I.B.6 of Form S-3, which limits sales of our securities under this instruction in any 12-month period to one-third of the aggregate market

value of our public float (unless our public float rises to $75 million or more, in which case the instruction will cease to apply).

a result of this limitation and our then-current public float, in May 2023, we amended our “at-the-market offering” to cover

up to an additional $18 million of our common stock.

In the year ended December 31, 2023, the Company sold 321,288 shares through

its at-the-market equity facility for net proceeds of approximately $1.8 million, after payment of 3% commissions.

Lucid Diagnostics Inc.

- Committed Equity Facility

and ATM Facility

In March 2022, Lucid Diagnostics

entered into a committed equity facility with a Cantor affiliate.

Under the terms of the committed equity facility, the Cantor affiliate

has committed to purchase up to $50 million of Lucid Diagnostics’ common stock from time to time at Lucid Diagnostics’ request.

While there are distinct differences, the committed equity facility is structured similarly to a traditional at-the-market equity facility,

insofar as it allows Lucid Diagnostics to raise primary equity capital on a periodic basis at prices based on the existing market price.

Cumulatively a total of 680,263 shares of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million,

after a 4% discount, as of December 31, 2023.

In November 2022, Lucid Diagnostics

also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered and sold under

a Controlled Equity Offering Agreement between Lucid Diagnostics and Cantor.

In the year ended December 31, 2023, Lucid Diagnostics

sold 230,068 shares through its at-the-market equity facility for net proceeds of approximately $0.3 million, after payment of 3% commissions.

of Operations

Company recognized revenue resulting from the delivery of patient EsoGuard test results when the Company considered the collection

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

Additionally, revenue was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1,

2021, between the Lucid Diagnostics Inc.

and ResearchDx Inc.

(“RDx”), a CLIA certified commercial laboratory service

On February 25, 2022, the EsoGuard Commercialization Agreement was terminated upon the execution of an Asset Purchase

Agreement between the Company’s wholly-owned subsidiary of LucidDx Labs Inc.

Company recognized revenue resulting from the delivery of patient EsoGuard test results when the Company considered the collection of

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

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

was recognized with respect to the EsoGuard Commercialization Agreement, dated August 1, 2021, between the Lucid Diagnostics and ResearchDx

(“RDx”), a CLIA certified commercial laboratory service provider.

On February 25, 2022, the EsoGuard Commercialization

Agreement was terminated upon Lucid’s acquisition, pursuant to the APA-RDx, of certain assets necessary to operate its own CLIA

certified laboratory.

For a fuller description of the APA-RDx, see Note 5, Asset Purchase Agreement and Management Services Agreement ,

to our accompanying consolidated financial statements.

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

4 unchanged sentences

expect that gross margin for our services will continue to fluctuate and be affected by EsoGuard test volume, our operating efficiencies,

patient compliance rates, payor mix, the levels of reimbursement, and payment patterns of payors and patients.

cost of revenue recognized with respect to the revenue recognized under the EsoGuard Commercialization Agreement is inclusive of:

fee incurred under the Amended CWRU License Agreement;

employee related costs of employees engaged in the administration to patients

of the EsoCheck cell sample collection procedure (principally at the Lucid Test Centers);

the EsoCheck devices and EsoGuard mailers (cell

sample shipping costs) distributed to medical practitioners locations and the Lucid Test Centers;

and Lucid Test Centers operating expenses,

including rent expense and supplies.

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

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

fee incurred under our license agreement with CWRU;

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

Lucid Test Centers operating expenses, including rent expense and supplies.

and marketing expenses

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

as advertising and promotion expenses.

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

as well as advertising and promotion expenses.

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

and administrative expenses consist primarily of salaries and related costs for personnel, travel expenses, facility-related costs, professional

fees, accounting and legal services, employees involved in third-party payor reimbursement contract negotiations and consultants and

expenses associated with obtaining and maintaining patents within our intellectual property portfolio.

anticipate our general and administrative expenses will increase in the future as and to the extent our business operations grow.

We also anticipate continued expenses related to being a

public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance as a public company,

insurance premiums and investor relations costs.

fees for accounting, tax, audit and legal services, salaries and related costs for employees involved in third-party payor reimbursement

contract negotiations and consulting fees and other expenses associated with obtaining and maintaining patents within our intellectual

property portfolio.

anticipate our general and administrative expenses will increase in the future to the extent our business operations grow.

we anticipate continued expenses related to being a public company, including fees and expenses for audit, legal, regulatory, tax-related

services, insurance premiums and investor relations costs associated with maintaining compliance as a public company.

and development expenses

and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred

for the research and development of our products, including:

costs charged to us by various external contract research organizations we contract with

to conduct clinical and preclinical studies and engineering design and development;

and benefit costs associated with our chief medical officer and engineering personnel;

for the development of our products, including:

costs for engineering design and development;

and benefit costs associated with our medical research personnel and engineering personnel;

associated with regulatory filings;

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design engineering studies;

expense for facilities maintained solely for research and development purposes.

expenses for facilities maintained solely for research and

development purposes.

current research and development activities, including our clinical trials, are focused principally on the acceleration of EsoGuard and

Veris Cancer Care Platform commercialization.

We will resume research and development activities with respect to as

well as applicable new technologies, as resources permit.

We will resume research and development activities with respect to other products in our

pipeline as well as applicable new technologies, as resources permit.

Income and Expense, net

4 unchanged sentences

dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented as dollars

in millions, except for per share amounts.

year ended December 31, 2022 as compared to the year ended December 31, 2021

in millions, except for share and per share amounts.

year ended December 31, 2023 as compared to year ended December 31, 2022

the year ended December 31, 2023, revenue was $2.5 million as compared to $0.4 million in the prior year.

The $0.1 million decrease principally

relates to the termination of the EsoGuard Commercialization Agreement with RDx, as the Company transitioned to its own laboratory operations

effective February 25, 2022.

The decrease was partially offset by revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA

laboratory for the year ended December 31, 2022.

The $2.1 million increase principally

relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory.

During the year ended December 31,

2022, there was revenue from the EsoGuard Commercialization Agreement with RDx recognized in first two months of the year.

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

the year ended December 31, 2023, cost of revenue was approximately $6.4 million as compared to $3.6 million in the prior year.

million increase principally related to:

● approximately

$0.5 million increase in compensation related costs as a result of an increase in headcount;

million increase was principally related to:

● approximately

$0.8 million increase in EsoCheck and EsoGuard supplies usage costs;

$1.6 million increase in EsoCheck and EsoGuard supplies costs;

● approximately

$1.7 million increase in laboratory operations costs.

$1.2 million increase in compensation related costs, including stock-based compensation at

Lucid and Veris.

and marketing expenses

the year ended December 31, 2022, sales and marketing costs were approximately $19.3 million, compared to $8.9 million in the prior year.

The net increase of $10.4 million was principally related to:

● approximately

$7.4 million increase in compensation related costs principally as a result of an increase

in headcount;

● approximately

$1.2 million increase in stock based compensation from RSA grants to Lucid Diagnostics and

PAVmed employees and non-employees, and an increase in stock options granted corresponding

with the increase in headcount;

the year ended December 31, 2023, sales and marketing costs were approximately $17.6 million as compared to $19.3 million in the prior

The net decrease of $1.7 million was principally related to:

approximately

$1.6 million increase in consulting and outside professional services;

$1.9 million decrease in third party marketing expenses;

approximately

$0.2 million increase general business expenses.

$0.2 million increase in facility-related costs.

and administrative expenses

the year ended December 31, 2022, general and administrative costs were approximately $41.0 million, compared to $25.4 million in the

The net increase of $15.6 million was principally related to:

the year ended December 31, 2023, general and administrative costs were approximately $30.9 million as compared to $41.4 million in the

The net decrease of $10.5 million was principally related to:

approximately

$3.5 million increase in compensation related costs principally as a result of an increase

in headcount;

$8.1 million decrease in stock-based compensation, primarily related to decreases at Lucid, partially offset by increases at PAVmed;

approximately

$1.3 million increase in stock based compensation from RSA grants to Lucid and PAVmed employees

and non-employees, and an increase in stock options granted corresponding with the increase

in the number of employees;

$3.5 million decrease in third-party professional fees and expenses related to legal services, consulting fees and professional recruiting

approximately

$9.2 million increase in consulting services related to patents, regulatory compliance, legal

processes for contract review, transition of public relations and investor relations firms,

and public company expenses;

$1.3 million increase in compensation related costs;

approximately

$1.6 million increase in general business expenses.

$0.2 million decrease related to facility related costs at Lucid, partially offset by an increase in facility related costs at PAVmed.

and development expenses

the year ended December 31, 2023, research and development costs were approximately $14.3 million as compared to $25.3 million in the

The net increase $5.7 million was principally related to:

The net decrease of $11.0 million was principally related to:

● approximately

$3.2 million increase in development costs, particularly in clinical trial activities and

outside professional and consulting fees with respect to EsoCheck, Veris Cancer Care Platform,

CarpX, EsoCure and PortIO;

$10.1 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees;

● approximately

$2.5 million increase in compensation related costs and related to expanded clinical and

engineering staff.

As mentioned above, above we have

paused research and development with respect to CarpX, EsoCure and PortIO.

Until such time as resources permit, we expect to devote our

research and development efforts to EsoGuard, EsoCheck and the Veris Cancer Care Platform.

$0.9 million decrease in third party professional fees and expenses related to consulting.

of Acquired Intangible Assets

the year ended December 31, 2022, the amortization of acquired intangible assets was approximately $1.8 million as compared to $0.1 million

amortization of acquired intangible assets increased to $2.0 million in the year ended December 31, 2023, as compared to $1.8 million

in the prior year.

The net increase was principally related to the purchase of a defensive asset in Q4 2021 and the purchase of laboratory

licenses and certifications and laboratory information management software in Q1 2022.

The increase of $0.2 million in the current period was due to the timing of the acquired intangible assets in 2022.

of Operations - continued

year ended December 31, 2022 as compared to the year ended December 31, 2021 - continued

year ended December 31, 2023 as compared to year ended December 31, 2022 - continued

Income and Expense

in fair value of convertible debt

the year ended December 31, 2022, the non-cash expense recognized for the change in the fair value of our convertible notes was approximately

$1.3 million, related to both the April 2022 and September 2022 Senior Convertible Notes.

The April 2022 and September 2022 Senior Convertible

Notes were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of the

reporting period date.

The Company initially recognized a $3.5 million fair value non-cash expense on the issue-dates.

This initial recognition

was partially offset by $2.2 million of decreases in fair value upon remeasurements through December 31, 2022.

the year ended December 31, 2021, the non-cash income (expense) recognized for the change in the fair value of our convertible notes

was approximately $1.7 million of other income.

The change in the fair value adjustment of the convertible notes is principally related

to each of the convertible notes being repaid-in-full during the year ended December 31, 2021, as discussed herein below under “Loss

from Extinguishment of Debt.”

the year ended December 31, 2023, the change in the fair value of our convertible notes was approximately $6.0 million of expense, related

to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.

The April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note

were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value as of each reporting

The Company initially recognized an aggregate of $4.3 million of fair value non-cash expense on the issue dates.

on Issue and Offering Costs - Senior Secured Convertible Note

the year ended December 31, 2022, in connection with the issue of both the April 2022 and the September 2022 Senior Convertible Notes,

we recognized a total of approximately $4.3 million of other expense, inclusive of approximately $3.5 million of lender fee non-cash

expense, and approximately $0.8 million of offering costs paid by us.

the year ended December 31, 2023, in connection with the issue of the Lucid March 2023 Senior Convertible Note, we recognized a total

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

In the year ended December 31, 2022, in connection with the

issue of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note, we recognized a total of approximately

$4.3 million of lender fees and offering costs.

on Debt Extinguishment

the year ended December 31, 2023, a debt extinguishment loss in the aggregate of approximately $3.8 million was recognized in connection

with our April 2022 Senior Convertible Note as discussed below.

2022, approximately $6.0 million of principal repayments along with $0.4 million of interest

expense thereon, were settled through the issuance of 7,189,358 shares of common stock of

the Company, with such shares having a fair value of approximately $11.8 million (with such

fair value measured as the respective conversion date quoted closing price of the common

with our April 2022 Senior Convertible Note and September 2022 Senior Convertible Note as discussed below.

the year ended December 31, 2023, approximately $6.1 million of principal repayments along with $0.4 million of interest expense

thereon, were settled through the issuance of 1,745,824 shares of common stock of the Company, with such shares having a fair value

of approximately $10.0 million (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 $5.4 million

in the year ended December 31, 2022.

the prior year ended December 31, 2021, a debt extinguishment loss in the aggregate of approximately $3.7 million was recognized in connection

with the (previous) convertible notes, as discussed below.

January 5, 2021, the repayment of the remaining face value principal of the November 2019

Senior Convertible Note, along with the payment of interest thereon of approximately $1.0

million, were settled with the issuance of 667,668 shares of our common stock, with a fair

value of approximately $1.7 million (with such fair value measured as the respective conversion

date quoted closing price of our common stock), resulting in the recognition of a loss from

extinguishment of debt of approximately $0.8 million in the year ended December 31, 2021;

January 30, 2021, we paid in cash a $350 partial principal repayment of the Senior Convertible

Note dated April 30, 2020 (“April 2020 Senior Convertible Note”);

2, 2021, we made a cash payment of approximately $14.5 million, resulting in the repayment-in-full

on such date of both the April 2020 Senior Convertible Note and the Senior Secured Convertible

Note dated August 6, 2021, resulting in the recognition of a loss from extinguishment of

debt of approximately $3.0 million in the year ended December 31, 2021.

Note 14 , Debt , to the Financial Statements, for additional information with respect to the April 2022 and the September 2022 Senior

Convertible Note.

In addition, the Company paid $0.2 million in cash related to acceleration floor payments on these notes related to

the conversion price being below $2.70, recorded as debt extinguishment loss.

The conversions resulted in a debt extinguishment loss

of $3.8 million in the year ended December 31, 2023.

comparison, in the year ended December 31, 2022, a debt extinguishment loss in the aggregate of approximately $5.4 million was recognized

in connection with our April 2022 Senior Convertible Note as discussed below.

August 2022, approximately $6.0 million of principal repayments along with $0.4 million of interest expense thereon, were

settled through the issuance of 479,291 shares of common stock of the Company, with such shares having a fair value of approximately

$11.8 million (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 $5.4 million in the year ended December 31, 2022.

Note 13 , Debt , to the Financial Statements, for additional information with respect to the April 2022 Senior Convertible Note,

the September 2022 Senior Convertible Note, and the Lucid March 2023 Senior Convertible Note.

and Capital Resources

current operational activities are principally focused on the commercialization of EsoGuard and the Veris Cancer Care Platform, and,

as resource permit, our development activities would be focused on pursuing FDA approval and clearance of other lead products in our

product portfolio pipeline.

Our ability to generate revenue depends upon successfully advancing the commercialization of EsoGuard and

the Veris Cancer Care Platform while, as resources permit, also completing the development and the necessary regulatory approvals of

our other products and services.

There are no assurances, however, we will be able to obtain an adequate level of financial resources

required for the short-term or long-term commercialization and development of its products and services.

current financing strategy is to obtain capital directly into Lucid, Veris and other subsidiaries to fund any product development or

other related activities.

There are no assurances, however, we will be able to obtain an adequate level of financial resources required

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

have financed our operations principally through the public and private issuances of our common stock, preferred stock, common stock

3 unchanged sentences

and ongoing R&D and clinical trials.

We expect to continue to experience recurring losses from operations, and will continue to fund

our operations with debt and/or equity financing transactions.

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

and other debt and equity committed sources of financing, we expect to be able to fund our future operations for one year from the date

of the issue of the Financial Statements.

We experienced a net loss before noncontrolling interests of approximately $79.3 million and

used approximately $52.0 million of cash in operations for the year ended December 31, 2023.

Financing activities provided $31.2 million

of cash during the year ended December 31, 2023.

We ended the year with cash on-hand of $19.6 million as of December 31, 2023.

expect to continue to experience recurring losses and negative cash flows from operations, and will continue to fund our operations with

debt and/or equity financing transactions, including current obligations on the Company’s 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

The Company’s ability to continue operations beyond March 2025 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 its ability

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

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

the accompanying consolidated financial statements are issued.

Liquidity and Capital Resources - continued

of Shares of Our Common Stock

the year ended December 31, 2023

issued 299,999 shares of our common stock for cash proceeds of approximately $0.3 million

upon exercise of stock options granted under the PAVmed 2014 Equity Plan, as such equity

plan is discussed in Note 15, Stock-Based Compensation , to the Financial Statements.

issued 58,483 shares of our common stock for proceeds of approximately $0.3 million under

1 unchanged sentence

Note 14, Stock-Based Compensation, to the Financial Statements.

issued 106,225 shares of our common stock for proceeds of approximately $0.1 million from

the sale of shares through PAVmed’s at-the-market equity facility through Cantor Fitzgerald

issued 321,288 shares of our common stock for net proceeds of approximately $1.8 million,

after payment of 3% commissions, from the sale of shares through PAVmed’s at-the-market

equity facility through Cantor.

See below for more information.

issued 100,000 shares of our common stock to a service provider as the consideration for

services rendered.

The issued shares of common stock had a fair value of approximately $0.6

See Note 16, Common Stock and Common Stock Purchase Warrants for additional

issued 1,745,824 shares of our common stock in satisfaction of approximately $6.1 million

of principal repayments along with approximately $0.4 million of interest expense thereon

under the April 2022 Senior Convertible Note and September 2022 Senior Convertible Note.

Purchase Agreement - March 31, 2022 - Senior Secured Convertible Notes - April 4, 2022 and September 8, 2022

as of March 31, 2022, we entered into the SPA with the Investor, pursuant to which we agreed to sell, and the Investor agreed to purchase

an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.

The SPA provided for the sale of the initial

Senior Secured Convertible Note with a face value principal of $27.5 million, which closed on April 4, 2022 (referred to as the “April

2022 Senior Convertible Note”).

The SPA also provided for sales of additional Senior Secured Convertible Notes in one or more additional

closings (upon the satisfaction of certain conditions), with an aggregate face value principal of up to an additional $22.5 million.

The April 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per

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

recapitalization or other similar transaction), and a contractual maturity date of April 4, 2024.

The April 2022 Senior Convertible Note

may be converted into or otherwise paid in shares of our common stock as described in Note 14, Debt.

The April 2022 Senior Convertible

Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the Company’s offering costs of approximately $0.6

million, inclusive primarily of $0.5 million placement agent fees.

as of March 31, 2022, we entered into the SPA with an accredited investor, pursuant to which we agreed to sell, and the investor agreed

to purchase an aggregate of $50.0 million face value principal of Senior Secured Convertible Notes.

The SPA provided for the sale of

the initial Senior Secured Convertible Note with a face value principal of $27.5 million, which closed on April 4, 2022 (referred to

as the “April 2022 Senior Convertible Note”).

The SPA also provided for sales of additional Senior Secured Convertible Notes

in one or more additional closings (upon the satisfaction of certain conditions), with an aggregate face value principal of up to an

additional $22.5 million.

The April 2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion

price (adjusted for the December 2023 1-for-15 reverse stock split) of $75.00 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 an initial contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4,

The April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note

The April 2022 Senior Convertible Note proceeds were $24.4 million after deducting a $2.5 million lender fee and the

Company’s offering costs of approximately $0.6 million, inclusive primarily of $0.5 million placement agent fees.

September 8, 2022, we completed an additional closing under the SPA, in which we sold to the investor an additional Senior Secured Convertible

1 unchanged sentence

The September

2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of the

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

or other similar transaction), and a contractual maturity date of September 6, 2024.

The September 2022 Senior Convertible Note may be

converted into or otherwise paid in shares of our common stock as described in Note 14, Debt.

2022 Senior Secured Convertible Note has a 7.875% annual stated interest rate, a contractual conversion price (adjusted for the December

2023 1-for-15 reverse stock split) of $75.00 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 September 8, 2024 which maturity date the investor agreed to extend by one year, to September 8, 2025.

The September 2022 Senior Convertible

Note may be converted into or otherwise paid in shares of our common stock as described in Note 13, Debt .

The September 2022 Senior

Convertible Note proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s total offering costs of

approximately $0.2 million, inclusive primarily of placement agent fees.

the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the SPA, we are subject to certain customary

affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness

and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets,

the maturity of other indebtedness, and transactions with affiliates, among other customary matters.

We also are subject to

financial covenants requiring that (i) the amount of our available cash equal or exceed $8.0 million at all times, (ii) the ratio of

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

late charges to (b) our average market capitalization over the prior ten trading days, not exceed 30% (the “Debt to Market Cap

Ratio Test”), and (iii) that our market capitalization shall at no time be less than $75 million (the “Market Cap

Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).

From time to time from and

after December 1, 2023 through March 12, 2024, the Company was not in compliance with the Financial Tests.

As of March 12, 2024, the

investor agreed to waive any such non-compliance during such time period and thereafter through August 31, 2024.

waiver, as of December 31, 2023, the Company was in compliance with the Financial Tests.

In addition, based on the waiver, the

Company presently is in compliance with the Financial Tests.

In consideration of the covenant

waiver and maturity extensions discussed above, the Company agreed to pay the holder of the notes $2,000,000 in cash (or in such other

form as may be mutually agreed in writing) by April 25, 2024.

Note 13 , Debt , to the Financial Statements for additional information about the SPA, the April 2022 Senior Convertible Note, and

the September 2022 Senior Convertible Note.

proceeds were $10.0 million after deducting a $1.0 million lender fee and the Company’s total offering costs of approximately $0.2

million, inclusive primarily of placement agent fees.

and Capital Resources - continued

August 9, 2022, the Company and the Investor also agreed, in connection with the waiver described in Note 14, Debt , to the Financial

Statements, that the Investor may convert up to $5.0 million of the principal amount of the April 2022 Senior Convertible Note at the

then current conversion price as if the date of conversion were an Installment Date, i.e.

a price per share of common stock equal to

the lower of (i) the fixed conversion price then in effect (currently $5.00) and (ii) 82.5% of the average VWAP of the Company’s

common stock for each of the two trading days with the lowest VWAP of the Company’s common stock during the ten consecutive trading

day period ending and including the trading day immediately prior to the applicable conversion date, but in the case of clause (ii),

not less than $0.18 per share.

As contemplated by such amendment, in the year ended December 31, 2022, approximately $6.0 million of

principal repayments along with $0.4 million of interest expense thereon, were settled through the issuance of 7,189,358 shares of our

common stock.

the Senior Convertible Notes and the SPA, we are subject to certain customary affirmative and negative covenants regarding the incurrence

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

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

among other customary matters.

We also are subject to financial covenants requiring that (i) the amount of our available cash equal or

exceed $8.0 million at all times, (ii) the ratio of (a) the outstanding principal amount of the notes issued under the SPA, accrued and

unpaid interest thereon and accrued and unpaid late charges to (b) our average market capitalization over the prior ten trading days,

not exceed 30% (except that such maximum percentage is 50% for the period from September 8, 2022 through March 5, 2023) (the “Debt

to Market Cap Ratio Test”), and (iii) that our market capitalization shall at no time be less than $75 million (the “Market

Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”).

From time to time from and

after September 8, 2022, including as of December 31, 2022, the Company was not in compliance with the Financial Tests.

As of March 12,

2023, the Investor agreed to waive any such non-compliance during such aforementioned time periods, under the Senior Convertible Notes

Accordingly, as of the date of this Form 10-K, the Company is in compliance with the Financial Tests.

Note 14 , Debt , to the Financial Statements for additional information about the SPA and the Senior Secured Convertible Notes.

Diagnostics - Series A Preferred Stock Offering

Lucid Diagnostics - Preferred Stock Offerings

On March 13, 2024, Lucid entered

into subscription agreements for the sale of 13,625 shares (the “ Lucid Series A Preferred Stock ”).

Each share of the

Lucid Series A Preferred Stock has a stated value of $1,000 and a conversion price of $1.394.

The terms of the Lucid Series A Preferred

Stock also include a one times preference on liquidation and a right to receive dividends equal to 20% of the number of shares of Lucid

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

The Lucid Series A Preferred Stock is a non-voting security, other than with respect to limited matters related to changes in terms

of the Lucid Series A Preferred Stock.

The aggregate gross proceeds from the sale of shares in such offering were $13.625 million.

Diagnostics - Private Placement - Securities Purchase Agreement

Effective as of March 13, 2023,

Lucid entered into a Securities Purchase Agreement (“Lucid SPA”) with an accredited institutional investor (“Lucid Investor”,

“Lucid Lender”, and/or “Lucid Holder”), pursuant to which Lucid agreed to sell, and the Lucid Investor agreed

to purchase a Senior Secured Convertible Note with a face value principal of up to $11.1 million (the “March 2023 Lucid Senior Convertible

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

The March 2023 Lucid Senior Secured Convertible Note would have a 7.875%

annual stated interest rate, a contractual conversion price of $5.00 per share of Lucid’s common stock (subject to standard adjustments

in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual

maturity date of the two-year anniversary of the date of issuance.

The March 2023 Lucid Senior Convertible Note would be convertible into

or otherwise paid in shares of Lucid’s common stock.

the March 2023 Lucid Senior Convertible Note, Lucid is and would be subject to certain customary affirmative and negative covenants

regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the

payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness,

and transactions with affiliates, among other customary matters.

Under the March 2023 Lucid Senior Convertible Note, Lucid would also be subject to financial

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

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

unpaid late charges to (b) Lucid’s average market capitalization over the prior ten trading days, not exceed 30%, and (iii)

that Lucid’s market capitalization shall at no time be less than an amount to be agreed upon.

and Capital Resources - continued

into subscription agreements (each, a “Series B Subscription Agreement”) and exchange agreements (each, an “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 Lucid’s newly designated Series B Convertible Preferred Stock, par value

$0.001 per share (the “Lucid 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 Lucid’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Lucid

Series A Preferred Stock”), and 10,670 shares of Lucid’s Series A-1 Convertible Preferred Stock, par value $0.001 per share

(the “Lucid Series A-1 Preferred Stock”), held by them for 31,790 shares of Lucid Series B Preferred Stock (collectively,

the “Lucid Series B Offering and Exchange”).

Prior to the execution of the Series B Subscription Agreements and the Exchange

Agreements, Lucid entered into subscription agreements with certain of the Series B Investors providing for the sale to such investors

of 5,670 shares of Lucid 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 Lucid Series B Preferred Stock pursuant to the Exchange Agreements (and are included in the 10,670 shares of

Lucid Series A-1 Preferred Stock set forth above).

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

conversion price of $1.2444.

The terms of the Lucid 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 Lucid common stock into which such Lucid Series B Preferred Stock is

convertible, payable on the one-year and two-year anniversary of the issuance date.

The Lucid Series B Preferred Stock is a voting security.

The aggregate gross proceeds to Lucid of these transactions was $18.16 million (inclusive of $5.67 million of aggregate gross proceeds

from the sale of the Lucid Series A-1 Preferred Stock that was immediately exchanged for Lucid Series B Preferred Stock in the transactions).

As a result of 100% of the then-outstanding

shares of Lucid Series A Preferred Stock and Lucid Series A-1 Preferred Stock being exchanged for shares of Lucid Series B Preferred Stock

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

On October 17, 2023, Lucid sold

5,000 shares of Lucid Series A-1 Preferred Stock, solely to accredited investors (all of which were including in the 10,670 shares of

Lucid Series A-1 Preferred exchanged for Lucid Series B Preferred Stock in the Lucid Series B Offering and Exchange).

The aggregate gross

proceeds to Lucid of this offering was $5.0 million.

Diagnostics - Securities Purchase Agreement - March 13, 2023 - Senior Secured Convertible Note - March 21, 2023

as of March 13, 2023, Lucid Diagnostics entered into the Lucid SPA with an accredited institutional investor, pursuant to which Lucid

Diagnostics agreed to sell, and the investor agreed to purchase the Lucid March 2023 Senior Convertible Note with a face value principal

of $11.1 million.

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

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

as described under the heading “ Recent Developments—Financing ” in Item 7 above,

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

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

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

affiliates, among other customary matters.

Under the Lucid March 2023 Senior Convertible Note, Lucid Diagnostics is also subject to financial

covenants requiring that (i) the amount of its available cash equal or exceed $5.0 million at all times, (ii) the ratio of (a) the outstanding

principal amount of the notes issued under the Lucid SPA, accrued and unpaid interest thereon and accrued and unpaid late charges, as

of the last day of any fiscal quarter commencing with September 30, 2023, to (b) Lucid Diagnostics’ average market capitalization

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

than $30 million (the “Lucid Financial Tests”).

As of December 31, 2023, Lucid Diagnostics was in compliance with the Lucid

Financial Tests.

In addition, Lucid Diagnostics presently is in compliance with the Lucid Financial Tests.

December 2021, we entered into an “at-the-market offering” for up to $50 million of our common stock that may be offered

and sold under a Controlled Equity Offering Agreement between us and Cantor Fitzgerald & Co.

In the year ended December 31, 2022,

the Company sold 106,225 shares through their at-the-market equity facility for approximately $79.

Subsequent to December 31, 2022, through

March 9, 2023, we sold 1,081,997 shares through their at-the-market equity facility for approximately $0.5 million.

and sold under a Controlled Equity Offering Agreement between us and Cantor as described under the heading “ Recent Developments—Financing ”

in Item 7 above.

In the year ended December 31, 2023, the Company sold 321,288 shares through its at-the-market equity facility for net

proceeds of approximately $1.8 million, after payment of 3% commissions.

Diagnostics Inc.

- Committed Equity Facility and ATM Facility

March 2022, our majority-owned subsidiary, Lucid Diagnostics, entered into a committed equity facility with Cantor.

Under the terms of

the committed equity facility, Cantor has committed to purchase up to $50 million of Lucid Diagnostics common stock from time to time

at the request of Lucid Diagnostics.

While there are distinct differences, the facility is structured similarly to a traditional at-the-market

equity facility, insofar as it allows Lucid Diagnostics to raise primary equity capital on a periodic basis at prices based on the existing

market price.

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

were issued for proceeds of approximately $1.8 million.

In November 2022, Lucid

Diagnostics also entered into an “at-the-market offering” for up to $6.5 million of its common stock that may be offered

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

March 2022, Lucid Diagnostics entered into a committed equity facility with a Cantor affiliate.

Cumulatively a total of 680,263 shares

of Lucid Diagnostics’ common stock were issued for net proceeds of approximately $1.8 million, after a 4% discount, as of December

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

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

In the year ended December

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

to December 31, 2022, through March 9, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility

for approximately $0.3 million.

Accounting Policies and Significant Judgments and Estimates

31, 2023, Lucid Diagnostics sold 230,068 shares through its at-the-market equity facility for net proceeds of approximately $0.3 million,

after payment of 3% commissions.

Accounting Policies and Estimates

discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which

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financial statements.

and Development Expenses

and development expenses are recognized as incurred and include the salary and stock-based compensation of employees engaged in product

research and development activities, and the costs related to the Company’s various contract research service providers, suppliers,

engineering studies, supplies, and outsourced testing and consulting fees, as well as depreciation expense and rental costs for equipment

used in research and development activities, and fees incurred for access to certain facilities of contract research service providers.

are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration we expect to

collect in exchange for those services.

Our 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.

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.

revenue recognition for the arrangements that we determine are within the scope of ASC 606, Revenue from Contracts with Customers, we

perform 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.

key aspects we consider include the following:

Contracts —Our

customer is primarily the patient, but we do not enter into a formal reimbursement contract with a patient.

We establish 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 us and payers.

However, when a patient is considered self-pay, we require payment from the

patient prior to the commencement of our performance obligations.

Our consideration can be deemed variable or fixed depending on the

structure of specific payer contracts, and we consider collection of such consideration to be probable to the extent that it is unconstrained.

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.

Our 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.

We elected 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.

price —The transaction price is the amount of consideration that we 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.

the consideration derived from the contracts is deemed to be variable, we estimate the amount of consideration to which it will be entitled

in exchange for the promised goods or services.

We limit the amount of variable consideration included in the transaction price to the

unconstrained portion of such consideration.

In other words, we recognize 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.

we do 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, we recognize 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.

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.

Expedients —We do not adjust the transaction price for the effects of a significant financing component, as at contract inception,

we expect the collection cycle to be one year or less.

Value Option (“FVO”) Election

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as discussed below.

a Securities Purchase Agreement dated March 13, 2023, Lucid Diagnostics issued a Senior Secured Convertible Note dated March 21, 2023,

referred to herein as the “Lucid March 2023 Senior Convertible Note”, which is accounted under the “fair value option

election” as discussed below.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative

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The estimated fair value adjustment of the

April 2022 Senior Convertible Note is presented in a single line item within other income (expense) in the accompanying consolidated

statement of operations (as provided for by ASC 825-10-50-30(b)).

Further, as required by ASC 825-10-45-5, to the extent a portion of

the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component

of other comprehensive income (“OCI”) (for which there was no such adjustment with respect to the April 2022 Senior Convertible

Note or the September 2022 Senior Convertible Note).

April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note are presented

in a single line item within other income (expense) in the accompanying consolidated statement of operations (as provided for by ASC

825-10-50-30(b)).

Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change

in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”)

(for which there was no such adjustment with respect to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible

Note or the Lucid March 2023 Senior Convertible Note).

The estimated fair values recognized utilized PAVmed and Lucid’s common stock prices, along with certain Level

3 inputs, in the development of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models.

The estimated fair values are subjective and are affected by changes in inputs to the valuation models and analyses, including the respective

common stock prices, the dividend yields, 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 respective common stock prices.

Changes in these assumptions

can materially affect the recognized estimated fair values.

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

and Note 13, Debt , for a discussion

of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note.

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

2014 Equity Plan and the Lucid Diagnostics Inc.

2018 Equity Plan.

Company accounts for stock-based compensation in accordance with the provisions of FASB ASC Topic 718, Stock Compensation (“ASC

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

is generally the vesting period of the respective stock-based award, with such straight-line recognition adjusted, as applicable, so

the cumulative expense recognized is at-least equal-to-or-greater-than the estimated fair value of the vested portion of the respective

stock-based award as of the reporting date.

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

Plan and the Lucid Diagnostics Inc.

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

of the April 2022 Senior Convertible Note, the September 2022 Senior Convertible Note and the Lucid March 2023 Senior Convertible Note.

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

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

The Company accounts for stock-based compensation in accordance

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

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

which is generally the vesting period of the respective stock-based award, with such straight-line recognition adjusted, as

applicable, so the cumulative expense recognized is at least equal to or greater than the estimated fair value of the vested portion

of the respective stock-based award as of the reporting date.

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

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

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

respect to the PAVmed Inc.

2014 Equity Plan, the expected stock price volatility is based

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

on the historical stock price volatility of PAVmed Inc.

common stock and the volatilities

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

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

in the years ended December 31, 2022 and 2021;

respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan, the expected

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

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

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

common stock over the period commensurate

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

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

respect to stock options granted under the Lucid Diagnostics 2018 Equity Plan, the expected

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

over the period commensurate with the expected term with respect to stock options granted

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

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

4 unchanged sentences

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

price per share of PAVmed Inc.

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

granted under the PAVmed Inc.

The price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the PAVmed 2014

Equity Plan is its quoted closing price per share.

October 14, 2021, Lucid Diagnostics Inc.

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

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

333-259721), wherein a total of 5.0 million IPO shares of common stock of Lucid Diagnostics

were issued, with such total IPO shares inclusive of 571,428 shares issued to PAVmed Inc.

The price per share of Lucid Diagnostics

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

Diagnostics Inc.

2018 Equity Plan is as follows:

(i) for the period October 14, 2021 to December 31, 2022 it is its quoted closing price

and (ii) for the period January 1, 2021 to October 14, 2021, it was estimated using a probability-weighted average expected

return methodology (“PWERM”), which involves the determination of equity value under various exit scenarios and an estimation

of the return to the common stockholders under each scenario.

Accounting Standards Updates Adopted

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

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

ASU 2020-06 simplifies the accounting

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

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

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

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

The ASU 2020-06 amendments are effective for fiscal years

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

Early adoption is permitted, but no earlier than fiscal

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

The Company’s adoption of the ASU

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

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes:

Simplifying the Accounting for Income Taxes”, (“ASU

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

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

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

Adoption of the guidance of ASU

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

The Company’s adoption of the

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

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

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

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

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

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

common stock used in the computation of estimated fair value of stock options and restricted stock awards granted under the Lucid Diagnostics

2018 Equity Plan is its quoted closing price per share.

Recent Accounting Standards Updates Adopted

In June 2016, the FASB issued Accounting

Standards Update (“ASU”) No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting

date based on historical experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss

model and is applicable to the measurement of credit losses on financial assets, including trade receivables.

The guidance was adopted

by the Company on January 1, 2023.

The adoption of the ASU did not have an impact on the Company’s consolidated financial statements.

Recent Accounting Standards Updates Not Yet Adopted

In December 2023, the FASB issued

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.

We are currently evaluating

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

In November 2023, the FASB issued

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.

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

beginning after December 15, 2024.

Early adoption is permitted.

The guidance is applied retrospectively to all periods presented in the

financial statements, unless it is impracticable.

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

statements and disclosures.

In October 2023, the FASB issued

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification

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.

currently evaluating the potential impact of this guidance on its consolidated financial statements.

Off-Balance sheet arrangements

We do not have any off-balance

sheet arrangements.

do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure About Market Risk

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

What changed 10-K

Item 7. Management’s Discussion and Analysis