What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-13 compared with 2023-11-13 · 318 added, 530 removed, 181 unchanged (82% of the section changed)

46 unchanged sentences

joint ventures or investments we may make.

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

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

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

undue reliance on our forward-looking statements.

3 unchanged sentences

or otherwise, except as required by applicable law.

is a diversified commercial-stage medical technology company operating in the medical device, diagnostics, and digital health sectors,

including through its majority-owned subsidiaries Lucid Diagnostics, a publicly-traded commercial-stage cancer prevention diagnostics

company, and Veris Health, a private digital health company focused on enhanced personalized cancer care through remote patient monitoring

using implantable biologic sensors with wireless communication along with a custom suite of connected external devices.

Our current central

focus is on the commercialization of Lucid Diagnostics’s EsoGuard and Veris Health’s Veris Cancer Care Platform.

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.

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.

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”).

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.

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.

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”, in the Form 10-K 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 Cancer Care Platform, which are currently our two

leading products.

Strategic Business Update

January 2023, PAVmed launched a strategic initiative designed to maximize cash runway and protect long-term shareholder interests through

adjustments in near-term strategic priorities and associated resource allocation.

The Company is currently focusing substantially all

of its resources and near-term efforts on the commercialization of Lucid’s and Veris’ products.

of Lucid Clinical Trials and Publications

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

These efforts include an investigator-initiated,

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

cancer awareness event described below;

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

participants;

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

and two Lucid-sponsored registries,

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

esophageal precancer in two distinct populations.

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

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

on increased-risk firefighters.

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

Journal of Gastrointestinal & Digestive System (ISSN:

Combined early interim results from the PREVENT and PREVENT-FF

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

Digestive Systems (ISSN:

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

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

Similarly, results for the Lucid-sponsored

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

#CheckYourFoodTube

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

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

A total of 391 members

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

by our clinical personnel using EsoCheck.

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

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

to prevent progression to esophageal cancer.

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

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

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

of Direct Contracting Strategic Initiative

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

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

companies that have deployed similar strategies.

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

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

Revenue Cycle Management Provider

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

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

The provider upgrade has been completed and claim submissions resumed

in June 2023.

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

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

Personnel Update

on November 6, 2023, the Lucid board of directors appointed Shaun M.

O’Neil as the President of Lucid.

O’Neil, who is

41 years old, also continues to serve as the Chief Operating Officer of PAVmed and as the Chief Operating Officer of Lucid.

For additional

biographical information about Mr.

O’Neil, please refer to PAVmed’s definitive proxy statement on Schedule 14A filed on May

1, 2023, which information is incorporated herein by reference.

Other than in connection with his service as an officer of PAVmed and

O’Neil has not engaged in any transactions with PAVmed that are required to be reported pursuant to Item 404(a) of Regulation

Health Commercialization Update

December 2022 Veris Health, PAVmed’s digital health subsidiary, commercially launched its Veris Cancer Care Platform by executing

its first commercial contract with New Jersey Cancer Care, PA (“NJCC”), an oncology practice and member of the prestigious

Quality Cancer Care Alliance.

In February 2023, the Veris Cancer Care Platform went live following successful onboarding of the first

cohort of cancer patients and their clinicians at NJCC.

Enrolled patients received a VerisBox and began connecting their Bluetooth-enabled

health care devices to transmit real-time physiologic data to the cloud-based Veris Cancer Care Platform clinician portal.

also began reporting symptoms and quality-of-life parameters through the Veris Cancer Care Platform patient smartphone app, which is

now available for patients on the Apple App Store and Google Play.

The cloud-based clinician portal was concurrently integrated into

the oncology practice and the cancer care team began using it to review physiologic and clinical data and other remote patient monitoring

(“RPM”) services.

Since the Veris Cancer Care Platform went “live” in February, Veris added two additional accounts,

expanding utilization of the product to a total of six locations across three oncology practices while continuing to seek to build a

pipeline of prospective customers.

the leadership of its new President, Veris is actively restructuring and expanding its commercial team seeking to accelerate patient

enrollment and subscription revenue, while also launching two strategic initiatives which expand its long-term commercial potential.

These include:

a Biopharma Companion Digital Platform module to extend the Veris Cancer Care Platform as

a companion solution for biopharmaceutical companies developing novel cancer therapeutics.

The module will provide these companies with a long-term patient monitoring solution tightly

linked to their cancer therapeutic—from clinical-stage through full commercialization.

This includes support for clinical trials and post-marketing surveillance to enhance safety

by reducing adverse events, expedite regulatory filings, lower regulatory hurdles, and accelerate

speed to market.

The business model seeks to replicate the widespread success of companion

diagnostics tightly linked to therapeutics.

the Veris Cancer Care Platform from an FDA-designated Medical Device Data System (“MDDS”),

limited to displaying medical data for clinicians without modification, to a Software-as-a-Medical-Device

As a SaMD, the platform will have unlimited potential to grow into

a full-bore clinical decision support tool that includes threshold alarms for faster provider

response, analytical algorithms for effective triage, and digital biomarkers based on artificial

intelligence and machine learning that will provide a risk assessment for cancer patients.

The first step will be to incorporate the key features in the next generation product and

initiate validation testing to support FDA 510(k) submission as a SaMD next year.

also has continued to make progress toward regulatory submission of its implantable cardiac and physiologic monitor, The device, which

is designed to be implanted in conjunction with a vascular access port, is targeted for FDA submission and commercial launch in 2024

and will further the power of the Veris Cancer Care Platform by better assuring patient compliance with RPM data reporting requirements.

Veris recently completed an animal study which demonstrated intended device performance, consistent with its design and clinical specifications,

over an extended implant period and pre-submission meetings seeking feedback on various design features have been ongoing.

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, and that the Company could be

eligible for additional time.

Although the Company did not regain compliance within the initial 180 calendar day period, Nasdaq determined

that the Company was eligible for an additional 180 calendar day period to regain compliance (until December 26, 2023).

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

Services Agreement/Payroll Benefits and Expense Reimbursement Agreement with Lucid Diagnostics

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.

amendment also reset the maximum number of shares issuable under the agreement to 19.99% of the shares outstanding as of the date of

the amendment.

January 26, 2024, in accordance with the MSA and the payroll, benefits and expense reimbursement agreement between PAVmed and Lucid (“PBERA”),

PAVmed elected to receive payment of approximately $4.7 million of fees and reimbursements accrued under the MSA and the PBERA through

the issuance of 3,331,771 shares of Lucid’s common stock.

Distribution of Lucid Diagnostics Common Stock to Shareholders

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.

On 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.

distribution constituted an “Extraordinary Dividend” as defined in the warrant agreement that governs the Company’s

Series Z Warrants.

As a result, 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 as of the date of the distribution) to $23.48 per share.

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

during the additional 180 calendar day period.

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

listing standards.

On March 31, 2023, the Company’s stockholders approved an amendment to its certificate of incorporation, authorizing

the Company to effect, at any time prior to March 31, 2024, (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 Company’s board of directors authorizes the Company to consummate the reverse stock split, the Company

anticipates it will regain compliance with the Nasdaq requirements for continued listing through such transaction.

Diagnostics - Series A Preferred Stock Offering

March 7, 2023, Lucid sold 13,625 shares of newly designated Lucid Series A Convertible Preferred Stock (the “Lucid Series A Preferred

Stock”), solely to accredited investors.

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

price of $1.394.

The Lucid Series A Preferred Stock is convertible into shares of Lucid’s common stock at any time at the option

of the holder from and after the six-month anniversary of its issuance (or, if later, the effective date of an increase in Lucid Diagnostics’

authorized share capital or the effective date of a registration statement covering the resale of the underlying shares), and automatically

converts into shares of Lucid’s common stock on the second anniversary of its issuance.

The terms of the Lucid Series A Preferred

Stock also include a 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 each of 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 sale of the Lucid Series A Preferred Stock generated $13.625 million in aggregate

gross proceeds.

Diagnostics - Series A-1 Preferred Stock Offering

October 17, 2023, Lucid sold 5,000 shares of Lucid Series A-1 Convertible Preferred Stock (the “Lucid Series A-1 Preferred Stock”),

solely to accredited investors.

The terms of the Lucid Series A-1 Preferred Stock are substantially identical to the terms of the Lucid

Series A Preferred Stock, except that the Lucid Series A-1 Preferred Stock has a conversion price of $1.2592.

The sale of the Lucid Series

A-1 Preferred Stock generated $5.0 million in aggregate gross proceeds.

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

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

investor, pursuant to which Lucid Diagnostics agreed to sell, and the investor agreed to purchase a Senior Secured Convertible Note with

a face value principal of $11.1 million (the “Lucid March 2023 Senior Convertible Note”).

Lucid Diagnostics issued the Lucid

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

The sale of the Lucid March 2023 Senior Convertible Note

generated $9.925 million in proceeds, after deducting a $1.186 million lender fee and offering costs.

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

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

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

The principal of the Lucid March 2023 Senior Convertible Note and accrued interest thereon is convertible at the option of the holder

into Lucid Diagnostics’ common stock at the contractual conversion price.

In addition, the principal of the Lucid March 2023 Senior

Convertible Note amortizes over 18 months commencing six months after its issuance.

The amortization payments and accrued interest on

the Lucid March 2023 Senior Convertible Note are payable in shares of Lucid Diagnostics’ common stock (subject to the satisfaction

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

market price.

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.

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.

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.

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.

Cancer Care Platform

April 30, 2024, we announced that Veris and a National Cancer Institute-Designated Comprehensive Cancer Center had executed a memorandum

of understanding to implement a pilot program where cancer patients would be enrolled on the Veris Cancer Care Platform.

FDA Enforcement Discretion

In April 2024, FDA published the final rule under which FDA intends to phase out its general enforcement discretion

approach for LDTs so that IVDs manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs (the

proposed rule was published in October 2023).

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

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

Clinical Laboratory Evaluation Program (NYS CLEP).

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

will remain under continued enforcement discretion from FDA’s premarket review requirements and quality systems requirements (except

for record-keeping).

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

of Senior Convertible Notes

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).

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.

The 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 $2.0 million in cash (or in such other form as may be

mutually agreed in writing) by April 25, 2024, which has been extended to June 15, 2024.

our accompanying unaudited condensed consolidated financial statements Note 10, Debt , for further discussion of the senior convertible notes.

Diagnostics - Preferred Stock Offerings

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

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

“Lucid 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 Lucid 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 Lucid Series B Subscription Agreements and the Lucid Series B Exchange

Agreements, Lucid entered into subscription agreements with certain of the Lucid 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 Lucid Series B 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 holders of the Lucid Series B Preferred Stock also will be entitled to dividends equal, on an as-if-converted

to shares of Lucid common stock basis, to and in the same form as dividends actually paid on shares of Lucid common stock when, as, and

if such dividends are paid on shares of Lucid common stock.

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).

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.

May 6, 2024, Lucid issued approximately 11,634 shares of newly designated Lucid Series B-1 Convertible Preferred Stock (the

“Lucid Series B-1 Preferred Stock”).

The terms of the Lucid Series B-1 Preferred Stock are substantially identical to

the terms of the Lucid Series B Preferred Stock, except that the Lucid Series B-1 Preferred Stock has a conversion price of $0.7228.

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

- ATM Facility

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).

As 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 nine months ended September

30, 2023, the Company sold 2,330,747 shares through its at-the-market equity facility for net proceeds of approximately $1.2 million,

after payment of 3% commissions.

No shares were sold through the Company’s at-the-market equity facility during the three months

ended September 30, 2023.

Diagnostics Inc.

- Committed Equity Facility and ATM Facility

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

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).

As 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 $18 million of our common stock.

three month period ended March 31, 2024, the Company sold 133,299 shares through its at-the-market equity facility for net proceeds

of approximately $0.5 million, after payment of 3% commissions.

Diagnostics - Committed Equity Facility and ATM Facility

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

6 unchanged sentences

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 September 30, 2023.

No shares were sold through this facility

during the three months ended September 30, 2023.

for net proceeds of approximately $1.8 million, after a 4% discount, as of March 31, 2024.

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

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

In the nine months ended

September 30, 2023, 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.

No shares were sold through Lucid’s at-the-market equity facility during the three

months ended September 30, 2023.

Cumulatively, a total

of 230,068 shares of Lucid Diagnostics’ common stock were issued through its at-the-market equity facility for net proceeds of

approximately $0.3 million, after payment of 3% commissions, as of March 31, 2024.

of Operations

1 unchanged sentence

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 unaudited condensed 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 (as defined in Note 4, Related Party Transactions , to our accompanying unaudited

condensed consolidated financial statements);

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

to medical practitioners locations and the Lucid Test Centers;

and Lucid Test Centers operating expenses, including rent expense and

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

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

negotiations and consulting 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 as and to the extent our business operations grow.

also anticipate continued expenses related to being a public company, including fees and expenses for 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:

for the development of our products, including:

costs for engineering design and development;

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

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

associated with regulatory filings;

2 unchanged sentences

design engineering studies;

expense for facilities maintained solely for research and development purposes.

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

5 unchanged sentences

upon repayment of such convertible notes.

of Operations - continued

of Dollar Amounts

1 unchanged sentence

in millions, except for share and per share amounts.

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

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

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

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

the three months ended September 30, 2023, cost of revenue was approximately $1.8 million as compared to $1.6 million for the corresponding

period in the prior year.

The $0.2 million increase principally related to:

● approximately

$0.4 million increase in compensation costs at Lucid and Veris;

● approximately

$0.3 million decrease in laboratory facility and operations costs;

● approximately

$0.1 million increase in EsoCheck and EsoGuard supplies costs.

and marketing expenses

the three months ended September 30, 2023, sales and marketing costs were approximately $4.0 million as compared to $4.7 million for

the corresponding period in the prior year.

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

● approximately

$0.3 million decrease related to a reduction of third party marketing and corporate information

technology expenses;

● approximately

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

and PAVmed employees and non-employees;

● approximately

$0.2 million decrease in compensation costs primarily related to a reduction in headcount

in the first quarter of 2023.

This decrease is inclusive of an increase in compensation related

costs at Lucid.

and administrative expenses

the three months ended September 30, 2023, general and administrative costs were approximately $6.9 million as compared to $10.4 million

for the corresponding period in the prior year.

The net decrease of $3.5 million was principally related to:

● approximately

$2.4 million decrease in stock based compensation from RSA and stock option grants to Lucid

and PAVmed employees and non-employees;

● approximately

$1.1 million decrease in third-party professional fees and expenses related to legal services

and professional recruiting services.

and development expenses

the three months ended September 30, 2023, research and development costs were approximately $3.2 million as compared to $6.2 million

for the corresponding period in the prior year.

The net decrease of $3.0 million was principally related to:

● approximately

$2.6 million decrease in development costs, particularly in clinical trial activities and

outside professional and consulting fees;

● approximately

$0.4 million decrease in compensation related costs related to a reduction in headcount in

the first quarter of 2023.

This decrease is inclusive of an increase in compensation related

costs at Lucid.

mentioned above, above we have paused research and development with respect to CarpX, EsoCure, NextFlo and PortIO.

Until such time as

resources permit, we expect to devote substantially all of our research and development efforts to EsoGuard, EsoCheck and the Veris Cancer

Care Platform.

of Acquired Intangible Assets

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

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

of Operations - continued

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

Income and Expense

in fair value of convertible debt

the three months ended September 30, 2023, the change in the fair value of our convertible notes was approximately $4.4 million of expense,

related to the April 2022 Senior Convertible Note (as defined in “ Liquidity and Capital Resources ” below), the September

2022 Senior Convertible Note (as defined in “ Liquidity and Capital Resources ” below), 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 period date.

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

on Debt Extinguishment

the three months ended September 30, 2023, a debt extinguishment loss in the aggregate of approximately $1.8 million was recognized in

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

the three months ended September 30, 2023, approximately $2.2 million of principal repayments,

along with less than $0.1 million of interest expense thereon, were settled through the issuance

of 10,859,964 shares of common stock of the Company, with such shares having a fair value

of approximately $4.0 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 $1.8 million in the three months ended September 30, 2023.

comparison, in the three months ended September 30, 2022, a debt extinguishment loss in the aggregate of approximately $5.1 million was

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

August 2022, approximately $5.0 million of principal repayments along with less than $0.1

million of interest expense thereon, were settled through the issuance of 5,013,908 shares

of common stock of the Company, with such shares having a fair value of approximately $10.1

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 $5.1 million in the three months ended September 30, 2022.

Note 11 , 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.

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

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

The $1.1 million increase principally relates to the revenue for our EsoGuard Esophageal DNA Test performed in our own CLIA laboratory,

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

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

the nine months ended September 30, 2023, cost of revenue was approximately $4.8 million as compared to $2.0 million for the corresponding

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

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

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

CLIA laboratory.

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

period in the prior year.

The $2.8 million increase principally related to:

The $0.4 million increase was principally related to:

● approximately

1 unchanged sentence

● approximately

$1.0 million increase in compensation related costs, including stock-based compensation at

Lucid and Veris;

● approximately

$0.7 million increase in laboratory facility and operations costs.

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

and marketing expenses

the nine months ended September 30, 2023, sales and marketing costs were approximately $12.9 million as compared to $13.6 million for

the corresponding period in the prior year.

the three months ended March 31, 2024, sales and marketing costs were approximately $4.3 million as compared to $4.5 million for the

corresponding period in the prior year.

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

● approximately

$1.4 million decrease in third party marketing expenses;

● approximately

$0.5 million increase in compensation related costs, including stock-based compensation,

primarily related to an increase in headcount at Lucid.

The increase is inclusive of a decrease

related to a reduction in headcount in first quarter of 2023 at PAVmed and Veris;

$0.1 million decrease in compensation related costs;

● approximately

$0.2 million increase in facility-related costs.

of Operations - continued

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

$0.1 million increase in third party marketing costs.

and administrative expenses

the nine months ended September 30, 2023, general and administrative costs were approximately $23.9 million as compared to $31.3 million

the three months ended March 31, 2024, general and administrative costs were approximately $6.7 million as compared to $10.4 million

for the corresponding period in the prior year.

1 unchanged sentence

● approximately

$5.3 million decrease in stock-based compensation, primarily related to decreases at Lucid,

partially offset by increases at PAVmed;

$2.5 million decrease in stock-based compensation, related to decreases at both PAVmed and

● approximately

$1.2 million decrease in third-party professional fees and expenses related to legal services

consulting fees and professional recruiting services;

● approximately

$0.9 million increase in compensation related costs;

● approximately

$0.2 million decrease related to facility related costs, partially offset by an increase

in facility related costs at PAVmed.

and consulting fees.

and development expenses

the nine months ended September 30, 2023, research and development costs were approximately $10.7 million as compared to $18.7 million

for the corresponding period in the prior year.

the three months ended March 31, 2024, research and development costs were approximately $1.9 million as compared to $4.1 million for

the corresponding period in the prior year.

The net decrease of $2.2 million was principally related to:

● approximately

$8.8 million decrease in development costs, particularly in clinical trial activities and

$1.5 million decrease in development costs, particularly in clinical trials activities and

outside professional and consulting fees;

● approximately

$0.8 million increase in compensation related costs, including stock-based compensation.

mentioned above, we have paused research and development with respect to CarpX, EsoCure, NextFlo and PortIO.

Until such time as resources

permit, we expect to devote substantially all of our research and development efforts to EsoGuard, EsoCheck and the Veris Cancer Care

$0.5 million decrease in compensation related costs.

of Acquired Intangible Assets

amortization of acquired intangible assets increased to $1.5 million in the nine months ended September 30, 2023, as compared to $1.3

million in the corresponding period in the prior year.

The increase of $0.2 million in the current period was due to the timing

of the acquired intangible assets in 2022.

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

million for the corresponding period in the prior year.

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

intangible assets being fully amortized in February 2024.

of Operations - continued

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

Income and Expense

in fair value of convertible debt

the nine months ended September 30, 2023, the change in the fair value of our convertible notes was approximately $5.8 million of expense,

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

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 period date.

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

the three months ended March 31, 2024 and March 31, 2023, the change in the fair value of our convertible notes was approximately

$2.2 million and $1.0 million of expense, respectively, related to the April 2022 Senior Convertible Note, the September 2022 Senior Convertible

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

consolidated financial statements).

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 period date.

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 nine months ended September 30, 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 nine months ended September 30, 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.

the three months ended March 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.

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

three months ended March 31, 2024.

on Debt Extinguishment

the nine months ended September 30, 2023, a debt extinguishment loss in the aggregate of approximately $3.0 million was recognized in

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

the nine months ended September 30, 2023, approximately $5.1 million of principal repayments

along with $0.3 million of interest expense thereon, were settled through the issuance of

20,383,445 shares of common stock of the Company, with such shares having a fair value of

approximately $8.4 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 $3.0 million in the nine months ended September 30, 2023.

of Operations - continued

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

comparison, in the nine months ended September 30, 2022, a debt extinguishment loss in the aggregate of approximately $5.1 million was

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

August 2022, approximately $5.0 million of principal repayments along with less than $0.1

million of interest expense thereon, were settled through the issuance of 5,013,908 shares

of common stock of the Company, with such shares having a fair value of approximately $10.1

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 $5.1 million in the nine months ended September 30, 2022.

the three months ended March 31, 2024, a debt extinguishment loss in the aggregate of approximately $0.4 million was recognized in connection

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

the three months ended March 31, 2024, approximately $0.3 million of principal repayments along with less than $0.1 million of

interest expense thereon, were settled through the issuance of 112,461 shares of common stock of the Company, with such shares

having a fair value of approximately $0.3 million (with such fair value measured as the quoted closing price of the common stock of

the Company on the respective conversion date).

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 and cash paid resulted in a debt

extinguishment loss of $0.2 million in the three months ended March 31, 2024.

comparison, in the three months ended March 31, 2023, a debt extinguishment loss in the aggregate of approximately $0.5 million was recognized

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

the three months ended March 31, 2023, approximately $1.5 million of principal repayments along with less than $0.1 million of

interest expense thereon, were settled through the issuance of 288,709 shares of common stock of the Company, with such shares

having a fair value of approximately $2.0 million (with such fair value measured as the quoted closing price of the common stock of

the Company on the respective conversion date).

The conversions resulted in a debt extinguishment loss of $0.5 million in the three months ended March 31,

Note 10 , 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.

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

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

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

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

Series A-1 Preferred Stock (carrying value of $24.3 million), resulting in an excess of fair value of $7.5 million

recognized as a deemed dividend charged to accumulated deficit in the unaudited condensed consolidated balance sheet on March 13,

2024, with such deemed dividend included as a component of net loss attributable to common stockholders, summarized as

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

March 13, 2024

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

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

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

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

Deemed Dividend Charged to Accumulated Deficit

and Capital Resources

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

as resources 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 our 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

purchase warrants, and debt.

We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic and

medical device companies that devote substantially all of their efforts to the commercialization of their initial product and services

and ongoing R&D and clinical trials.

We experienced a net loss before noncontrolling interests of approximately $61.9 million and

used approximately $40.2 million of cash in operations for the nine months ended September 30, 2023.

Financing activities provided $25.9

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

We ended the quarter with cash on-hand of $26.4 million as of September

We 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 date.

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

the other debt and equity committed sources of financing, described below, and conversion and refinancing of existing convertible notes, we expect to be able to fund our future operations for the

one year period from the date of the issue of the our unaudited condensed consolidated Financial Statements, as included herein this

We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic

and medical device companies that devote substantially all of their efforts to the commercialization of their initial product and

services and ongoing R&D and clinical trials.

We experienced a net loss before noncontrolling interests of approximately $18.5

million and used approximately $13.1 million of cash in operations for the three months ended March 31, 2024.

Financing activities

provided $19.0 million of cash during the three months ended March 31, 2024.

We ended the quarter with cash on-hand of $25.5 million

as of March 31, 2024.

We 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 date.

The Company’s ability to continue operations 12 months beyond the issuance of the financial statements will depend upon generating substantial revenue that is conditioned on obtaining positive third-party reimbursement coverage

for its EsoGuard Esophageal DNA Test from both government and private health insurance providers, increasing revenue through

contracting directly with self-insured employers, and on its ability to raise additional capital through various potential sources

including equity and/or debt financings or refinancing existing debt obligations.

These factors raise substantial doubt about the

Company’s ability to continue as a going concern within one year after the date the accompanying unaudited condensed

consolidated financial statements are issued.

of Shares of Our Common Stock

the nine months ended September 30, 2023

the three months ended March 31, 2024

issued 34,332 shares of our common stock for proceeds of approximately $0.1 million under

5 unchanged sentences

See below for more information.

issued 1,500,000 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 14, Common Stock and Common Stock Purchase Warrants for additional discussion.

On the six-month anniversary of the issuance of the shares, the then-current market value

of the shares will be determined based on the volume weighted average price per share of

the common stock during the last ten trading days of such six-month period.

If the aggregate

market value of the shares as so determined is less than $750,000, the Company shall, at

its election, either pay to the service provider an amount in cash equal to the shortfall

or issue to the service provider a number of additional shares equal to the shortfall divided

by the greater of the market value and $0.10.

In no event will the number of shares issued

exceed 9.99% of the Company’s outstanding common stock as of May 31, 2023.

issued 20,383,445 shares of our common stock in satisfaction of approximately $5.1 million

of principal repayments along with approximately $0.3 million of interest expense thereon

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

and Capital Resources - continued

issued 112,461 shares of our common stock in satisfaction of approximately $0.3 million of

principal repayments along with less than $0.1 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 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 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.

2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 11, Debt.

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

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

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 11, 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.

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 April 2022 Senior Secured Convertible Note had an initial

contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4, 2025.

April 2022 Senior Convertible Note may be converted into or otherwise paid in shares of our common stock as described in Note 10 , Debt .

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 (referred to as the “September 2022 Senior Convertible

The September 2022 Senior Secured Convertible Note had an initial contractual

maturity date of September 6, 2024, which maturity date the investor agreed to extend by one year, to September 8, 2025.

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

5 unchanged sentences

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 was 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

From time to time from and after June 1, 2023 through August 14, 2023, the Company was not in compliance with the Financial

As of August 14, 2023, the investor agreed to waive any such non-compliance during such time period and thereafter through November

Based on the waiver, as of September 30, 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.

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.

Based on the waiver, as of March 31, 2024, 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.

consideration of the covenant waiver and maturity extensions discussed above, the Company agreed to pay the holder of the notes $2.0 million

in cash (or in such other form as may be mutually agreed in writing) by April 25, 2024, which has been extended to June 15, 2024.

Note 10 , Debt , to the Financial Statements for additional information about the SPA, the April 2022 Senior Convertible Note, and

the September 2022 Senior Convertible Note.

Diagnostics - Series A Preferred Stock and Series A-1 Preferred Stock Offerings

March 7, 2023, Lucid Diagnostics sold 13,625 shares of 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 Lucid Series A Preferred Stock is convertible into shares of

Lucid Diagnostics’ common stock at any time at the option of the holder from and after the six-month anniversary of its issuance

(or, if later, the effective date of an increase in Lucid Diagnostics’ authorized share capital or the effective date of a registration

statement covering the resale of the underlying shares), and automatically converts into shares of Lucid Diagnostics’ common stock

on the second anniversary of its issuance.

The terms of the Lucid Series A Preferred Stock also include a 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 each of 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 aggregate gross proceeds from the sale of shares in such offering were $13.625 million.

October 17, 2023, Lucid Diagnostics sold 5,000 shares of Lucid Series A-1 Convertible Preferred Stock (the “Lucid Series A-1 Preferred

The terms of the Lucid Series A-1 Preferred Stock are substantially identical to the terms of the Lucid Series A Preferred

Stock, except that the Lucid Series A-1 Preferred Stock has a conversion price of $1.2592.

The aggregate gross proceeds from the sale

of shares in such offering were $5.0 million.

and Capital Resources - continued

Diagnostics - Preferred Stock Offerings

March 13, 2024, Lucid entered into Lucid Series B Subscription Agreements and Lucid Series B Exchange Agreements with teh Lucid

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

Lucid Series B Preferred Stock, at a purchase price of $1,000 per share, and (ii) the exchange by the Lucid Series B Investors of

13,625 shares of Lucid Series A Preferred Stock, and 10,670 shares of Lucid Series A-1 Preferred Stock held by them for 31,790

shares of Lucid Series B Preferred Stock.

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

B Exchange Agreements, Lucid entered into subscription agreements with certain of the Lucid 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 Lucid Series B 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 holders of the Lucid Series B Preferred Stock also will be entitled to dividends equal, on an

as-if-converted to shares of Lucid common stock basis, to and in the same form as dividends actually paid on shares of the Lucid

common stock when, as, and if such dividends are paid on shares of the Lucid common stock.

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).

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.

May 6, 2024, Lucid issued approximately 11,634 shares of newly designated Lucid Series B-1 Preferred Stock.

The terms of the Lucid Series B-1 Preferred Stock are substantially identical to

the terms of the Lucid Series B Preferred Stock, except that the Lucid Series B-1 Preferred Stock has a conversion price of $0.7228.

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

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

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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.

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

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

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

The principal of the Lucid March 2023 Senior Convertible Note and accrued interest thereon is convertible at the option of the holder

into Lucid Diagnostics’ common stock at the contractual conversion price.

In addition, the principal of the Lucid March 2023 Senior

Convertible Note amortizes over 18 months commencing six months after its issuance.

The amortization payments and accrued interest on

the Lucid March 2023 Senior Convertible Note are payable in shares of Lucid Diagnostics’ common stock (subject to the satisfaction

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

market price.

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

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

As of September 30, 2023, Lucid Diagnostics was in compliance with the Lucid

As of March 31, 2024, Lucid Diagnostics was in compliance with the Lucid

Financial Tests.

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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).

As 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 nine months ended September

30, 2023, the Company sold 2,330,747 shares through its at-the-market equity facility for net proceeds of approximately $1.2 million,

after payment of 3% commissions.

No shares were sold through the Company’s at-the-market equity facility during the three months

ended September 30, 2023.

In the three month period ended March 31, 2024, the Company

sold 133,299 shares through its at-the-market equity facility for net proceeds of approximately $0.5 million, after payment of 3% commissions.

Diagnostics Inc.

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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 September 30, 2023.

No shares were sold through this facility

during the three months ended September 30, 2023.

Cumulatively, a total of 680,263 shares

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

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

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

In the nine months ended

September 30, 2023, 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.

No shares were sold through Lucid’s at-the-market equity facility during the three

months ended September 30, 2023.

Accounting Policies and Significant Judgments and Estimates

Cumulatively, a total

of 230,068 shares of Lucid Diagnostics’ common stock were issued through its at-the-market equity facility for net proceeds of

approximately $0.3 million, after payment of 3% commissions, as of March 31, 2024.

Accounting Estimates

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

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There have been no material changes to our critical accounting

policies and estimates in the nine months ended September 30, 2023.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis