LUCD US Equity☆

Item 1A. Risk Factors 14

Item 1B. Unresolved Staff Comments 42

Item 2. Property 42

Item 3. Legal Proceedings 42

Item 4. Mine Safety Disclosures 42

PART II

Item 6. [Reserved] 43

Item 7A. Quantitative and Qualitative Disclosure About Market Risk 53

Item 8. Financial Statements and Supplementary Data 53

Item 9A. Controls and Procedures 54

Item 9B. Other Information 54

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54

PART III

Item 10. Directors, Executive Officers, and Corporate Governance 55

Item 11. Executive Compensation 55

Item 14. Principal Accountant Fees and Services 55

PART IV

Item 15. Exhibits and Financial Statement Schedules 56

i

FORWARD-LOOKING

STATEMENTS

This

Annual Report on Form 10-K (this “Form 10-K”) of Lucid Diagnostics Inc. (“we”, “us”, “our”

or “Lucid” or the “Company”) contains forward-looking statements that involve substantial risks and uncertainties.

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

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

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

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

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

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

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

significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are

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

herein by reference.

Important

factors that may affect our actual results include:

● our limited operating history;

● our financial performance, including our ability to generate revenue;

● the ability of our products to achieve market acceptance;

● our potential ability to obtain additional financing when and if needed;

● our ability to protect our intellectual property;

● our ability to complete strategic acquisitions;

● our ability to manage growth and integrate acquired operations;

● the potential liquidity and trading of our securities;

● our regulatory and operational risks;

● cybersecurity risks;

● risks related to the COVID-19 pandemic;

● risks related to our relationship with PAVmed; and

In

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

joint ventures or investments we may make.

We

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

undue reliance on our forward-looking statements. You should read this Annual Report on Form 10-K and the documents we have filed as

exhibits to this Annual Report on Form 10-K completely and with the understanding our actual future results may be materially different

from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information,

future events or otherwise, except as required by applicable law.

ii

Part

I

Item

1. Business

Background

and Overview

Lucid

Diagnostics Inc. (“Lucid”) is a commercial-stage medical diagnostics technology company focused on the millions of patients

with gastroesophageal reflux disease (“GERD”), also known as chronic heartburn, acid reflux or simply reflux, who are at

risk of developing esophageal precancer and cancer, specifically highly lethal esophageal adenocarcinoma (“EAC”). References

in this Form 10-K to “we,” “us” and “our” are to Lucid and, unless the context otherwise requires,

its subsidiaries.

We

believe that our flagship product, the EsoGuard Esophageal DNA Test, performed on samples collected with the EsoCheck Esophageal Cell

Collection Device, constitutes the first and only commercially available diagnostic test capable of serving as a widespread screening

tool to prevent esophageal adenocarcinoma (“EAC”) deaths, through early detection of esophageal precancer in at-risk gastroesophageal

reflux disease (“GERD,” also commonly known as chronic heartburn, acid reflux or simply reflux) patients.

EsoGuard

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

quantifies methylation at 31 sites on two genes, Vimentin (VIM) and Cyclin A1 (CCNA1). The assay was evaluated in a 408-patient multicenter

case-control study published in Science Translational Medicine and showed greater than 90% sensitivity and specificity at detecting esophageal

precancer and all conditions along the BE-EAC spectrum, including on samples collected with EsoCheck (Moinova, et al. Sci Transl Med.

2018 Jan 17;10(424): eaao5848). EsoGuard is commercially available in the U.S. as a Laboratory Developed Test (LDT) performed at our

CLIA-certified laboratory. Cell samples, including those collected with EsoCheck, as discussed below, are sent to our laboratory, for

testing and analyses using our proprietary EsoGuard NGS DNA assay.

EsoCheck

is an FDA 510(k) and CE Mark cleared noninvasive swallowable balloon capsule catheter device capable of sampling surface esophageal

cells in a less than five-minute office procedure. It consists of a vitamin pill-sized rigid plastic capsule tethered to a thin silicone

catheter from which a soft silicone balloon with textured ridges emerges to gently swab surface esophageal cells. When vacuum

suction is applied, the balloon and sampled cells are pulled into the capsule, protecting them from contamination and dilution by

cells outside of the targeted region during device withdrawal. We believe this proprietary Collect+ProtectTM technology makes

EsoCheck the only noninvasive esophageal cell collection device capable of such anatomically targeted and protected

sampling.

EsoGuard

and EsoCheck are based on patented technology licensed by Lucid from Case Western Reserve University (“CWRU”). EsoGuard and

EsoCheck have been developed to provide an accurate, non-invasive, patient-friendly screening test for the early detection of adenocarcinoma

of the esophagus (“EAC”) and Barrett’s Esophagus (“BE”), including dysplastic BE and related pre-cursors

to EAC in patients with chronic gastroesophageal reflux (“GERD”).

Market

Opportunity

In

2023, approximately 20,000 U.S. GERD patients are projected to be diagnosed with EAC and approximately 16,000 will die from it. Over

80% of EAC patients will die within five years of diagnosis, making it the second most lethal cancer in the U.S. The U.S. incidence of

EAC has increased 500% over the past four decades, while the incidences of other common cancers have declined or remained flat. In nearly

all cases, EAC silently progresses until it manifests itself with new symptoms of advanced disease. EAC is nearly always invasive at

diagnosis, and, unlike other common cancers, mortality rates are high even in its earlier stages.

As

discussed below under the heading “Clinical Guidelines for At-Risk Population”, the American Gastroenterology Association

(“AGA”) recently significantly expanded the target population for esophageal precancer screening, recommending screening

in at-risk patients without symptoms of GERD. Based on this revision, we believe the cohort recommended for screening consists of an

estimated 30 million U.S. individuals with at least 3 established risk factors for BE. Accordingly, we believe EsoGuard’s total

addressable U.S. market opportunity exceeds $60 billion based on an effective Medicare payment of $1,938 and the estimated 30 million

U.S. patients recommended for screening by clinical practice guidelines. (In December 2019, we secured “gapfill” determination

for EsoGuard’s PLA code 0114U through the CMS CLFS process. This allowed us to engage directly with Medicare contractor Palmetto

GBA and its MolDx Program on CMS payment and coverage. In October 2020, CMS granted EsoGuard final Medicare payment determination of

$1,938.01, effective January 1, 2021.)

Unfortunately,

for a variety of reasons, less than 10% of at-risk patients who are recommended for screening undergo traditional invasive upper gastrointestinal

endoscopy (EGD). We believe that the profound tragedy of an EAC diagnosis is that likely death could have been prevented if the at-risk

patient had been screened and then undergone surveillance and curative endoscopic esophageal ablation of dysplastic BE.

Since

mortality rates are high even in early stage EAC, preventing EAC deaths requires detection and intervention at the precancer stage. Most

of the necessary elements for such an early detection program are already well established—an at-risk population (at-risk GERD

patients), a precancer (BE), and an intervention which can halt progression to EAC (endoscopic esophageal ablation). The only missing

element for such an early detection program is a widespread screening tool that can detect BE prior to EAC.

We

believe EsoGuard, used with EsoCheck, constitutes that missing element—the first and only commercially available diagnostic test

capable of serving as a widespread screening tool to prevent EAC deaths through early detection of esophageal precancer and cancer in patients with 3 or more risk factors.

Clinical

Guidelines for At-Risk Population

The

subgroup of long-standing or severe GERD patients at-risk for BE and progression to EAC is well defined in clinical practice guidelines,

including the American College of Gastroenterology (ACG) BE Guidelines. In its Recommendation 5, the ACG suggests a single screening

endoscopy in patients with chronic GERD symptoms and 3 or more additional risk factors for BE, including male sex, age greater than 50

years, White race, tobacco smoking, obesity, and family history of BE or EAC in a first-degree relative.

An

ACG clinical guideline entitled “Diagnosis and Management of Barrett’s Esophagus: An Updated ACG Guideline,”

the first such update since 2016, was published online last year in the American Journal of Gastroenterology. The clinical guideline

reiterates the ACG’s long-standing recommendation for esophageal precancer screening in at-risk patients with GERD. For the first

time, however, the clinical guideline also endorses nonendoscopic biomarker screening as an acceptable alternative to costly and invasive

endoscopy stating that “a swallowable nonendoscopic capsule device combined with a biomarker is an acceptable alternative to endoscopy

for BE.” The clinical guideline specifically mentions EsoCheck, along with our EsophaCap® device, as such swallowable, nonendoscopic

esophageal cell collection devices, as well as methylated DNA biomarkers such as EsoGuard. The summary of evidence for this recommendation

includes a reference to the seminal NIH-funded, multicenter, case-control study published in 2018 in Science Translational Medicine, which demonstrated

that EsoGuard is highly accurate at detecting esophageal precancer and cancer, including on samples collected with EsoCheck.

In

July 2022, the American Gastroenterology Association (“AGA”) published in their “Clinical Practice Update on New Technology

and Innovation for Surveillance and Screening in Barrett’s Esophagus” updated clinical guidance that mirrors the same furnished

by the ACG as described above, endorsing the use of non-endoscopic cell collection tools to screen for BE like our EsoCheck Cell Collection

Device, which is cited in the update, as an acceptable alternative to endoscopy to directly address the need for noninvasive screening

tools that are easy to administer, patient friendly, and cost-effective for the detection of BE. The clinical practice update by the

AGA also significantly expands the target population for esophageal precancer screening, including for EsoGuard and EsoCheck, by recommending,

for the first time, screening in at-risk patients without symptoms of GERD. The AGA does so by adding a history of chronic GERD as merely

an additional, seventh risk factor to the six risk factors for BE and EAC that have traditionally identified at-risk symptomatic patients

recommended for screening.

Commercialization

Our

EsoGuard commercialization efforts span multiple channels including targeting primary care physicians and GI physicians, who have generally

embraced our message that EsoGuard has the potential to expand the funnel of BE-EAC patients who will need long term EGD surveillance

and, potentially, treatment with endoscopic esophageal ablation.

To

assure sufficient testing capacity and geographic coverage, we have built our own network of Lucid Test Centers, staffed by Lucid-employed

clinical personnel, where patients can undergo the EsoCheck procedure and have the sample sent for EsoGuard testing at our CLIA-certified

laboratory. Our current test center network currently includes locations in metropolitan areas in Arizona, California, Colorado, Florida,

Idaho, Illinois, Nevada, Ohio, Oregon, Texas and Utah.

In

addition to our base test center network, we have established a satellite test center program, whereby we are expanding our footprint

by making our personnel available to perform cell collection services in physician offices. Further, we have sought to expand our outreach

by successfully conducting multiple “#CheckYourFoodTube Precancer Testing Event” for organizations such as the San Antonio Fire Department, where

samples are collected from the organization’s employees for testing with EsoGuard at our CLIA-certified laboratory.

We

have also established an EsoGuard Telemedicine Program, in partnership with UpScript, LLC, an independent third-party telemedicine provider,

that accommodates EsoGuard self-referrals from direct-to-consumer marketing.

Reimbursement

and Market Access

As

noted above, in December 2019, we secured “gapfill” determination for EsoGuard’s PLA code 0114U through the CMS CLFS

process. This allowed us to engage directly with Medicare contractor Palmetto GBA and its MolDx Program on CMS payment and coverage.

In October 2020, CMS granted EsoGuard final Medicare payment determination of $1,938.01, effective January 1, 2021.

A proposed Local Coverage Determination

(“LCD”) DL39256, entitled “Molecular Testing for Detection of Upper Gastrointestinal Metaplasia, Dysplasia, and Neoplasia”

was published recently on the Center for Medicare and Medicaid Services (“CMS”) website by MAC Palmetto GBA. The proposed

LCD is a further step in our efforts to secure Medicare coverage and payment for EsoGuard. The proposed LCD, which the CMS website explicitly

characterizes as a “work in progress” for “public review,” outlines criteria that MolDX expects upper gastrointestinal

precancer and cancer molecular diagnostic tests to meet. These criteria include active GERD with at least two risk factors, as well as

evidence of analytic validity, clinical validity, and clinical utility. Although the proposed LCD indicated that it found that no currently

existing test has fulfilled all these criteria, it indicated that it will “monitor the evidence and will provide coverage based

on the pertinent literature and society recommendations.” Notably, the proposed LCD pre-dated, and therefore does not include consideration

of, the most recent AGA clinical practice update endorsing swallowable, nonendoscopic capsule devices combined with a biomarker, such

as EsoCheck and EsoGuard,, an an alternative to endoscopy. The publication of the proposed LCD triggered a written comment period, and

MolDX also held an open meeting on May 10, 2022, during which stakeholders and other interested parties had the opportunity to address

the proposed LCD. We presented at the public meeting and made a written submission during the comment period as well. A final LCD will

not be issued until the MAC has had the opportunity to assess and consider all stakeholder comments.

While we await a CMS coverage determination

from MolDX, we are aggressively pursuing EsoGuard commercial insurer payment and coverage. Although the claim adjudication cycle can be

prolonged during the early commercialization of a new test, we have received out-of-network commercial insurance payments for the EsoGuard

test, and has entered into agreements with insurers that provide access to, in the aggregate, over 70 million patients.

Clinical

Utility and Clinical Trials

Demonstrating

EsoGuard’s clinical utility, which requires providing evidence that the test has a meaningful impact on clinical practice, is very

important for a variety of purposes, including, importantly, for Medicare and private payor payment and coverage. It has been established

that one of the most important factors to private payors in deciding whether to grant payment and coverage will be demonstration that

the EsoGuard test, when ordered by physicians, provides information that can be used to

identify or exclude patients who would benefit from additional management and/or treatment. Clinical utility studies are also important

for general EsoGuard commercialization by facilitating physician understanding of test indications and potential benefit to the patients.

We

are currently seeking to accelerate our 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.

As

previously disclosed, consequently, we have 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 we are devoting

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

prioritizing to drive EsoGuard commercialization.

Manufacturing

EsoCheck

is currently manufactured for us by our partners Coastline International, a high-volume device manufacturer, and Sage Product Development.

Through mid-2023, we expect to further transition from Sage to Coastline as the manufacturing process is further optimized. Our current

line capacity can produce up to 25,000 units per year. With Coastline’s improvement and expansion, there is capacity to scale exponentially.

Our EsoGuard Specimen Kits are currently manufactured for us by our partner Path-Tec. The warehousing, logistics, fulfillment and customer

support of our products is managed for us by our partners HealthLink International (a leading third-party logistics company) and Path-Tec.

License

Agreement

Under

the terms of our license agreement with CWRU, we acquired an exclusive worldwide right to use the intellectual property rights to the

EsoGuard and EsoCheck technology for the detection of changes in the esophagus and on sample preservation. we are required to pay CWRU

royalties on net sales of licensed products as follows: 5% of net sales of less than $100 million per year; and 8% of net sales greater

than $100 million per year. We are also required to pay CWRU minimum annual royalty payments as follows: $50,000 per year, beginning

January 1 following the first anniversary of a commercial sale of a licensed product; $150,000 per year, if net sales of a licensed product

exceed $25 million in a year; $300,000 per year, if net sales of a licensed product exceed $50 million in a year; and $600,000 per year,

if net sales of a licensed product exceed $100 million in a year. Minimum yearly royalty amounts are subject to increase based on the

percentage change in the CPI-W Consumer Price Index and are credited against the royalties otherwise due. The license agreement was subject

to four regulatory and commercialization milestones, of which one remains unachieved and unpaid. The remaining milestone is the FDA PMA

submission of a licensed product, upon the achievement of which we will pay CWRU a milestone payment of $200,000. The license agreement

terminates upon the expiration of the last-to-expire licensed patent, or on May 12, 2038, in countries where no such patents exist, or

upon expiration of any exclusive marketing rights for a licensed product that have been granted by FDA or other U.S. government agency,

whichever comes later. The EsoCheck patents, which are currently the last to expire, begin to expire in May 2035.

Regulatory

In

June 2019, we received FDA 510(k) clearance to market EsoCheck in the U.S. as a device indicated for use in the collection and retrieval

of surface cells of the esophagus in adults followed by FDA 510(k) clearance in 2022, expanding the use of EsoCheck in adults and pediatric

populations in the U.S. In December 2019, our CLIA-certified then-laboratory partner, completed documentation of EsoGuard analytical

validity allowing us to commercialize it as a Laboratory Developed Test (LDT).

In

February 2020, we received FDA “Breakthrough Device Designation” for EsoGuard as an in-vitro diagnostic (“IVD”)

medical device. The FDA Breakthrough Device Program was created to offer patients more timely access to breakthrough technologies which

provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions by expediting

their development, assessment and review through enhanced communications and more efficient and flexible clinical study design, including

more favorable pre/post market data collection balance. The Centers for Medicare and Medicaid Services and the United States Congress

continue to work to provide an expedited coverage pathway for emerging technologies.

In

May 2021, we received CE Mark certification for EsoCheck (under the Medical Devices Directive 93/42/EEC), and in June 2021, we completed

CE Mark self-certification for EsoGuard (under the European In-Vitro Diagnostic Devices Directive (IVDD 98/79/EC)), indicating both may

be marketed in CE Mark European countries.

Our

longer-term strategy is to secure a specific indication, based on published guidelines, for BE screening in certain at-risk populations

using EsoGuard on samples collected with EsoCheck. This use of EsoGuard together with EsoCheck as a screening system must be cleared

or approved by the FDA as an IVD device.

Laboratory

Operations

On

February 25, 2022, our new, wholly owned subsidiary, LucidDx Labs Inc. (“LucidDx Labs”), acquired from RDx, certain licenses

and other related assets necessary for LucidDx Labs to operate its own new CLIA-certified, CAP-accredited clinical laboratory located

in Lake Forest, CA. Since March 2022, we have conducted EsoGuard testing at our own laboratory with, until recently, the assistance of

RDx, which had continued to provide certain testing and related services for the laboratory in accordance with the terms of a management

services agreement (“MSA-RDx”), dated and effective February 25, 2022. Recently, however, the Company accelerated the development

of internal resources necessary to operate the laboratory entirely on its own. Accordingly, our subsidiary LucidDx Labs and RDx agreed

terminate the MSA-RDx effective as of February 10, 2023, such that LucidDx Labs now operates the laboratory itself, which the Company

believes will improve the efficiency of the performance of the EsoGuard assay.

Competition

The

U.S. market for esophageal cancer (i.e., EAC) and pre-cancer (i.e., BE, with or without dysplasia) screening is large, consisting of

more than 30 million at-risk individuals over the age of 50. Given the large market for pre-cancer screening, we likely will face numerous

competitors, some of which possess significantly greater financial and other resources and development capabilities than us. Our EsoGuard

test faces competition from procedure-based detection technologies such as upper endoscopy, and other screening technologies such as

multi-cancer early detection products. Our EsoCheck device faces competition from other manufactures with devices designed to collect

cell samples from targeted regions of the esophagus. For example, Cytosponge is a small mesh sponge within a soluble gelatin capsule

that dissolves in the stomach and then is pulled thru the targeted region brushing the lining of the esophagus and then later retrieved,

although, unlike EsoCheck, it is unprotected from contamination. Our competitors may also be developing additional methods of detecting

esophageal cancer and pre-cancer that have not yet been announced.

Accordingly,

the market for our products is highly competitive and is characterized by extensive research and clinical efforts and rapid technological

change. In order to compete effectively, EsoGuard and EsoCheck will have to achieve market acceptance, receive adequate insurance coverage

and reimbursement, be cost effective and be simultaneously safe and effective. We believe that the principal competitive factors in our

markets are:

● diagnostic accuracy and the quality of outcomes for medical conditions;

● acceptance by physicians and the medical device market generally;

● ease of use and reliability;

● technical leadership and superiority;

● effective marketing and distribution;

● speed to market; and

● product price and qualification for coverage and reimbursement.

Most

of our existing and potential competitors have substantially greater financial, marketing, sales, distribution, manufacturing and technological

resources. We may be unable to compete effectively against our competitors either because their products and services are superior or

more cost efficient, or because of they have access to greater resources than us. These competitors may have greater name recognition

than we do. Many of these competitors have obtained all desirable FDA or other regulatory approvals, and superior patent protection,

for their products. Certain of our competitors have already commercialized their products, and others may commercialize their products

in advance of our products. In addition, our competitors may make technical advances that render our products obsolete. We may be unable

to respond to such technical advances.

We

will also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as in acquiring

technologies and licenses complementary to our products or advantageous to our business. We are aware of several companies that compete

or are developing technologies in our current and future products areas. In order to compete effectively, our products will have to achieve

market acceptance, receive adequate insurance coverage and reimbursement, be cost effective and be simultaneously safe and effective.

Esocure

In

connection with our efforts to expand our presence in the EAC diagnostic market, we are also developing the EsoCure Esophageal Ablation

Device, with the intent to allow a clinician to treat dysplastic BE before it can progress to EAC, a highly lethal esophageal cancer,

and to do so without the need for complex and expensive capital equipment. We have successfully completed a pre-clinical feasibility

animal study of EsoCure demonstrating excellent, controlled circumferential ablation of the esophageal mucosal lining. An acute and survival

animal study of EsoCure Esophageal Ablation Device has also been completed, demonstrating successful direct thermal balloon catheter

ablation of esophageal lining through the working channel of a standard endoscope. When resources permit, we plan to conduct additional

development work and animal testing of EsoCure to support a future FDA 510(k) submission.

In

March 2022, both the PAVmed and Lucid board of directors approved entering into an intercompany license between PAVmed and Lucid such

that Lucid will be granted the rights to commercialize EsoCure for the treating dysplastic Barrett’s Esophagus. Under the intercompany

license, Lucid will pay PAVmed a 5% royalty on all EsoCure sales up to $100 million per calendar year, and 8% above that threshold.

Our

Relationship with PAVmed Inc.

We

are a majority-owned subsidiary of PAVmed, and PAVmed has a controlling financial interest. We continue to depend on PAVmed to provide

us various management, technical, research and development, legal, accounting, and administrative services.

PAVmed

owns approximately 73% as of December 31, 2022 and 72% as of March 9, 2023 of the combined voting power of our outstanding

common stock (with such percentage inclusive of shares of our common stock underlying granted but unvested restricted stock awards).

For as long as PAVmed continues to control more than 50% of our common stock, PAVmed will be able to direct the election of all the members

of our board of directors. Similarly, PAVmed will have the power to determine matters submitted to a vote of our stockholders without

the consent of our other stockholders, to prevent a change in control of us, and to take other actions that might be favorable to PAVmed,

without prior notice to other stockholders. PAVmed’s controlling interest may discourage a change of control that other holders

of our common stock may favor.

We

are party to a management services agreement with PAVmed (the “MSA”), as well as a payroll benefits and expense reimbursement

agreement (the “PBERA”). Under the MSA, PAVmed provides management, technical and administrative services to us, including

without limitation services related to research and development, regulatory clearance, manufacture, and commercialization of our products,

as well as services related to corporate financial, accounting and legal matters. The terms of this agreement are intended to be consistent

with the terms that we could have negotiated with unaffiliated third parties; however, they may actually be more or less favorable. Under

the PBERA, as more fully described below, PAVmed has agreed to pay certain payroll and benefit-related expenses in respect of our personnel

on our behalf, and we reimburse PAVmed for the same. PAVmed may elect that our obligations under each of the MSA and the PBERA are settled

by the issuance of our stock (instead of cash), subject to applicable restrictions under securities laws (and, in the case of the PBERA,

subject also to approval by our board). The MSA does not have a termination date, but may be terminated by the our board of directors

at any time. The PBERA likewise does not have a termination date, but may be terminated by PAVmed or Lucid at any time.

Recent

Events

Business

Status of Clinical Trials

We are currently seeking to accelerate

our 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.

As previously disclosed, consequently, we have 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 we are devoting our clinical resources to the studies cited above, which we expect will more efficiently generate the clinical data

we are currently prioritzing to drive EsoGuard commercialization.

LucidDx

Labs Laboratory Operations Update

On

February 14, 2023, we and our subsidiary, 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

10, 2023. 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, we accelerated the development of internal resources necessary to operate

the Laboratory entirely on its own. Accordingly, we believe that termination of the MSA-RDx will improve the efficiency of the performance

of the EsoGuard assay.

Among

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 us of $2,725,000. The payment was satisfied through

the issuance of 553,436 shares of Lucid Diagnostics’ common stock on February 25, 2023. We were not required to make any cash payments

in connection with the termination.

#CheckYourFoodTube

Precancer Testing Events

In

January 2023, we successfully completed our 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. The SAFD 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. Hamblin 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 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 we look to expand across the country, are an extension of our 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. We demonstrated that our nurse practitioners can each perform up to fifty EsoCheck procedures in a day, and our 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.

Payroll

and Benefit Expense Reimbursement Agreement

On

November 30, 2022, PAVmed and we 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 our personnel on our behalf, and we have reimbursed PAVmed

for the same. Pursuant to the PBERA, PAVmed will continue to pay such expenses, and we 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 PAVmed’s and our boards of directors, in shares of our 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 PAVmed’s and our boards of directors (subject to a floor price of $0.40 per share), or in a combination

of cash and shares. However, in no event shall we issue any shares of our common stock to PAVmed in satisfaction of all or any portion

of the expenses if the issuance of such shares of our common stock would exceed the maximum number of shares of common stock that we

may issue under the rules or regulations of The Nasdaq Stock Market LLC (“Nasdaq”), unless we obtain the approval of our

stockholders as required by the applicable rules of the Nasdaq for issuances of shares of our common stock in excess of such amount.

Financing

Committed Equity Facility and ATM Facility

In March 2022, we entered into a

committed equity facility with an affiliate of Cantor Fitzgerald (“Cantor”). Under the terms of the facility, Cantor committed

to purchase up to $50 million of our common stock from time to time upon our request. While there are distinct differences, the facility

is structured similarly to a traditional at-the-market equity facility, insofar as it allows us to raise primary capital on a periodic

basis at prices based on the existing market price. Through December 31, 2022, 680,263 shares of our common stock were issued under this

facility for total proceeds of approximately $1.8 million.

In November 2022, we also entered into an “at-the-market offering”

for up to $6.5 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, there were no shares sold through the at-the-market equity facility. Subsequent

to December 31, 2022, through March 9, 2023, we sold 230,068 shares through its at-the-market equity facility for approximately $0.3

million.

Series A Preferred Stock Offering

On

March 7, 2023, we entered into subscription agreements for the sale of 13,625 shares of Series A preferred stock (the

“Series A Preferred Stock”). Each share of the Series A Preferred Stock has a stated value of $1,000 and a

conversion price of $1.394. The terms of the 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 into which such Series A Preferred Stock is convertible, payable on the

one-year and two-year anniversary of the issuance date. The Series A Preferred Stock is a non-voting security, other than with

respect to limited matters related to changes in terms of the Series A Preferred Stock. The aggregate gross proceeds from the sale

of shares in such offering were $13.625 million.

Senior Secured Convertible Note

Effective as of March 13, 2023, 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 a Senior Secured Convertible Note with a face value principal

of $11.1 million (the “March 2023 Senior Convertible Note”). The issuance of the March 2023 Senior Convertible Note is

subject to customary closing conditions.

The March 2023 Senior Secured Convertible Note

would have 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 the two-year anniversary of the date of issuance. The March 2023 Senior Convertible

Note would be convertible into or otherwise paid in shares of the Company’s common stock.

Under the March 2023 Senior

Convertible Note, the Company 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 Senior Convertible Note, the Company would also be subject to financial covenants requiring that (i) the amount

of our 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 SPA, 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 (iii) that the Company’s market capitalization shall at no

time be less than an amount to be agreed upon.

Intellectual

Property

Our

business will depend on proprietary medical device and diagnostic technologies, including the EsoCheck and EsoGuard technology

licensed by us. We intend to vigorously protect our proprietary technologies’ intellectual property rights in patents,

trademarks and copyrights, as available through registration in the United States and internationally. Patent protection and other

proprietary rights are thus essential to our Diagnostics business. We currently have applied for, license or own 19 domestic and

foreign patents covering the EsoGuard and EsoCheck products and related technology. The

date the patents protecting certain of our owned and licensed technology will first begin to expire is as set forth in the table

below (although currently pending patent applications, both foreign and domestic, are positioned to provide protection beyond such

date in each instance).

Technology Year

The EsoCheck and EsoGuard technology is protected by patents in the United States and

internationally, and our policy is to continue to aggressively file patent applications, both independently and in collaboration

with CWRU, as appropriate, to protect this technology and other of our proprietary technologies relating to our Diagnostics

business, including inventions and improvements to inventions. Under the CWRU License Agreement, CWRU has agreed to apply for patent

coverage, at our expense, in any country requested by us, to the extent such protection is reasonably attainable. We seek patent

protection, as appropriate, on:

● the product itself including all embodiments with future commercial potential;

● the methods of using the product; and

● the methods of manufacturing the product.

In

addition to filing and prosecuting patent applications in the United States, we intend to file counterpart patent applications in other

countries worldwide where there is a value in doing so. Foreign filings can be cumbersome and expensive, and we will pursue such filings

when we believe they are warranted as we try to balance our international commercialization plans with our desire to protect the global

value of the technology.

The

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries

in which we file, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States,

a patent’s term may be shortened if a patent is terminally disclaimed over another patent or as a result of delays in patent prosecution

by the patentee, and a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative

delays by the USPTO in granting a patent, or patent term extension, which restores time lost due to regulatory delays.

We

intend to continuously reassess and fine-tune our intellectual property strategy in order to fortify the position of our business in

the United States and internationally. Prior to acquiring or licensing a technology from a third party, we will evaluate the existing

proprietary rights, our ability to adequately obtain and protect these rights and the likelihood or possibility of infringement upon

competing rights of others.

We also rely upon trade secrets,

know-how, continuing technological innovation, and may rely upon licensing opportunities, to develop and maintain our competitive position.

We intend to protect our proprietary rights through a variety of methods, including confidentiality agreements and/or proprietary information

agreements with suppliers, employees, consultants, independent contractors and other entities who may have access to proprietary information.

We will generally require employees to assign patents and other intellectual property to us as a condition of employment with us. All

of our consulting agreements will pre-emptively assign to us all new and improved intellectual property that arise during the term of

the agreement.

Lucid

also has (directly or through its subsidiaries) proprietary rights to a range of trademarks, including, among others, Lucid DiagnosticsTM,

LUCIDTM, EsoCheck®, EsoGuard®, Collect + Protect®, and EsoCheck Cell Collection Device®. (Solely as a matter of

convenience, trademarks and trade names referred to herein may or may not be accompanied with the requisite marks of “TM”

or “®”. However, the absence of such marks is not intended to indicate, in any way, Lucid or its subsidiaries will not

assert, to the fullest extent possible under applicable law, their respective rights to such trademarks and trade names.)

Health

Insurance Coverage and Reimbursement

Our

ability to successfully commercialize our products will depend in part on the extent to which governmental authorities, private health

insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which

our products are used.

In

the United States, third-party payors continue to implement initiatives that restrict the use of certain technologies to those that meet

certain clinical evidentiary requirements. In addition to uncertainties surrounding coverage policies, there are periodic changes to

reimbursement. Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to

determine reimbursement amounts. This includes annual updates to payments to physicians, hospitals and ambulatory surgery centers for

procedures during which our products are used. An example of payment updates is the Medicare program’s updates to hospital and

physician payments, which are done on an annual basis using a prescribed statutory formula. In the past, when the application of the

formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions.

A

product’s reimbursement profile, both in the U.S. and internationally, is an important component of the product’s commercial

opportunity. We prefer projects with existing reimbursement codes, the opportunity to seek reimbursement under higher-value surgical

procedure codes or the potential to seek reimbursement under narrow, product-specific codes as opposed to bundled procedure codes. For

those products that have high strategic value, but with less defined reimbursement, we have engaged reimbursement experts and support

from industry associations to accelerate the acquisition of satisfactory reimbursement levels.

See

“Reimbursement and Market Access” above for a fuller discussion of the reimbursement status for EsoCheck and EsoGuard.

Government

Regulation

Key

U.S. Regulation

FDA

Regulation

For

the purposes of FDA regulation a “medical device” is broadly defined in section 201(h) of the FDCA as “an instrument,

apparatus, implement, machine, contrivance, implant, in-vitro reagent, or other similar or related article, which is intended for use

in humans for the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, or intended

to affect the structure or any function of the body, and which does not achieve its primary intended purposes through chemical action

and which is not dependent upon being metabolized for the achievement of its primary intended purposes.” Medical devices subject

to FDA regulation include “in-vitro diagnostic medical devices” or IVD devices, defined in the same FDCA section as “reagents,

instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of

health, in order to cure, mitigate, treat, or prevent disease or its sequelae, which are intended for use in the collection, preparation,

and examination of specimens taken from the human body”.

Our

marketing of any medical device product we may develop, license, or acquire, including traditional medical devices such as EsoCheck,

and IVD products such as EsoGuard, is subject to FDA regulation.

FDA

defines an LDT as “an IVD product that is intended for clinical use and designed, manufactured and used within a single laboratory.”

FDA has long maintained that it has clear regulatory authority over LDTs and has chosen to fully exercise its authority for certain classes

of “single laboratory” IVD products which would satisfy its definition of an LDT, such as direct-to-consumer tests that do

not involve a health care provider. FDA, however, has generally not enforced these regulatory requirements for most LDTs not in one of

these classes and has generally not required these LDTs to undergo FDA premarket review of analytical validity and clinical validity,

as all other IVD products must. For over a decade, FDA has expressed its concern about insufficient regulatory oversight over increasingly

high-risk LDTs. On multiple occasions from 2010 to 2020 it announced its intent to reconsider its long-standing policy of LDT enforcement

discretion with respect to LDTs but never acted on this intent, limiting its actions to hosting a public workshop to gather feedback

from industry stakeholders. publishing two draft guidance documents describing a proposed risk-based framework to LDTs, issuing a report

citing evidence for the need for additional regulation of LDTs, and issuing a Discussion Paper on LDTs. FDA never issued a final guidance

document on the regulation of LDTs and, in 2020, HHS announced that, effective immediately, it was rescinding all guidance, compliance

manuals, website statements, or other informal issuances concerning FDA premarket review of LDTs, and that FDA may not require premarket

review of LDTs absent a formal notice-and-comment rulemaking process.

This

2020 HHS directive notwithstanding, the regulatory status for LDTs such as EsoGuard remains somewhat ambiguous and uncertain. The current

administration could rescind the HHS directive and allow FDA to return to its previous regime of enforcement discretion. The Verifying

Accurate Leading-edge IVCT Development (VALID) Act of 2020, which seeks to revamp the regulatory framework of diagnostic tests, including

LDTs, is expected to be reintroduced in 2021 and could radically alter the landscape for LDTs. FDA may also choose to modify its enforcement

discretion of elements of its “single laboratory” definition of LDTs which by strict interpretation would require the LDT

to have been “designed” at the “single laboratory” and not transferred from another research laboratory, as EsoGuard

was.

Since

only EsoCheck is FDA cleared, we are not permitted to jointly market it with EsoGuard. This currently is not a significant obstacle to

our commercialization efforts, which are almost entirely devoted to marketing EsoGuard. EsoCheck is merely offered, free of charge, as

a generic esophageal cell collection device, which is FDA 510(k) cleared to be used to collect samples for any diagnostic test. We believe,

however, over the long-term, once our commercialization efforts have gain significant traction, it would be useful to jointly market

EsoGuard, used with EsoCheck, as a combined product. We therefore may, when resources permit, pursue FDA PMA approval for EsoGuard, when

used on samples collected with EsoCheck, which will allow us to jointly market them as well as provide protection against changes to

LDT regulation which could threaten our ability to market EsoGuard as an LDT.

FDA

“Breakthrough Device” is highly-coveted special designation under FDA’s Breakthrough Devices Program, established pursuant

to the 21st Century Cures Act and the FDA Reauthorization Act of 2017, which seeks to offer patients and healthcare providers timely

access to medical devices which “provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating

human disease or conditions” by speeding up their development, assessment and review through (i) enhanced communications (ii) more

efficient and flexible clinical study design, including more favorable pre/post market data collection balance and (iii) priority review

of regulatory submissions. Once effective, MCIT would provide each Breakthrough Device with four years of national Medicare coverage

starting on the date of FDA market authorization. In February 2020 we were granted Breakthrough Device designation for EsoGuard on esophageal

samples collected using EsoCheck. Pursuant to this designation, we will be working with FDA to design an extension to our current screening

study to support an expanded indication to detect dysplastic BE, once FDA resumes Breakthrough Device meetings for IVD products, which

are currently on hold as the branch works to clear a Covid-19 pandemic related backlog.

Before

and after approval or clearance in the United States, our products are subject to extensive regulation by the FDA under the Federal

Food, Drug, and Cosmetic Act and/or the Public Health Service Act, as well as by other regulatory bodies. FDA regulations govern,

among other things, the development, testing, manufacturing, labeling, safety, storage, recordkeeping, market clearance or approval,

advertising and promotion, import and export, marketing and sales, and distribution of medical devices and products.

In

the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending

on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy:

In

general, the higher the classification, the greater the time and cost to obtain approval to market. There are no “standardized”

requirements for approval, even within each class. For example, FDA could grant 510(k) status, but require a human clinical trial, a

typical requirement of a PMA. They could also initially assign a device Class III status but end up clearing a device as a 510(k) device

if certain requirements are met. The range of the number and expense of the various requirements is significant. The quickest and least

expensive pathway would be 510(k) clearance with a review of existing bench and animal data. The longest and most expensive path would

be a PMA with extensive randomized human clinical trials. We cannot predict fully how FDA will classify our products, nor predict what