| Summary of Significant Accounting Policies and Recent Accounting Standards Updates | Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Significant
Accounting Policies Basis
of Presentation The
accompanying unaudited condensed financial statements are those of Lucid Diagnostics Inc. on a stand-alone legal entity
basis. Lucid Diagnostics Inc. (“the Company”) is a majority-owned consolidated subsidiary of PAVmed Inc., which has a majority
equity ownership interest and has financial control of Lucid Diagnostics Inc. The
accompanying unaudited condensed financial statements of Lucid Diagnostics Inc. have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”), and applicable rules and regulations of the United States
Securities and Exchange Commission (“SEC”) regarding interim financial reporting. As permitted under SEC rules, certain footnotes
or other financial information normally required by U.S. GAAP have been condensed or omitted. The balance sheet as of December 31, 2020
has been derived from the Company’s audited financial statements at such date. The accompanying unaudited condensed financial statements
have been prepared on the same basis as the Company’s annual financial statements, and in the opinion of management, include all
adjustments, consisting only of routine recurring adjustments, necessary for a fair presentation of the Company’s unaudited condensed
financial information. Effective
October 6, 2021, the Lucid Diagnostics Inc. board of directors: increased the authorized shares of common stock to 100.0 1.411-to-1.0 The
results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected
for the year ending December 31, 2021 or for any other interim period or for any other future periods. Use
of Estimates In
preparing unaudited condensed financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited
condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent
uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On
an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include the estimated fair value
of stock-based equity awards, and the estimated fair value of financial instruments recognized as liabilities. In addition, management’s
assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash
inflows and outflows. Segment
Data The
Company manages its operations as a single Cash The
Company maintains its cash at a major financial institution with high credit quality. At times, the balance of its cash deposits may
exceed federally insured limits. The Company has not experienced a loss on deposits with commercial banks and financial institutions
which exceed federally insured limits. Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Significant
Accounting Policies Revenue Recognition The
Company recognizes revenue under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 606, Revenue from Contracts with Customers Offering
Costs Offering
costs consist of certain legal, accounting, and other advisory fees incurred related to the Company’s efforts to raise debt and
equity capital. Offering costs in connection with equity financing are recognized as either an offset against the financing proceeds
to the extent the underlying security is equity classified or a current period expense to extent the underlying security is liability
classified or for which the fair value option is elected. Offering costs, lender fees, and warrants issued in connection with debt financing,
to the extent the fair value option is not elected, are recognized as debt discount, which reduces the reported carrying value of the
debt, with the debt discount amortized as interest expense, generally over the contractual term of the debt agreement, to result in a
constant rate of interest. Offering costs associated with in-process capital financing are accounted for as deferred offering costs.
As of September 30, 2021 and December 31, 2020, the were no Research
and Development Expenses Research
and development expenses are recognized as incurred and include the salary and stock-based compensation of employees engaged in product
research and development activities, and the costs related to the Company’s various contract research service providers, suppliers,
engineering studies, supplies, and outsourced testing and consulting fees, as well as depreciation expense and rental costs for equipment
used in research and development activities, and fees incurred for access to certain facilities of contract research service providers. Patent
Costs and Purchased Patent License Rights Patent
related costs in connection with filing and prosecuting patent applications and patents filed by the Company are expensed as incurred
and are included in the line item captioned “general and administrative expenses” in the accompanying consolidated statements
of operations. Patent fee reimbursement expense incurred under the patent license agreement agreements are included in the line item
captioned “research and development expenses” in the accompanying consolidated statements of operations. The
Company has entered into agreements with third parties to acquire technologies for potential commercial development. Such agreements
generally require an initial payment by the Company when the contract is executed. The purchase of patent license rights for use in research
and development activities, including product development, are expensed as incurred and are classified as research and development expense.
Additionally, the Company may be obligated to make future royalty payments in the event the Company commercializes the technology and
achieves a certain sales volume. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification
(“ASC”) Topic 730, “ Research and Development Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Significant
Accounting Policies Stock-Based
Compensation Stock-based
awards are made to members of the board of directors of the Company, the Company’s employees and non-employees, under each of the
Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc. 2018 Equity Plan”) and the PAVmed Inc.
2014 Long-Term Incentive Equity Plan (“PAVmed Inc. 2014 Equity Plan”). The
provisions of FASB Accounting Standard Update (“ASU”) 2018-07 (“ASU 2018-07”) amended FASB ASC Topic 718, Stock-Based
Compensation Equity-Based Payments
to Non-Employees In
the year ended December 31, 2020, with respect to stock-based awards granted to the board of directors, employees, and non-employees,
the Company recognizes stock-based compensation in accordance with the provisions of ASC 718, as amended by ASU 2018-07, wherein the
grant-date estimated fair value of the stock-based award is recognized on a straight-line basis over the requisite service period, which
is generally the vesting period of the respective stock-based award, with such straight-line recognition adjusted, as applicable, so
the cumulative expense recognized is at-least equal-to-or-greater-than the estimated fair value of the vested portion of the respective
stock-based award as of the reporting date. The
Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed Inc. 2014 Equity
Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, which requires the Company to make certain weighted-average valuation estimates
and assumptions for stock-based awards, principally as follows:
● The
expected term of stock options represents the period of time stock options are expected to be outstanding, which is the expected
term derived using the simplified method and, through December 31, 2019 for non-employees was the remaining contractual term (under
the previous provisions of ASC 505-50);
● With
respect to the PAVmed Inc. 2014 Equity Plan, the expected stock price volatility is based on the historical stock price volatility
of PAVmed Inc. common stock and the volatilities of similar entities within the medical device industry over the period commensurate
with the expected term with respect to stock options granted to the board of directors and employees in the years ended December
31, 2020 and 2019; and for stock options granted to non-employees in the year ended December 31, 2019, the period of volatility was
commensurate with the remaining contractual term of the respective stock option (under the previous provisions ASC 505-50).
● With
respect to stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan, the expected stock price volatility was based
on the historical stock price volatility of similar entities within the medical device industry over the period commensurate with
the expected term with respect to stock options granted to employees in the year ended December 31, 2019; and for stock options granted
to non-employees in the year ended December 31, 2019, the period of volatility was commensurate with the remaining contractual term
of the respective stock option (under the previous provisions ASC 505-50). There were no stock options granted under the Lucid Diagnostics
Inc. 2018 Equity Plan in the year ended December 31, 2020;
● The
risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period
commensurate with either the expected term or the remaining contractual term, as applicable, of the stock option; and,
● The
expected dividend yield is based on annual dividends of $ 0.00 The
price per share of PAVmed Inc. common stock used in the computation of estimated fair value of stock options granted under the PAVmed
Inc. 2014 Equity Plan is its quoted closing price per share. The price per share of Lucid Diagnostics Inc. common stock used in the computation
of estimated fair value of stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan was estimated using a discounted cash
flow method applied to a multi-year forecast of its future cash flows. Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Significant
Accounting Policies Financial
Instruments Fair Value Measurements FASB
ASC Topic 820, Fair Value
Level
1 Valuations
based on quoted prices for identical assets and liabilities in active markets.
Level
2 Valuations
based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets which are not active, or other inputs
observable or can be corroborated by observable market data.
Level
3 Valuations
based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made
by other market participants. These valuations require significant judgment. The
Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments potentially
qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging The
recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation models,
including the Company’s common stock price, and certain Level 3 inputs, including, the assumptions regarding the estimated volatility
in the value of the Company’s common stock price; the Company’s dividend yield; the likelihood and timing of future dilutive
transactions, as applicable, along with the risk-free rates based on U.S. Treasury security yields. Changes in these assumptions can
materially affect the estimated fair values. As
of September 30, 2021 and December 31, 2020, the carrying values of cash, and accounts payable, approximate their respective fair value
due to the short-term nature of these financial instruments. Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Significant
Accounting Policies Income
Taxes The
Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes Under
ASC 740, a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through
their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future
tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when
the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. As
a result of the evaluation of the positive and negative evidence bearing upon the estimated realizability of net deferred tax assets,
and based on a history of operating losses, it is more-likely-than-not the deferred tax assets will not be realized, and therefore a
valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, has been recognized
as a charge to income tax expense as of September 30, 2021 and December 31, 2020. The
Company recognizes the benefit of an uncertain tax position it has taken or expects to take on its income tax return if such a position
is more-likely-than-not to be sustained upon examination by the taxing authorities, with the tax benefit recognized being the largest
amount having a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2021, the Company
does no t
have any unrecognized tax benefits resulting from uncertain tax positions. The
Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. There were no Lucid
Diagnostics Inc. is included in the consolidated tax returns of PAVmed Inc. and Subsidiaries. Notwithstanding, the Lucid Diagnostics
Inc. stand-alone legal entity estimated income tax provision was computed on an assumed separate income tax return, wherein, the estimated
income tax provision of Lucid Diagnostics Inc. is computed as if its income tax returns were filed by Lucid Diagnostics Inc. on a stand-alone
legal entity basis. Notwithstanding the absence of a formal tax sharing agreement between PAVmed Inc. and Lucid Diagnostics Inc., the
Lucid Diagnostics Inc. stand-alone legal entity current tax expense and /or tax refund, if any, would be settled with PAVmed Inc. (as
opposed with the respective tax authority). The deferred tax asset and /or deferred tax liability; a valuation allowance on the deferred
tax asset, net; and /or an uncertain tax position, if any; each as discussed above, is determined based on Lucid Diagnostics Inc. stand-alone
legal entity assumed filing of separate income tax returns. Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Significant
Accounting Policies Net
Loss Per Share The
net loss per share is computed by dividing each of the respective net loss by the number of “basic weighted average common shares
outstanding” and “diluted weighted average shares outstanding” for the reporting period indicated. The basic weighted-average
shares common shares outstanding are computed on a weighted average based on the number of days the shares of common stock of the Company
are issued and outstanding during the respective reporting period indicated. The diluted weighted average common shares outstanding are
the sum of the basic weighted-average common shares outstanding plus the number of common stock equivalents’ incremental shares
on an if-converted basis, computed using the treasury stock method, computed on a weighted average based on the number of days the incremental
shares would potentially be issued and outstanding during the periods indicated, if dilutive. The Company’s common stock equivalents
include the Senior Unsecured Promissory Note, dated June 1, 2021, and stock options and unvested restricted stock awards granted under
the Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan. Notwithstanding,
as the Company has a net loss for each reporting period presented, only the basic weighted average common shares outstanding are used
to compute the basic and diluted net loss per share for each reporting period presented. Financial
Condition The
provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40,
Presentation of Financial Statements - Going Concern Since
its inception to the date of the Company’s IPO on October 14, 2021, the operations of Lucid Diagnostics Inc. have been funded by
PAVmed Inc. providing working capital cash advances and the payment by PAVmed Inc. of certain operating expenses on-behalf-of Lucid Diagnostics
Inc. Additionally, the daily operations of Lucid Diagnostics Inc. continue to be managed by personnel employed by PAVmed Inc., for which
Lucid Diagnostics Inc. incurs expense according to the provisions of a Management Services Agreement between Lucid Diagnostics Inc. and
PAVmed Inc. See Note 4, Related Party Transactions, Due To PAVmed Inc. The
Company is 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 research and
development activities and conducting clinical trials. The Company expects to continue to experience recurring losses from operations
and will continue to fund its operations with debt and equity financing transactions. Notwithstanding, however, with the cash on-hand
as of the date hereof, of which is inclusive of the cash proceeds resulting from the Company’s IPO, the Company
expects to be able to fund its future operations for one year from the date of the issue of the Company’s unaudited condensed financial
statements, as included herein in this Quarterly Report on Form 10-Q for the period ended September 30, 2021. JOBS
Act EGC Accounting Election Lucid
Diagnostics Inc. is an “emerging growth company” or “EGC” as defined in the Jumpstart Our Business Startups Act
of 2012 (“JOBS Act”). Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued after the
enactment of the JOBS Act until such time as those standards apply to private companies. In this regard, Lucid Diagnostics Inc. has irrevocably
elected to avail itself of this exemption from new or revised accounting standards, and, therefore, will not be subject to the same new
or revised accounting standards as public companies who are not an EGC. Note
2 — Summary of Significant Accounting Policies and Recent Accounting Standards Updates Recent
Accounting Standards Updates Accounting Standards Updates
Adopted As
of January 1, 2020, the Company adopted the (amended) guidance of ASC 718, as amended by ASU 2018-07, with respect to the recognition
and measurement of stock-based compensation expense of stock-based awards granted to non-employees, which aligned the accounting
for stock-based payments to nonemployees with the accounting for employees under ASC 718. The adoption of the amended guidance
of ASC 718 did not have an effect on the Company’s financial statements. As
of January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement, As
of January 1, 2020, the Company adopted the guidance of ASU 2017-11, issued by the FASB in July 2017, Earnings Per Share (Topic 260),
Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) - Part I - Accounting for Certain Financial Instruments
with Down-Round Features, and Part II - Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain
Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In
August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal
years. The Company’s adoption of the ASU 2020-06 guidance as of January 1, 2021 did not have an effect on the Company’s financial
statements. In
December 2019, the FASB issued ASU No. 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes”, Accounting Standards Updates
Not Yet Adopted FASB
ASC Topic 842, Leases Leases ) |
