Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations should be read together with our Annual Report on Form 10-K for the year ended December 31, 2025 (the "Form 10-K"), as filed with the Securities and Exchange Commission (the "SEC").

Unless the context otherwise requires, (i) "we", "us", and "our", and the "Company", "Lucid" and "Lucid Diagnostics" refer to Lucid Diagnostics Inc. and its subsidiaries LucidDx Labs Inc. ("LucidDx Labs") and CapNostics, LLC ("CapNostics"), (ii) "FDA" refers to the Food and Drug Administration, (iii) "510(k)" refers to a premarket notification, submitted to the FDA by a manufacturer pursuant to § 510(k) of the Food, Drug and Cosmetic Act and 21 CFR § 807 subpart E, (iv) "CLIA" refers to the Clinical Laboratory Improvement Amendments of 1988 and associated regulations set forth in 42 CFR § 493, (v) "CE Mark" refers to a "Conformité Européenne" Mark, a mark indicating that a product such as a medical device conforms to the essential requirements of the relevant European directive, and (vi) "LDT" refers to a diagnostic test, defined by the FDA as "an IVD that is intended for clinical use and designed, manufactured and used within a single laboratory," which is generally subject only to self-certification of analytical validity under the CMS CLIA program.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Form 10-Q"), including the discussion and analysis of our unaudited condensed consolidated financial condition and results of operations, contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from those expressed or implied in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Item 1A of Part I of the Form 10-K under the heading "Risk Factors."

Important factors that may affect our actual results include:

	●	our limited operating history;
	●	our financial performance, including our ability to generate revenue;
	●	our ability to obtain regulatory approval for the commercialization of our products;
	●	the ability of our products to achieve market acceptance;
	●	our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
	●	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 health-related emergencies;
	●	risks related to our relationship with PAVmed; and
	●	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing.

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 results, plans and/or objectives disclosed in our forward-looking statements, and the intended or expected results, developments and/or other events disclosed in our forward-looking statements may not actually occur, and accordingly you should not place undue reliance on our forward-looking statements. You should read this Quarterly Report on Form 10-Q and the documents we have filed as exhibits to this Form 10-Q and the Form 10-K completely and with the understanding our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Overview

We are a commercial-stage, cancer prevention medical diagnostics technology company focused on the millions of patients with gastroesophageal reflux disease ("GERD"), also known as chronic heartburn, who are at risk of developing esophageal precancer and cancer, specifically highly lethal esophageal adenocarcinoma ("EAC").

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 tool with the goal of preventing EAC deaths, through early detection of esophageal precancer in at-risk GERD patients.

EsoGuard is a bisulfite-converted targeted next-generation sequencing ("NGS") DNA assay performed on surface esophageal cells collected with the FDA 510(k) cleared EsoCheck device. It quantifies methylation at 31 sites on two genes, Vimentin ("VIM") and Cyclin A1 ("CCNA1"). Analytical validation tests of EsoGuard demonstrated approximately 97% analytical sensitivity, 95% analytical specificity, 98% analytical accuracy, and 100% inter-assay and intra-assay precision. Performance characteristics of the EsoGuard test have been evaluated in two case-control studies and two prospective, single-arm cohort studies. Both cohort studies were designed as "screening" studies, enrolling patients from the intended-use population. In these screening settings, EsoGuard demonstrated a positive predictive value ("PPV") of 30-33% and a negative predictive value ("NPV") of 99% for the detection of Barrett's esophagus ("BE") and EAC.

EsoCheck is an FDA 510(k) cleared and CE Mark certified noninvasive swallowable balloon capsule catheter device designed for in office targeted sampling of surface esophageal cells in a less than two minute office procedure. It consists of a vitamin sized semi rigid plastic capsule tethered to a thin silicone catheter from which a soft inflatable silicone balloon with textured ridges emerges to gently swab surface esophageal cells. When 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+Protect™ 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 testing for the early detection of EAC and BE, including dysplastic BE and related pre-cursors to EAC in patients with GERD.

Recent Developments

Medicare Reimbursement

On September 22, 2026, we announced that we operate two CLIA-certified laboratories, located in Lake Forest, California and Irving, Texas, and that we would begin submitting Medicare claims for EsoGuard tests performed at our Irving laboratory. We began submitting those claims in September 2026 under EsoGuard's Proprietary Laboratory Analyses, or ("PLA"), code 0114U, and have since received Medicare payments on claims submitted from that laboratory at EsoGuard's established Clinical Laboratory Fee Schedule, or ("CLFS"), rate of $1,938.01 per test. Medicare claims are administered by the Medicare Administrative Contractor, or ("MAC"), with jurisdiction over the location at which a test is performed. Our Irving laboratory is located within the jurisdiction of Novitas Solutions, Inc., which does not participate in the MolDx program and adjudicates claims on an individual basis.

On September 15 and 16, 2026, the Centers for Medicare & Medicaid Services, or ("CMS"), held a public meeting of the Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests on the basis for establishing payment amounts for laboratory tests for which CMS received no applicable information during the 2026 data reporting period, including PLA code 0114U. At the September 16 meeting, 0114U was included on Consent Agenda 1 under the recommended determination "Original gapfill maintained," which the Panel adopted as a single motion. CMS is expected to post preliminary determinations, followed by a public comment period, with final determinations expected in November 2026.

Medicare Coverage

In November 2024, we submitted to MolDx our complete clinical evidence package in support of a request for reconsideration of the non-coverage language in the local coverage determination, or ("LCD") to secure Medicare coverage for EsoGuard. The EsoGuard clinical evidence package included six new peer-reviewed publications: three clinical validation studies (two in the intended use population, one case control), two clinical utility studies, and one analytical validation study. The current LCD provides clear coverage criteria consistent with the American College of Gastroenterology, or ("ACG") guidelines for esophageal precancer testing.

As part of the LCD reconsideration process, MolDx-participating Medicare Administrative Contractors convened a Contractor Advisory Committee, or ("CAC") Meeting regarding the LCD on September 4, 2025. At the meeting, eleven experts, including physicians across multiple specialties (GI, primary care, pathology), major society guideline co-authors (American College of Gastroenterology, American Gastroenterological Association) and industry leaders (American Foregut Society, American Society for Gastrointestinal Endoscopy), participated in this extensive discussion of the unmet clinical need with respect to early detection of esophageal precancer and the strength of the EsoGuard clinical validity and clinical utility data.

We will be able to submit Medicare claims under PLA code 0114U for EsoGuard tests performed at our Lake Forest laboratory once a final revised LCD resulting from our pending reconsideration request, and its associated billing and coding article, are effective. A final revised LCD would establish Medicare coverage for EsoGuard across the jurisdictions of the MolDx-participating MACs.

Peer-Reviewed Publication of Real-World EsoGuard Experience

On November 3, 2026, we announced the peer-reviewed publication in the journal Diagnostics of a manuscript entitled "Non-Endoscopic Screening for Barrett's Esophagus Using a DNA Methylation-Based Assay: Real-World Experience in 11,991 Patients." The retrospective study evaluated 11,991 patients with clinical risk factors who underwent EsoGuard testing on samples collected with EsoCheck between January 2023 and June 2024. EsoCheck cell collection was successful in 94.7% of patients, with an average collection time of less than two minutes and no reported device-related adverse events. Collection performance was consistent across operators, including newly trained personnel, and 82% of patients surveyed reported very low discomfort. The study authors concluded that the findings support the feasibility of large-scale implementation of EsoGuard testing.

Laboratory Benefit Manager Coverage Policy

In July 2026, we secured our first positive coverage policy for EsoGuard from Concert, a laboratory benefit manager, or ("LBM"), that establishes genetic and molecular testing coverage policies for adoption by its client health plans. The policy considers EsoGuard medically necessary for patients who meet ACG screening criteria. Several of Concert's health plan clients have since adopted the policy.

Recent Developments - continued

October 2026 Series C Preferred Stock Offering

On October 21, 2026, the Company closed on the sale to certain accredited investors (collectively, the "Series C Investors") of 15,000 shares of the Company's newly designated Series C Convertible Preferred Stock, par value $0.001 per share (the "Series C Preferred Stock"), at a purchase price of $1,000 per share (collectively, the "Series C Offering"). Each share of the Series C Preferred Stock has a stated value of $1,000 and a conversion price of $0.3519. The holders of Series C Preferred Stock are entitled to dividends at a rate of 20% per annum, payable in equal quarterly installments on the last day of each calendar quarter from December 31, 2026 to March 31, 2030. Dividends shall be paid in shares of common stock, valued at the initial conversion price (the number of dividend shares each quarter being fixed at 5% of the shares issuable upon conversion of the original stated value at the original conversion price). For each dividend payable after April 1, 2027, if the market value of the dividend shares at the time of issuance (based on the average VWAP of the common stock during the five days preceding the dividend payment date) is less than the number of dividend shares multiplied by the initial conversion price, the shortfall shall be paid by adding such amount to the stated value of the Series C Preferred Stock (or, at the Company's election and only if permitted under the terms of the Company's senior indebtedness, by paying such amount in cash). The holders of the Series C Preferred Stock also will be entitled to dividends equal, on an as-if-converted to shares of common stock basis, to and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. So long as 25% of the original Series C Preferred Stock remains outstanding and not converted, the holders of a majority-in-interest of the Series C Preferred Stock have the collective right to designate one individual to be appointed to the Company's board of directors, subject to certain limitations and subject to the policies and procedures of the Company's nominating and corporate governance committee. The Series C Preferred Stock is a voting security. The aggregate gross proceeds of the offering are approximately $15.0 million. As of November 10, 2026, there was approximately $1.6 million of subscription receivable related to the sale of Series C Convertible Preferred Stock.

April 2026 Registered Direct Offering

On April 24, 2026, the Company closed on the sale of 18,000,000 shares of its common stock at a price of $1.00 per share in a registered direct offering. The net proceeds of the offering, after deducting approximately $1.2 million of the underwriting discount and other expenses, were approximately $16.8 million.

ATM Facility

On May 30, 2025, the Company entered into an "at-the-market offering" ("ATM") for up to $25.0 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between the Company and Maxim Group LLC. In the nine months ended September 30, 2026, the Company sold 4,298,616 shares through the ATM for net proceeds of approximately $5.4 million, after payment of 3% commissions or approximately $0.2 million.

Nasdaq Notice

On October 12, 2026, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq") stating that, for the prior 30 consecutive business days (through October 9, 2026), 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 April 12, 2027) 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. The notification letter also stated that, in the event the Company does not regain compliance within the initial 180-day period, the Company may be eligible for an additional 180-day period. If the Company is not eligible for the additional 180-day period, or if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, the Nasdaq Listing Qualifications Department will provide notice after the end of the initial 180-day period that the Company's securities will be subject to delisting.

Results of Operations

Overview

Revenue

The Company recognized revenue resulting from the delivery of patient EsoGuard test results when the Company considered the collection of such consideration to be probable to the extent that it is unconstrained.

Cost of revenue

Cost of revenues recognized from the delivery of patient EsoGuard test results includes costs related to EsoCheck device usage, shipment of test collection kits, royalties and the cost of services to process tests and provide results to physicians. We incur expenses for tests in the period in which the activities occur, therefore, gross margin as a percentage of revenue may vary from quarter to quarter due to costs being incurred in one period that relate to revenues recognized in a later period.

We expect that the gross margin for our services will continue to fluctuate and be affected by EsoGuard test volume, our operating efficiencies, patient compliance rates, payer mix, the levels of reimbursement, and payment patterns of payers and patients.

Sales and marketing expenses

Sales and marketing expenses consist primarily of salaries and related costs for employees engaged in sales, sales support and marketing activities, as well as the portion of the MSA Fee (as defined in Note 5, Related Party Transactions, to our accompanying unaudited condensed consolidated financial statements) allocated to sales and marketing expenses, which are principally costs related to PAVmed employees who are performing services for the Company. We anticipate our sales and marketing expenses will increase in the future, to the extent we expand our commercial sales and marketing operations as resources permit and insurance reimbursement coverage for our EsoGuard test expands.

General and administrative expenses

General and administrative expenses consist primarily of professional fees for accounting, tax, audit and legal services (including those fees incurred as a result of our being a public company), consulting fees, employee costs involved in third-party payor reimbursement, expenses associated with obtaining and maintaining patents within our intellectual property portfolio, and certain employee costs, along with the portion of the MSA Fee allocated to general and administrative expenses.

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

Results of Operations - continued

Research and development expenses

Research and development expenses are recognized in the period they are incurred and consist principally of internal and external expenses incurred for the development of our technologies and conducting clinical trials, including:

	●	costs associated with submission of regulatory filings;
	●	cost of laboratory supplies and acquiring, developing, and manufacturing preclinical prototypes; and
	●	the portion of the MSA Fee allocated to research and development.

We plan to incur research and development expenses for the foreseeable future as we continue the development of our existing products as well as new innovations. Our research and development activities, including our clinical trials, are focused principally on facilitating insurer reimbursement, encouraging physician adoption and developing product improvements or extending the utility of the lead products in our pipeline, including EsoCheck and EsoGuard.

Other Income and Expense, net

Other income and expense, net, consists principally of changes in fair value of our convertible notes and losses on extinguishment of debt upon repayment of such convertible notes.

Presentation of Dollar Amounts

All dollar amounts in this Management's Discussion and Analysis of Financial Condition and Results of Operations are presented in millions, except for share and per share amounts.

Results of Operations - continued

The three months ended September 30, 2026 as compared to the three months ended September 30, 2025

Revenue

In the three months ended September 30, 2026, revenue was flat, at $1.2 million, as compared to the corresponding period in the prior year.

Cost of revenue

In the three months ended September 30, 2026, the cost of revenue was approximately $1.4 million as compared to $1.7 million for the corresponding period in the prior year. The $0.3 million decrease principally related to:

	●	approximately $0.2 million decrease in compensation related costs; and
	●	approximately $0.1 million decrease in professional services, consulting and information technology costs.

Sales and marketing expenses

In the three months ended September 30, 2026, sales and marketing costs were approximately $5.3 million as compared to $4.3 million for the corresponding period in the prior year. The net increase of $1.0 million was principally related to:

	●	approximately $0.9 million increase in compensation, related personnel costs and stock-based compensation costs; and
	●	approximately $0.1 million increase in professional services and consulting costs.

General and administrative expenses

In the three months ended September 30, 2026, general and administrative costs were approximately $5.5 million as compared to $5.6 million for the corresponding period in the prior year. The net decrease of $0.1 million was principally related to:

	●	approximately $0.5 million decrease in third-party consulting and professional fees related to financing activities; and
	●	approximately $0.4 million increase in compensation and stock-based compensation costs.

Research and development expenses

In the three months ended September 30, 2026, research and development costs were approximately $1.2 million, compared to $1.3 million for the corresponding period in the prior year. The net decrease of $0.1 million was principally related to:

	●	approximately $0.2 million decrease in professional services and consulting costs; and
	●	approximately $0.1 million increase in stock-based compensation costs.

Amortization of Acquired Intangible Assets

In the three months ended September 30, 2026, the amortization of acquired intangible assets remained relatively level at approximately $0.1 million, as compared to the corresponding period in the prior year.

Other Income and Expense

Change in fair value of convertible debt

In the three months ended September 30, 2026 and 2025, the change in fair value of our convertible notes of approximately $5.5 million and $2.3 million, respectively, is reflected as other income in the Statement of Operations (see Note 10, Debt, to our accompanying unaudited condensed consolidated financial statements). The convertible notes were initially measured at the issue-date estimated fair value and are subsequently remeasured at estimated fair value as of each reporting period end date.

Results of Operations - continued

The nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025

Revenue

In the nine months ended September 30, 2026, revenue was approximately $3.9 million as compared to $3.2 million for the corresponding period in the prior year. The $0.7 million increase principally relates to the increase in consideration received for the performance of the EsoGuard tests.

Cost of revenue

In the nine months ended September 30, 2026, the cost of revenue was approximately $4.5 million, as compared to $4.8 million for the corresponding period in the prior year. The $0.3 million decrease principally related to:

	●	approximately $0.5 million decrease in compensation, related personnel costs and stock-based compensation costs; and
	●	approximately $0.2 million increase in the CLIA laboratory supplies required to perform EsoGuard tests.

Sales and marketing expenses

In the nine months ended September 30, 2026, sales and marketing costs were approximately $16.0 million as compared to $12.4 million for the corresponding period in the prior year. The net increase of $3.6 million was principally related to:

	●	approximately $3.2 million increase primarily related to an increase in compensation, related personnel costs and stock-based compensation costs; and
	●	approximately $0.4 million increase in professional services and third-party consulting costs.

General and administrative expenses

In the nine months ended September 30, 2026, general and administrative costs were approximately $16.7 million as compared to $17.4 million for the corresponding period in the prior year. The net decrease of $0.7 million was principally related to:

	●	approximately $2.0 million decrease in third-party professional fees primarily associated with financing activities;
	●	approximately $1.2 million increase in compensation and stock-based compensation costs; and
	●	approximately $0.1 million increase in other general corporate and consulting costs.

Research and development expenses

In the nine months ended September 30, 2026, research and development costs were approximately $3.6 million compared to $4.0 million for the corresponding period in the prior year. The net decrease of $0.4 million was principally related to:

	●	approximately $0.5 million decrease in professional and consulting services;
	●	approximately $0.2 million increase in compensation and stock-based compensation costs; and
	●	approximately $0.1 million decrease in development costs, primarily attributable to reduced clinical trial activities.

Amortization of Acquired Intangible Assets

In the nine months ended September 30, 2026, the amortization of acquired intangible assets remained relatively level at approximately $0.3 million, as compared to the corresponding period in the prior year.

Other Income and Expense

Change in fair value of convertible debt

In the nine months ended September 30, 2026 and 2025, the change in the fair value of our convertible notes of approximately $4.7 million of income and $5.3 million of expense, respectively, is reflected in other income (expense) on the Statement of Operations (see Note 10, Debt, to our accompanying unaudited condensed consolidated financial statements). The convertible notes were initially measured at the issue-date estimated fair value and are subsequently remeasured at estimated fair value as of each reporting period end date.

Results of Operations - continued

Liquidity and Capital Resources

Our current operational activities are principally focused on the commercialization of EsoGuard. We are pursuing commercialization across multiple sales channels, including: the communication to and education of medical practitioners and clinicians regarding EsoGuard; the establishment of Lucid Test Centers for the collection of cell samples using EsoCheck; use of our mobile testing unit; ongoing #CheckYourFoodTube testing days; and our direct contracting strategic initiative (including in the concierge medicine and employer markets sectors). Additionally, we are developing expanded clinical evidence to support insurance reimbursement adoption by government and private insurers. Further, as resources permit, the Company also intends to pursue development of other products and services.

Our ability to generate revenue depends upon our ability to successfully advance the commercialization of EsoGuard, including significantly expanding insurance reimbursement coverage. There are no assurances, however, that we will be able to obtain an adequate level of financial resources required for the long-term commercialization and development of our products and services.

We are subject to all of the risks and uncertainties typically faced by medical device and diagnostic companies that devote substantially all of their efforts to the commercialization of their initial products and services. We experienced a net loss of approximately $32.3 million and used approximately $38.9 million of cash in operations during the nine months ended September 30, 2026. Financing activities provided $22.5 million of cash during the nine months ended September 30, 2026. We ended the quarter with cash on-hand of $18.0 million as of September 30, 2026. We expect to continue to experience recurring losses and negative cash flow from operations, and will continue to fund our operations with debt and/or equity financing transactions, which in accordance with management's plans may include conversions of our existing debt to equity and refinancing our existing debt obligations to extend the maturity date. Our ability to continue operations 12 months beyond the issuance of the accompanying financial statements will depend upon generating substantial revenue that is conditioned on obtaining positive third-party reimbursement coverage for our EsoGuard Esophageal DNA Test from both government and private health insurance providers, and increasing revenue through contracting directly with self-insured employers, and upon raising additional capital through various potential sources including equity and/or debt financings or refinancing existing debt obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the accompanying unaudited condensed consolidated financial statements are issued.

Liquidity and Capital Resources

October 2026 Series C Preferred Stock Offering

On October 21, 2026, the Company closed on the sale to certain accredited investors (collectively, the "Series C Investors") of 15,000 shares of the Company's newly designated Series C Convertible Preferred Stock, par value $0.001 per share (the "Series C Preferred Stock"), at a purchase price of $1,000 per share (collectively, the "Series C Offering"). Each share of the Series C Preferred Stock has a stated value of $1,000 and a conversion price of $0.3519. The holders of Series C Preferred Stock are entitled to dividends at a rate of 20% per annum, payable in equal quarterly installments on the last day of each calendar quarter from December 31, 2026 to March 31, 2030. Dividends shall be paid in shares of common stock, valued at the initial conversion price (the number of dividend shares each quarter being fixed at 5% of the shares issuable upon conversion of the original stated value at the original conversion price). For each dividend payable after April 1, 2027, if the market value of the dividend shares at the time of issuance (based on the average VWAP of the common stock during the five days preceding the dividend payment date) is less than the number of dividend shares multiplied by the initial conversion price, the shortfall shall be paid by adding such amount to the stated value of the Series C Preferred Stock (or, at the Company's election and only if permitted under the terms of the Company's senior indebtedness, by paying such amount in cash). The holders of the Series C Preferred Stock also will be entitled to dividends equal, on an as-if-converted to shares of common stock basis, to and in the same form as dividends actually paid on shares of the common stock when, as, and if such dividends are paid on shares of the common stock. The Series C Preferred Stock is a voting security. The aggregate gross proceeds of the offering are $15.0 million. As of November 10, 2026, there was approximately $1.6 million of subscription receivable related to the sale of Series C Convertible Preferred Stock.

See Note 12, Stockholders' Equity, for more information.

April 2026 Registered Direct Offering

On April 24, 2026, the Company closed on the sale of 18,000,000 shares of its common stock at a price of $1.00 per share. The net proceeds of the offering, after deducting approximately $1.2 million of the underwriting discount and other expenses, were approximately $16.8 million.

ATM Facility

On May 30, 2025, the Company entered into an "at-the-market offering" ("ATM") for up to $25.0 million of its common stock that may be offered and sold under a Controlled Equity Offering Agreement between the Company and Maxim Group LLC. In the nine months ended September 30, 2026, the Company sold 4,298,616 shares through its at-the-market equity facility for net proceeds of approximately $5.4 million, after payment of 3% commissions, or approximately $0.2 million.

Debt Financing

On November 22, 2024, the Company closed on the sale of $21.975 million in principal amount of 2024 Convertible Notes, as defined in Note 10, Debt, to our accompanying unaudited condensed consolidated financial statements. Each 2024 Convertible Note has a 12.0% annual stated interest rate, a contractual maturity date of five years from the date of issuance, and an initial contractual conversion price of $1.00 per share of the Company's common stock (subject to adjustment in certain circumstances). Under the 2024 Convertible Notes, the Company is subject to certain customary affirmative and negative covenants, including certain financial covenants. The Company was in compliance with all covenants as of September 30, 2026. The 2024 Convertible Notes also provide that a majority-in-interest of the holders of the 2024 Convertible Notes (including the two largest noteholders) may declare that the Company's failure to obtain a positive Medicare coverage decision constitutes an event of default (absent such declaration, such event would not be an event of default under the 2024 Convertible Notes). The Company began submitting Medicare claims from its Irving, TX laboratory in September 2026, and have since received Medicare payments on such submitted claims at a rate of $1,938.01 per test. As of September 30, 2026, no event of default had occurred and was continuing under the 2024 Convertible Notes.

On October 21, 2026, as a result of the issuance of the Series C Preferred Stock with a conversion price below the then-current conversion price under the 2024 Convertible Notes, the conversion price under such notes was reduced to $0.3519, the conversion price of the Series C Preferred Stock.

See Note 10, Debt, for more information.

Management Fee Obligation

The Company's daily operations are also managed in part by personnel employed by PAVmed, for which the Company incurs the MSA Fee. The MSA Fee is charged on a monthly basis and is subject to periodic adjustment corresponding with changes in the services provided by PAVmed personnel to the Company. Currently, the MSA Fee is $1.05 million per month. As of September 30, 2026, the Company had prepaid $5.3 million of MSA fees to PAVmed.

See Note 5, Related Party Transactions, for more information.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in our unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgements. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting estimates are as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 25, 2026. There have been no material changes to our critical accounting estimates in the nine months ended September 30, 2026.