What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-15 compared with 2020-04-14 · 617 added, 1022 removed, 119 unchanged (93% of the section changed)

Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

for Common Equity

common stock is traded on the Nasdaq Capital Market under the symbol “PAVM.”

Our Series Z Warrants and

Series W Warrants are also traded on the Nasdaq Capital Market under the symbols “PAVMZ”

and “PAVMW,”

respectively.

of March 31, 2020, there were 44,133,745 shares of our common stock outstanding.

Our shares of common stock are

held by 25 holders of record and we believe our shares of common stock are held by more than 3,000 beneficial owners.

have not paid any cash dividends on our common stock to date.

Any future decisions regarding dividends will be made by our board

of directors.

We do not anticipate paying dividends in the foreseeable future but expect to retain earnings to finance the growth

of our business.

Our board of directors has complete discretion on whether to pay dividends.

Even if our board of directors decides

to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and

surplus, general financial condition, contractual restrictions and other factors the board of directors may deem relevant.

Series B Convertible Preferred Stock provides for dividends at a rate of 8% per annum based on the $3.00 per share stated value

of the Series B Convertible Preferred Stock, with such dividends compounded quarterly, accumulate, and are payable in arrears

upon being declared by the Company’s board of directors.

The Series B Convertible Preferred Stock dividends from April 1,

2018 through October 1, 2021 are payable-in-kind (“PIK”) in additional shares of Series B Convertible Preferred Stock.

The dividends may be settled after October 1, 2021, at the option of the Company, through any combination of the issuance of additional

Series B Convertible Preferred Stock, shares of common stock, and /or cash payment.

December 31, 2019, the Company’s board of directors had declared Series B Convertible Preferred Stock dividend payments

of an aggregate of $647,518, with such dividend payment settled by the issue of an additional 215,966 shares of Series B Convertible

Preferred Stock in accordance with the applicable certificate of designations.

Subsequent to December 31, 2019, in January

2020, the Company’s board of directors declared a Series B Convertible Preferred Stock dividend payment of earned but unpaid

dividends as of December 31, 2019, payable as of January 1, 2020, of $69,492, with such dividend payment settled by the issue

of an additional 23,182 shares of Series B Convertible Preferred Stock in accordance with the applicable certificate of designations.

Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - continued

Sales of Unregistered Securities

10 unchanged sentences

and “Risk Factors”

sections of this Annual Report on Form 10-K for a discussion of important factors which could cause actual results to differ

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

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

and to the “Company”

sections of this Annual Report on Form 10-K for a discussion of important factors which could cause actual results to differ materially

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

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

the “Company”

or “PAVmed”

1 unchanged sentence

and its subsidiaries.

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

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

Since inception on June 26, 2014, the Company’s activities have focused on advancing the lead products towards regulatory

approval and commercialization, protecting its intellectual property, and building its corporate infrastructure and management

The Company operates in one segment as a medical device company and recently aligned its product offerings into four general

groupings intended to become future operating divisions of the Company which include GI Health, Minimally Invasive Interventions,

Infusion Therapy, and Emerging Innovations.

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

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

In addition to the

PAVmed, the parent company, we have substantive daily operations conducted in two majority owned subsidiaries:

Lucid Diagnostics,

incorporated in May 2018 and Solys Diagnostics, incorporated in October 2019.

multiple products are in various phases of development and regulatory clearance or approval.

EsoCheck has received 510(k) marketing

clearance from the FDA as a generic esophageal cell collection device.

EsoGuard has been established as a LDT and was ready for

commercial launch in December 2019 after completing CLIA/CAP certification of the test at Lucid’s commercial diagnostic

laboratory partner ResearchDx, headquartered in Irvine, CA.

Our other products in development have not yet received clearance

or approval to be marketed or sold in the U.S.

and Subsidiaries (“PAVmed”

or “the Company”) is a highly differentiated, multi-product, commercial-stage

technology medical device company organized to advance a broad pipeline of innovative medical technologies from concept to commercialization,

employing a business model focused on capital efficiency and speed to market.

Since inception on June 26, 2014, the Company’s

activities have focused on advancing its lead products towards regulatory approval and commercialization, protecting its intellectual

property, and building its corporate infrastructure and management team.

Company operates in one segment as a medical device company currently organized as “GI Health”, “Minimally Invasive

Interventions”, “Infusion Therapy”, and “Emerging Innovations”.

The Company has ongoing operations

conducted through PAVmed Inc.

and its majority-owned subsidiaries of Lucid Diagnostics, Inc.

(“Lucid Diagnostics”

or “LUCID”), and Solys Diagnostics, Inc.

(“Solys Diagnostics”

or “SOLYS”).

and /or its subsidiaries have proprietary rights to the trademarks used herein, including, among others, PAVmed™, Lucid

Diagnostics™, Caldus™, CarpX ®

, DisappEAR™, EsoCheck ®

, EsoGuard ®

EsoCheck Cell Collection Device ®

, EsoCure Esophageal Ablation Device™, NextCath™, NextFlo™, PortIO™,

and “Innovating at the Speed of Life”™.

Solely as a matter of convenience, trademarks and trade names referred

to herein may or may not be accompanied with the requisite marks of “™”

or “®”, however, the

absence of such marks is not intended to indicate, in any way, PAVmed Inc.

or its subsidiaries will not assert, to the fullest

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

multiple products and services are in various phases of development, regulatory clearances, approvals, and commercialization.

EsoCheck device received 510(k) marketing clearance from the U.S.

Food and Drug Administration (“FDA”), in June

2019 as an esophageal cell collection device;

and, EsoGuard has been established as a Laboratory Developed Test (“LDT”),

and was launched commercially in December 2019 after Clinical Laboratory Improvement Amendment (“CLIA”) and College

of American Pathologists accreditation of the test at Lucid Diagnostics commercial diagnostic laboratory partner ResearchDx

Inc., headquartered in Irvine, California.

CarpX device is a patented, single-use, disposable, minimally-invasive surgical device designed as a precision cutting tool

to treat carpal tunnel syndrome while reducing recovery times that was cleared by the FDA under section 510(k) on April 2020

and was launched commercially in August 2020 with the first commercial procedure successfully performed in December 2020.

other products in development have not yet received clearance or approval to be marketed or sold in the U.S.

or elsewhere.

We have been granted patents by the USPTO for CarpX, PortIO, and

Caldus and have acquired licenses to certain patents and intellectual property for DisappEAR from Tufts University and a group

of academic centers, for EsoGuard and EsoCheck from CWRU and more recently for patents covering infrared technology to non-invasively

detect glucose in tissue within the in-patient field of use from Liquid Sensing, Inc.

product groupings for each of the four operating divisions include:

Health (EsoGuard Esophageal DNA Test, EsoCheck Esophageal Cell Collection Device, and

EsoCure Esophageal Ablation Device with Caldus Technology);

Invasive Interventions (CarpX Minimally Invasive Device for Carpal Tunnel Syndrome);

Therapy (PortIO Implantable Intraosseous Vascular Access Device and NextFlo Highly Accurate

Disposable Intravenous Infusion Set);

Innovations (non-invasive laser-based glucose monitoring, NextCath™

self-anchoring

catheters, pediatric ear tubes and mechanical circulatory support).

inception through December 31, 2019, our operational efforts have been almost exclusively devoted to medical innovation, product

development, testing, clinical studies, patent writing, regulatory acceptance, insurance reimbursement and more recently toward

planning and pre-market activities (e.g.

trade shows and industry conferences) to sustain a substantive market introduction in

2020 for EsoCheck, our first FDA cleared device, and our EsoGuard LDT assay.

is commercially available under a substantial equivalence determination made by the FDA pursuant to a 510(k).

On June 21, 2019,

Lucid was notified by FDA that it may market EsoCheck, subject to the general controls provisions of the FDCA, as a cell collection

device indicated for use in the collection and retrieval of surface cells of the esophagus in the general population of adults,

22 years of age and older.

is commercially available to be prescribed by physicians for patients in the United States as an LDT and has been reported in

an article in Science Translational Medicine to have a high sensitivity and specificity for the detection of BE

with and without dysplasia, as well as for EAC.

LDT refers to a laboratory developed test and is a type of molecular diagnostic

test that is designed, manufactured and used within a single laboratory which is also certified pursuant to the CLIA to support

the marketing of the test.

, by itself) may be used routinely by physicians to collect esophageal cells for various medical diagnostic purposes,

including to diagnose or manage conditions such as Esophageal Candidiasis (a yeast infection of the esophagus which occurs in

patients with compromised immune systems) and Eosinophilic Esophagitis (a common inflammatory condition of the esophagus).

, also by itself) may be performed on cytology samples collected by a means other than EsoCheck, e.g.

However, our present clinical development focus, and the subject of a recent IVD pre-submission meeting with the FDA, is

on assessing the performance of the combined system ( i.e.

, the use of the EsoGuard assay on cells collected using EsoCheck)

to detect BE, with and without dysplasia, and/or EAC, in individuals deemed to be at high risk for these conditions.

We have been granted patents by the United States Patent and Trademark Office (“USPTO”) for CarpX, PortIO, and

and have acquired licenses to certain patents and intellectual property for:

DisappEAR from Tufts University and a

group of academic centers;

the intellectual property licensed from Case Western Reserve University (“CWRU”) underlying

the technology developed for the EsoGuard diagnostic LDT and the EsoCheck cell sample collection device;

and for patents covering

a proprietary nondispersive infrared technology to non-invasively detect glucose in tissue within the in-patient field of

use from Liquid Sensing, Inc.

(an unrelated third-party).

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Products –

Continuing development and regulatory clearances

mentioned above, many of our other products are in various phases of development and regulatory clearances or approvals and incurred

substantive amount of management effort and/or costs to date and will require more of the same in the upcoming year, include:

A March 2020, 510(k) application is currently has been accepted for review by

the FDA after completion in December 2019 of a first-in-human clinical study.

obtain market clearance from the FDA, we expect to commercialize our products to U.S.

hand surgeons through a network of independent sales representatives and/or inventory-stocking

medical distributors together with our in-house sales management and marketing teams.

- We are pursuing an FDA clearance for use in patients with a need for vascular access

up to seven days, under de novo classification of section 513(f)2 of the FDCA.

The broader “seven days”

clearance is being pursued in discussion with FDA

following our previous initial submission to the FDA for a 510(k).

The GLP animal study

requested by the FDA has been completed along with supplementary cadaver and animal studies.

This data was submitted to the FDA as part of a pre-submission filing that included an

in-person meeting on January 8, 2020 to define a likely small human clinical safety study

through the de novo pathway.

Based on encouraging animal data, we are also planning

a long-term (60-day implant duration) FIH clinical study in dialysis patients or those

with poor venous access in Colombia, South America and intend to fulfill the likely FDA

request for human clinical data with an “outside-of-United States”

(“OUS”)

clinical safety study in Auckland, New Zealand.

Of significance toward our belief of

PortIO will one day become the answer to solve many of the current drawbacks intravenous

access devices regularly encounter, our supplemental animal testing has demonstrated

maintenance-free patency over a six-month implant duration.

- The NextFlo disposable IV infusion set has completed key milestones in its quest to

eliminate the need for complex and expensive electronic infusion pumps for most of the

estimated one million infusions of fluids, medications and other substances delivered

each day in hospitals and outpatient settings in the United States.

NextFlo maintains

constant flow by incorporating a proprietary, passive, pressure-dependent variable flow-resistor

consisting entirely of inexpensive, easy-to-manufacture disposable mechanical parts.

NextFlo testing has now repeatedly demonstrated it can achieve constant flow rates across

a wide range of IV bag heights, with accuracy rates comparable to electronic infusion

Deloitte Consulting LLP has completed a comprehensive market research and strategic

analysis of NextFlo demonstrating a very large addressable market and recommended PAVmed

seek a long-term strategic partnership or acquisition.

The global professional services

firm Alvarez and Marsal has been running a formal M&A process for NextFlo targeting

discussed herein below, our current lines-of-business are as follows:

Health - EsoGuard Esophageal DNA Laboratory Developed Test, EsoCheck Esophageal Cell Collection Device,

and EsoCure Esophageal Ablation Device with Caldus Technology;

Invasive Interventions - CarpX Minimally Invasive Surgical Device for Carpal Tunnel Syndrome;

Therapy - PortIO Implantable Intraosseous Vascular Access Device and NextFlo Highly Accurate Disposable

Intravenous Infusion Platform Technology;

Innovations - Non-invasive laser-based glucose monitoring, single-use ventilators, resorbable pediatric ear tubes

and mechanical circulatory support cannulas.

EsoCheck, and EsoCure

and EsoCheck are based on patented technology licensed from Case Western Reserve University (“CWRU”) through our majority-owned

subsidiary Lucid Diagnostics Inc.

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 dysplasia and related pre-cursors to EAC in patients with chronic gastroesophageal reflux (“GERD”).

is based on our patented Caldus Technology developed by us to treat BE.

is a molecular diagnostic esophageal DNA test shown in a published human study to be highly accurate at detecting BE, as well

EsoCheck is a non-invasive cell collection device designed to sample cells from a targeted region of the esophagus in

a five-minute office-based procedure, without the need for endoscopy.

Both EsoGuard and EsoCheck are commercially available, as

separately marketed products, for physicians to prescribe for U.S.

is in development as an “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.

We plan to conduct additional development work and animal testing of EsoCure to support

a planned FDA 510(k) submission later in 2021.

are currently marketing the EsoGuard diagnostic LDT through a network of independent representatives working with our in-house

sales management.

Center for Medicare and Medicaid Services (“CMS”), finalized the Clinical Laboratory Fee

Schedule determination for the EsoGuard Esophageal DNA Test (CPT code 0114U) in the amount of $1,938.10, with such reimbursement

expected to be applicable from January 1, 2021 to December 31, 2023.

In addition, we have entered into a manufacturing agreement

with medical device contract manufacturer Coastline International Inc.

to serve as a high-volume, lower-cost manufacturer of the

EsoCheck device.

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 in vitro diagnostic (“IVD”), device.

In September 2019, we entered into an agreement

with a clinical research organization to assist us with two ongoing clinical trials for EsoGuard as an IVD device, which are actively

enrolling patients and consist of a screening study (ESOGUARD-BE-1) and a case control study (ESOGUARD-BE-2).

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Health - continued

February 2020, we received a FDA “Breakthrough Device Designation”

for EsoGuard as an IVD 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.

have received ISO 13485:2016 certification for Lucid Diagnostics quality management system and filed a European Union CE Mark

regulatory submission for EsoCheck in November 2020, having confirmed that EsoGuard falls under the self-declaration category

of the European Union regulatory requirements.

Invasive Interventions

a minimally invasive surgical device for use in the treatment of carpal tunnel syndrome, received FDA 510(k) marketing clearance

in April 2020.

CarpX is a minimally invasive surgical device for use in the treatment of carpal tunnel syndrome.

We launched CarpX

commercially in August 2020 with the first commercial procedure successfully performed in December 2020.

believe CarpX is designed to allow the physician to relieve the compression on the median nerve without an open incision or the

need for endoscopic or other imaging equipment.

To use CarpX, the operator first advances a guidewire through the carpal tunnel

under the ligament, and then advanced over the wire and positioned in the carpal tunnel under ultrasonic and/or fluoroscopic guidance.

When the CarpX balloon is inflated it creates tension in the ligament positioning the cutting electrodes underneath it and creates

space within the tunnel, providing anatomic separation between the target ligament and critical structures such as the median

Radiofrequency energy is briefly delivered to the electrodes, rapidly cutting the ligament, and relieving the pressure

on the nerve.

We believe CarpX will be significantly less invasive than existing treatments.

are commercializing CarpX through a network of independent U.S.

sales representatives and/or inventory-stocking medical distributors

together with our in-house sales management and marketing teams.

Our focus on CarpX, and other high margin products and

services, is particularly suitable to this mode of distribution.

A high gross margin allows us to properly incentivize our distributors,

which in turn allows us to attract the top distributors with the most robust networks in our targeted specialties.

distributors play an even larger role in many parts of Europe, most of Asia and emerging markets worldwide.

may eventually choose to build (or obtain through a strategic acquisition) our own sales and marketing team to commercialize CarpX,

along with some or all of our products, if it is in our long-term interests.

We may also choose to enter into distribution agreements

with larger strategic partners whereby we take full responsibility for the manufacturing of CarpX but outsource some or all of

its distribution to a partner, particularly outside the United States, with its own robust distribution channels.

have received ISO 13485:2016 certification for PAVmed’s quality management system and filed a European Union CE Mark regulatory

submission for CarpX in December 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

is a novel, patented, implantable, intraosseous vascular access device which does not require accessing the central venous system

and does not have an indwelling intravascular component.

It is designed to be highly resistant to occlusion and may not require

regular flushing.

It features simplified, near-percutaneous insertion and removal, without the need for surgical dissection or

radiographic confirmation.

It provides a near limitless number of potential access sites and can be used in patients with chronic

total occlusion of their central veins.

The absence of an intravascular component will likely result in a very low infection rate.

on encouraging animal data, we are preparing to initiate a long-term (60-day implant duration) first-in-human clinical study in

dialysis patients or those with poor venous access in Colombia, South America and intend to fulfill the likely FDA request for

human clinical data with a clinical safety study in the U.S.

following FDA clearance of our Investigational Device Exemption (“IDE”)

submission to begin clinical testing in dialysis patients to support a future de novo regulatory submission.

is a patented, disposable, and highly accurate infusion platform technology including intravenous, or “

infusion sets and disposable infusion pumps designed to eliminate the need for complex and expensive electronic infusion pumps

for most of the estimated one million infusions of fluids, medications and other substances delivered each day in hospitals and

outpatient settings in the U.S.

NextFlo is designed to deliver highly accurate gravity-driven infusions independent of the height

of the IV bag.

It maintains constant flow by incorporating a proprietary, passive, pressure-dependent variable flow-resistor consisting

entirely of inexpensive, easy-to-manufacture disposable mechanical parts.

NextFlo testing has demonstrated constant flow rates

across a wide range of IV bag heights, with accuracy rates comparable to electronic infusion pumps.

are seeking a long-term strategic partnership or acquiror.

We have been running a formal M&A process for NextFlo targeting

strategic and financial partners.

The process is active with ongoing discussion with

multiple parties.

- These are pediatric ear tubes, manufactured from a proprietary aqueous silk

technology licensed from Tufts University and two Harvard teaching hospitals, that

seek to revolutionize the care of the estimated one million children who undergo

bilateral ear tube placement each year to treat complex or recurrent middle ear infections

or fluid collections, by eliminating the need for a second procedure as well as the standard

difficult-to-administer post-operative ear drop regimen.

An eight-month animal study

of DisappEAR has been completed with excellent results.

The ear tubes appear to possess

unexpected surfactant properties which would provide several unique benefits over traditional

plastic tubes, including enhanced flow of fluids in and out of the tube and potential

intrinsic antimicrobial properties.

A six-month GLP animal study has been completed and

the Company is in active discussions with a large strategic partner to produce commercial-scale

aqueous silk to support a future FDA 510(k) submission and commercialization.

Diagnostics (Noninvasive Glucose Monitoring) - In

October 2019, PAVmed formed Solys Diagnostics with authorization to issue 50 million

shares of its common stock, par value $0.001 per share and 20 million shares of its preferred

stock, par value $0.001 per share.

Concurrent with its formation, Solys Diagnostics issued

8.3 million shares of its common stock to PAVmed and also immediately acquired a license

agreement from Liquid Sensing, Inc., a subsidiary of Airware, Inc., each an unrelated-third-party,

in exchange for 1.5 million shares of Solys Diagnostics common stock issued to Airware,

Inc., and 200,000 shares of Solys Diagnostics common shares issued to a unrelated-third-party

equity interests have certain anti-dilution rights under limited

circumstances and 810,810 shares of Solys Diagnostics common stock issued to Airware

are subject to certain milestone vesting restrictions.

The exclusive worldwide licensing

agreement acquired from Liquid Sensing, Inc.

is for its six issued and one pending U.S.

patents covering a proprietary nondispersive infrared (NDIR) laser technology for the

non-invasive detection of glucose and other substances such as electrolytes in tissue

within the inpatient (e.g.

hospital) field of use.

Pursuant to the licensing agreement,

Solys Diagnostics will immediately advance the technology toward an established accuracy

milestone for blood glucose monitoring within the licensed field of use.

Upon achievement

of the accuracy milestone, it is expected Solys Diagnostics will then pursue a full regulatory

and development plan while also seeking to maximize the value of this proprietary technology

with potential strategic partners or acquirers in the blood glucose monitoring market.

If commercialized by Solys Diagnostics, Liquid Sensing Inc.

has the right to collect

future royalties on revenues related to the product developed for commercial use.

has granted a 15 percent equity interest in its company to PAVmed with a

portion of the shares issued being subject to certain performance vesting restrictions.

The process is active with ongoing discussion with multiple parties and we are simultaneously

progressing toward an initial FDA 510(k) submission for the NextFlo IV Infusion System planned for later in 2021.

Innovations include a diversified and expanding portfolio of innovative products designed to address unmet clinical needs across

a broad range of clinical conditions.

We are evaluating a number of these product opportunities and intellectual property covering

a wide spectrum of clinical conditions, which have either been developed internally or have been presented to us by clinician

innovators and academic medical institutions for consideration of a partnership to develop and commercialize these products.

collection of products includes, without limitation, initiatives in non-invasive laser-based glucose monitoring, mechanical circulatory

support cannulas, single-use ventilators and resorbable pediatric ear tubes.

In June 2020, we announced the execution of a letter

of intent to consummate a series of agreements to develop and utilize Canon Virginia’s commercial grade and scalable aqueous

silk fibroin molding process to manufacture PAVmed’s DisappEAR molded pediatric ear tubes for commercialization.

we are exploring other opportunities to grow our business and enhance shareholder value through the acquisition of pre-commercial

or commercial stage products and/or companies with potential strategic corporate and commercial synergies.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

April, May and June 2019, we raised approximately $5.4 million, net, from three registered direct offerings of 5,480,000 shares

of our common stock pursuant to our previously filed effective shelf registration statement on Form S-3 (File No.

November 2019, we consummated the sale of a Senior Secured Convertible Notes in a private placement with a $14.0 million aggregate

the year ended December 31, 2020, we issued debt and equity resulting in approximately $35.9 million of gross proceeds, before

placement agent fees and expenses and offering costs, summarized as follows:

a private placement, we issued a Senior Secured Convertible Notes dated November 4, 2019, with a $14.0 million aggregate

face value principal, referred to herein as the “November 2019 Senior Convertible Notes”.

November 2019 Senior Convertible Notes were further sub-divided into a Series A and Series B, each having a face value principal

of $7.0 million, with each referred to as the “Series A November 2019 Senior Convertible Note”

and the “Series

B November 2019 Senior Convertible Note”.

The Series A and Series B November 2019 Senior Convertible Notes each provide

for the payment of a $700,000 lender fee, with such lender fee deducted from the cash proceeds when funded by the investors, and

additionally, we are obligated to pay a financial advisory fee to the placement agent fee of 6.5% of the cash proceeds upon their

respect to the Series A November 2019 Senior Convertible Note, the investors delivered to us cash proceeds of $6.3 million on

November 4, 2019, after deducting $0.7 million of lender fees, and we incurred total offering costs of $550,254, including a $409,500

advisory fee paid to the placement agent.

to December 31, 2019, with respect to the Series B November 2019 Senior Convertible Note, the investors,

at their election under the prepayment provisions, delivered to us cash proceeds of $6.3 million on March 30, 2020, after deducting

$0.7 million of lender fees, and we paid an advisory fee of $409,500 to the placement agent .

registration statement on Form S-3 was filed with the SEC in December 2019, which has not yet been declared effective, for the

common stock underlying the Series A November 2019 Senior Convertible Note.

The November 2019 Senior

Convertible Notes were comprised of a Series A and Series B, each with a $7.0 million face value principal, and each having

a $0.7 million lender fee deducted from the cash proceeds when funded.

The Series A was funded in November 2019 and the Series

B was funded in March 2020.

issued the November 2019 Senior Convertible Note - Series B on March 30, 2020, with a face value principal of $7.0 million,

resulting in cash proceeds of $6.3 million after a $0.7 million of lender fee, and we additionally paid offering costs of

$0.4 million, consisting of a financial advisory fee paid to the placement agent.

As of December 31, 2020, the November

2019 Senior Convertible Notes (Series A and Series B) remaining unpaid outstanding face value principal was approximately

$1.0 million, which was repaid-in-full subsequent to December 31, 2020, as discussed herein below in Liquidity and Capital

issued a Senior Convertible Note, dated April 30, 2020, in a private placement, with a face value principal of $4.1 million,

resulting in cash proceeds of $3.7 million after a $0.4 million lender fee, and we additionally paid total offering costs

of $0.2 million, inclusive of a financial advisory fee paid to the placement agent and legal fees.

As of December 31, 2020,

the unpaid outstanding face value principal was $4.1 million, which was repaid-in-full subsequent to December 31, 2020,

as discussed herein below in Liquidity and Capital Resources .

issued a Senior Secured Convertible Note, dated August 6, 2020, in a private placement, with a face value principal of $7.75

million, resulting in cash proceeds of $7.0 million after a $0.75 million lender fee, and we additionally paid total offering

costs of $0.1 million of legal fees.

As of December 31, 2020, the unpaid outstanding face value principal was $7.75 million,

of which, subsequent to December 31, 2020, which was repaid-in-full subsequent to December 31, 2020, as discussed herein below

in Liquidity and Capital Resources .

December 2020, we issued a total of 10,647,500 shares of

our common stock for gross proceeds of $17.0 million, with cash proceeds of $16.0 million after the payment of a placement

agent fee and expenses of approximately $1.0 million, and we additionally paid offering costs of $0.1 million.

shares of our common stock were issued in two registered direct offerings pursuant to respective Prospectus Supplement

dated December 11, 2020 and December 18, 2020, each with respect to our effective shelf registration statement on Form S-3

to December 31, 2020, on January 5, 2021, we issued 6,000,000 shares of our common stock for gross proceeds of $13.4

million, with cash proceeds of $12.4 million, after the payment of $0.9 million of a placement agent fee and expenses, and

we additionally paid offering costs of $0.1 million.

The shares of our common stock were issued in a registered direct

offering pursuant to a Prospectus Supplement dated January 5, 2021 with respect to our effective shelf registration statement

on Form S-3 (File No.

to December 31, 2020, on February 23, 2021 we issued 9,782,609 shares of our common stock for proceeds of $41.6 million, before

underwriter expenses of $0.1 million, and we additionally incurred estimated offering costs of $0.4 million.

The shares of

our common stock were issued in an underwritten registered offering pursuant to a final Prospectus Supplement dated February

23, 2021 with respect to our effective shelf registration statement on Form S-3 (File No.

333-248709 and File No.

to December 31, 2020, as of March 12, 2021, a total of 773,842 Series Z Warrants were exercised for cash at a $1.60 per share

of our common stock, resulting in the issue of a corresponding number of shares of our common stock.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations

date, we have not generated any revenues from product sales.

Our ability to generate product revenue and become profitable depends

upon our ability to successfully complete the development and initiate the commercialization of our products.

of SARS-CoV-2 - COVID-19 Pandemic

in December 2019, there was an outbreak of a novel strain of a coronavirus occurred, with such coronavirus designated by the United

Nations (UN) World Health Organization (“WHO”) as the “Severe Acute Respiratory Syndrome Coronavirus 2”

- or “SARS-CoV-2”.

The SARS-CoV-2 spread on a global basis to other countries, including the United States of America

(“USA”

“U.S.”

or “United States”).

On March 11, 2020, the WHO declared a pandemic resulting

from SARS-CoV-2, with such pandemic commonly referred to by its resulting illness of “COVID-19”

(“coronavirus

disease-2019”), and is referred to herein as the “COVID-19 pandemic”.

The COVID-19 pandemic is ongoing, and

we continue to monitor the ongoing impact of the COVID-19 pandemic on the United States national economy, the global economy,

and our business.

COVID-19 pandemic may have an adverse impact on our operations, supply chains, and distribution systems and /or those of our contractors

of our laboratory partner, and increase our expenses, including as a result of impacts associated with preventive and precautionary

measures being taken, restrictions on travel, quarantine polices, and social distancing.

Such adverse impact may include, for

example, the inability of our employees and /or those of our contractors or laboratory partner to perform their work or curtail

their services provided to us.

expect the significance of the COVID-19 pandemic, including the extent of its effect on our consolidated financial condition and

consolidated operational results and cash flows, to be dictated by the success of United States and global efforts to mitigate

the spread of and /or to contain the SARS-CoV-2 and the impact of such efforts.

addition, the spread of the SARS-CoV-2 has disrupted the United States’

healthcare and healthcare regulatory systems which

could divert healthcare resources away from, or materially delay United States Food and Drug Administration (“FDA”)

approval with respect to our products.

our clinical trials have been and may be further affected by the COVID-19 pandemic, as site initiation and patient enrollment

may be delayed, for example, due to prioritization of hospital resources toward the virus and /or illness response, as well as

travel restrictions imposed by governments, and the inability to access clinical test sites for initiation and monitoring.

COVID-19 pandemic may have an adverse impact on the economies and financial markets of many countries, including the USA, resulting

in an economic downturn that could adversely affect demand for our products and services and /or our product candidates.

we are continuing to monitor and assess the effects of the COVID-19 pandemic on our business, the ultimate impact of the COVID-19

pandemic (or a similar health epidemic) is highly uncertain and subject to change, and therefore, its impact on our consolidated

financial condition, consolidated results of operations, and /or consolidated cash flows, the adverse impact could be material.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

of Operations

and administrative expenses

and administrative expenses consist primarily of salaries and related costs for personnel, including travel expenses for our employees

in executive and research and development functions, facility-related costs, professional fees, accounting and legal services,

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

anticipate our general and administrative expenses will increase in the future prior to the potential regulatory approval of our

first product, as we anticipate an increase in payroll and related expenses related to our preparation for commercial operations,

including as it relates to sales and marketing.

We also anticipate continued expenses related to being a public company, including

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

insurance premiums and investor relations costs.

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

professional fees, accounting and legal services, consultants and expenses associated with obtaining and maintaining patents within

our intellectual property portfolio.

anticipate our general and administrative expenses will increase in the future, as we anticipate an increase in payroll and related

expenses related to the roll-out of our commercial sales and marketing operations.

We also anticipate continued expenses related

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

as a public company, insurance premiums and investor relations costs.

and development expenses

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

incurred for the research and development of our products and include:

incurred for the research and development of our products, including:

costs charged to us by various external contract research organizations we contract with to conduct preclinical studies and

engineering studies;

and benefit costs associated with our chief medical officer;

and benefit costs associated with our clinical and engineering personnel;

associated with regulatory filings;

2 unchanged sentences

design engineering studies.

expense for facilities maintained solely for research and development purposes.

plan to incur research and development expenses for the foreseeable future as we continue the development of our products.

current research and development activities are focused principally on obtaining FDA clearance and initializing commercialization

of the lead products in our pipeline including CarpX, EsoGuard, and EsoCheck, along with advancing our DisappEAR, NextFlo,

and noninvasive glucose monitoring products through their respective development phase, with research and development activities

on our other portfolio products commensurate with available capital resources.

These planned research and development activities

include the following:

of engineering design studies for our products;

of engineering designs and documentation supporting our products;

engineering and preclinical studies through our contract research partners;

and filing of regulatory submissions with the FDA for our products;

and documenting manufacturing processes for our products.

successful development of our products is uncertain and subject to numerous risks including, but not limited to:

scope, rate of progress and expense of our research and development activities;

scope, terms and timing of obtaining regulatory clearances;

expense of filing, prosecuting, defending and enforcing patent claims;

continued access to expertise through outsourced suppliers for engineering and manufacturing;

cost, timing and our ability to manufacture sufficient prototype and commercial supplies for our products.

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 are focused principally on obtaining FDA approvals and developing

product improvements or extending the utility of the lead products in our pipeline, including CarpX, EsoCheck and EsoGuard, along

with advancing our DisappEAR, PortIO, NextFlo, and non-invasive glucose monitoring products through their respective development

Income and Expense, net

income and expense, net, consists principally of changes in fair value of our convertible notes, losses on extinguishment of debt

upon repayment of such convertible notes;

and interest expense recognized in connection with one of our convertible notes.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

and administrative expense

Compensation & related

personnel costs

Stock-based compensation

Outside professional services

Facility related costs

Board related costs

Other operating

Total general

ended December 31, 2020 versus December 31, 2019

and administrative expenses

and administrative expenses incurred in the year ended December 31, 2019 were $7,664,965, an increase of $1,354,759 as compared

to $6,310,206 incurred for corresponding prior year period.

The increased general and administrative expenses for the current

year period is principally due to increased expenses related to compensation and related personnel costs of $399,634, stock based

compensation of $214,227, outside professional services of $473,159, facility related costs of $123,410, board related costs of

$23,333 and other operating costs of $120,996.

increased compensation and related personnel costs expense in the year ended December 31, 2019 as compared to the corresponding

prior year period, resulted from higher salary and benefit expense related to the hiring of additional personnel, annual salary

increases, and higher accrued bonus expense, inclusive of increases in each of the guaranteed bonus under the Chief Executive

Officer (“CEO”) employment agreement and discretionary bonus payments to the CEO and other employees.

stock-based compensation expense classified as general and administrative expense, which includes stock options and restricted

stock granted to both employees and non-employees, of $1,162,370 incurred during the year ended December 31, 2019, increased

$214,227 as compared to the corresponding prior year period, principally resulting from increased stock-based compensation expense

resulting from stock options granted to employees in 2019.

outside professional services expense of $3,066,441 incurred during the year ended December 31, 2019 as compared to the corresponding

prior year period, increased by $473,159, principally resulting from increased expenses of:

$380,720 related to intellectual property

matters, $234,566 related to investor and public relations, $183,622 related to marketing expenses, and $29,598 associated

with professional fees for legal, accounting, auditing, tax, valuations, and information technology;

partially offset by decreased

$105,348 related to regulatory matters.

Additionally, outside professional services expenses decreased $250,000 in

the current period as compared with the corresponding prior period with respect to consulting agreements with entities and /or

individuals affiliated with certain of our officers and /or former directors.

In this regard, $0 and $250,000 of expense was incurred

in the year ended December 31, 2019 and 2018, respectively, with respect to the HCP/Advisors consulting agreement.

increase in facility related costs of $123,410 in the year ended December 31, 2019 as compared to the corresponding prior year

period, principally resulted from increased computer and internet expense, postage and delivery expense and rent expense associated

with our corporate offices.

board of director related costs of $271,250 for the year ended December 31, 2019 increased by $23,333 as compared to the corresponding

prior year period, principally resulting from increase in expenses related to board of director fees.

increased other operating expenses in the year ended December 31, 2019 as compared to the prior year period, principally resulted

from higher director and officer insurance premiums, worker compensation insurance expense, and travel and related costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

and development expenses

Compensation & related

personnel costs

Stock-based compensation

Outside professional services

Patent license fees

Regulatory filing fees

Total research

the year ended December 31, 2020, general and administrative costs were approximately $12.4 million, compared to $7.7 million

for the year ended December 31, 2019.

The net increase of $4.7 million was principally related to:

approximately

$2.3 million increase in compensation related costs principally related to sales staffing levels and other costs related to

our commercial launch of EsoGuard and CarpX;

approximately

$2.0 million in consulting services related to patents, regulatory compliance, legal processes for contract review, and public

company expenses;

approximately

$0.3 million in general business expenses.

and development expenses

and development expenses incurred for the year ended December 31, 2019 totaled $6,630,330, an increase of $2,377,331 as compared

to $4,252,999 incurred for the corresponding prior year period.

The increase in research and development expenses resulted from

the milestone costs of $75,000 incurred with respect to the CWRU License Agreement and increased expenses of:

related to compensation and related personnel costs, $127,726 related to stock-based compensation, $1,500,720 of increased expenses

incurred for outside professional services, and $55,483 of increased other operating costs;

partially offset by decreased expenses

patent license fees $272,553 with respect to the CWRU License Agreement, and regulatory filing fees of $10,953.

increased compensation and related personnel costs expense of $901,909 in the year ended December 31, 2019 as compared to the

corresponding prior year period, resulted from higher salary expense related to additional personnel, as well as annual salary

increases, increased accrued bonus expense related to higher discretionary employee bonus payments, and accrued expense related

to employee relocation costs, for which there was no comparative amount in the prior year period.

outside professional services of $4,421,531 in the year ended December 31, 2019 is an increase of $1,500,720 as compared to the

corresponding prior year period.

The increased outside professional services research and development expense principally resulted

from our emphasis of current research and development activities being focused principally on completion of on-going efforts to

obtain FDA clearance and initializing commercialization of each of the CarpX, EsoGuard, EsoCheck and PortIO products, and

to continue to advance the development of the DisappEAR and the NextFlo products, as discussed above under “Overview”.

were no regulatory filing fees for the year ended December 31, 2019.

The regulatory filing fee of $10,953 in the

year ended December 31, 2018 was with respect to the submission to the FDA of a 510(k) premarket notification for the EsoCheck.

increased other operating expenses in the year ended December 31, 2019 as compared to the corresponding prior year period,

principally resulted from higher compensation insurance expense, and travel and related costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

the year ended December 31, 2020, research and development costs were approximately $11.0 million as compared to $6.6 million

for the corresponding period in the prior year, with the approximate $4.4 million increase principally related to:

approximately

$4.0 million increase in clinical trial costs and outside professional and engineering services with respect to CarpX, NextFlo,

Port IO, EsoGuard and our glucose monitoring product;

approximately

$0.4 million increase in compensation related costs related to expanded clinical and engineering staff.

Income and Expense

Expense –

Senior Secured Convertible Note - November 4, 2019 - Series B.

Senior Secured Convertible Notes issued November 4, 2019 are comprised of a Series A and Series B - each with a face value principal

of $7.0 million - “Series A”

and /or “Series B”

“November 2019 Senior Convertible Note”.

investors delivered to the Company cash proceeds of $6.3 million on November 4, 2019, after deducting $0.7 million of lender fees.

Subsequent to December 31, 2019, with respect to the Series B November 2019 Senior Convertible Note, the investors delivered

to the Company cash proceeds of $6.3 million on March 30, 2020, after deducting $0.7 million of lender fees.

Series A and Series B November 2019 Senior Convertible Notes have a stated interest rate of 7.875% per annum, to the extent the

investor has funded the cash proceeds of each such respective note.

During the period November 4, 2019 to March 29, 2020, when

the Series B November 2019 Senior Convertible Note was not funded by the investors, the Company will incur interest expense of

3.0% per annum on the $7.0 million face value principal of the Series B November 2019 Senior Convertible Note.

(cash) payment of 3.0% interest on the $7.0 million face value principal of the (unfunded) Series B November 2019 Senior Convertible

Note, as such interest is discussed above, resulted in the recognition of $32,667 during the period November 4, 2019 through December

31, 2019, with such interest expense included in other income (expense) in the accompanying consolidated statement of operations.

our accompanying consolidated financial statements Note 12, Debt , for further information regarding the Senior Secured

Convertible Notes issued November 4, 2019 - Series A and Series B.

Expense - Senior Secured Note issued July 3, 2017 (Scopia Holdings LLC)

Senior Secured Note, previously issued in July 2017 by us to Scopia Holdings LLC (“Scopia Note”) had an annual

interest rate of 15.0%, with interest payable semi-annually in arrears on June 30 and December 30 of each calendar year,

commencing December 30, 2017 (“15% interest expense”).

At our sole discretion, we were able to defer payment of up

to 50% of each of the semi-annual 15% interest expense payable, with such deferred amount added to the outstanding interest-bearing

principal balance of the Scopia Note.

In this regard, the Scopia Note principal balance was $5,780,116 at

December 27, 2018

December 27, 2018, concurrent with the issue of the December 2018 Senior Convertible Note (as defined below), we repaid-in-full

the previously issued Scopia Note, inclusive of the total outstanding principal payable and the accrued but unpaid interest

expense payable as of December 27, 2018, with such repayment comprised of a $5.0 million cash payment and the issue of 600,000

shares of common stock of the Company.

The Scopia Note repayment was executed under a Notice of Prepayment agreement dated

December 27, 2018.

Scopia Note total interest expense of $ $2,392,447, for the year ended December 31, 2018, and was comprised of $786,145

resulting from the 15% interest expense and $1,606,302 resulting from the amortization of Scopia Note debt discount.

Scopia Note remaining unamortized debt discount was $1,637,972 as of December 27, 2018 the date of extinguishment.

was no interest expense on the Scopia Note in 2019.

our accompanying consolidated financial statements Note 12, Debt , for further information regarding the Scopia Note.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

in Fair Value –

Senior Secured Convertible Notes

Value Option Election

November 2019 Senior Convertible Notes (Series A and Series B) and the December 2018 Senior Convertible Note are each a debt financial

instrument host containing embedded features and /or options which would otherwise be required to be bifurcated from the debt-host

and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements

under ASC 815, Derivatives and Hedging (“ASC-815”).

Notwithstanding,

ASC 825, Financial Instruments (“ASC-825”), under ASC 825-10-15-4 provides for the “fair value option”

(“FVO”) election, to the extent not otherwise prohibited by ASC 825-10-15-5, to be afforded to financial instruments,

wherein the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated

fair value on a recurring basis at each reporting period date.

As such, the November 2019 Senior Convertible Notes, with respect

to the Series A of such note, was initially measured at its November 4, 2019 issue-date estimated fair value and then subsequently

remeasured at estimated fair value on a recurring basis at each subsequent reporting period date.

(As well, the Series B of such

note will be initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value

on a recurring basis at each subsequent reporting period date.

For accounting purposes, the Series B November 2019 Senior Convertible

Note issue date is deemed to be the prepayment date of the promissory notes issued by the investors in payment for such Series

B notes, or March 30, 2020.) As provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is presented as a single

line item within other income (expense) in the accompanying consolidated statement of operations.

Secured Convertible Notes Issued November 4, 2019

noted above, the November 2019 Senior Convertible Notes are comprised of Series A and Series B notes, each with a face value principal

of $7.0 million.

respect to the Series A November 2019 Senior Convertible Note,

on November 4, 2019, the investors delivered to the Company cash proceeds of $6.3 million, after deducting $0.7 million of

lender fees (which were recognized as a current period expense on such date), and we incurred total offering costs

of $550,254, including a $409,500 advisory fee paid to the placement agent, with such offering costs recognized as an expense

in other income (expense).

Series A November 2019 Senior Convertible Note fair value adjustment totaled $475,250 and was recognized as current period income

in the year ended December 31, 2019 (as no portion of such fair value adjustments resulted from instrument-specific credit risk

of such note as of such dates), and was inclusive of the fair value adjustment on the November 4, 2019 issue date and the fair

value adjustment as of December 31, 2019.

Secured Convertible Note Issued December 27, 2018

December 27, 2018, the Company consummated the sale of a Senior Secured Convertible Note in a private placement with a $7.75 million

face value principal, referred to herein as the “December 2018 Senior Convertible Note”.

the December 27, 2018 closing date of the December 2018 Senior Convertible Note, the investor delivered to the Company

cash proceeds were $7.0 million, after deducting $0.750 million of lender fees (which were recognized as a current period expense

on the closing date), and the Company incurred total offering costs of $614,940, inclusive of the payment of $455,000 placement

agent fee and legal fees, with such offering costs recognized as an expense in other income (expense) in the accompanying consolidated

statement of operations.

December 2018 Senior Convertible Note fair value adjustments of $333,849 and $153,000 in the years ended December 31, 2019 and

2018, respectively, were recognized as a current period income in the respective accompanying consolidated statement of operations

(as no portion of such fair value adjustments resulted from instrument-specific credit risk of such note as of such dates).

estimated fair value of the Series A November 2019 Senior Convertible Notes as of their November 4, 2019

issue date and as of December 31, 2019, was computed using a Monte Carlo simulation of the present value of its cash flows using

a synthetic credit rating analysis and a required rate of return;

and, the estimated fair value of the December 2018 Senior

Convertible Note as of December 31, 2019 and 2018, were computed using a combination of the present value of its cash flows using

a synthetic credit rating analysis’

required rate of return and the Black-Scholes option pricing model, using the Company’s

common stock price, the Company’s dividend yield, the risk-free rates based on U.S.

Treasury security yields, estimated

volatility in the value of the Company’s common stock, and the respective unit purchase options’

and warrants’

exercise price.

our accompanying consolidated financial statements Note 11, Financial Instruments Fair Value Measurements , and Note 12,

Debt , for further information regarding the fair value option election, the change in fair value recognized as other income

(expense), and the Series A November 2019 Senior Convertible Notes and the December 2018 Senior Secured Convertible

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

Extinguishment –

Senior Secured Convertible Note Issued December 27, 2018

the year ended December 31, 2019, aggregate principal repayments of $6,058,000 on the December 2018 Convertible Note and

corresponding non-installment payments of $199,847 were settled by the issue of a total of 7,773,110 shares of common stock of

the Company with a fair value of $8,089,163, resulting in a debt extinguishment loss in the year ended December 31, 2019 of $1,831,316.

There were no such issue of shares of common stock of the Company

with respect to the December 2018 Senior Convertible Note in the prior year ended December 31, 2018.

fair value of the shares of common stock of the Company issued was measured as the respective issue date quoted closing price

per share of the common stock of the Company.

our accompanying consolidated financial statements Note 12, Debt , for further information regarding the debt extinguishment

loss with respect to the issue of shares of our common stock in connection with the Senior Secured Convertible Note issued December

Extinguishment - Senior Secured Note issued July 3, 2017

recognized as other income (expense), a debt extinguishment loss of $1.4 million resulting from the difference between a $5.5

million debt reacquisition price and a $4.1 million debt carrying value, net, of the Scopia Note as of December 27, 2018

debt repayment date.

our accompanying consolidated financial statements Note 12, Debt , for further information regarding the Scopia Note.

in fair value of convertible debt

the year ended December 31, 2020, the (non-cash) expense recognized for the change in the fair value of our convertible notes

was approximately $6.0 million, inclusive of the recognition of other expense of approximately $1.9 million of lender fees incurred

with respect to the convertible notes, as compared to $1.1 million for the year ended December 31, 2019, resulting in an increase

of approximately $4.9 million principally related to:

increase in the face principal amount of our convertible notes of approximately $18.1 million, inclusive of $1.9 million in

other fair value input assumptions, an increase in the Company’s common stock price between the periods resulting in

a higher estimated fair value of the convertible notes;

total of approximately $1.9 million of lender fees recognized as other expense, inclusive of approximately $0.7 million with

respect to our November 2019 Senior Secured Convertible Note - Series B ;

approximately $0.4 million with respect to our April

2020 Senior Convertible Note;

and approximately $0.8 million with respect to our August 2020 Senior Secured Convertible Note.

These fees were $0.7 million in the corresponding prior year period with respect to our November 2019 Senior Convertible Note

Note 8, Financial Instruments Fair Value Measurement , and Note 9, Outstanding Debt , of our consolidated

financial statements for a further discussion of the change in fair value of our convertible notes, and “—Liquidity

and Capital Resources”, below.

from Extinguishment of Debt

the year ended December 31, 2020, a debt extinguishment loss of approximately $6.5 million was recognized in connection with the

Senior Secured Convertible Notes issued November 4, 2019 and December 27, 2018, with such debt extinguishment loss resulting from

the difference between the sum of the face value principal repayments and the corresponding interest thereon as compared to the

fair value of the shares of our common stock issued upon conversion of such convertible notes.

In the prior year period ended

December 31, 2019, a debt extinguishment loss of approximately $1.8 million was recognized in connection with the Senior Secured

Convertible Note issued December 27, 2018.

See Note 9, Outstanding Debt , of our consolidated financial statements for a

further discussion of our convertible notes.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

Expense - Series Z Warrant Agreement Amendment - June 1, 2018

Series Z Warrant is a common stock purchase warrant with an exercise price initially of $3.00 per share through May 31, 2018,

and then $1.60 per share effective June 1, 2018, wherein, on May 15, 2018, the Company’s board of directors approved a reduction

to the Series Z Warrant exercise price to $1.60 per share, effective June 1, 2018.

Series Z Warrant exercise price adjustment to $1.60 per share from $3.00 per share, resulted in the recognition of a modification

expense under the analogous guidance with respect to stock option modification under FASB ASC 718, wherein an exchange of warrants

is deemed to be a modification of the initial warrant agreement by the replacement with a revised warrant agreement, requiring

the incremental estimated fair value, measured as the difference between the estimated fair value immediately after the modification

as compared to the estimated fair value immediately before the modification, to the extent an increase, recognized as a modification

this regard, the Series Z Warrant June 1, 2018 exercise price adjustment resulted in the recognition on such date of a current

period modification expense of $1,140,995 included in other income (expense) in the consolidated statement of operations, with

a corresponding increase to additional paid-in capital in the consolidated balance sheet, as the Series Z Warrants are equity

ended December 31, 2020 versus December 31, 2019 - continued

Senior Secured Convertible Notes dated Nov 4, 2019 are comprised of a Series A and Series B, each with a $7.0 million face value

principal (“November 2019 Senior Convertible Notes), with the Series A previously funded on November 4, 2019 and the Notes

Series B funded on March 30, 2020 (as further discussed herein below).

During the period from November 2019 to its funding on

March 30, 2020, the Series B incurred interest expense at 3.0% per annum based on its $7.0 million face value principal.

regard, interest expense of approximately $0.1 million was recognized in each of the year ended December 31, 2020 and 2019 (during

the period when the Series B was unfunded from November 4, 2019 to March 29, 2020).

have total estimated federal and state net operating loss (“NOL”) carryforward of approximately $63 million and $40.0

million as of December 31, 2020 and 2019, respectively, which is available to reduce future taxable income, of which approximately

$13.8 million have statutory expiration dates commencing in 2035, and approximately $49.2 million which do not have a statutory

expiration date.

The State and Local NOL carryforwards of approximately $63.0 million have statutory expiration dates commencing

We have total estimated research and development (“R&D”) tax credit carryforward of approximately $0.4

million as of December 31, 2020 which are available to reduce future tax expense and have statutory expiration dates commencing

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 December 31, 2020 and 2019.

March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the

pandemic resulting from the outbreak of a novel strain of a coronavirus designated as the “Severe Acute Respiratory Syndrome

Coronavirus 2”

- or “SARS-CoV-2”.

The pandemic resulting from SARS-CoV-2 is commonly referred to by its resulting

illness of “coronavirus disease-2019”

(“COVID-19”), and is referred to herein as the COVID-19 pandemic.

other provisions, the CARES Act increases the limitation on the allowed business interest expense deduction from 30 percent to

50 percent of adjusted taxable income for tax years beginning January 1, 2019 and 2020 and allows businesses to immediately expense

the full cost of Qualified Improvement Property, retroactive to tax years beginning on or after January 1, 2018.

Additionally,

the Series Z Warrants issued in both the March 15, 2018 Series A and Series A-1 Exchange Offer and the April 5, 2018 Series W

Warrants Exchange Offer, each as discussed below, were issued under the original Series Z Warrant Agreement.

The Company’s

board of directors approved Amendment No.

1 to the original Series Z Warrant Agreement, which was embodied in an Amended

and Restated Series Z Warrant Agreement, dated June 8, 2018, referred to as the “Amended Series Z Warrant Agreement”.

The amendment to the original Series Z Warrant Agreement was evaluated under the analogous guidance with respect to

stock option modification under FASB ASC 718 as discussed above but did not result in the recognition of a modification expense

as there was no incremental estimated fair value.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

- “Series A and Series A-1 Exchange Offer”

- March 15, 2018 Exchange Date

“Series A and Series A-1 Exchange Offer”, completed on March 15, 2018, was offered to and accepted by all holders

of both the Series A Convertible Preferred Stock and Series A Warrants, and the Series A-1 Convertible Preferred Stock and Series

A-1 Warrants, wherein shares of Series B Convertible Preferred Stock were issued-upon-exchange of shares of each of Series A and

Series A-1 Convertible Preferred Stock and Series Z Warrants were issued-upon-exchange of each of Series A and Series A-1 Warrants

- referred to as the “Series A and Series A-1 Exchange Offer”

and the “March 15, 2018 Exchange Date”.

Series Z Warrants issued-upon-exchange of Series A-1 Warrants in the Series A and Series A-1 Exchange Offer, as such exchange

offer is discussed above, resulted in the recognition of a modification expense under the analogous guidance with respect to stock

option modification under FASB ASC 718, as described above with respect to the Series Z Warrant Agreement Amendment.

this regard, the March 15, 2018 Exchange Date estimated fair value of $895,478 of the equity-classified 1,399,185 Series Z Warrants

issued-upon-exchange as compared to the estimated fair value of $545,682 of the equity-classified 279,837 Series A-1 Warrants

extinguished-upon-exchange, resulted in incremental estimated fair value of $349,796, which was recognized on such exchange date

as a current period modification expense in other income (expense) in the consolidated statement of operations, with a corresponding

increase to additional paid in capital, as the Series Z Warrants are equity classified.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

Expense - Series W Warrants Exchange Offer - April 5, 2018 ’

total of 5,075,849 Series Z Warrants were issued-upon-exchange of 10,151,682 Series W Warrants, in an exchange offer transaction

referred to as the “Series W Warrants Exchange Offer”

and the “April 5, 2018 Exchange Date”.

W Warrant Exchange Offer, resulted in the recognition of a modification expense on the April 5, 2018 Exchange Date, under the

analogous guidance with respect to stock option modification under FASB ASC 718, as described above with respect to the Amended

Series Z Warrant Agreement.

In this regard, the April 5, 2018 Exchange Date estimated fair value of $3,304,377 of the 5,075,849

Series Z Warrants issued-upon-exchange as compared of the estimated fair value of $2,537,921 of the 10,151,682 Series W Warrants

extinguished-upon-exchange, resulted in incremental estimated fair value of $766,456, which was recognized on such exchange date

as a current period modification expense in other income (expense) in the consolidated statement of operations, with a corresponding

increase to additional paid in capital, as the Series Z Warrants are equity classified.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

Income and Expense - continued

in Fair Value - Derivative Liability - Series A Warrants Derivative Liability and Series A Convertible Preferred Stock Conversion

Series A Warrants derivative liability and the Series A-1 Convertible Preferred Stock conversion option derivative liability were

each initially measured at fair value at the time of issuance and subsequently remeasured at estimated fair value on a recurring

basis at each reporting period date, with changes in estimated fair value of each respective derivative liability recognized as

other income or expense.

of the March 15, 2018 Exchange Date of the Series A and Series A-1 Exchange Offer each of the corresponding Series A Warrants

derivative liability and the Series A Convertible Preferred Stock conversion option derivative liability were each fully extinguished-upon-exchange

as of the March 15, 2018 Exchange Date.

Accordingly, there was no recognition of income or expense related to the change in estimated

fair value of each such derivative liability after the March 15, 2018 Exchange Date.

this regard, as of the March 15, 2018 Exchange Date, the change in the estimated fair value of each respective derivative liability

resulted in the recognition of income of $64,913 with respect to the Series A Convertible Preferred Stock conversion option derivative

liability, and the recognition of a net expense of $96,480 with respect to the Series A Warrants derivative liability.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations - continued

account for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes , (“ASC

Current tax liabilities or receivables are recognized for the amount of estimated income tax payable and/or refundable

for the current year.

Deferred tax assets and deferred tax liabilities are recognized for estimated future tax consequences attributable

to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis,

along with net operating loss and tax credit carryforwards.

tax assets and deferred tax liabilities are measured using enacted tax rates expected to apply to taxable income in the years

in which those temporary differences are expected to be recovered or settled, Changes in deferred tax assets and deferred tax

liabilities are recorded in the provision for income taxes.

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 indicated 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 December 31, 2019 and 2018.

have total estimated federal and state NOL carryforwards of approximately $40.0 and $27.4 million as of December 31, 2019

and 2018, respectively, which are available to reduce future taxable income and begin to expire in 2035.

We have total

estimated research and development (“R&D”) tax credit carryforward of $0.4 million as of December 31, 2019, with

the R&D tax credit carryforward available to reduce future tax expense and begin to expire in 2035.

our consolidated financial statements Note 6, Income Taxes , for additional information with respect to our income tax provision,

deferred tax assets, and deferred tax liabilities.

the CARES Act permits net operating loss carryovers (“NOLs”) and carrybacks to offset 100% of taxable income for taxable

years beginning before 2021.

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each

of the five preceding taxable years to generate a refund of previously paid income taxes.

While we are currently evaluating the

impact of these CARES Act provisions, it is not expected, at this time, to have a material impact on our consolidated income tax

our consolidated financial statements Note 13, Income Taxes , for additional information with respect to our income

tax provision, deferred tax assets, and deferred tax liabilities.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources

of Common Stock - Registered Offerings

the year ended December 31, 2019, a total of 5,480,000 shares of common stock of the Company were issued in registered offerings,

under common stock share subscription agreements entered into with individual investors, resulting in total proceeds of $5,480,000,

before placement agent fees and legal fees of $101,098.

of Common Stock - Conversions - Senior Secured Convertible Note - Issued December 27, 2018

December 27, 2018, we issued the December 2018 Senior

Secured Convertible Note with a face value principal of $7.75 million, a stated interest rate of 7.875% per annum, and

a contractual maturity date of December 31, 2020.

At the election of the Holder, the December 2018 Senior Convertible Note may

be converted into shares of our common stock.

As of December 31, 2019, the December 2018 Senior Convertible Note face value principal

was approximately $1.7 million, as result of approximately $6.1 million face value principal repayments, as discussed below.

December 2018 Senior Convertible Note proceeds were $7.0 million after payment of $750,000 of lender fees.

We incurred total offering

costs of $614,940, inclusive of the payment of a $455,000 placement agent fee and legal fees, with such offering costs recognized

as a current period expense on December 27, 2018.

the year ended December 31, 2019, with respect to the December 2018 Senior Convertible Note, aggregate principal repayments of

$6,085,000, respectively, and $199,847 of corresponding non-installment payments, respectively, were settled by the issue of 7,773,110,

shares of common stock of the Company, respectively, resulting in a debt extinguishment loss in the year ended December 31, 2019,

of $1,831,317, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

- Financing- continued

Secured Convertible Notes Issued November 2019

a private placement, on November 3, 2019, we entered into a Securities Purchase Agreement (“SPA”) with two institutional

investors (“Investors”, “Lender”, and /or “Holders”), and pursuant to the SPA, on November

4, 2019, we consummated the sale of Senior Secured Convertible Notes with a $14.0 million aggregate face value principal, referred

to as the “November 2019 Senior Convertible Notes”.

At the election of the holder, the November 2019 Senior Convertible

Notes may be converted into shares of common stock of the Company.

November 2019 Senior Convertible Notes were further sub-divided into a Series A and a Series B, each having a face value principal

of $7.0 million, each referred to as the “Series A November 2019 Senior Convertible Note”

and the “Series B

November 2019 Senior Convertible Note”.

The Series A and Series B November 2019 Senior Convertible Notes each provide for

the payment of a $700,000 lender fee, with such lender fee deducted from the cash proceeds when funded by the investors, and additionally,

we are obligated to pay a financial advisory fee to the placement agent of 6.5% of the cash proceeds upon their receipt.

respect to the Series A November 2019 Senior Convertible Note, on November 4, 2019, the investors delivered to us cash proceeds

of $6.3 million, after deducting $0.7 million of lender fees, and we incurred total offering costs of $550,254, including a $409,500

advisory fee paid to the placement agent.

to December 31, 2019, with respect to the Series B November 2019 Senior Convertible Note, on March 30, 2020, the investors, at

their election under the prepayment provisions, delivered to us cash proceeds of $6.3 million, after deducting $0.7 million of

lender fees and we paid an advisory fee of $409,500 to the placement agent.

the year ended December 31, 2019, $85,750 of non-installment payments with respect to the Series A November 2019 Senior Convertible

Note were paid in cash.

bi-monthly principal repayment and corresponding interest payment is due on the Series A and Series B November 2019 Senior Convertible

Notes commencing March 30, 2020, and then on each of the successive 15th day of the month and the last trading day of the month,

and on the maturity date.

On each bi-monthly date, we are required to settle an installment amount, consisting of a principal

repayment totaling $378,380 together with interest thereon, which shall be satisfied in shares of our common stock, subject to

customary equity conditions (including minimum price and volume thresholds), at 100% of the installment amount, or otherwise (or

at our election, in whole or in part) in cash at 115% of the installment amount.

the November 2019 Senior Secured Convertible Notes, we are subject to certain customary affirmative and negative covenants regarding

the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends,

distributions or redemptions, and the transfer of assets, among other matters, We also are subject to a financial covenant requiring

that we have an unrestricted cash balance of at least $2.0 million at each quarterly balance sheet date.

The Company was in compliance

with the financial covenant as of December 31, 2019.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

- Financing- continued

of Financing in the year ended December 31, 2018

2018, we raised approximately $15.5 million of net proceeds, comprised of $20.5 million

of gross proceeds, less $5.0 million used to repay debt ahead of the contractual maturity

date, including:

January 2018, we raised $4.3 million of net cash proceeds in an underwritten public offering of 2,649,818 shares of our common

stock pursuant to our previously filed effective shelf registration statement on SEC Form S-3 - File No.

June 2018, we raised approximately $9.2 million of net cash proceeds from an Equity Subscription Rights Offering (“ESRO”)

pursuant to our previously filed effective registration statement on SEC Form S-1 - File No.

333-222581, wherein, 9.0 million

units were issued comprised of a corresponding number of shares of our common stock and Series Z Warrants exercisable to purchase

9.0 million shares of our common stock at an exercise price of $1.60 per share.

December 2018, we raised approximately $7.0 million of net cash proceeds, after payment of $750,000 of lender fees, from the issue

of the December 2018 Senior Convertible Note, with a face value principal of $7.75 million, to an institutional

after the consummation of the issue of the December 2018 Senior Convertible Note, we repaid in full the outstanding principal

balance and all accrued but unpaid interest expense as of December 27, 2018 on the Scopia Note, with such repayment consisting

of a cash payment of $5.0 million the issue of 600,000 shares of our common stock.

* Additionally

during 2018, we also completed exchange offers of private securities and a tender

offer of public warrants, including:

March 2018, in an exchange offer captioned the “Series A and Series A-1 Exchange Offer”, we issued a total of 975,568

shares of Series B Convertible Preferred Stock for all of the issued and outstanding shares of each of the Series A Convertible

Preferred Stock and the Series A-1 Convertible Preferred Stock, and we issued a total of 2,739,190 Series Z Warrants for all of

the issued and outstanding of each of the Series A Warrants and the Series A-1 Warrants.

April 2018, in an exchange offer captioned the “Series W Warrant Exchange Offer”, we completed a Tender Offer whereby

96.4% of the then outstanding publicly traded Series W Warrants, or 10,151,682 Series W Warrants, were exchanged for 5,075, 849

Series Z Warrants.

Series Z Warrants are publicly traded on the NASDAQ Capital Market under the symbol PAVMZ, and each Series Z Warrant may be exercised

to purchase a share of our common stock, initially at $3.00 per share through May 31, 2018, then $1.60 per share effective June

1, 2018, as a result of our board of directors approval on May 15, 2018 of such exercise price adjustment.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

- Financing- continued

of Financing in the year ended December 31, 2018 - continued

Secured Convertible Note Issued December 27, 2018

a private placement transaction with an institutional investor on December 27, 2018, we entered into a Securities Purchase Agreement

under which we issued the December 2018 Senior Convertible Note, having a contractual maturity date of December 31, 2020, a face

value principal of $7.75 million, and a stated interest rate of 7.875% per annum.

At the election of the holder, the December

2018 Senior Convertible Note may be converted into shares of common stock of the Company, as discussed below.

December 2018 Senior Convertible Note proceeds were $7.0 million after deducting $0.750 million of lender fees (which were recognized

as a current period expense on such date), and we incurred an additional total offering costs of $614,940, inclusive of $455,000

placement agent fee, with such offering costs recognized as an expense in other income (expense) in the accompanying consolidated

statement of operations.

December 27, 2018, concurrent with the issue of the December 2018 Senior Convertible Note, we repaid-in-full the previously

issued Scopia Note inclusive of the total outstanding principal payable and the accrued but unpaid interest expense payable

as of December 27, 2018, with such repayment comprised of a $5.0 million cash payment and the issue of 600,000 shares of common

stock of the Company.

December 2018 Senior Convertible Note requires bi-monthly payments, with such payments due and payable on each of the 15 th

calendar day of each month and the Last Trading Day of each month, with the first bi-monthly payment date of January 15,

2019 and the last bi-monthly payment date of December 31, 2020.

The bi-monthly payments have two components:

a bi-monthly “Installment

Repayment”

which commences June 28, 2019 through December 31, 2020, and a bi-monthly “Non-Installment Payment”

which commences January 15, 2019 through the December 31, 2020.

The bi-monthly Installment Repayments are prescribed

and the bi-monthly Non-Installment Repayments are a function of the remaining Senior Convertible Note face value principal outstanding.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

- Financing- continued

Subscription Rights Offering - “ESRO”

- June 12, 2018

ESRO, closed on June 12, 2018, resulted in approximately $10.4 million of gross cash proceeds, before approximately

$1.0 million of commissions and fees to the dealer-managers, and approximately $0.2 million of offering costs incurred by the

Company, upon the issue on June 12, 2018 of 9.0 million common stock units, comprised of one share of common stock of the Company

and one Series Z Warrant, as noted above.

of Common Stock - Underwritten Public Offering - January 2018

January 2018, we conducted an underwritten public offering, under our previously filed and effective shelf registration statement

on Form S-3 (File No.

333-220549) wherein we issued a total of 2,649,818 shares of our common stock resulting in cash proceeds,

net of the underwriter’s discount, of approximately $4.4 million before offering costs of approximately $0.1 million.

A and Series A-1 Exchange Offer - March 15, 2018

the March 15, 2018 Exchange Date of the “Series A and Series A-1 Exchange Offer”, a total of 975,568 shares of Series

B Convertible Preferred Stock were issued, including 499,334 shares of Series B Convertible Preferred Stock issued-upon-exchange

of 249,667 shares of Series A Convertible Preferred Stock and 476,234 shares of Series B Convertible Preferred Stock issued-upon-exchange

of 357,259 shares of Series A-1 Convertible Preferred Stock;

and, a total of 2,739,190 Series Z Warrants were issued, including

1,340,005 Series Z Warrants issued-upon-exchange of 268,001 Series A Warrants and 1,399,185 Series Z Warrants issued-upon-exchange

of 279,837 Series A-1 Warrants.

Consequently,

as of the March 15, 2018 Exchange Date, there were no issued and outstanding shares of Series A Convertible Preferred Stock and

Series A Warrants, nor any issued and outstanding shares of Series A-1 Convertible Preferred Stock and Series A-1 Warrants, as

each were fully exchanged for shares of Series B Convertible Preferred Stock and Series Z Warrants, respectively.

Additionally,

each of the Series A Warrants derivative liability and the Series A-1 Convertible Preferred Stock conversion option derivative

liability were fully extinguished-upon-exchange as of the March 15, 2018 Exchange Date.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

- Financing- continued

of Financing in the year ended December 31, 2018 - continued

W Warrants Offer-to-Exercise- February 8, 2018

January 11, 2018, we filed with the SEC a Tender Offer Statement on Schedule TO offering Series W Warrants holders a temporary

exercise price of $2.00 per share, with such offer having an expiry of February 8, 2018 - referred to as the “Series W Warrants

Offer-to-Exercise”.

As of the February 8, 2018 expiry date, a total of 34,345 Series W Warrants were exercised at the temporary

exercise of $2.00 per share, resulting in $68,690 of cash proceeds, before offering costs of $50,520.

and Security Purchase Agreement with Scopia Holdings LLC

December 27, 2018, concurrent with the issue of the Senior Convertible Note issued on December 27, 2018, as discussed above,

we repaid-in-full the previously issued Senior Secured Note between us and Scopia Holdings LLC, inclusive of the total

outstanding principal payable and the accrued but unpaid interest expense payable as of December 27, 2018, with such repayment

comprised of a $5.0 million cash payment and the issue to Scopia Holdings LLC of 600,000 shares of our common stock.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 205-40, Presentation of Financial Statements - Going Concern (ASC Topic 205-40) requires management to assess an

entity’s ability to continue as a going concern within one year of the date of the financial statements are issued.

reporting period (including interim periods), an entity is required to assess conditions known and reasonably knowable as of the

financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within

one year from the financial statement issuance date.

Substantial doubt about an entity’s ability to continue as a going

concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet

its financial obligations as they become due within one year after the date the financial statements are issued.

are an early stage and emerging growth company and are subject-to the corresponding risk of such companies.

Since inception we

have not generated any revenues and have incurred losses and negative cash flows from operating activities.

We do not expect to

generate positive cash flows from operating activities in the near future until we complete the development process and regulatory

approvals of our products, and thereafter begin to commercialize and achieve substantial marketplace acceptance of our products.

have incurred a net loss attributable to PAVmed Inc.

common stockholders of approximately $16.7 million and net cash flows

used in operating activities of approximately $13.4 million for the year ended December 31, 2019.

As of December 31, 2019, we

have negative working capital of approximately $5.3 million, with such working capital inclusive of approximately $8.1

million of the Senior Secured Convertible Notes classified as a current liability and approximately $6.2 million of cash.

anticipate incurring operating losses and do not expect to generate positive cash flows from operating activities, if any, for

the next several years as we complete the development of our products, file for and request regulatory approvals and clearances

of such products, and begin to commercially market such products.

These factors raise substantial doubt about our ability to continue

as a going concern within one year after the date our consolidated financial statements are issued.

ability to fund our operations is dependent upon management’s plans, which include raising additional capital, refinance

our debt upon maturity, obtaining regulatory approvals for our products currently under development, commercializing and generating

revenues from our products currently under development, and continuing to control expenses.

However, there is no assurance we

will be successful in these efforts.

failure to raise sufficient capital, refinance our debt upon maturity, obtain regulatory approvals and clearances of our products,

generate sufficient product revenues, or control expenditures, among other factors, will adversely impact our ability to meet

our financial obligations as they become due and payable and to achieve our intended business objectives, and therefore raise

substantial doubt regarding our ability to continue as a going concern within one year after the date our consolidated financial

statements are issued.

consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and

satisfaction of liabilities and commitments in the normal course of business.

The consolidated financial statements do not include

any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification

of liabilities should we be unable to continue as a going concern.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

flows and liquidity

cash flow sources and uses for operating, investing, and financing activities, for each period presented is as follows:

Ended December 31,

Net cash flows (used in) or provided

$ (13,357,271 )

$ (8,787,907 )

Investing activities

Net increase (decrease)

Cash, beginning

cash flows (used in) or provided by operating activities was $13,357,271 and $8,787,907 in the year ended December 31, 2019 and

2018, respectively, consisting of:

a net loss - before noncontrolling interest of $17,268,131 and $18,172,822, respectively, with

non-cash adjustments totaling, $3,901,860 and $9,384,915 to reconcile the net loss - before noncontrolling interest to net cash

used in operating activities, inclusive of $3,974,794 and $8,038,595 of non-cash items, respectively, and, $(63,934) and $1,346,320

of a net change in operating assets and liabilities, respectively, as follows:

Ended December 31,

Non-Cash Adjustments

Stock-based compensation

Interest expense

added to principal of Senior Secured Note

Interest expense

- amortization of discount - Senior Secured Note

Debt extinguishment

- Senior Secured Note

Debt extinguishment

- Senior Convertible Note

Change in fair value

- Senior Secured Convertible Note

Modification expense

- Series Z Warrants - June 1, 2018

Modification expense

- Series A-1 Warrant - October 18, 2017

Series A and Series

A-1 Exchange Offer - March 15, 2018

Series W Warrants

Exchange Offer - April 5, 2018

Unit Purchase Options

Exchange Offer - August 22, 2018

Loss on issuance

of Preferred Stock Units

Change in fair value

- Series A Warrants derivative liability

in fair value - Series A Convertible Preferred Stock conversion option derivative liability

non-cash adjustments, net

Change in Operating

Assets and Liabilities

Prepaid expenses

and other current assets

Accounts payable

Accrued expenses

and other current liabilities

Assets - Non-Current

Change in operating assets and liabilities, net

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

stock purchase warrants, and debt.

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

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

product and services and ongoing R&D and clinical trials.

We expect to continue to experience recurring losses from operations,

and will continue to fund our operations with debt and equity financing transactions.

Notwithstanding, however, together with

the cash on-hand as of December 31, 2020, and the cash proceeds from the issue of shares of common stock of the Company subsequent

to December 31, 2020 in January and February 2021, as discussed herein below, we expect to be able

to fund our future operations for one year from the date of the issue of our consolidated financial statements as included in

our Annual Report on Form 10-K for the year ended December 31, 2020.

the year ended December 31, 2020 and 2019 we issued convertible notes and shares of our common stock, as discussed herein below,

which resulted in approximately $35.9 million and $12.5 million, respectively, of gross proceeds, before placement agent fees

and expenses and additional offering costs incurred by us.

to December 31, 2020, in January and February 2021, we issued shares of our common stock for gross proceeds of approximately $55.0

million before placement agent and underwriter fees and expenses and additional offering costs incurred by us, as discussed herein

Additionally, subsequent to December 31, 2020, we repaid-in-full the remaining outstanding principal balances of each of

our convertible notes, inclusive of the “November 2019 Senior Convertible Notes”

as of January 5, 2021 upon conversion

into shares of our common stock;

and both the “April 2020 Senior Convertible Note”

and the “August 2020 Senior

Convertible Note”

as of March 2, 2021, upon cash repayments, each as discussed herein below.

Secured Convertible Notes dated November 4, 2019 - Series A (November 4, 2019) and Series B (March 30, 2020) (“

2019 Senior Convertible Notes ”)

previously consummated a private placement with an accredited investor in November 2019 of the issue of a Senior Secured Convertible

Note with a $14.0 million aggregate face value principal, referred to herein as the “November 2019 Senior Convertible Notes”.

The November 2019 Senior Convertible Notes were comprised of a Series A and Series B, each with a $7.0 million face value principal,

and each having a $0.7 million lender fee deducted from the cash proceeds when funded, as well as the payment of additional offering

costs, inclusive of a financial advisory fee paid to the placement agent and legal fees.

issued the November 2019 Senior Convertible Note - Series A on November 4, 2019, with a face value principal of $7.0 million,

resulting in cash proceeds of $6.3 million after a $0.7 million lender fee, and we paid additional offering costs of $0.6 million,

inclusive of a financial advisory fee paid to the placement agent and legal fees.

the election of the holder, under its prepayment terms, the November 2019 Senior Convertible Note - Series B was issued on March

30, 2020, with a face value principal of $7.0 million, resulting in cash proceeds of $6.3 million after a $0.7 million of lender

fee, and we additionally paid offering costs of $0.4 million, consisting of a financial advisory fee paid to the placement agent.

November 2019 Senior Convertible Notes accrued interest at 7.875% per annum, upon the respective Series A and Series B being funded

by the investor.

During the period from November 2019 to its funding on March 30, 2020, the November 2019 Senior Convertible Notes

- Series B incurred interest expense at 3.0% per annum based on its $7.0 million face value principal.

the year ended December 31, 2020, with respect to the November 2019 Senior Convertible Notes, approximately $13.0 million of principal

repayments and approximately $0.5 million of interest thereon non-installment payments were settled through the issuance of 8,854,004

shares of our common stock with a fair value of approximately $18.8 million.

As of December 31, 2020, the November 2019 Senior

Convertible Notes remaining unpaid outstanding face value principal was approximately $1.0 million, which was repaid-in-full subsequent

to December 31, 2020, as discussed herein below.

to December 31, 2020, on January 5, 2021, the November 2019 Senior Secured Convertible Note remaining amount due of approximately

$1.0 million was settled with the issuance of 667,668 shares of the Company’s common stock with a fair value of approximately

$1.7 million (with such fair value measured as the respective conversion date quoted closing price of our common stock), with

such final conversion resulting in the November 2019 Senior Secured Convertible Notes being paid-in-full as of January 5, 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

and Capital Resources - continued

flows and liquidity - continued

cash flows used in investing activities was $27,203 and $26,209 in the year ended December 31, 2019 and 2018, respectively, related

to the purchases of research and development and office equipment.

cash flows provided by financing activities in the year ended December 31, 2019 totaled $11,381,586, principally comprised of:

proceeds from issuance of common stock, issuance of Senior Convertible Note, and employee stock purchase plan of $5,480,000, $6,300,000

and $67,436, respectively, partially offset by:

the payment of offer costs of $101,098, lender fees attributable to the Senior

Convertible Note of $85,750, and a payment for the issuance of Senior Convertible Note –

non-installment of $279,002.

cash flows provided by financing activities in the year ended December 31, 2018 totaled $15,501,613, principally comprised of:

proceeds of $7,000,000, net of lender fees of 750,000, from the issue of a Senior Secured Convertible Note with a face value principal

of $7,750,000;

a payment of $5,000,000 with respect to the repayment of the previously issued Senior Secured Note (between

us and Scopia Holdings LLC), with such payment concurrent with the Senior Convertible Note issued on December 27, 2018;

proceeds of $9,437,000, offset by the payment of $225,674 of related incurred offering costs, from the “June 12, 2018 Equity

Subscription Rights Offering”;

and proceeds of $4,388,099, offset by the payment of $113,438 of related incurred offering

costs, from the issue of common stock of the Company in an underwritten public offering in January 2018.

Other financing activities

during the year ended December 31, 2018 include:

a total of $20,913 of net proceeds from the exercise of Series W Warrants and

Series S Warrants;

proceeds of $1,812 resulting from the issue of shares of common stock of Lucid Diagnostics Inc., a majority-owned

subsidiary of the Company;

and, the payment of $7,099 of Series A Convertible Preferred Stock dividends.

See our consolidated

financial statements Note 13, Preferred Stock, for a further discussion of the Series A Convertible Preferred Stock dividend

cash payment.

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

April 2020, in a private placement with an accredited investor, we issued a Senior Convertible Note dated April 30, 2020, with

a face value principal of $4.1 million, resulting in cash proceeds of approximately $3.7 million, after a lender fee of approximately

$0.4 million (the “April 2020 Senior Convertible Note”).

The April 2020 Senior Convertible Note has a contractual

maturity date of April 30, 2022, and an annual interest rate of 7.875%, payable in cash on a monthly basis.

As of December 31,

2020, the April 2020 Senior Convertible Note unpaid outstanding face value principal was $4.1 million, which was repaid-in-full

subsequent to December 31, 2020, as discussed herein below.

Secured Convertible Note dated August 6, 2020 (“August 2020 Senior Convertible Note”)

August 2020, in a private placement with an accredited investor, we issued a Senior Secured Convertible Note dated August 6, 2020,

with a face value principal of $7.8 million, resulting in cash proceeds of approximately $7.0 million, after a lender fee of approximately

$0.8 million (the “August 2020 Senior Secured Convertible Note”).

The August 2020 Senior Secured Convertible Note

has a contractual maturity date of August 5, 2022, and an annual interest rate of 7.875%, payable in cash on a monthly basis.

As of December 31, 2020, the August 2020 Senior Secured Convertible Note unpaid outstanding face value principal was $7.75 million,

which was repaid-in-full subsequent to December 31, 2020, as discussed herein below.

Repayments - April 2020 Senior Convertible Note and August 2020 Senior Convertible Note

to December 31, 2020:

on January 30, 2021, we paid in cash a $0.3 million partial principal repayment of the April 2020 Senior

Convertible Note;

and on March 2, 2021, we paid in cash a total of $14.5 million of principal repayments, resulting in both the

April 2020 Senior Convertible Note and the August 2020 Senior Convertible Note being repaid-in-full as of such date.

of Common Stock

the year ended December 31, 2020, we issued a total of 10,647,500 shares of our common stock for gross proceeds of $17.0 million,

with cash proceeds of $15.9 million after the payment of a placement agent fee and expenses of approximately $1.0

million, and we additionally paid offering costs of $0.1 million.

The shares of our common stock were issued in two registered

direct offerings pursuant to a respective Prospectus Supplement dated December 11, 2020 and December 18, 2020, each with

respect to our effective shelf registration statement on Form S-3 (File No.

to December 31, 2020, on January 5, 2021, we issued 6,000,000 shares of our common stock for gross proceeds of $13.4

million, with cash proceeds of $12.4 million, after the payment of $0.9 million of a placement agent fee and expenses, and we

additionally paid offering costs of $0.1 million.

The shares of our common stock were issued in a registered direct offering,

pursuant to a Prospectus Supplement dated January 5, 2021 with respect to our effective shelf registration statement on Form S-3

to December 31, 2020, on February 23, 2021 we issued 9,782,609 shares of our common stock for proceeds of $41.6 million, before

underwriter expenses of $0.1 million, and we additionally incurred estimated offering costs of $0.4 million.

The shares of our

common stock were issued in an underwritten registered offering pursuant to a final Prospectus Supplement dated February 23, 2021

with respect to our effective shelf registration statement on Form S-3 (File No.

333-248709 and File No.

to December 31, 2020, as of March 12, 2021, a total of 773,842 Series Z Warrants were exercised for cash at a $1.60 per share

of our common stock, resulting in the issue of a corresponding number of shares of our common stock.

the previous year ended December 31, 2019, we issued a total of 5,480,000 shares of our common stock for gross proceeds of $5.5

million, with cash proceeds of $5.4 million after the payment of a total of $0.1 million of a placement agent fee and expenses,

and the payment of additional offering costs.

The shares of our common stock were issued in three registered direct

offerings pursuant to a respective Prospectus Supplement dated April 12, 2019, May 8, 2019, and June 25, 2019, each with

respect to our effective shelf registration statement on Form S-3 (File No.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

12 unchanged sentences

and Development Expense

and development expenditures are charged to research and development expense as incurred.

Research and development costs include

costs related to our various outside professional service providers and suppliers, engineering studies, supplies, outsourced testing

and consulting as well as rental costs for access to certain facilities at one of our contract research suppliers.

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.

Instruments and Fair Value Measurements

ASC Topic 820, Fair Value Measurement, (ASC 820) defines fair value as the price which would be received to sell an asset

or paid to transfer a liability in an orderly transaction between market participants at a transaction measurement date.

ASC 820 three-tier fair value hierarchy prioritizes the inputs used in the valuation methodologies, as follows:

1 Valuations based on quoted prices for identical assets and liabilities in active markets.

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.

3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available

assumptions made by other market participants.

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 820, Fair Value Measurement, (ASC 820) defines fair value as the price which would be received to sell an asset or

paid to transfer a liability in an orderly transaction between market participants at a transaction measurement date.

820 three-tier fair value hierarchy prioritizes the inputs used in the valuation methodologies, as follows:

based on quoted prices for identical assets and liabilities in active markets.

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.

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.

13 unchanged sentences

adjustment recognized as other income or expense, and then the derivative liability will be derecognized at such date-of-occurrence

Series A Warrant and the Series A Convertible Preferred Stock conversion option were each determined to be a derivative liability

under FASB ASC 815, as the Series A Convertible Preferred Stock common stock exchange factor denominator and the Series A Warrant

exercise price are each subject to potential adjustment resulting from future financing transactions, under certain conditions,

along with certain other provisions which may result in required or potential full or partial cash settlement.

The respective

Series A Warrants and the Series A Convertible Preferred Stock conversion option derivative liability are each classified as a

current liability on the consolidated balance sheet, and each were initially measured at fair value at the time of issuance and

are subsequently remeasured at fair value on a recurring basis at each reporting period, with changes in fair value recognized

as other income or expense in the consolidated statement of operations, with each such estimated fair values using a Monte Carlo

simulation valuation model, utilizing the Company’s common stock price and certain Level 3 inputs to take into account the

probabilities of certain events occurring over their respective life.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Accounting Policies and Significant Judgments and Estimates - continued

Company accounts for the issued and outstanding Senior Convertible Notes under the “FVO election”

of ASC 825, Financial

Instruments , as discussed below.

The Senior Secured Convertible Notes issued November 4, 2019 (Series A and Series B) and

the Senior Secured Convertible Note issued December 27, 2018, are each a debt financial instrument host containing embedded features

and /or options which would otherwise be required to be bifurcated from the debt host and recognized as separate derivative liabilities

subject to initial and subsequent periodic estimated fair value measurements under ASC 815.

Notwithstanding,

ASC 825-10-15-4 provides for the “fair value option (“FVO”), to the extent not otherwise prohibited by ASC 825-10-15-5,

to be afforded to financial instruments, wherein the financial instrument is initially measured at its issue-date estimated fair

value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

Further, the estimated

fair value adjustment, as required by ASC 825-10-45-5, is recognized as a component of other comprehensive income (“OCI”)

with respect to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the

remaining amount of the fair value adjustment recognized as other income (expense) in the consolidated statement of operations.

With respect to the Company, the “other income (expense) component”

of the Senior Convertible Note fair value adjustment

is presented in a single line in the consolidated statement of operations, as provided for by ASC 825-10-50-30(b).

Financial Instruments Fair Value Measurements , and Note 12, Debt , for a further discussion of such FVO election

and the Senior Secured Convertible Debt.

addition to the Senior Secured Convertible Notes noted above, the Series A and Series A-1 Exchange Offer on March 15, 2018, and

the Series A Exchange Offer on November 17, 2017, each as discussed above, the other issue-date and /or date-of-occurrence non-recurring

estimated fair values include:

the Series W Warrants Exchange Offer on April 5, 2018, the Series Z Warrant exercise price adjustment

on June 1, 2018, and the UPO Exchange Offer on August 22, 2018;

along with the Series A Preferred Stock Units private placement

during the three months ended March 31, 2017, the Senior Secured Note and Series S Warrants issued in connection with the Note

and Security Purchase Agreement between the Company and Scopia Holdings LLC on July 3, 2017;

the Series A-1 Preferred Stock Units

private placement on August 4, 2017;

the Series A-1 Warrants Agreement Amendment No.

1 on October 18, 2017, and the conversion

of shares of Series A Convertible Preferred Stock into shares of common stock of the Company in November 2017 and December 2017,

with each utilizing the Company’s common stock price along with certain Level 3 inputs, as discussed below, in the development

of Monte Carlo simulation models, discounted cash flow analyses, and /or Black-Scholes valuation models.

recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation

8 unchanged sentences

Accounting Policies and Significant Judgments and Estimates - continued

Company measures stock-based compensation of stock-based awards granted to employees and members of its board of directors using

the grant-date estimated fair value of the stock-based award and recognizes such estimated fair value 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 so the cumulative expense recognized is at-least equal-to-or-greater-than the estimated fair value of the

respective vested stock-based award.

Company measures the expense of stock-based awards granted to non-employees on a vesting date basis, fixing the fair value of

vested non-employee stock options as of their respective vesting date.

The fair value of vested non-employee stock options is

not subject-to- further remeasurement at subsequent reporting dates.

The estimated fair value of the unvested non-employee stock

options is remeasured to then current fair value at each subsequent reporting date, until such time when the stock options vest,

at which time the fair value is fixed, as noted above.

The estimated fair value of stock-based awards granted to non-employees

is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective

non-employee stock-based award, with such straight-line recognition adjusted so the cumulative expense recognized is at-least

equal-to-or-greater-than the estimated fair value of the respective vested stock-based award.

ASU 2018-07 amended ASC-718 guidance is effective for public entities for fiscal years beginning after December 15, 2018, including

interim periods within such fiscal year, and for all other entities, including the Company (as a result of its “JOBS Act

EGC Accounting Standards Election”, as such election is discussed above), such amended guidance is effective for fiscal

years beginning after December 15, 2019 - (i.e.

December 31, 2020), and interim periods within fiscal years beginning after December

15, 2020 - (i.e.

commencing with the interim period three months ending March 31, 2021, and thereafter).

Early adoption is permitted,

but no earlier than a company’s adoption of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606).

Value Option (“FVO”) Election

Senior Secured Convertible Notes and Senior Convertible Note are each a debt host financial instrument containing embedded features

and /or options which would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities

subject to initial and subsequent periodic estimated fair value measurements under ASC 815.

Notwithstanding, FASB ASC

Topic 825, Financial Instruments , (“ASC 825”) provides for the “fair value option”

(“FVO”)

In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by

ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at its issue-date

estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date,

with changes in the estimated fair value recognized as other income (expense) in the consolidated statement of operations.

this regard, as provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is presented in a single line item within

other income (expense) in the consolidated statement of operations.

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

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

as a component of other comprehensive income (“OCI”).

Notwithstanding, there was no such portion of the fair value

adjustment attributed to a change in the instrument-specific credit risk in the years ended December 31, 2020 and 2019.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Accounting Policies and Significant Judgments and Estimates - continued

Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes, (ASC

Current tax liabilities or receivables are recognized for the amount of estimated income tax payable and /or refundable

for the current year.

Deferred tax assets and deferred tax liabilities are recognized for estimated future tax consequences attributable

to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis,

along with net operating loss and tax credit carryforwards.

Deferred tax assets and deferred tax liabilities are measured using

enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

Changes in deferred tax assets and deferred tax liabilities are recorded in the provision for income taxes.

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

of the PAVmed Inc.

2014 Long-Term Incentive Equity Plan and the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan.

the year ended December 31, 2020, stock-based compensation is recognized in accordance with the provisions of FASB ASC Topic 718,

Compensation - Stock Compensation (“ASC 718”), as amended by FASB Accounting Standard Update (ASU)

2018-07 (“ASU 2018-07”).

The provisions of ASU 2018-07 amended ASC 718 to align the accounting for stock-based awards

granted to nonemployees with the requirements for accounting for stock-based payments to employees;

and to supersede the previous

guidance of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”).

The adoption as of

January 1, 2020, of the updated provisions of ASC 718, as amended by ASU 2018-07, had no effect on the Company’s consolidated

financial statements.

the year ended December 31, 2020, with respect to stock-based awards granted to members of 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 previous year ended December 31, 2019, the Company recognized stock-based compensation of stock-based awards granted to members

of its board of directors and employees in accordance with ASC 718, as described above;

and with respect to non-employees the

Company recognized stock-based compensation in accordance with previous provisions of ASC 505-50, wherein, the expense of stock-based

awards granted to non-employees was recognized on a vesting date basis by fixing the fair value of vested non-employee stock options

as of their respective vesting date.

The fair value of vested non-employee stock options was not subject-to further remeasurement

at subsequent reporting dates.

The estimated fair value of the unvested non-employee stock options was remeasured to then current

fair value at each subsequent reporting date, until such time when the stock options vest, at which time the fair value is fixed,

as noted above.

The estimated fair value of stock-based awards granted to non-employees was recognized on a straight-line basis

over the requisite service period, which was generally the vesting period of the respective non-employee stock-based award, with

such straight-line recognition adjusted so the cumulative expense recognized was at-least equal-to-or-greater-than the estimated

fair value of the vested portion of the respective stock-based award.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Accounting Policies and Significant Judgments and Estimates - continued

Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes ,

(“ASC 740”).

Current tax liabilities or receivables are recognized for estimated income tax payable and/or

refundable for the current year.

Deferred tax assets and deferred tax liabilities are recognized for estimated future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

tax basis, along with net operating loss and tax credit carryforwards.

Deferred tax assets and deferred tax liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to

be recovered or settled.

Changes in deferred tax assets and deferred tax liabilities are recorded in the provision for income

ASC 740, a “more-likely-than-not”

21 unchanged sentences

Accounting Policies and Significant Judgments and Estimates - continued

provisions of FASB ASC Topic 205-40, Presentation of Financial Statements - Going Concern (ASC 205-40) requires management

to assess an entity’s ability to continue as a going concern within one year of the date of the financial statements are

In each reporting period (including interim periods), an entity is required to assess conditions known and reasonably

knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial

obligations within one year from the financial statement issuance date.

Substantial doubt about an entity’s ability to continue

as a going concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be

unable to meet its financial obligations as they become due within one year after the date the financial statements are issued.

We have incorporated specific disclosures within our financial statements stating there is substantial doubt regarding the Company’s

ability to continue as a going concern within one year from the financial statement issuance date.

See Liquidity and Capital Resources

above for a discussion of our liquidity and going concern status.

Company’s consolidated financial statements have been prepared on a going concern basis which contemplates the realization

of assets and satisfaction of liabilities and commitments in the normal course of business, and do not include any adjustments

relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities should

the Company be unable to continue as a going concern.

Issued Accounting Standards

July 2017, the FASB issued ASU 2017-11, 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.

Principally, ASU 2017-11 amendments simplify

the accounting for certain financial instruments with down-round features.

The amendments require companies to disregard the down-round

feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification.

Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the down-round

feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because

of the down-round feature) and will also recognize the effect of the trigger within equity.

Additionally, ASU 2017-11 also addresses

“navigational concerns”

within the FASB ASC related to an indefinite deferral available to private companies with

mandatorily redeemable financial instruments and certain noncontrolling interests, which has resulted in the existence of significant

“pending content”

The FASB decided to reclassify the indefinite deferral as a scope exception, which does

not have an accounting effect.

The guidance of ASU 2017-11 is effective for public business entities, as defined in the ASC Master

Glossary, for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and for all

other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal

years beginning after December 15, 2020.

Earlier adoption is permitted for all entities as of the beginning of an interim period

for which financial statements (interim or annual) have not been issued or have not been made available for issuance.

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

Accounting Standards Updates

noted herein above, as of January 1, 2020, the Company adopted the amended guidance of ASC 718 with respect to stock-based awards

granted to non-employees, as amended by ASU 2018-07, which aligned the accounting for stock-based payments to nonemployees for

goods and services with the requirements for accounting for stock-based awards granted to employees under ASC 718.In this regard,

ASU 2018-07 provides for stock-based payments to non-employees to be measured at the grant date fair value of the equity instruments

to be provided to the nonemployee when the goods or services have been delivered.

Prior to the ASU 2018-07 amendment, nonemployee

share-based payments were accounted for under the superseded provisions of ASC 505-50.

The adoption of such amended guidance did

not have an effect on the Company’s consolidated financial statements.

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, which modifies the disclosure requirements on fair value measurement.

The adoption of ASU 2018-13 did not have an effect on the Company’s consolidated financial statements.

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.

Principally, ASU 2017-11 amendments simplify the accounting for certain financial instruments with down-round features.

amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock,

for purposes of determining liability or equity classification.

Companies that provide earnings per share data will adjust their

basic earnings per share calculation for the effect of the down-round feature when triggered (i.e., when the exercise price of

the related equity-linked financial instrument is adjusted downward because of the down-round feature) and will also recognize

the effect of the trigger within equity.

Additionally, ASU 2017-11 also addresses “navigational concerns”

FASB ASC related to an indefinite deferral available to private companies with mandatorily redeemable financial instruments and

certain noncontrolling interests, which has resulted in the existence of significant “pending content”

The FASB decided to reclassify the indefinite deferral as a scope exception, which does not have an accounting effect.

of ASU 2017-11 is effective for public business entities, as defined in the ASC Master Glossary, for fiscal years beginning after

December 15, 2018, including interim periods within those fiscal years.

With respect to all other entities, including the Company

under its JOBS Act EGC Accounting Election, as discussed herein below, the guidance of ASU 2017-11 was effective for fiscal years

beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

The adoption of

the ASU 2017-11 guidance as of January 1, 2020 did not have an effect on the Company’s consolidated financial statements.

August 2020, the FASB issued ASU 2020-06, Debt –

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging –

Contracts in Entity’s Own Equity (Subtopic 815 –

40) , (“ASU 2020-06”).

simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible

instruments and contracts on an entity’s own equity.

The ASU 2020-06 amendments are effective for fiscal years beginning

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

Early adoption is permitted, but no earlier than fiscal

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

The Company’s adoption of

the ASU 2020-06 guidance as of January 1, 2021 is not expected to have an effect on the Company’s consolidated financial

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes:

Simplifying the Accounting for Income Taxes”,

(“ASU 2019-12”).

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

performing intra-period allocation, and calculating income taxes in interim periods, and adds revised guidance to reduce complexity

in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

Adoption of the guidance of ASU 2019-12 is required for annual and interim financial statements beginning after December 15, 2020.

The Company’s adoption of the ASU 2019-12 guidance as of January 1, 2021 is not expected to have an effect on the Company’s

consolidated financial statements.

ASC 842, Leases , (ASU No.

2016-02, Leases , February-2016 - “ASU 2016-02”

) which established a

right-of-use (“ROU”) model requiring a lessee to recognize a ROU asset and a lease liability for all leases with terms

greater-than 12 months.

Leases are classified as either finance or operating, with classification affecting the pattern of expense

recognition in the income statement.

The ASC 842 effective date for the Company is December 31, 2022 for its annual financial

statement, and for interim quarterly financial statements commencing March 31, 2023.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Accounting Policies and Significant Judgments and Estimates - continued

Issued Accounting Standards - continued

May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequently issued additional

updates amending the guidance contained in Topic 606 (ASC 606), thereby affecting the guidance contained in ASU 2014-09.

and the subsequent ASC 606 updates will supersede and replace nearly all existing U.S.

GAAP revenue recognition guidance.

core principle of ASU 2014-09 is to recognize revenue when promised goods or services are transferred to customers in an amount

equal to the consideration to which the entity expects to be entitled for those goods and services.

ASU 2014-09 defines a five

step process to achieve this core principle, and in doing so, more judgment and estimates may be required within the revenue recognition

process than are required under existing U.S.

The standard is effective for annual periods beginning after December 15,

2017, including interim periods therein, using either of the following transition methods:

(i) a full retrospective approach reflecting

the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii)

a retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which

includes additional footnote disclosures).

To date, since its inception, the Company has not generated any revenue, as such, the

provisions of ASC 606 have not impacted the Company’s consolidated results of operations or financial condition.

March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations

(“ASU 2016-08”).

The amendments are intended to improve the operability and understandability of the implementation

guidance on principal versus agent considerations by amending certain existing illustrative examples and adding additional illustrative

examples to assist in the application of the guidance.

The effective date and transition requirements for the amendments are the

same as the effective date and transition requirements in Topic 606.

The guidance is effective for the Company beginning January

1, 2018, although early adoption is permitted beginning January 1, 2017.

To date, since its inception, the Company has not generated

any revenue, as such, the provisions of ASC 606 have not impacted the Company’s consolidated results of operations or financial

April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations

and Licensing (“ASU 2016-10”).

The amendments in ASU 2016-10 clarify the following two aspects of Topic 606:

identifying performance obligations;

and (b) the licensing implementation guidance.

The amendments do not change the core principle

of the guidance in Topic 606.

The effective date and transition requirements for the amendments are the same as the effective

date and transition requirements in Topic 606.

The guidance is effective for the Company beginning January 1, 2018, although early

adoption is permitted beginning January 1, 2017.

To date, since its inception, the Company has not generated any revenue, as such,

the provisions of ASC 606 have not impacted the Company’s consolidated results of operations or financial condition.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”), which establishes a right-of-use

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

Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in

the income statement.

The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods

with those fiscal years.

A modified retrospective transition approach is required for leases existing at, or entered into after,

the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

The Company does not expect this guidance to have a significant effect on its consolidated financial position, results of operations,

and cash flows.

are an “emerging growth company”

9 unchanged sentences

sheet arrangements

do not have any off-balance sheet arrangements, as defined by applicable SEC regulations.

of Inflation and Changes in Prices

do not expect inflation and changes in prices will have a material effect on our operations.

do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure About Market Risk

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity