What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-03-15 compared with 2020-04-14 · 1403 added, 2244 removed, 408 unchanged (90% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness

of our disclosure controls and procedures as of December 31, 2019.

Based on such evaluation, due to the material weakness in

internal control over financial reporting described below, our principal executive officer and principal financial officer

concluded our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) were not

effective as of such date to provide reasonable assurance that information required to be disclosed by us in the reports we

file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the

SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed

to ensure information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and

communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow

timely decisions regarding required disclosure.

Management’s

Report on Internal Control Over Financial Reporting

management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as

such term is defined in Exchange Act Rules 13(a)-15(f).

Our system of internal control over financial reporting is designed to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with accounting principles generally accepted in the U.S.

internal control over financial reporting includes those policies and procedures that:

to the maintenance of records, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our

reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance

with accounting principles generally accepted in the U.S., and our receipts and expenditures are being made only in accordance

with authorizations of our management and our directors;

a reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets

could have a material effect on the financial statements.

of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may

not prevent or detect all misstatements.

Further, because of changes in conditions, effectiveness of internal controls over financial

reporting may vary over time.

Our system contains self-monitoring mechanisms, so actions will be taken to correct deficiencies

as they are identified.

management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the

framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Based on this evaluation, our management concluded our system of internal control over financial reporting was not

effective as of December 31, 2019.

Our management’s

conclusion was due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies,

in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our

annual or interim financial statements would not be prevented or detected on a timely basis.

Our management identified the following

material weakness in our internal control over financial reporting:

We did not maintain a properly designed control environment that identified

key control risk areas with an appropriate level of precision in order to conclude on the operating effectiveness of our disclosure

controls and procedures.

Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control

over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant

to the rules of the SEC to permit us to provide only management’s report in this Form 10-K.

Remediation of the Material Weakness

Management intends

to implement changes to strengthen our internal control over financial reporting.

These changes are intended to address the identified

material weakness and enhance our overall control environment and are expected to include the activities described below.

intend to hire a consultant to assist us in revising our internal control documentation

so that it identifies key control risk areas with sufficient precision for us to properly

test the operating effectiveness of our disclosure controls and procedures.

While we believe that

the above actions will ultimately remediate the material weakness, we intend to continue to refine those controls and monitor

their effectiveness for a sufficient period of time prior to reaching any determination as to whether the material weakness has

been remediated.

Notwithstanding the

identified material weakness, management believes that the consolidated financial statements included in this Form 10-K present

fairly, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented

in accordance with U.S.

CONTROLS AND PROCEDURES - continued

- Material Weakness

of December 31, 2019, our management concluded our system of internal control over financial reporting was not effective, due

to the identification of a material weakness in our internal control over financial reporting, namely, we did

not maintain a properly designed control environment that identified key control risk areas with an appropriate level of precision,

in order to conclude on the operating effectiveness of our disclosure controls and procedures.

material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there

is a reasonable possibility a material misstatement of our annual or interim consolidated financial statements would not be prevented

or detected on a timely basis.

implemented changes during 2020 to strengthen our internal control over financial reporting.

These changes addressed the

identified material weakness and enhanced our overall internal control over financial reporting environment.

The changes included

the hiring of a consulting firm to assist us in revising our internal control documentation so that it identifies key control

risk areas with sufficient precision for us to identify and test the operating effectiveness of our disclosure controls and procedures.

The consulting firm assisted us with the design, documentation, evaluation of design adequacy, and testing the operational

effectiveness of a revised system of internal control over financial reporting.

believe these actions remediated the material weakness, and we intend to continue to refine those internal controls over financial

reporting and monitor their effectiveness on an ongoing basis.

to Internal Controls Over Financial Reporting

has been no change in internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act) that occurred during the fiscal quarter ended December 31, 2019 that has materially affected, or is reasonably likely to

materially affect, our internal control over financial reporting.

However, we expect to make changes to our internal control

over financial reporting in the future to remediate the material weakness identified above.

for the remediation and enhancements as described herein above, there has been no change in internal controls over financial reporting

(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2020 that

has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

33 unchanged sentences

of Amendment to Certificate of Incorporation, dated June 26, 2019 (10)

of Amendment to Certificate of Incorporation, dated July 24, 2020 (14)

of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (11)

of Elimination - Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock (6)

Amended and Restated Bylaws (13)

of Registrant’s Securities &dagger;

11 unchanged sentences

agreement regarding corporate opportunities executed by Dr.

Lishan Aklog (1)

Lishan Aklog, M.D.

agreement regarding corporate opportunities executed by Michael Glennon (1)

agreement regarding corporate opportunities executed by Dr.

Brian deGuzman (1)

Brian deGuzman, M.D.

Purchase Agreement between PAVmed Inc.

8 unchanged sentences

deGuzman, M.D.

Amended and Restated PAVmed Inc.

2014 Long-Term Equity Incentive Plan (10)

Exhibits and Financial Statement Schedules - continued

following documents filed as a part of the report:

following exhibits (continued):

of Securities Purchase Agreement between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B

of Secured Convertible Promissory Note between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio

of Security and Pledge Agreement between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B

of Guaranty between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (8)

of Voting Agreement between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (8)

of Registration Rights Agreement between PAVmed Inc.

and Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B

of Securities Purchase Agreement.

of Series A and Series B Secured Convertible Promissory Note.

of Amend and Restated Security and Pledge Agreement.

of Amended and Restated Guaranty.

of Note Purchase Agreement.

of Investor Note.

of Master Netting Agreement.

of Registration Rights Agreement.

of Voting Agreement.

of Amended and Restated Leak-Out Agreement (11)

Fourth Amended and Restated 2014 Long-Term Incentive Equity Plan (10)(12)

Employee Stock Purchase Plan (10)(12)

of Code of Ethics (1)

of Subsidiaries &dagger;

- Marcum LLP &dagger;

of Citrin Cooperman & Company, LLP &dagger;

of Marcum LLP &dagger;

Certification

of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.&dagger;

Certification

14 unchanged sentences

by reference to the Registrant’s Registration Statement on Form S-1 - SEC File No.

by reference to the Registrant’s Current Report on Form 8-K filed on February 1, 2017.

by reference to the Registrant’s Current Report on Form 8-K filed on May 3, 2016.

by reference to the Registrant’s Current Report on Form 8-K filed on July 19, 2016.

by reference to the Registrant’s Current Report on Form 8-K filed on April 5, 2018.

by reference to the Registrant’s Current Report on Form 8-K/A filed on April 20, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed on June 8, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed on December 27, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed on March 20, 2019.

by reference to the Registrant’s Current Report on Form 8-K filed February 1, 2017.

by reference to the Registrant’s Current Report on Form 8-K filed May 3, 2016.

by reference to the Registrant’s Current Report on Form 8-K filed July 19, 2016.

by reference to the Registrant’s Current Report on Form 8-K filed April 5, 2018.

by reference to the Registrant’s Current Report on Form 8-K/A filed April 20, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed June 8, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed November 4, 2019.

by reference to the Registrant’s Current Report on Form 8-K filed October 2, 2018.

by reference to the Registrant’s Current Report on Form 8-K filed March 20, 2019.

by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A filed June 11, 2020

by reference to the Registrant’s Current Report on Form 8-K filed June 27, 2019.

by reference to the Registrant’s Current Report on Form 8-K filed July 27, 2020.

by reference to the Registrant’s Current Report on Form 8-K filed January 15, 2021.

contract or compensatory plan or arrangement.

2 unchanged sentences

by the undersigned hereunto duly authorized.

Lishan Aklog, M.D.

of Board of Directors

Executive Officer

Dennis M McGrath.

Financial Officer

to the requirements of the Securities Exchange Act of 1934, as amended, the report has been signed by the following persons on

19 unchanged sentences

of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2019 and 2018

Balance Sheets as of December 31, 2020 and December 31, 2019

Statements of Operations for the years ended December 31, 2020 and 2019

Statement of Changes in Equity (Deficit) for the

year ended December 31, 2019

Statement of Changes in Series A Convertible Preferred Stock and Equity (Deficit) for the

year ended December 31, 2018

Statements of Cash Flows for the years ended December 31, 2019 and 2018

Statements of Changes in Stockholders’

Equity (Deficit) for the year ended December 31, 2020

Statements of Changes in Stockholders’

Equity (Deficit) for the year ended December 31, 2019

Statements of Cash Flows for the year ended December 31, 2020 and 2019

to Consolidated Financial Statements

3 unchanged sentences

on the Financial Statements

have audited the accompanying consolidated balance sheet of PAVmed Inc.

have audited the accompanying consolidated balance sheets of PAVmed Inc.

and Subsidiaries (the “Company”) as of December

31, 2019, the related consolidated statements of operations, changes in equity (deficit) and cash flows for

the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

31, 2020 and 2019, the related consolidated statements of operations, changes in equity (deficit) and cash flows for each of the

two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with

accounting principles generally accepted in the United States of America.

Paragraph –

Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully

described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise

additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's

ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide s a reasonable basis for our opinion.

have served as the Company’s auditor since 2019 .

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of PAVmed Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheet of PAVmed Inc.

and Subsidiaries (the “Company”) as of December

31, 2018, the related consolidated statements of operations, Series A Convertible preferred stock and stockholders’

deficit, and cash flows, for the year then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial

position of the Company as of December 31, 2018, and the results of their consolidated operations and their cash flows for the

year then ended, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 2 to the financial statements, the Company’s recurring losses from operations, recurring cash used in operating

activities, accumulated deficit and absence of revenue generation raise substantial doubt about its ability to continue as a going

Management’s plans concerning these matters are also discussed in Note 2 to the financial statements.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended

December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audit.

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

3 unchanged sentences

and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

1 unchanged sentence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

CITRIN COOPERMAN & COMPANY, LLP

We believe that our audits provides a reasonable basis for our opinion.

have served as the Company’s auditor since 2019.

York, New York

BALANCE SHEETS

expenses and other current assets

in thousands except shares and per share data)

Current assets:

and Equity (Deficit )

expenses and other current liabilities

Secured Convertible Note issued December 27, 2018 at fair value, face value principal of $1,692,000 and $7,750,000 at December

31, 2019 and 2018, respectively

Secured Convertible Note issued November 4, 2019 at fair value, face value principal of $7,000,000 at December 31, 2019

expenses, deposits, and other current assets

Total current assets

Liabilities, Preferred

Stock and Stockholders’

Current liabilities:

AND CONTINGENCIES (NOTE 9)

Accounts payable

Accrued expenses

and other current liabilities

Act Paycheck Protection Program note payable

Senior Secured Convertible

Notes - at fair value

Convertible Note - at fair value

Commitments and contingencies (Note

Stockholders’

Equity (Deficit):

Stock, par value $0.001, 20,000,000 shares authorized;

B Convertible Preferred Stock, par value $0.001, 1,158,209 and 1,069,941 shares issued and outstanding at December 31, 2019

and 2018, respectively

Stock, par value, $0.001;

100,000,000 shares authorized, 40,478,861 and 27,142,979 shares issued and outstanding as of December

31, 2019 and 2018, respectively

paid-in capital

(53,714,751 )

(36,992,911 )

Preferred stock,

$0.001 par value.

Authorized, 20,000,000 shares;

Series B Convertible Preferred Stock, par value $0.001, issued and outstanding

1,228,075 at December 31, 2020 and 1,158,209 shares at December 31, 2019

Common stock, $0.001 par value.

150,000,000 shares;

issued and outstanding, 63,819,935 shares at December 31, 2020 and 40,478,861 shares at December 31, 2019

Additional paid-in

Stockholders’

1 unchanged sentence

Noncontrolling

interest in majority-owned subsidiaries

Liabilities and Equity (Deficit )

Stockholders’

Equity (Deficit)

Liabilities and Stockholders’

Equity (Deficit)

accompanying notes to the consolidated financial statements.

STATEMENTS OF OPERATIONS

in thousands, except share and per share data)

Ended December 31,

General and administrative

development expenses

Operating expenses:

and administrative

and development

operating expenses

Loss from operations

$ (14,295,295 )

(10,563,205 )

Other income (expense):

Interest expense

Debt extinguishments

Change in fair value

- Senior Secured Convertible Note

- Senior Secured Convertible Notes and Senior Convertible Note

Offering costs -

issue of Senior Secured Convertible Notes

Modification - Series

Z Warrant Agreement

Series A and Series

A-1 Exchange Offer - March 15, 2018 - incremental fair value - Series Z Warrants issued-upon-exchange of Series A-1 Warrants

Series W Warrants

Exchange Offer - April 5, 2018 - incremental fair value - Series Z Warrants issued-upon-exchange of Series W Warrants

Unit Purchase Options

(UPOs) Exchange Offer - August 22, 2018 - incremental fair value - UPO-Z issued-upon-exchange of UPO-W

Change in fair value

- Series A Warrants derivative liability

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

Other income (expense),

Loss before provision

for income tax

(17,268,131 )

(18,172,822 )

Senior Secured Convertible Note and Senior Convertible Note

extinguishments loss - Senior Secured Convertible Notes

income (expense), net

Loss before provision for income tax

Provision for

Net loss - before noncontrolling interest

$ (17,268,131 )

(18,172,822 )

Net loss attributable

to noncontrolling interest

Net loss before noncontrolling interests

Net loss attributable

to PAVmed Inc.

$ (16,457,241 )

(17,968,750 )

Series B Convertible Preferred

Stock dividends earned

Series A-1 Convertible Preferred

Stock dividends earned

Series A Convertible Preferred

Stock dividends earned

Series A and Series A-1 Exchange Offer

- March 15, 2018 - deemed dividend - incremental fair value - Series B Convertible Preferred Stock issued-upon-exchange of

Series A Convertible Preferred Stock

Series A-1 Exchange Offer - March 15, 2018 - increase to additional paid-in capital - incremental fair value - Series B Convertible

Preferred Stock issued-upon-exchange of

Series A-1 Convertible Preferred Stock

to the noncontrolling interests

Net loss attributable to PAVmed Inc.

B Convertible Preferred Stock dividends earned

Net loss attributable

1 unchanged sentence

common stockholders

$ (16,727,136 )

$ (18,750,798 )

Per share information:

share attributable to PAVmed Inc.

1 unchanged sentence

share attributable to PAVmed Inc.

common stockholders - basic and diluted

common stockholders –

basic and diluted

Weighted average

1 unchanged sentence

accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN

EQUITY (DEFICIT)

the YEAR ENDED DECEMBER 31, 2019

A-1 Convertible

Preferred Stock

Non-controlling

Balance at December 31, 2018

$ (36,992,911 )

$ (2,476,153 )

Issue common stock

in registered offerings, net of offering cost

Exchange Offer - UPOs

Issue of common stock

upon partial conversions of Senior Secured Convertible Debt issued December 27, 2018

Series B Convertible

Preferred Stock

dividends declared

Issue common stock

under employee stock purchase plan

Stock-based compensation

of majority-owned subsidiary

(16,457,241 )

(17,268,131 )

Balance at December

$ (53,714,751 )

$ (4,638,130 )

STATEMENTS OF CHANGES IN

A CONVERTIBLE PREFERRED STOCK and EQUITY (DEFICIT)

STATEMENT OF CHANGES IN EQUITY (DEFICIT)

the YEAR ENDED December 31, 2020

thousands except shares and per share data)

Stockholders’

Equity (Deficit)

Noncontrolling

at December 31, 2019

$ (17,907,611 )

$ (2,848,357 )

Underwritten public

offering of common stock, net of offering cost

Equity Subscription

Rights Offering, net of offering cost

Debt extinguishment

Exercise - common

stock purchase warrant, net of offering costs

Exchange Offer - March 15, 2018

Exchange Offer - April 5, 2018

Series Z Warrant

Exchange Offer -

Common stock issued

common stock –

registered offerings, net

common stock upon partial conversions of Senior Secured Convertible Note

common stock –

exercise Series S warrants

common stock –

exercise Series Z warrants

common stock –

conversion Series B Convertible Preferred Stock

Series B Convertible Preferred Stock Dividends

Series A Convertible Preferred Stock Dividends

Issue of common stock

of majority-owned subsidiary

Stock-based compensation

Stock-based compensation of majority-owned

(17,968,750 )

(18,172,822 )

B Convertible Preferred Stock dividends declared

common stock - Employee Stock Purchase Plan

of restricted stock awards

compensation - PAVmed Inc.

2014 Equity Plan

compensation - majority-owned subsidiary

common stock of majority- owned subsidiary exercise of stock options

at December 31, 2020

$ (36,992,911 )

$ (2,476,153 )

accompanying notes to the consolidated financial statements.

STATEMENT OF CHANGES IN EQUITY (DEFICIT)

the YEAR ENDED December 31, 2019

thousands except shares and per share data)

Stockholders’

at December 31, 2018

common stock –

registered offerings, net

common stock –

upon partial conversions of Senior Secured Convertible Note

B Convertible Preferred Stock dividends declared

common stock –

Employee Stock Purchase Plan

compensation - PAVmed Inc.

2014 Equity Plan

compensation - majority-owned subsidiary

at December 31, 2019

accompanying notes to the consolidated financial statements.

STATEMENTS OF CASH FLOWS

thousands except shares and per share data)

Ended December 31,

flows from operating activities

loss - before noncontrolling interest (“NCI”)

$ (17,268,131 )

$ (18,172,822 )

to reconcile net loss - before NCI to net cash used in operating activities

expense added to principal of Senior Secured Note

expense –

amortization of debt discount –

Senior Secured Note

extinguishment –

Senior Secured Convertible Notes

extinguishment –

Senior Secured Note

in fair value –

Senior Secured Convertible Notes

expense –

Series Z Warrant

A and Series A-1 Exchange Offer –

March 15, 2018

W Warrants Exchange Offer - April 5, 2018

Purchase Options Exchange Offer - August 22, 2018

in fair value - Series A Warrants derivative liability

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

in operating assets and liabilities:

expenses and other current assets

expenses and other current liabilities

cash flows used in operating activities

(13,357,271 )

flows from investing activities

cash flows used in investing activities

flows from financing activities

- issue of Senior Secured Convertible Note

of debt - Senior Secured Note

- issue of units in an equity subscription rights offering

- offering costs - equity subscription rights offering

- issue of common stock in an underwritten public offering

- offering costs - underwritten public offering

- issue of common stock of majority-owned subsidiary

- issue of common stock- registered offerings

Cash flows from operating

Net loss - before noncontrolling

interest (“NCI”)

Adjustments to reconcile net loss -

before NCI to net cash used in operating activities

Depreciation expense

Stock-based compensation

Change in fair value

- Senior Secured Convertible Notes and Senior Convertible Note

Debt extinguishment

loss - Senior Secured Convertible Notes

Changes in operating

assets and liabilities:

Prepaid expenses

and other current assets

Accounts payable

Accrued expenses

and other current liabilities

Deposits –

Net cash flows

used in operating activities

Cash flows from investing

Purchase of equipment

Net cash flows

used in investing activities

Cash flows from financing

Proceeds –

issue of Senior Secured

Convertible Notes

Proceeds –

issue of Senior Convertible

Proceeds –

Cares Act Paycheck

Protection Program Loan

Proceeds –

issue of common stock

registered offerings

Payment –

offering costs –

registered offerings

- issue of Senior Convertible Note

- issue of Senior Convertible Note –

non-installment

- issue of common stock under employee stock purchase plan

- Series A Convertible Preferred Stock Dividends

- issue of common stock upon exercise of warrants, net

cash flows provided by financing activities

increase (decrease) in cash

beginning of period

end of period

Payment –Senior Secured Convertible

Payment –

Senior Secured Convertible

Notes –

non-installment payments

Proceeds –

issue common stock

Employee Stock Purchase Plan

Proceeds –

exercise of Series

Proceeds –

exercise of stock options issued under equity incentive plan

of majority owned subsidiary

Net cash flows

provided by financing activities

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

accompanying notes to the consolidated financial statements.

and SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and Description of the Business

amounts in these accompanying notes are presented in thousands, except number of shares and per-share amounts.)

of the Business

(“PAVmed”

or the “Company”) 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

or the “Company”) together with its majority owned subsidiaries, Lucid Diagnostics, Inc.

(“Lucid Diagnostics”

or “LUCID”) and Solys Diagnostics, Inc.

(“Solys Diagnostics”

or “SOLYS”)

were 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.

The Company is focused on advancing its lead products towards regulatory

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

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 team.

The Company operates in one segment as a medical device company.

May 8, 2018, Lucid Diagnostics Inc.

(“Lucid”) a majority-owned subsidiary of the Company, was incorporated

in the State of Delaware.

On May 12, 2018, Lucid Diagnostics Inc.

entered into the “EsoGuard License Agreement”

with Case Western Reserve University (“CWRU”), with respect to the “EsoGuard Technology”.

Agreements Related to Acquired Intellectual Property Rights , for a discussion of the “EsoGuard License Agreement”.

October 7, 2019, Solys Diagnostics Inc.

(“Solys”) a majority-owned subsidiary of the Company, was incorporated

in the State of Delaware.

Upon formation, Solys Diagnostics Inc.

entered into a research and development license agreement with

Liquid Sensing, Inc., a subsidiary of Airware, Inc., each an unrelated-third-party, under which was granted to Solys Diagnostics

a perpetual worldwide license to develop and commercialize products based on intellectual property portfolio covering the

use of “Nondispersive Infrared”

(“NDIR”) laser technology with respect to the potential development of

technology to noninvasively measure interstitial concentrations of glucose or other substances through the skin.

have entered into a shareholder’s agreement which, among other customary terms, limits certain transfers of

their respective ownership interests in Solys Diagnostics Inc.

See Note 7, Agreements Related to Acquired Intellectual Property

Rights , for a further discussion of such license agreement.

date, the Company has not recognized revenue.

The ability to generate revenue depends upon the Company’s ability to successfully

complete the development, obtain regulatory approval, and to initiate commercialization of its product candidates.

The only product

to obtain regulatory clearance to date is EsoCheck, which has received 510(k) marketing clearance from the FDA as a generic esophageal

cell collection device.

In late December 2019 EsoGuard completed CLIA/CAP certification as a Laboratory Developed Test (LDT) making

it commercially available at Lucid’s contract diagnostic laboratory service provider in California.

Our current research

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

of the other lead products in our product portfolio pipeline, such as EsoGuard IVD, CarpX and PortIO, while advancing DisappEAR

and NextFlo through development.

The Company will also engage in research and development activities on other product candidates

commensurate with the Company’s available capital resources.

The Company plans to incur research and development expenses

for the foreseeable future from the continued development of its current and future product candidates.

Company has financed its operations principally through the issuances of its common stock, preferred stock, warrants, and debt,

proceeds from private offerings of its common stock and common stock purchase warrants prior to the April 8, 2016 closing

proceeds from the April 28, 2016 closing of the IPO;

and, subsequent issue of shares of convertible preferred stock

and common stock purchase warrants in private placements, the issue of shares of common stock of the Company and common stock

purchase warrants under effective registration statements;

and the issue of debt.

See Note 12, Debt, Note 13, Preferred

Stock, and Note 14, Stockholders’

Equity and Common Stock Purchase Warrants , for further information with respect

to the various financing transactions .

and 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.

Liquidity and Going

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

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.

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

Since inception

the Company has not generated any revenues and has incurred losses and negative cash flows from operating activities.

does not expect to generate positive cash flows from operating activities in the near future until it completes the development

process and regulatory approvals of its products, and thereafter begins to commercialize and achieve substantial marketplace acceptance

for its products.

Company incurred a net loss attributable to PAVmed Inc.

common stockholders of approximately $16.7 million and had net

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

As of December

31, 2019, the Company had negative working capital of approximately $5.3 million, with such working capital inclusive of

the Senior Secured Convertible Notes classified as a current liability of an aggregate of approximately $8.1 million

and approximately $6.2 million of cash.

Company anticipates incurring operating losses and does not expect to experience positive cash flows from operating activities

and may continue to incur operating losses for the next several years as it completes the development of its products, seeks regulatory

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

These factors, which have existed since

inception, are expected to continue, and raise substantial doubt about the Company’s ability to continue as a going concern

within one year after the date the accompanying consolidated financial statements are issued.

Summary of Significant Accounting Policies

ability of the Company to generate revenue depends upon the Company’s ability to successfully advance the commercialization

of EsoGuard and CarpX while also completing the development and the necessary regulatory approvals of its other products and services.

In this regard:

EsoCheck device received 510(k) marketing clearance from the FDA as an esophageal cell collection device in June 2019;

completed the certification required by the Clinical Laboratory Improvement Amendment (“CLIA”) and accreditation

of the College of American Pathologists (“CAP”) making it commercially available as a Laboratory Developed Test

(“LDT”) at LUCID’s contract diagnostic laboratory service provider in California in December 2019;

developed as a patented, single-use, disposable, minimally invasive device designed as a precision cutting tool to treat carpal

tunnel syndrome while reducing recovery times, received 510(k) marketing clearance from the FDA in April 2020.

the Company’s current operational activities are principally focused on the commercialization of EsoGuard and CarpX its

development activities are focused on pursuing FDA approval and clearance of other lead products in our product portfolio pipeline,

including EsoGuard IVD, PortIO, DisappEAR, NextFlo, and EsoCure.

Company has financed its operations principally through the public and private issuances of its common stock, preferred stock,

common stock purchase warrants, and debt.

The Company is subject to all of the risks and uncertainties typically faced

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

of their initial product and services and ongoing R&D and clinical trials.

The Company expects to continue to experience recurring

losses from operations, and will continue to fund its operations with debt and equity financing transactions.

Notwithstanding,

however, 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, the Company expects to be able to fund its future

operations for one year from the date of the issue of the Company’s consolidated financial statements, as included in the

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

See Note 12, Stockholders’

Equity, Common

Stock Purchase Warrants, and Noncontrolling Interest , for a discussion of the issue of shares of common stock of the Company

subsequent to December 31, 2020, in each of January 2021 and February 2021;

and Note 9, Outstanding Debt , for a discussion

of the principal repaid-in-full of each of the convertible notes subsequent to December 31, 2020, in each of January 2021 and

Summary of Significant Accounting Policies and Recent Accounting Standards Updates

Accounting Policies

of Presentation

5 unchanged sentences

and Solys Diagnostics Inc., with the corresponding noncontrolling interest included

as a separate component of consolidated equity (deficit), including the recognition in the consolidated statement of

operations of the net loss attributable to the noncontrolling interest based on the respective minority interest ownership of

each respective entity.

as a separate component of consolidated equity (deficit), including the recognition in the consolidated statement of operations

of the net loss attributable to the noncontrolling interest based on the respective minority interest ownership of each respective

See Note 12, Stockholders’

Equity and Common Stock Purchase Warrants , for a discussion of

the Company’s majority-owned subsidiaries and the corresponding noncontrolling interest.

Certain items have been reclassified

to conform to the current period presentation.

Equity and Common Stock Purchase Warrants , for a discussion of the Company’s

majority-owned subsidiaries and the corresponding noncontrolling interest.

amounts in these accompanying notes to the accompanying consolidated financial statements are presented in thousands, if not otherwise

noted as being presented in millions, except for shares and per share amounts.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

GAAP”) requires management to make accounting estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of expenses during the reporting period.

Significant estimates in these consolidated financial statements include

those related to the fair value of each of:

debt obligations, common stock purchase warrants, and derivative liabilities.

significant estimates include the provision or benefit for income taxes and the corresponding

valuation allowance on deferred tax assets.

In addition, management’s assessment of the Company’s ability to continue

as a going concern involves the estimation of the amount and timing of future cash inflows and outflows.

On an ongoing basis,

the Company evaluates its estimates, judgements, and methodologies.

The Company bases its estimates on historical experience and

on various other assumptions believed to be reasonable.

GAAP”) requires management to make accounting estimates and assumptions that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported

amounts of expenses during the reporting period.

Significant estimates in these consolidated financial statements include those

related to the fair value of debt obligations and common stock purchase warrants.

Additional significant estimates include the

provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets.

On an ongoing basis, the

Company evaluates its estimates, judgements, and methodologies.

The Company bases its estimates on historical experience and on

various other assumptions believed to be reasonable.

Due to the inherent uncertainty involved in making such judgements, assumptions,

and accounting estimates, the actual financial statement results could differ materially from such accounting estimates and assumptions.

Act EGC Accounting Election

Company is an “emerging growth company”

or “EGC”, as defined in the Jumpstart Our Business Startups Act

of 2012 (the “JOBS Act”).

Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued

subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has irrevocably

elected to avail itself of this exemption from new or revised accounting standards, and, therefore, will not be subject to the

same new or revised accounting standards as public companies who are not an EGC.

Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions.

No revenue has been generated since inception, and all tangible assets are held in the United States.

Summary of Significant Accounting Policies  - continued

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

refinance the debt upon maturity, obtaining regulatory approvals for its products currently under development, commercializing

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

However, there is no assurance

the Company will be successful in these efforts.

failure to raise sufficient capital, refinance the debt upon maturity, obtain regulatory approvals and clearances for the Company’s

products, generate sufficient product revenues, or control expenditures, among other factors, will adversely impact the Company’s

ability to meet its financial obligations as they become due and payable and to achieve its intended business objectives, and

therefore, raises substantial doubt of the Company’s ability to continue as a going concern within one year after the date

the consolidated financial statements are issued.

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.

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 the Company be unable to continue as a going concern.

Company maintains its cash at a major financial institution with high credit quality.

3 unchanged sentences

banks and financial institutions which exceed federally insured limits.

Summary of Significant Accounting Policies  

costs consist of certain legal, accounting, and other advisory fees incurred related to the Company’s efforts to raise debt

9 unchanged sentences

for as deferred offering costs.

Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

and Development Expenses

20 unchanged sentences

the technology and achieves a certain sales volume.

In accordance with FASB ASC Topic 730-10-55, “Research and Development”,

In accordance with Financial Accounting Standards Board (“FASB”)

Accounting Standard Codification (“ASC”) Topic 730, “

Research and Development ”, (“ASC 730”),

expenditures for research and development, including upfront licensing fees and milestone payments associated with products not

yet been approved by the FDA, are charged to research and development expense as incurred.

Future contract milestone payments

will be recognized as expense when achievement of the milestone is determined to be probable and the amount of the corresponding

milestone can be objectively estimated.

Summary of Significant Accounting Policies  - continued

awards are made to employees, members of its board of directors, 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.

stock-based awards granted to employees and members of the Company’s board of directors are accounted for in accordance

with FASB ASC Topic 718, Stock Compensation (“ASC 718”) and stock-based awards granted to non-employees are

accounted for in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”).

See herein below for a discussion of “ASU 2018-07”

with respect to ASC 505-50 non-employee stock-based compensation.

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.

Summary of Significant Accounting Policies  - continued

yet been approved by the United States Food and Drug Administration (“FDA”), are charged to research and development

expense as incurred.

Future contract milestone and /or royalty payments will be recognized as expense when achievement of the

milestone is determined to be probable and the amount of the corresponding milestone can be objectively estimated.

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 (“PAVmed Inc.

2014 Equity Plan”) and the Lucid Diagnostics

2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc.

2018 Equity Plan”).

the year ended December 31, 2020, stock-based compensation is recognized in accordance with the provisions of FASB ASC Topic 718,

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 awards 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 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.

Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Compensation - continued

the previous year ended December 31, 2019, with respect to stock-based awards granted to the board of directors and employees,

the Company recognized stock-based compensation 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.

Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the PAVmed Inc.

2014 Equity Plan and the Lucid Diagnostics Inc.

2018 Equity Plan, which requires the Company to make certain weighted-average

valuation estimates and assumptions for stock-based awards, principally as follows:

term of stock options represents the period of time stock options are expected to be outstanding, which is the expected term

derived using the simplified method and, through December 31, 2019 for non-employees was the remaining contractual term (under

the previous provisions of ASC 505-50);

respect to the PAVmed Inc.

2014 Equity Plan, the expected stock price volatility is based

on the historical stock price volatility of PAVmed Inc.

common stock and the volatilities

of similar entities within the medical device industry over the period commensurate with the

expected term with respect to stock options granted to the board of directors and employees

in the years ended December 31, 2020 and 2019;

and for stock options granted to non-employees

in the year ended December 31, 2019, the period of volatility was commensurate with the remaining

contractual term of the respective stock option (under the previous provisions ASC 505-50).

respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan, the expected

stock price volatility was based on the historical stock price volatility of similar entities

within the medical device industry over the period commensurate with the expected term with

respect to stock options granted to employees in the year ended December 31, 2019;

stock options granted to non-employees in the year ended December 31, 2019, the period of

volatility was commensurate with the remaining contractual term of the respective stock option

(under the previous provisions ASC 505-50).

There were no stock options granted under the

Lucid Diagnostics Inc.

2018 Equity Plan in the year ended December 31, 2020;

The risk-free

interest rate is based on the interest rate payable on U.S.

Treasury securities in effect at the time of grant for a period

commensurate with either the expected term or the remaining contractual term, as applicable, of the stock option;

dividend yield is based on annual dividends of $0.00 as there have not been dividends paid to-date, and there is no plan to

pay dividends for the foreseeable future.

price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options granted under the

2014 Equity Plan is its quoted closing price per share.

The price per share of Lucid Diagnostics Inc.

used in the computation of estimated fair value of stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan was

estimated using a discounted cash flow method applied to a multi-year forecast of its future cash flows.

Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Instruments Fair Value Measurements

9 unchanged sentences

These valuations require significant judgment.

of December 31, 2019, and December 31, 2018, the carrying values of cash, and accounts payable, approximate their respective

fair value due to the short-term nature of these financial instruments.

Company evaluates its financial instruments to determine if those instruments or any embedded components of those instruments

potentially qualify as derivatives required to be separately accounted for in accordance with FASB ASC Topic 815, Derivatives

and Hedging (ASC 815).

The accounting for warrants issued to purchase shares of common stock of the Company is based on the

specific terms of the respective warrant agreement, and are generally classified as equity, but may be classified as a derivative

liability if the warrant agreement provides required or potential full or partial cash settlement.

A warrant classified as a derivative

liability, or a bifurcated embedded conversion or settlement option classified as a derivative liability, is initially measured

at its issue-date fair value, with such fair value subsequently adjusted at each reporting period, with the resulting fair value

adjustment recognized as other income or expense.

If upon the occurrence of an event resulting in the warrant liability or the

embedded derivative liability being subsequently classified as equity, or the exercise of the warrant or the conversion option,

the fair value of the derivative liability will be adjusted on such date-of-occurrence, with such date-of-occurrence fair value

adjustment recognized as other income or expense, and then the derivative liability will be derecognized at such date-of-occurrence

recurring and non-recurring estimated fair value measurements are subjective and are affected by changes in inputs to the valuation

models, including the Company’s common stock price, and certain Level 3 inputs, including, the assumptions regarding the

estimated volatility in the value of the Company’s common stock price;

the Company’s dividend yield;

the likelihood

and timing of future dilutive transactions, as applicable, along with the risk-free rates based on U.S.

Treasury security yields.

Changes in these assumptions can materially affect the estimated fair values.

of December 31, 2020, and December 31, 2019, the carrying values of cash, and accounts payable, approximate their respective fair

value due to the short-term nature of these financial instruments.

Value Option (“FVO”) Election

Company accounts for the Senior Secured Convertible Notes issued November 4, 2019 (Series A and Series B) and the Senior Secured

Convertible Note issued December 27, 2018, under the “fair value option”

election of ASC 825, Financial Instruments

(“ASC-825”) as discussed below.

Senior Secured Convertible Notes noted above 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, Derivatives and Hedging (“ASC-815”).

Notwithstanding, 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 then subsequently remeasured at estimated fair value on a recurring basis

at each reporting period date.

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 accompanying consolidated statement

of operations.

With respect to each of the above Senior Secured Convertible Note, as provided for by ASC 825-10-50-30(b), the

estimated fair value adjustment is presented in a respective single line item within other income (expense) in the accompanying

consolidated statement of operations.

Summary of Significant Accounting Policies  - 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

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 accompanying consolidated statement of operations.

In 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 accompanying 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

Summary of Significant Accounting Policies and Recent Accounting Standards - continued

Accounting Policies - continued

Company accounts for income taxes using the asset and liability method, as required by FASB ASC Topic 740, Income Taxes ,

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

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 taxes.

31 unchanged sentences

incremental shares on an if-converted basis, computed using the treasury stock method, computed on a

weighted average based on the number of days potentially issued and outstanding during the period indicated, if dilutive.

Company’s common stock equivalents include:

stock options, unit purchase options, convertible preferred stock, and common

stock purchase warrants.

weighted average based on the number of days the incremental shares would potentially be issued and outstanding during the periods

indicated, if dilutive.

The Company’s common stock equivalents include convertible preferred stock, common stock purchase

warrants, unit purchase options, and stock options.

Notwithstanding,

as the Company has a net loss for each reporting period presented, each of the basic and diluted net loss per share for each period

presented is computed using only the basic weighted average common shares outstanding for each respective reporting period, as

the inclusion of common stock equivalents incremental shares would be anti-dilutive.

Series B Convertible Preferred Stock has the right to receive common stock dividends, and prior to the March 15, 2018 Exchange

Date of the Series A and Series A Exchange Offer, holders of the Series A Warrants and the Series A-1 Warrants previously had

the right to receive common stock dividends.

As such, the Series B Convertible Preferred Stock and the Series A Warrants and Series

A-1 Warrants would potentially been considered participating securities under the two-class method of calculating net loss per

as presented in the accompanying consolidated statement of operations, basic weighted average common shares outstanding are used

to compute the basic and diluted net loss per share attributable to PAVmed Inc.

and the basic and diluted net loss per share attributable

to PAVmed Inc.

as the Company has a net loss for each reporting period presented, only the basic weighted average common shares outstanding are

used to compute the basic and diluted net loss per share attributable to PAVmed Inc.

and the basic and diluted net loss per share

attributable to PAVmed Inc.

common stockholders, for each reporting period presented.

Summary of Significant Accounting Policies  - continued

Accounting Standards

December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

Series B Convertible Preferred Stock dividends earned as of the each of the respective periods are included in the calculation

of basic and diluted net loss attributable to PAVmed Inc.

common stockholders for each respective period presented.

Series B Convertible Preferred Stock has the right to receive common stock dividends.

As such, the Series B Convertible Preferred

Stock would potentially be considered participating securities under the two-class method of calculating net loss per share.

the Company has incurred net losses to-date, and as such holders are not contractually obligated to share in the losses, there

is no impact on the Company’s net loss per share calculation for the periods presented.

Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Act EGC Accounting Election

Company is an “emerging growth company”

or “EGC”, as defined in the Jumpstart Our Business Startups Act

of 2012 (the “JOBS Act”).

Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued

after the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has irrevocably

elected to avail itself of this exemption from new or revised accounting standards, and, therefore, will not be subject to the

same new or revised accounting standards as public companies who are not an EGC.

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 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 stock-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 above, 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.

Summary of Significant Accounting Policies and Recent Accounting Standards Updates - continued

Accounting Policies - continued

Accounting Standards Updates - continued

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”).

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.

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 statements.

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes:

Simplifying the Accounting for Income Taxes”, which removes certain exceptions

for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating

taxes to members of a consolidated group.

The ASU is effective for annual or interim periods beginning after December 15, 2020.

Early adoption is permitted for periods for which financial statements have not been issued.

The Company does not expect the standard

to have a significant impact on its consolidated financial statements.

August 2018, the FASB issued 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.

is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, and early adoption

is permitted.

The Company does not expect the standard to have a significant impact on its consolidated financial statements.

June 2018, the FASB has issued Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which, upon its effective

date, will supersede the application of ASC 505-50, resulting in non-employee stock-based awards to be within the scope of ASC-718,

with the principal changes including the use of the “expected term”

(and not the ASC 505-50 required “contractual

term”) as an input to the option pricing model used to compute estimated fair value and the use of the grant date estimated

fair value, as the measurement of a stock-based award granted to a non-employee, thus conforming to the measurement of a stock-based

award granted to an employee.

Early adoption is permitted, but no earlier than a company’s adoption of ASC Topic 606, Revenue

from Contracts with Customers (“ASC 606”).

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).

The Company does not expect the standard to have a significant impact on its consolidated financial statements.

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.

does not expect the standard to have a significant impact on its consolidated financial statements.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASC 842”), 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

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, 2021 for its annual financial statement, and

for interim quarterly financial statements commencing March 31, 2022.

Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following as of:

payments to service providers and suppliers

prepaid expenses and other current assets

Accrued Expenses and Other Current Liabilities

expenses and other current liabilities consisted of the following as of:

stock purchase plan

License Agreement fee

accrued expenses and other current liabilities

accrued bonus as of December 31, 2019 and 2018 represents the guaranteed bonus payment to the Company’s Chief Executive

Officer (“CEO”) under the CEO Employment Agreement and discretionary bonus payments to the CEO and other employees.

Company’s CEO agreed to the payment of a reduced salary of $4,200 per month for the period July 1, 2017 through January

31, 2018, with such earned but unpaid salary to be paid to the CEO only upon the Senior Secured Note first being

repaid-in-full.

The earned but unpaid salary has been recognized as an accrued salary expense liability of $145,937 as of

December 31, 2018.

There was no such liability as of December 31, 2019 as the accrued CEO payroll was paid in January 2019

upon the Senior Secured Note being repaid-in-full on December 27, 2018 concurrent with the issue of the Senior Secured

Convertible Note.

See Note 12 Debt , for a discussion of each of the “Senior Secured Convertible Note”

the “Senior Secured Note”.

Employee Stock Purchase Plan (“ESPP”) is discussed in Note 10, Stock-Based Compensation .

EsoGuard License Agreement fee is the remaining unpaid balance of such fee incurred in connection with the EsoGuard License Agreement,

as discussed in Note 7, Agreements Related to Acquired Intellectual Property Rights .

tax (benefit) expense for respective periods noted is as follows:

Federal, State, and Local

State and local

allowance reserve

reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as

federal statutory rate

state and local income taxes, net

of federal tax benefit

Permanent Differences

Valuation Allowance

Effective tax

tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:

operating loss

Non-deductible interest

Debt issue costs

Stock-based compensation

Patent licenses

Research and development

tax credit carryforward

Accrued expenses

195 deferred start-up costs

Tax Liabilities

Deferred tax assets,

net of deferred tax liabilities

valuation allowance

(16,707,634 )

tax assets, net after valuation allowance

tax assets and deferred tax liabilities resulting from temporary differences 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.

of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted.

Income Taxes - continued

required by FASB ASC Topic 740, Income Taxes”

(“ASC 740), a “more-likely-than-not”

applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income,

or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense.

A valuation allowance is established,

when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not,

the full or partial amount of the net deferred tax asset will not be realized.

Accordingly, the Company evaluated the positive

and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s

history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore

recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities,

as of December 31, 2019 and 2018.

Company has total estimated federal and state net operating loss (“NOL”) carryforward of approximately $40 million

and $27.4 million as of December 31, 2019 and 2018, respectively, which is available to reduce future taxable income, of which

approximately $13.8 million begin to expire in 2035, and approximately $26.2 million which do not have an expiration date.

Company has not yet conducted a formal analysis and the NOL carryforward may be subject-to limitation under U.S.

Internal Revenue

Code (“IRC”) Section 382, provided there was a greater then 50% ownership change, as computed under such IRC Section

The State and Local NOL carryforwards of approximately $40.0 million begin to expire in 2035.

The Company has total estimated

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

2019 which are available to reduce future tax expense, and begin to expire in 2035.

Company files income tax returns in the United States in federal and applicable state and local jurisdictions.

The Company’s

tax filings for the years 2016 and thereafter each remain subject to examination by taxing authorities.

The Company’s policy

is to record interest and penalties related to income taxes as part of its income tax provision.

The Company has not recognized

any penalties or interest related to its income tax provision.

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 Topic 842, Leases , (“ASC 842”) (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 consolidated financial statements, and for interim quarterly financial statements commencing March 31, 2023.

Agreements Related to Acquired Intellectual Property Rights

License Agreement - Case Western Reserve University - EsoGuard Technology

May 12, 2018, Lucid Diagnostics Inc., a majority-owned subsidiary of the Company, entered into a patent license agreement

with Case Western Reserve University (“CWRU”), referred to as the “EsoGuard™

License Agreement”.

See Note 14, Stockholders’

Equity and Common Stock Purchase Warrants , for a discussion of the Company’s majority-owned

subsidiary Lucid Diagnostics Inc.

and the corresponding noncontrolling interest.

EsoGuard License Agreement provides for the exclusive worldwide license of the intellectual property rights for the proprietary

technologies of two distinct components - the “EsoCheck Cell Collection Device”

referred to as the “EsoCheck,

and EsoGuard, a panel of methylated DNA biomarkers, and together are collectively referred to as the “EsoGuard Technology”.

the EsoGuard License Agreement, Lucid Diagnostics Inc.

incurred a payment obligation to CWRU of approximately $273,000, referred

to as the “EsoGuard License Agreement Fee”, with such license fee requiring an initial payment of $50,000, which the

Company has paid, and quarterly payments of $50,000 until such fee is paid-in-full, provided, however, the commencement of such

quarterly payments is subject to Lucid Diagnostics Inc.

consummation of a bona fide financing with an unrelated third-party in

excess of $500,000.

As of December 31, 2019, there is $222,553 EsoGuard License Agreement that is unpaid and included in Accrued

expenses and other current liabilities.

Diagnostics Inc.

will also be required to pay a minimum annual royalty commencing the year after the first commercial sale of

products resulting from the commercialization of the EsoGuard Technology, with the minimum amount based on net sales of such product(s),

Additionally, the EsoGuard License Agreement provides for Lucid Diagnostics Inc.

to make payments to CWRU upon the achievement

of certain regulatory milestones.

The EsoGuard License Agreement also provides for potential payments upon the achievement of

certain product development and regulatory clearance milestones.

In this regard, upon FDA clearance on June 21, 2019 of the EsoCheck

device, the Company paid a $75,000 milestone payment.

The license agreement also provides for two additional milestone

obligations with a payment of $100,000 due within 30 days upon the first commercial sale of a licensed product and a payment of

$200,000 due upon a PMA submission to the FDA related to a licensed product.

the May 12, 2018 effective date of the EsoGuard License Agreement, the EsoGuard License Agreement fee was recognized as a current

period research and development expense in the consolidated statement of operations, with the remaining unpaid balance included

in accrued expenses and other current liabilities in the consolidated balance sheet.

The EsoGuard License Agreement was determined

to not meet the “business combination”

criteria under FASB ASC Topic 805, Business Combinations (“ASC

805”), as such license agreement did not meet the ASC 805 definition of a business, as the transaction resulted in an intangible

asset of acquired intellectual property rights only, and the Company did not acquire any employees or tangible assets, or any

processes, protocols, or operating systems.

Accordingly, the transaction was determined to be to be an asset acquisition under

Further, as noted, the cost of the acquired intellectual property rights were recognized as a current period research

and development expense, as required under FASB ASC Topic 730, Research and Development (ASC 730), as the acquired intellectual

property rights were purchased from others for use in a research and development activity, and for which there are no alternative

EsoGuard License Agreement also provides for potential payments upon the achievement of certain product development and regulatory

clearance milestones.

If Lucid Diagnostics Inc.

does not meet certain milestones listed in the EsoGuard License Agreement, then

CWRU has the right, in its sole discretion, to require the Company to transfer to CWRU a percentage, varying up to 100%, of the

shares of common stock of Lucid Diagnostics Inc.

held by the Company.

Lucid has not yet met all the milestones required by

this provision.

Lucid Diagnostics Inc.

will also be required to pay a minimum annual royalty commencing the year after the

first commercial sale of products resulting from the commercialization of the EsoCheck™

Technology, with the minimum amount

rising based on net sales of such product(s), if any.

Such contingent milestone and /or royalty payments, if any, will be recognized

License Agreement –

Case Western Reserve University

May 12, 2018, Lucid Diagnostics Inc., a majority-owned subsidiary of the Company, entered into a patent license agreement with

Case Western Reserve University (“CWRU”), referred to as the “CWRU License Agreement”.

CWRU License Agreement provides for the exclusive worldwide license of the intellectual property rights for the proprietary technologies

of two distinct technology components - the “EsoCheck Cell Collection Device”

referred to as the “EsoCheck™”;

and a panel of proprietary methylated DNA biomarkers, a laboratory developed test (“LDT”), referred to as “EsoGuard™”;

and together are collectively referred to as the “EsoGuard Technology”.

CWRU License Agreement requires Lucid Diagnostics Inc.

to achieve certain milestones with respect to regulatory filings and clearances

and commercialization of products and services.

In this regard, in , 2019, the Company recognized a $75 research and development

expense in connection with a regulatory clearance milestone, which was paid in 2019.

The CWRU License Agreement was amended to:

change the achievement date of commercialization milestone from November 2020 to August 2021;

to eliminate the payment with respect

to the commercialization milestone;

and to add a non-refundable payment to CWRU in consideration for the aforementioned changes

to the commercialization milestone (“CWRU License Agreement Amendment”).

In connection with such CWRU License Agreement

Amendment, the Company recognized $100 of general and administrative expense, with such expense included in accrued expenses as

of December 31, 2020.

If the Company does not meet the remaining commercialization and regulatory clearance milestones listed

in the CWRU License Agreement, then CWRU has the right, in its sole discretion, to require PAVmed Inc.

to transfer to CWRU 80%

of the shares of common stock of Lucid Diagnostics Inc.

then held by PAVmed Inc.

Such contingent milestone payments will be recognized

in the period in which such payment obligations are incurred.

Reimbursement of CWRU billed patent fees incurred

under the EsoCheck™

License Agreement of $200,437 and $20,978 were recognized as research and development expense

in each of the years ended December 31, 2019 and 2018, respectively.

EsoGuard License Agreement terminates upon the expiration of certain related patents, or on May 12, 2038 in countries where no

such patents exist, or upon expiration of any exclusive marketing rights granted by the FDA or other U.S.

Diagnostics Inc.

is required to pay a minimum annual royalty of a percentage of recognized net sales revenue resulting from the

commercialization of the products and /or services developed using the CWRU License Agreement intellectual property, with the

minimum amount of royalty payments based on net sales of such products and services, if any.

Such contingent royalty payments

will be recognized in the period in which such payment obligations are incurred.

provided for under the CWRU License Agreement, reimbursement of CWRU billed patent fees of $250 and $200 were recognized as research

and development expense in the years ended December 31, 2020 and 2019, respectively.

CWRU License Agreement terminates upon the expiration of certain related patents, or on May 12, 2038 in countries where no such

patents exist, or upon expiration of any exclusive marketing rights granted by the FDA or other U.S.

government agency, whichever

Agreements Related to Acquired Intellectual Property Rights - continued

License Agreement - Case Western Reserve University - EsoGuard™

Technology (continued)

three physician inventors of the EsoGuard™

Technology, each entered into consulting agreements with Lucid Diagnostics Inc.

to continue to support the development of the EsoGuard Technology.

In addition to cash compensation based on a contractual rate

per hour, additional compensation under each such consulting agreement includes:

the grant under the Lucid Diagnostics Inc.

Long-Term Incentive Equity Plan of stock options dated May 12, 2018 to each individual to purchase 100,000 shares of common

stock of Lucid Diagnostics Inc.

at an exercise price of $0.50 per share of such common stock;

and, the grant under the PAVmed

2014 Long-Term Incentive Plan of stock options dated May 12, 2018 to each individual to purchase 25,000 shares of

common stock at an exercise price of $1.59 per share of such common stock.

June 2018, Lucid Diagnostics Inc.

entered into a contract development and manufacturing organization (CDMO) agreement with an

unrelated third-party for the supply of the EsoCheck device, principally for use in research and development activities - referred

to herein as the “EsoCheck CDMO Supply Agreement”.

The EsoCheck CDMO Supply Agreement contains a firm price per unit,

and a contractual EsoCheck purchase minimum quantity, is cancellable with 10 day notice, among other routine and customary provisions.

With respect to the EsoCheck purchase contractual minimum quantity, if Lucid Diagnostics Inc.

terminates the EsoCheck CDMO Supply

Agreement without “good reason”, as defined, prior to placing purchase orders for 5,000 units of EsoCheck, then Lucid

Diagnostics Inc.

will make a single one-time $50,000 payment to the unrelated third-party CDMO.

The minimum quantity contingent

payment, if any, will be recognized as a current period expense if and when such payment obligation is incurred.

Further, in June

2018 Lucid Diagnostics Inc.

entered into a separate consulting agreement with the owner of the unrelated third-party supplier

of the EsoCheck device, with the sole compensation under such consulting agreement being the grant under the Lucid Diagnostics

2018 Long-Term Incentive Equity Plan of stock options dated June 23, 2018 to purchase 75,000 shares of common stock of Lucid

Agreement with Liquid Sensing Inc.

its formation in October 2019, Solys Diagnostics Inc., a majority-owned subsidiary of PAVmed Inc.

entered into a licensing agreement

with Liquid Sensing, Inc., a subsidiary formed by Airware Inc., each an unrelated third-party, (“Liquid Sensing License

Agreement”).

Under the Liquid Sensing License Agreement, Solys Diagnostics Inc.

granted an exclusive worldwide license for six issued and one pending U.S.

patents covering a proprietary nondispersive infrared

laser technology to develop and commercialize such proprietary technology to non-invasively monitor tissue concentrations of glucose

and other substances within the inpatient ( e.g.

, hospital) field of use.

Diagnostics Inc.

at an exercise price of $1.00 per share of such common stock.

See Note 10, Stock-Based Compensation ,

for information regarding the separate “Lucid Diagnostics Inc 2018 Long-Term Incentive Equity Plan”.

License Agreement –

Liquid Sensing Inc.

Nondispersive Infared (“NDIR”) Laser Technology

November 14, 2019, Solys Diagnostics Inc., a majority-owned subsidiary of the Company, entered into definitive license and shareholder

agreements with Airware Inc., and its newly formed subsidiary Liquid Sensing Inc., each an unrelated third party, to develop and

commercialize non-invasive diagnostic products using Nondispersive Infrared (NDIR) laser technology.

The agreements are referred

to herein as the “Liquid Sensing License Agreement”

and “Liquid Sensing Shareholder Agreement”.

to Liquid Sensing Shareholder Agreement executed concurrently with the Liquid Sensing License Agreement, PAVmed Inc.

granted to each other 15% non-dilutive equity ownership interests in each of their respective majority-owned subsidiaries

of Solys Diagnostics Inc.

and Liquid Sensing Inc., respectively, of which, 50% of such equity ownership interests vest immediately

and the remaining 50% will vest upon achievement of certain milestones.

Such investment in Liquid Sensing Inc.

was de minimis

as of December 31, 2019, and is included in other assets classified as non-current on the accompanying consolidated balance sheet.

The shareholder agreements also provide PAVmed with a right of first offer on any future investment in Liquid Sensing, which would

permit it to increase its equity stake at its discretion if the value of the company and its portable or wearable noninvasive

glucose technology is realized.

Agreements Related to Acquired Intellectual Property Rights - continued

advanced the research and development plan and completed a milestone consistent with the parameters and by the

date under the Liquid Sensing License Agreement.

Notwithstanding, PAVmed Inc.

determined it would be in the best interests of

the shareholders of PAVmed Inc.

to terminate the Liquid Sensing License Agreement.

In this regard, subsequent to December 31,

2020, PAVmed Inc.

on behalf of itself and Solys Diagnostics Inc., delivered to Airware Inc.

and Liquid Sensing Inc.

notice of termination of the Liquid Sensing License Agreement, dated February 12, 2021 (“Liquid Sensing License Agreement

Termination Notice”).

The Liquid Sensing License Agreement Termination Notice proposes the development of a negotiated mutually

agreeable final settlement between PAVmed Inc., Solys Diagnostics Inc., Airware Inc., and Liquid Sensing Inc.

discussion of each of the Company’s majority-owned subsidiaries and the corresponding noncontrolling interest is presented

in Note 12, Stockholders’

Equity and Common Stock Purchase Warrants .

License Agreement - Tufts University - Antimicrobial Resorbable Ear Tubes

November 2016, the Company executed a Patent License Agreement (the “Tufts Patent License Agreement”) with Tufts University

Company previously executed a Patent License Agreement (the “Tufts Patent License Agreement”) with Tufts University

and its co-owners, the Massachusetts Eye and Ear Infirmary and Massachusetts General Hospital (the “Licensors”).

2 unchanged sentences

technology conceived and developed by the Licensors.

execution of the Tufts Patent License Agreement, the Company paid the Licensors an upfront non-refundable fee of $50,000, with

such fee recognized as of the transaction date as a current period research and development expense in the statement of operations.

The Tufts Patent License Agreement was determined not to be meet the “business combination”

criteria under FASB ASC

Topic 805, Business Combinations (“ASC 805”).

Accordingly, the transaction was determined to be to be

an asset acquisition under ASC 805, with the cost of the acquired intellectual property rights recognized as a current

period research and development expense, under ASC Topic 730, Research and Development (ASC 730).

Tufts Patent License Agreement also provides for potential payments from the Company to the Licensors upon the achievement of

3 unchanged sentences

payments or royalties in the period in which such payment obligations are incurred, if any.

Reimbursement of Tufts University

billed patent fees incurred under the Tufts Patent License Agreement of $70,996 and $113,688 were recognized as research

and development expense in 2019 and 2018, respectively.

Related Party Transactions

Western Reserve University (“CWRU”)

May 2018, Lucid Diagnostics Inc.

issued to CWRU 943,464 shares of its common stock for a purchase price of $0.001 per share.

the years December 31, 2019 and 2018, the Company incurred an aggregate of approximately $275,000 and $294,000 under the EsoGuard

License Agreement, inclusive of:

approximately $200,000 and $21,000 for reimbursement of fees related to patents, in each of the

years ended December 31, 2019 and 2018, respectively;

a $75,000 milestone payment in the year ended December 31, 2019 (upon FDA

clearance of the EsoCheck™

device in June 2019);

and, approximately $273,000 with respect to the EsoGuard™

Agreement Fee in the year ended December 31, 2018.

See Note 7, Agreements Related to Acquired Intellectual Property Rights ,

for a discussion of the EsoGuard License Agreement;

Agreements with Inventors EsoGuard Technology

May 2018, Lucid Diagnostics Inc.

issued 289,679 shares of its common stock for a purchase price of $0.001 per share to each of

the three individuals.

Additionally, each of the three individuals entered into consulting agreements with the Company to support

the continued development of the technologies with respect to the EsoGuard™

License Agreement.

In addition to cash compensation

based on a contractual rate per hour, additional compensation under each such consulting agreement included the grant of stock

options to each individual under each of the PAVmed Inc 2014 Long-Term Incentive Equity Plan and the Lucid Diagnostics Inc.

connection with the CWRU License Agreement, CWRU and each of the three physician inventors of the intellectual property licensed

under the CWRU License Agreement hold minority equity ownership interests in Lucid Diagnostics Inc., a majority-owned subsidiary

of PAVmed Inc.

During the years ended December 31, 2020 and 2019 the Company incurred the following expenses with respect to the

minority shareholders of Lucid Diagnostics Inc.:

the year ended

CWRU License Agreement –

reimbursement of patent legal fees

CWRU License Agreement Amendment

EsoCheck devices provided to CWRU

Fees - Physician Inventors’

Stock-based compensation

expense - Physician Inventors’

stock option grants

Diagnostics Inc.

entered into consulting agreements with each of the three physician inventors of the CWRU License Agreement intellectual

property, providing for compensation on a contractual rate per hour for consulting services provided.

The consulting agreements

have a thirty-six month term ending May 12, 2021.

Additionally, each of the three physician inventors were granted stock options

under the PAVmed Inc.

2014 Long-Term Incentive Equity Plan and the Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan.

The Company recognized as research and development expense in the aggregate of:

approximately

$110,000 and $41,000 related to such consulting agreements;

and approximately $57,000 and $47,000 of stock based compensation

expense related to the stock options, in each of the years ended December 31, 2019 and 2018, respectively.

Note 14, Stockholders’

Equity and Common Stock Purchase Warrants - Noncontrolling Interests, for a discussion of

the issue of common stock of Lucid Diagnostics Inc.

to each of CWRU and the three physician inventors of the EsoGuard Technology;

Note 7, Agreements Related to Acquired Intellectual Property Rights , for a discussion of the EsoGuard License Agreement;

and, Note 10, Stock-Based Compensation , for information regarding each of the “PAVmed Inc.

2014 Long-Term Incentive

Equity Plan”

and the separate “Lucid Diagnostics Inc 2018 Long-Term Incentive Equity Plan”, with respect to

the stock options granted as discussed above.

Services Agreement

in the prior year 2018, the Company had a management services

agreement, with HCP/Advisors LLC, an affiliate of a former director of the Company, that expired on October 31, 2018 and was not

renewed by the Company.

The Company incurred an expense of $225,000 during 2018, with such fees included in “general and

administrative expenses”

in the accompanying consolidated statements of operations.

Commitments and Contingencies

Company’s corporate office lease is on a month-to-month basis, with a 5% per annum increase in the monthly lease payment

effective February 1 of each year, and the lease agreement may be cancelled with three months written notice.

Total rent expense

incurred under the corporate office space lease arrangement was $142,991 and $125,186 for 2019 and 2018, respectively.

As of December

31, 2019, the Company’s future minimum lease payments for the corporate office lease on a month-to-month basis are estimated

to be approximately $138,000 for the period January 1, 2020 to December 31, 2020.

Additionally, the Company entered into two separate

short-term lease arrangements for office space, including a lease agreement for the period October 16, 2019 to September 30, 2020

and a lease agreement for the period November 1, 2019 to April 30, 2020, with such lease agreement subsequently renewed for a

six-month period of May 1, 2020 to October 31, 2020.

The minimum lease payments under both lease agreements is an aggregate of

approximately $51,000 for the period January 1, 2020 to October 31, 2020.

Clinical Trials - Agreement with Clinical Research Organization

Note 3, Agreements Related to Acquired Intellectual Property Rights - Patent License Agreement - CWRU, for a discussion

of the “CWRU License Agreement”;

Note 10, Stock-Based Compensation , for information regarding each of the “PAVmed

2014 Long-Term Incentive Equity Plan”

and the separate “Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity

and Note 12, Stockholders’

Equity, Common Stock Purchase Warrants, and Noncontrolling Interest , for

a discussion of each of the Company’s majority-owned subsidiaries and the corresponding noncontrolling interests.

Prepaid Expenses, Deposits and Other Current and Non-Current Assets

expenses and other current assets consisted of the following as of:

Advanced payments to service

providers and suppliers

EsoCheck cell collection supplies

EsoGuard mailer supplies

CarpX devices

Total prepaid

expenses, deposits and other current assets

Company, through its majority-owned subsidiary Lucid Diagnostics Inc., entered into an agreement with a clinical research organization

(“CRO”) in connection with EsoGuard clinical trials, referred to as the EsoGuard CRO Agreement.

Under the CRO agreement,

the Company incurred an on-account deposit of $755 and $643 as of December 31, 2020 and 2019, respectively, of which $643 has

been paid as of December 31, 2020, with the deposit classified as a non-current asset in the line item captioned “Other

assets”

on the accompanying consolidated balance sheet as of December 31, 2020 and 2019.

See Note 7, Commitments and

Contingencies , for a discussion of the EsoGuard CRO Agreement.

Accrued Expenses and Other Current Liabilities

expenses and Other Current Liabilities consist of the following items as of December 31, 2020 and 2019:

Compensation and Employee

CWRU License Agreement fee

CWRU License Agreement Amendment

Operating expenses

EsoGuard supplies

CarpX devices

accrued expenses and other current liabilities

“Compensation and Employee Benefits”

the guaranteed bonus payment under the Company’s Chief Executive

Officer (“CEO”) Employment Agreement;

discretionary bonus payments to other employees;

unused employee vacation time;

and employee payroll deductions related to the PAVmed Inc.

Employee Stock Purchase Plan (“PAVmed Inc.

ESPP”).

Note 11, Stock-Based Compensation , for additional information on the PAVmed Inc.

CWRU License Agreement license fee was approximately $273, of which $50 was previously paid.

The remaining balance of the license

fee is to be paid in quarterly installments of $50, until the license fee is paid-in-full, provided, however, the commencement

of the quarterly payments is subject to Lucid Diagnostics Inc.

consummation of a bona fide financing with an unrelated third-party

in excess of $0.5 million.

See Note 3, Agreements Related to Acquired Intellectual Property Rights - Patent License Agreement

- CWRU , for a discussion of the CWRU License Agreement.

amounts for operating expenses, EsoGuard supplies, and CarpX devices relate to respective amounts incurred by the Company but

not yet invoiced by the respective vendors.

Commitment and Contingencies

Agreements - Office Space

Company’s corporate office rental agreement is on a month-to-month basis, with a 5% per annum increase in the monthly

lease payment effective February 1 of each year, and the lease agreement may be cancelled with two months written notice.

Additionally,

the Company additionally has a short-term (one year or less) and a month-to-month office space rental agreements, which may be

cancelled with two months written notice.

Total rent expense incurred under short-term and /or month-to-month rental agreements

for office space was $189 and $143, for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the

Company’s minimum lease payments for such office space rental agreements are estimated to be a total of approximately $157

for the period January 1, 2021 to December 31, 2021.

Trials - Agreement with Clinical Research Organization

September 2019, the Company, through its majority-owned subsidiary Lucid Diagnostics Inc., entered into an agreement with a clinical

6 unchanged sentences

The CRO agreement may be cancelled with sixty days written notice, without an early termination fee.

CRO agreement, the Company paid to the CRO a refundable on-account deposit of $643,000, with such deposit classified as a non-current

asset in the line item captioned Deposit and other assets on the accompanying consolidated balance sheet as of December

The Company has recognized as research and development expense approximately $700,000 during the year ended December

31, 2019 with respect to the EsoGuard CRO Agreement.

the ordinary course of our business, particularly as we begin commercialization of our products, the Company may be subject to

certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which

may arise from time to time.

Except as otherwise noted herein, the Company does not believe it is currently a party to any other

pending legal proceedings.

Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome

could include monetary damages, and excessive verdicts can result from litigation, and as such, could result in a material adverse

impact on the Company’s business, financial position, results of operations, and /or cash flows.

November 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint

in the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws

at the Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have

been approved were not so approved (including matters relating to the increase in the size of the 2014 Equity Plan and the ESPP).

The relief sought under the complaint includes certain corrective actions by the Company, but does not seek any specific monetary

The Company does not believe it is clear the prior approval of these matters is invalid or otherwise ineffective.

in order to avoid any uncertainty and to avoid the expense of further litigation, on January 5, 2021, the Company’s

Board of Directors determined it would be advisable and in the best interests of the Company and its stockholders to re-submit

these proposals to the Company’s stockholders for ratification and/or approval.

In this regard, the Company held a special

meeting of stockholders on March 4, 2021, at which such matters were ratified and approved.

The parties have reached agreement

on a proposed term sheet to settle the complaint, the terms of which do not contemplate payment of monetary damages to the putative

class in the proceeding.

The settlement of the complaint is pending and is subject to court approval.

December 23, 2020, Benchmark Investments, Inc.

filed a complaint against the Company in the U.S.

District Court of the Southern

District of New York alleging the registered direct offerings of shares of common stock of the Company completed in December 2020

were in violation of provisions set forth in an engagement letter between the Company and the plaintiff.

The plaintiff is seeking

monetary damages of up to $1.3 million.

The Company disagrees with the allegations set forth in the complaint and intends to

vigorously contest the complaint.

the ordinary course of our business, particularly as it begins commercialization of its products, the Company may

be subject to certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental

matters, which may arise from time to time.

Except as otherwise noted herein, the Company does not believe it is currently a party

to any other pending legal proceedings.

Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable

outcome could include monetary damages, and excessive verdicts can result from litigation, and as such, could result in a material

adverse impact on the Company’s business, financial position, results of operations, and /or cash flows.

Additionally, although

2 unchanged sentences

and /or cash flows.

Company executed a “Settlement Agreement & Mutual Releases”, dated December 12, 2018, resulting in the Company

making a settlement payment of $136,606, inclusive of plaintiff’s legal fees of $11,006, to a former financial advisor to

Financial Instruments Fair Value Measurements

Fair Value Measurements

fair value hierarchy table for the periods indicated is as follows:

Value Measurement on a Recurring Basis at

Reporting Date Using (1)

December 31, 2020

Secured Convertible Note - November 2019

Senior Convertible

Note - April 2020

Secured Convertible Note –

December 31, 2019

Senior Secured Convertible

Note - December 2018

Secured Convertible Note - November 2019

noted above, as presented in the fair value hierarchy table, Level-1 represents quoted prices in active markets for identical

items, Level-2 represents significant other observable inputs, and Level-3 represents significant unobservable inputs.

were no transfers between the respective Levels during the years ended December 31, 2020 and 2019.

August 2020 Senior Secured Convertible Note, the April 2020 Senior Convertible Note, the November 2019 Senior Secured Convertible

Note (Series-A and Series-B), and the December 2018 Senior Secured Convertible Note are each accounted for under the ASC 825-10-15-4

fair value option (“FVO”) election.

Under the FVO election 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 with

the resulting fair value adjustment recognized as other income (expense) in the consolidated statement of operations.

regard, 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.

estimated fair value of financial instruments classified within the Level 3 category was determined using both observable inputs

and unobservable inputs.

Unrealized gains and losses associated with liabilities within the Level 3 category include changes in

fair value attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable

long- dated volatilities) inputs.

Additional information with respect to the changes in Level 3 liabilities measured at fair value

for the years ended December 31, 2020 and 2019, is presented in Note 9 –

Outstanding Debt .”

Financial Instruments Fair Value Measurement s - continued

estimated fair value of each of the convertible notes as of December 31, 2020 and 2019, were 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, using the following

Secured Convertible Notes and Senior Convertible Note - Fair

Value and Fair Value Assumptions –

December 31, 2020:

Senior Secured

Convertible Notes

Convertible Note

Senior Secured

Convertible Note

Face value principal payable

Required rate of return

Conversion Price

Value of common stock

Expected term (years)

Risk free rate

Dividend yield

Secured Convertible Notes Fair Value and Fair

Value Assumptions –

December 31, 2019:

Senior Secured

Convertible Note

Senior Secured

Convertible Note

Face value principal payable

Required rate of return

Conversion Price

Value of common stock

Expected term (years)

Risk free rate

Dividend yield

estimated fair values reported utilize 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.

The estimated fair values are subjective and are affected by changes in inputs to the valuation models /analyses, including the

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

Treasury security yields,

and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s

common stock price.

Changes in these assumptions can materially affect the estimated fair values.

Outstanding Debt

fair value and face value principal of outstanding convertible notes as of December 31, 2020 and 2019 are as follows:

Maturity Date

Interest Rate

Price per Share

Value Principal Outstanding

November 2019 Senior Secured

Convertible Note

September 30, 2021

April 2020 Senior Convertible Note

April 30, 2022

August 2020 Senior

Convertible Note

August 6, 2022

Balance as of

December 31, 2020

December 2018 Senior Secured Convertible

December 31, 2020

November 2019

Senior Secured Convertible Note

September 30,

Balance as of

December 31, 2019

Secured Convertible Note issued December 27, 2018 - (“December 2018 Senior Convertible Note”)

Company previously issued a Senior Secured Convertible Note dated December 27, 2018, with a $7.75 million face value principal,

a stated interest rate of 7.875% per annum, and, at the election of the holder, was convertible into shares of common stock of

the Company at a contractual conversion price of $1.60 per share - the “December 2018 Senior Convertible Note”.

the year ended December 31, 2020, with respect to the December 2018 Senior Convertible Notes, approximately $1,692 of installment

principal repayments and the payment of interest thereon of approximately $6, were settled through the issuance of 2,075,198 shares

of common stock of the Company, with a fair value of approximately $2,901 (with such fair value measured as the respective conversion

date quoted closing price of the common stock of the Company).

the previous year ended December 31, 2019, with respect to the December 2018 Senior Convertible Notes, approximately $6,058 of

installment principal repayments and the payment of interest thereon of approximately $200, were settled through the issuance

of 7,773,110 shares of common stock of the Company, with a fair value of approximately $8,089 (with such fair value measured as

the respective conversion date quoted closing price of the common stock of the Company).

Additionally, approximately $279 of interest

non-installment payments were paid in cash during the year ended December 31, 2019.

December 2018 Senior Convertible Note was paid-in-full was paid in full as of June 4, 2020.

Outstanding Debt - continued

Notes - continued

Secured Convertible Note issued November 4, 2019 - Series A and Series B -

(“November

2019 Senior Convertible Notes”)

Company previously issued a Senior Secured Convertible Note dated November 4, 2019, with a $14.0 million aggregate face value

principal, a stated interest rate of 7.875% per annum (to the extent the investor has funded the cash proceeds), and, at the election

of the holder, is convertible into shares of common stock of the Company at a contractual conversion price of $1.60 per share

- 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.

November 2019 Senior Convertible Note - Series A was issued on November 4, 2019, with a face value principal of approximately

$7,000 and a lender fee of approximately $700 (with such lender fee recognized as a current period other expense), resulting in

approximately $6,300 of cash proceeds received by the Company on the issue date.

Additionally, the Company incurred a current

period expense of approximately $550, inclusive of a $410 placement agent advisory fee, along with legal fees.

November 2019 Senior Convertible Note - Series B was issued on March 30, 2020, with a face value principal of approximately $7,000

and a lender fee of approximately $700 (with such lender fee recognized as a current period other expense), resulting in approximately

$6,300 of cash proceeds received by the Company on the issue date.

Additionally, the Company incurred a current period expense

of approximately $410 with respect to a placement agent advisory fee.

Company incurred interest expense of 3.0% per annum on the $7.0 million face value principal of the (unfunded) Series B during

the period from November 4, 2019 to March 29, 2020 when the Series B was not funded.

The (cash) payment of such 3.0% interest

on the $7.0 million face value principal resulted in the recognition of approximately $53 and $33 of interest expense during the

year ended December 31, 2020 and 2019, respectively, with such interest expense included in other income (expense).

respect to the November 2019 Senior Convertible Notes, in the year ended December 31, 2020, approximately $13,044 of installment

principal repayments and the payment of interest thereon of approximately $465, were settled through the issuance of 8,854,004

shares of common stock of the Company, with a fair value of approximately $18,802 (with such fair value measured as the respective

conversion date quoted closing price of the common stock of the Company).

As of December 31, 2020, the November 2019 Senior Convertible

Notes remaining unpaid outstanding face value principal was approximately $956.

to December 31, 2020, on January 5, 2021, the repayment of the remaining face value principal of the November 2019 Senior

Convertible Note of approximately $956, along with the payment of interest thereon of approximately $7, were settled

with the issuance of 667,668 shares common stock of the Company, with a fair value of approximately $1,723 (with such fair value

measured as the respective conversion date quoted closing price of the common stock of the Company), with such final conversion

resulting in the November 2019 Senior Convertible Note being paid-in-full as of January 5, 2021.

Outstanding Debt - continued

Notes - continued

Convertible Note issued April 30, 2020 - (“April 2020 Senior Convertible Note”)

Company issued a Senior Convertible Note dated April 30, 2020, with a face value principal of approximately $4,111, a stated interest

rate of 7.875% per annum, and, at the election of the holder, is convertible into shares of common stock of the Company at a contractual

conversion price of $5.00 per share - the “April 2020 Senior Convertible Note”.

April 2020 Senior Convertible Note resulted in approximately $3,700 of cash proceeds received by the Company on the issue date,

after a lender fee of approximately $411 (with such lender fee recognized as a current period other expense).

Additionally, the

Company incurred a current period expense of approximately $200, inclusive of a $120 placement agent advisory fee, along with

Company was required to pay the holder in cash all

remaining outstanding unpaid face value principal at 115% of such principal amount plus unpaid interest thereon, on the April

30, 2022 maturity date.

the year ended December 31, 2020, approximately $215 of interest non-installment payments were paid in cash.

unpaid outstanding face value principal of the April 2020 Senior Convertible Note is approximately $4,111 as of December 31, 2020,

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

Secured Convertible Note issued August 6, 2020 - (“August 2020 Senior Convertible Note”)

Company issued a Senior Secured Convertible Note dated August 6, 2020, with a face value principal of approximately $7,750,

a stated interest rate of 7.875% per annum, and, at the election of the holder, is convertible into shares of common stock of

the Company at a contractual conversion price of $5.00 per share - the “August 2020 Senior Convertible Note”.

August 2020 Senior Convertible Note resulted in approximately $7,000 of cash proceeds received by the Company on the issue date,

after a lender fee of approximately $750 (with such lender fee recognized as a current period other expense).

Additionally, the

Company incurred a current period expense of approximately $50 with respect to legal fees.

Company was required to pay the holder in cash all

remaining outstanding unpaid face value principal at 115% of such principal amount plus unpaid interest thereon on the August

5, 2022 maturity date.

the year ended December 31, 2020, approximately $246 of interest non-installment payments were paid in cash.

unpaid outstanding face value principal of the April 2020 Senior Convertible Note is approximately $7,750 as of December 31, 2020,

of which such principal 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, the Company paid in cash a $350 partial principal repayment of the April 2020 Senior

Convertible Note;

and on March 2, 2021, the Company paid in cash a total of $14,466 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.

Outstanding Debt - continued

Notes - continued

- Sr Secured Convertible Notes and Senior Convertible Note

of December 31, 2020, each of the November 2019 Senior Convertible

Note, April 2020 Senior Convertible Note, and the August 2020 Senior Convertible Note were each held by the same investor

and its affiliates.

the November 2019 Senior Convertible Notes and the April 2020 Senior Convertible Note, as such convertible notes are discussed

above, the Company was 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.

Additionally, the April 2020 Senior Convertible Note contained

a financial covenant requiring the Company to maintain available cash in the amount of approximately $1.8 million at the end

of each quarter, with such amount increased to $2.0 million under the August 2020 Senior Convertible Note.

As of December 31,

2020, the Company was in compliance with this financial covenant.

August 2020 Senior Convertible Note contained substantively similar customary affirmative and negative covenants as those

described above, as well as the past transactions entered into with the investor, including the November 2019 Senior Convertible

The August 2020 Senior Secured Convertible Note contained security interest with a first priority in all of

our assets, including all of the Company’s current and future significant subsidiaries, similar to the November 2019 Senior

Secured Convertible Notes.

Notwithstanding,

as noted above, subsequent to December 31, 2020:

the November 2019 Senior Convertible Note was repaid-in-full as of January 5,

and both the April 2020 Senior Convertible Note and the August 2020 Senior Convertible Note were repaid-in-full as of March

Outstanding Debt - continued

Notes - continued

reconciliation of the fair value of the convertible notes for the years ended December 31, 2020 and 2019 is as follows:

Income (Expense)

Value - December 31, 2019

value principal –

value adjustment –

repayments –

Non-installment

payments –

Non-installment

payments –

in fair value

2019 Senior Secured Convertible Note - Series B;

2020 Senior Convertible Note;

2020 Senior Secured Convertible Note

Value at December 31, 2020

Income (Expense) - Change in fair value –

year ended December 31, 2020

Value - December 31, 2018

value principal –

value adjustment –

repayments –

Non-installment

payments –

Non-installment

payments –

in fair value

- November 2019 Senior Secured Convertible Note - Series A

Value at December 31, 2019

Income (Expense) - Change in fair value –

year ended December 31, 2019

Senior Convertible Notes presented above are each accounted for under the ASC 825-10-15-4 fair value option (“FVO”)

election, 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, with the resulting fair value adjustment

recognized as other income (expense) in the consolidated statement of operations.

In this regard, 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.

See Note 8, Financial Instruments Fair Value Measurements , for a further discussion of fair

value assumptions.

Outstanding Debt - continued

Act Paycheck Protection Program Loan

April 8, 2020 the Company entered into a loan agreement with JP Morgan Chase, N.A., and received approximately $300 of proceeds,

pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) Paycheck Protection Program (“PPP”)

- the “PPP Loan”.

Paycheck Protection Program provides that (1) the use of PPP Loan amount shall be limited to certain qualifying expenses, (2)

100 per cent of the principal amount of the loan is guaranteed by the Small Business Administration and (3) an amount up to the

full principal amount may qualify for loan forgiveness in accordance with the terms of CARES Act.

Under the CARES Act, loan forgiveness

is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during

either, at our discretion, the eight-week period or twenty-four week period beginning on the date of disbursement of proceeds

from the PPP loan.

In the event the PPP loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is

applied to outstanding principal with the Company being obligated to make equal monthly payments on the unforgiven principal and

interest balances to fully amortize the loan balance by the maturity date.

PPP Loan matures on April 8, 2022 and bears interest at a rate of approximately 1.0% per annum.

Monthly amortized principle and

interest payments are deferred in accordance with The Paycheck Protection Flexibility Act of 2020 which extended the deferral

period for loan payments to either (1) the date that U.S.

Small Business Administration remits the borrower’s loan forgiveness

amount to the lender or (2) if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s

loan forgiveness covered period.

As such, as of December 31, 2020, and to date, no principal or interest payments have been made.

Stock-Based Compensation

10 unchanged sentences

board of directors.

total of 7,951,081 shares of common stock of PAVmed Inc.

are reserved for issuance under the PAVmed Inc.

2014 Equity Plan, with

2,548,406 shares available for grant as of December 31, 2019, exclusive of 500,854 PAVmed Inc.

stock options previously granted

outside the PAVmed Inc.

2014 Equity Plan.

Inc 2014 Equity Plan - Stock Options

Outstanding at December 31, 2017

Outstanding at December 31, 2018

Vested and exercisable

at December 31, 2018

Outstanding at December 31, 2018

Outstanding at December 31, 2019

Vested and exercisable

at December 31, 2019

aggregate intrinsic value of stock options granted under the PAVmed Inc.

2014 Equity as of December 31, 2019 was $393,500 with

respect to such stock options outstanding and $126,375 with respect to such stock options vested and exercisable.

The intrinsic

value as of December 31, 2018 was $0 with respect to such stock options outstanding and vested and exercisable.

The intrinsic

value is computed as the difference between the quoted price of the PAVmed Inc.

common stock on each of December 31, 2019 and

2018 and the exercise price of the underlying PAVmed Inc.

stock options, to the extent such quoted price is greater than the exercise

Inc 2014 Equity Plan - Restricted Stock Awards

March 15, 2019, a total of 700,000 restricted stock awards were granted to employees under the PAVmed Inc.

2014 Equity Plan, representing

a corresponding number of shares of common stock of the Company, which vest ratably on an annual basis commencing March 15, 2020

and ending March 15, 2022.

The restricted stock awards are subject to forfeiture if the requisite service period is not completed.

As of December 31, 2019, no restricted stock awards had vested.

Subsequent to December 31, 2019, on March 15, 2020, a total

of 233,334 restricted stock awards had vested.

Employee Stock Purchase Plan

Employee Stock Purchase Plan (“ESPP”), adopted by the Company’s board of directors effective April

1, 2019, with an initial reservation of 250,000 shares of PAVmed Inc.

common stock, which was subsequently increased to 750,000

shares in March 2020, provides eligible employees the opportunity to purchase shares of PAVmed Inc.

common stock through payroll

deductions during six month periods, wherein the “purchase price per share”

is the lower of 85% of the quoted closing

price per share of PAVmed Inc.

common stock at the beginning or end of each six month share purchase period.

The PAVmed Inc.

share purchase dates are March 31 and September 30, with an initial six month payroll deduction period of April 1, 2019 to September

On September 30 2019 82,772 shares of PAVmed Inc.

common stock were issued for cash proceeds of $67,436 under the ESPP.

Subsequent to December 31, 2019, on March 31, 2020 154,266 shares of PAVmed Inc.

common stock were issued for cash proceeds

The ESPP liability for payroll deductions as of December 31, 2019 are included in accrued expense and other current

liabilities, as discussed in Note 5, Accrued Expense and Other Current Liabilities .

Stock-Based Compensation - continued

of December 31, 2020, the PAVmed Inc.

2014 Equity Plan has 2,003,406 shares available-for-grant of stock-based awards,

inclusive of the supplemental share reservation increase of an additional 2,000,000 shares, approved by the PAVmed Inc.

of directors on March 12, 2020, and approved at the PAVmed Inc.

2020 annual meeting of stockholders on July 24, 2020, and re-approved

at a special meeting of stockholders of PAVmed Inc.

on March 4, 2021.

A discussion of the PAVmed Inc.

special meeting of

stockholders is presented in Note 7, Commitments and Contingencies - Legal Proceedings .

available-for-grant exclude a total of 500,854 PAVmed Inc.

stock options previously granted outside the PAVmed Inc.

2014 Equity Plan - Stock Options

options issued and outstanding under the PAVmed Inc.

2014 Equity Plan are as follows:

stock options at December 31, 2018

stock options at December 31, 2019

and exercisable stock options at December 31, 2019

stock options at December 31, 2019

stock options at December 31, 2020

and exercisable stock options at December 31, 2020

options granted under the PAVmed Inc.

2014 Equity Plan vest ratably over twelve quarters

generally commencing with the grant date quarter and have a ten year contractual term

from date-of-grant.

intrinsic value is computed as the difference between the quoted price of the PAVmed

common stock on each of December 31, 2020 and 2019 and the exercise price of the

underlying PAVmed Inc.

stock options, to the extent such quoted price is greater than

the exercise price.

to December 31, 2020, as approved at the March 4, 2021 special meeting of stockholders, a total of 225,000 stock options were

granted with a weighted average exercise price of $2.03 per share of common stock of the Company.

A discussion of the PAVmed Inc.

special meeting of stockholders is presented in Note 7, Commitments and Contingencies - Legal Proceedings.

Stock-Based Compensation –

2014 Equity Plan - Restricted Stock Awards

May 1, 2020, a total of 950,000 restricted stock awards were granted under the PAVmed Inc.

2014 Equity Plan, vesting as follows:

450,000 restricted stock awards vesting ratably on an annual basis over a three year period with an initial annual vesting date

of May 1, 2021;

and 500,000 restricted stock awards vesting on May 1, 2023.

The restricted stock awards are subject to forfeiture

if the requisite service period is not completed.

March 15, 2019, a total of 700,000 restricted stock awards were granted under the PAVmed Inc.

2014 Equity Plan, vesting as follows:

233,334 restricted stock awards vested on March 15, 2020;

and 466,666 restricted awards vesting on March 15, 2022.

The restricted

stock awards are subject to forfeiture if the requisite service period is not completed.

Diagnostics Inc.

1 unchanged sentence

Lucid Diagnostics Inc.

2018 Long-Term Incentive Equity Plan (the “Lucid Diagnostics Inc.

2018 Equity Plan”) became

effective on May 12, 2018 and is separate from the PAVmed Inc.

2018 Long-Term Incentive Equity Plan (“Lucid Diagnostics Inc.

2018 Equity Plan”) is separate

and apart from the PAVmed Inc.

2014 Equity Plan discussed above.

The Lucid Diagnostics Inc.

Equity Plan is designed to enable Lucid Diagnostics Inc.

to offer employees, officers, directors, and consultants, as defined,

an opportunity to acquire shares of common stock of Lucid Diagnostics Inc.

The types of awards that may be granted under the Lucid

Diagnostics Inc.

2018 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards

subject to limitations under applicable law.

2018 Equity Plan is designed to enable

Lucid Diagnostics Inc.

to offer employees, officers, directors, and consultants, as defined, an opportunity to acquire shares

of common stock of Lucid Diagnostics Inc.

The types of awards that may be granted under the Lucid Diagnostics Inc.

Plan include stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under

applicable law.

All awards are subject to approval by the Lucid Diagnostics Inc.

6 unchanged sentences

Diagnostics Inc.

2018 Equity Play –

Stock Options

Outstanding at December 31, 2017

Outstanding at December 31, 2018

Vested and exercisable

2018 Equity Plan - Stock Options

options issued and outstanding under the Lucid Diagnostics Inc.

2018 Equity Plan for the period noted is as follows:

Outstanding stock options

at December 31, 2018

Unvested at December 31, 2018

Outstanding at December 31, 2018

Outstanding at December 31, 2019

Outstanding stock

options at December 31, 2019

Outstanding stock

options at December 31, 2020

Vested and exercisable

at December 31, 2019

Unvested at December 31, 2019

Stock-Based Compensation (continued)

stock options at December 31, 2020

Stock options granted under the

Lucid Diagnostics Inc.

2018 Equity Plan, have a ten-year contractual term from date of grant, and vest ratably over twelve

successive calendar quarters, with first vesting date in the quarter of the date of grant.

the year ended December 31, 2020, 3,333 stock options issued under the Lucid Diagnostics Inc.

2018 Equity Plan were exercised

for cash proceeds of $5, resulting in the issue of a corresponding number of shares of common stock of Lucid Diagnostics Inc.

Stock-Based Compensation –

Diagnostics Inc.

2018 Equity Plan - Restricted Stock Awards

to December 31, 2020, on March 1, 2021, a total of 1,040,000 restricted stock awards were granted under the Lucid Diagnostics

2018 Equity Plan, with a single vesting date of March 1, 2023.

The restricted stock awards are subject to forfeiture if the

requisite service period is not completed.

Compensation Expense

stock-based compensation expense recognized for both the PAVmed Inc.

consolidated stock-based compensation expense recognized for both the PAVmed Inc.

2014 Equity Plan and the Lucid Diagnostics Inc.

Plan, with respect to stock options and restricted stock awards, for the periods indicated, was as follows:

Ended December 31,

2018 Equity Plan, with respect to stock options and restricted stock awards as discussed above, for the periods indicated, was

General and administrative

1 unchanged sentence

consolidated stock-based compensation expense classified in research and development expenses, as presented above, includes $65

and $53,233 in the year ended December 31, 2019 and 2018, respectively, recognized by Lucid Diagnostics Inc., with stock-based

compensation expense recognized by Lucid Diagnostics Inc.

inclusive of stock options granted under the Lucid Diagnostics Inc.

and $174 in the years ended December 31, 2020 and 2019, respectively, recognized by Lucid Diagnostics Inc., with stock-based compensation

expense recognized by Lucid Diagnostics Inc.

inclusive of each of:

stock options granted under the Lucid Diagnostics Inc.

Equity Plan to employees of PAVmed Inc.

and to non-employees each providing services to Lucid Diagnostics Inc.;

options granted under the PAVmed Inc.

2014 Equity Plan to non-employees providing services to Lucid Diagnostics Inc., summarized

as follows for the periods noted:

Ended December 31,

and to non-employee consultants, with each providing services to Lucid Diagnostics Inc.;

and stock options granted under the PAVmed Inc.

2014 Equity Plan to non-employee consultants providing services to Lucid Diagnostics

Inc., summarized as follows for the periods noted:

Lucid Diagnostics Inc 2018

Equity Plan - research and development expenses

Equity Plan –

research and development expenses

PAVmed Inc 2014

Equity Plan - research and development expenses

Total stock-based compensation expense

Total stock-based

compensation expense –

recognized by Lucid Diagnostics Inc

of December 31, 2019, under the PAVmed Inc.

2014 Equity Plan, total unrecognized stock-based compensation expense of approximately

$1.2 million is expected to be recognized over the weighted average remaining requisite service period of 1.1 years;

the Lucid Diagnostics Inc.

2018 Equity Plan, total unrecognized stock-based compensation expense of approximately $0.1 million

is expected to be recognized over the weighted average remaining requisite service period of 1.8 years.

Company uses the Black-Scholes valuation model to estimate the fair value of stock options granted under both the Lucid Diagnostics

2018 Equity Plan and the PAVmed Inc.

2014 Equity Plan, which requires the Company to make certain estimates and assumptions,

with the weighted-average valuation assumptions for stock-based awards, as follows:

expected term of stock options represents the period of time stock options are expected to be outstanding, which for employees

is the expected term derived using the simplified method and for non-employees is the remaining contractual term;

expected stock price volatility is based on historical stock price volatilities of similar entities within the medical device

industry over the period commensurate with the expected term or remaining contractual term of the respective stock option;

risk-free interest rate is based on the interest rate payable on U.S.

Treasury securities in effect at the time of grant for

a period commensurate with the expected term of the stock option;

expected dividend yield is based on annual dividends of $0.00 as there has not been a dividend paid to-date, and there is

no plan to pay dividends for the foreseeable future.

price per share of PAVmed Inc.

common stock used in the computation of estimated fair value of stock options granted under the

2014 Equity Plan is its quoted closing price per share.

The price per share of Lucid Diagnostics Inc.

used in the computation of estimated fair value of stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan was

estimated using a discounted cash flow method applied to a multi-year forecast of its future cash flows.

of December 31, 2020, unrecognized stock-based compensation expense and weighted average remaining requisite service period with

respect to stock options and restricted stock awards issued under each of the PAVmed Inc.

2014 Equity Plan and the Lucid Diagnostics

2018 Equity Plan, as discussed above, is as follows:

2014 Equity Plan

Restricted Stock

Lucid Diagnostics Inc.

2018 Equity Plan

Stock Options

Stock-Based Compensation - continued

Compensation Expense - continued

compensation expense recognized for stock options granted to employees and members of the board of directors under the PAVmed

2014 Equity Plan was based on a weighted average fair value of $0.92 per share and $1.21 per share, during the year ended

December 31, 2019 and 2018, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:

Ended December 31

Expected term of stock options

Expected stock price volatility

Risk free interest rate

Expected dividend yield

compensation expense recognized for stock options granted to non-employees under the PAVmed Inc.

2014 Equity Plan was based on

a weighted average fair value of $1.97 per share and $1.97 per share, during the year ended December 31, 2019 and 2018, respectively,

calculated using the following weighted average Black-Scholes valuation model assumptions:

Ended December 31

Expected term of stock options

Expected stock price volatility

Risk free interest rate

Expected dividend yield

compensation expense recognized for stock options granted to employees under the Lucid Diagnostics Inc.

2018 Equity Plan was based

on a weighted average fair value of $0.32 per share during the year ended December 31, 2019, calculated using the following weighted

average Black-Scholes valuation model assumptions:

Ended December 31

Expected term of stock options

Expected stock price volatility

Risk free interest rate

Expected dividend yield

were no stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan to employees during the prior year ended December

compensation expense recognized for stock options granted to non-employees under the Lucid Diagnostics Inc.

2018 Equity Plan was

based on a weighted average fair value of $0.29 and $0.51 per share during the years ended December 31, 2019 and 2018, respectively,

calculated using the following weighted average Black-Scholes valuation model assumptions:

stock options granted under the PAVmed Inc.

2014 Equity Plan during the years ended December 31, 2020 and 2019, had a weighted

average estimated fair value of $1.27 per share and $0.48 per share, respectively, calculated using the following weighted average

Black-Scholes valuation model assumptions:

Ended December 31,

term of stock options (in years)

Expected stock price

Risk free interest

Expected dividend

compensation expense recognized with respect to stock options granted under the PAVmed Inc.

2014 Equity Plan to non-employees

in the prior year ended December 31, 2019, which was recognized under the previous provisions of ASC 505-50, was

based on a weighted average estimated fair value of such stock options of $1.97 per share, calculated using Black-Scholes valuation

model weighted-average assumptions of an 8.5 year contractual term, a 59% expected stock price volatility, a 2.3% risk free interest

rate, and a 0% expected dividend rate.

restricted stock awards granted to employees under the PAVmed Inc.

2014 Equity Plan are measured at their grant date estimated

fair value based on the date-of-grant quoted price per share of PAVmed Inc.

common stock.

The 700,000 restricted stock awards

granted on March 15, 2019 had an aggregate fair value of approximately $742 with such stock-based compensation expense recognized

ratably over the requisite service period, which is the three-year vesting period as discussed above.

The 950,000 restricted stock

awards granted on May 1, 2020 had an aggregate fair value of approximately $1,938 with such stock-based compensation expense recognized

ratably over the requisite service period, which is the three-year vesting period as discussed above.

stock-based compensation expense recognized in general and administrative expense related to restricted stock awards was approximately

$576 and $206 in the years ended December 31, 2020 and 2019, respectively.

The stock-based compensation expense recognized in

research and development expense related to restricted stock awards was $102 in the year ended December 31, 2020 (there was no

stock-based compensation expense recognized in research and development expense with respect to restricted stock awards in the

previous year ended December 31, 2019).

noted above, in the year ended December 31, 2020, there were no stock-based awards granted under the Lucid Diagnostics Inc 2018

In the previous year ended December 31, 2019, stock-based compensation expense recognized with respect to stock options

granted under the Lucid Diagnostics Inc.

2018 Equity Plan was based on a weighted average estimated fair value of such stock options

of $0.32 per share, and was calculated using the following weighted average Black-Scholes valuation model assumptions:

Expected term of stock options

2 unchanged sentences

Expected dividend yield

Financial Instruments Fair Value Measurements

Fair Value Measurements

fair value hierarchy table for the periods indicated is as follows:

Value Measurement on a Recurring Basis at Reporting Date Using (1)

December 31, 2019

Senior Secured Convertible

Note - issued December 27, 2018

Senior Secured

Convertible Note - Series A - issued November 4, 2019

December 31, 2018

Senior Secured

Convertible Note - issued December 27, 2018

noted above, as presented in the fair value hierarchy table, Level-1 represents quoted prices in active markets for identical

items, Level-2 represents significant other observable inputs, and Level-3 represents significant unobservable inputs.

Value Option Election - Senior Secured Convertible Notes Issued November 4 2019 and December 27, 2018

Company has issued each of Senior Secured Convertible Notes issued November 4, 2019 with an aggregate original face value principal

of $14.0 million and the Senior Secured Convertible Note issued December 27, 2018 with an original face value of $7.75 million.

The Senior Secured Convertible Notes issued November 4, 2019 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 herein as the “Series A November 2019 Senior Convertible

and the “Series B November 2019 Senior Convertible Note”.

Under the Series A November 2019 Senior Convertible

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

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

at their election under the prepayment provisions of such note, delivered to the Company cash proceeds of $6.3 million on March

30, 2020 after deducting $0.7 million of lender fees.

Series A November 2019 Senior Convertible Note and the Senior Secured Convertible Note issued December 27, 2018, are each accounted

for under the ASC 825-10-15-4 fair value option (“FVO”) election.

(As well, the Series B November 2019 Senior Convertible

Note will also be accounted for under the FVO election.) Under the FVO election 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

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.

Financial Instruments Fair Value Measurements - continued

Value Option Election - Senior Secured Convertible Notes Issued November 4 2019 and December 27, 2018 - continued

Secured Convertible Notes - November 2019 - Series A

discussed above, under the ASC-825 FVO election the Series A November 2019 Senior Convertible Note was initially measured at its

estimated fair value on its issue date of November 4, 2019, summarized as follows:

Series A November 2019

Senior Secured Convertible Note - Issue Date November 4, 2019

Face value principal - Series

A November 2019 Senior Convertible Note

Cash proceeds

- Series A November 2019 Senior Convertible Note

Loss-upon-issue - lender fees

Fair value adjustment

Series A November 2019 Senior Convertible Note - issue date November 4, 2019

Series A November 2019 Senior Convertible Note estimated fair value and face value principal, and the corresponding changes in

estimated fair value and face value principal payable, as of each of the respective dates noted, are as follows:

Fair Value /Face Value principal - issue date

November 4, 2019

repayment - bi-monthly Installment

Amount - common stock

repayment - Accelerated Installment

Amount - common stock

non-installment payments - cash

non-installment payments - common

Fair value adjustment

Fair Value /Face Value principal

- December 31, 2019

Series A November 2019 Senior Convertible Note fair value adjustment on the November 4, 2019 issue date and at December 31, 2019

of $475,250 was recognized as a 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).

estimated fair value of the Senior Convertible Note Series A as of its 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, using the following assumptions:

November 4, 2019

Face value principal payable

Original Conversion price

Value of common stock

Expected term (years)

Risk free rate

Financial Instruments Fair Value Measurements - continued

Value Option Election - Senior Secured Convertible Notes Issued November 4 2019 and December 27, 2018 - continued

Secured Convertible Note Issued December 27, 2018

discussed above, under the ASC-825 FVO election, the December 2018 Senior Convertible Note was initially measured at its estimated

fair value on its issue date of December 27, 2018, summarized as follows:

Face Value principal payable

- issue date December 27, 2018

Cash proceeds

Loss-upon-issue - lender fees

Fair value adjustment

December 2018 Senior Convertible Note - Issue Date December 27, 2018

December 2018 Senior Convertible Note estimated fair value and face value principal, and the corresponding changes in estimated

fair value and face value principal payable, as of each of the respective dates noted, is summarized as follows:

Fair Value /Face Value principal

payable - issue date December 27, 2018

repayment - bi-monthly Installment

Amount - common stock

repayment - Accelerated Installment

Amount - common stock

non-installment payments - cash

non-installment payments - common

Fair value adjustment

Fair Value /Face Value Principal Payable - December 31, 2018

repayment - bi-monthly Installment

Amount - common stock

repayment - Accelerated Installment

Amount - common stock

repayment - voluntary conversion

price adjustments - common stock

non-installment payments - cash

non-installment payments - common

Fair value adjustment

Fair Value /Face Value Principal

Payable - December 31, 2019

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 as of December 31, 2019, December 31, 2018 and on issue date of December 27, 2018 of the December 2018 Senior

Secured Convertible Note was computed using a combination of the present value of the Senior Secured Convertible Note cash flows

using a synthetic credit rating analysis’

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

following assumptions:

Fair Value Assumptions

December 2018 Senior

Secured Convertible Note

Face value principal payable

Required rate of return

Conversion price

Value of common stock

Expected term (years)

Risk free rate

Dividend yield

Financial Instruments Fair Value Measurements - continued

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

March 15, 2018, the “Series A and Series A-1 Exchange Offer”

was completed, wherein, two shares of Series B Convertible

Preferred Stock were issued-upon-exchange of one share of Series A Convertible Preferred Stock, and five Series Z Warrants were

issued-upon-exchange of one Series A Warrant;

and, 1.33 shares of Series B Convertible Preferred Stock were issued-upon-exchange

of one share of Series A-1 Convertible Preferred Stock, and five Series Z Warrants were issued-upon-exchange of one Series A-1

Collectively, such exchanges are referred to as the “Series A and Series A-1 Exchange Offer”

and the “March

15, 2018 Exchange Date”.

The Series A and Series A-1 Exchange Offer was offered to and accepted by all holders of the Series

A Convertible Preferred Stock and Series A Warrants and the Series A-1 Convertible Preferred Stock and Series A-1 Warrants.

the March 15, 2018 Exchange Date:

(i) a total of 975,568 shares of Series B Convertible Preferred Stock were issued-upon-exchange,

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, (ii) a total of 2,739,190 Series Z Warrants were issued-upon-exchange, 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.

of the March 15, 2018 Exchange Date of the Series A and Series A-1 Exchange Offer, there were no issued and outstanding shares

of Series A Convertible Preferred Stock and Series A Warrants, nor shares of Series A-1 Convertible Preferred Stock and Series

A-1 Warrants, as each were fully exchanged-upon-issue of shares of Series B Convertible Preferred Stock and Series Z Warrants,

compensation expense recognized with respect to stock options granted under the Lucid Diagnostics Inc.

2018 Equity Plan to non-employees

in the prior year ended December 31, 2019, which was recognized under the previous provisions of ASC 505-50, was

based on a weighted average estimated fair value of such stock options of $0.29 per share, calculated using Black-Scholes valuation

model weighted-average assumptions of a 8.8 year contractual term, a 57% expected stock price volatility, a 2.1% risk free interest

rate, and a 0% expected dividend rate.

Stock-Based Compensation - continued

Employee Stock Purchase Plan (“ESPP”)

Employee Stock Purchase Plan (“PAVmed Inc.

ESPP”), adopted by the Company’s board of directors effective

April 1, 2019, provides eligible employees the opportunity to purchase shares of PAVmed Inc.

common stock through payroll deductions

during six month periods, wherein the purchase price per share of common stock is the lower of 85% of the quoted closing price

per share of PAVmed Inc.

common stock at the beginning or end of each six month share purchase period.

ESPP share purchase dates are March 31 and September 30.

On each of the March 31, 2020 and September 30, 2020 ESPP

purchase dates, 154,266 and 152,289 shares of PAVmed Inc.

common stock were issued for proceeds of approximately $126 and

$231, respectively;

Additionally, 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

of the Series A and Series A-1 Exchange Offer.

Note 13, Preferred Stock, for further information with respect to Series B Convertible Preferred Stock, Series A-1 Convertible

Preferred Stock, and Series A Convertible Preferred Stock, and Note 14, Stockholders’

Equity and Common Stock Purchase

Warrants , for further information with respect to Series Z Warrants, Series A-1 Warrants, and Series A Warrants.

Financial Instruments Fair Value Measurements - continued

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

B Convertible Preferred Stock Issued-Upon-Exchange of Series A Convertible Preferred Stock

Z Warrants Issued-Upon-Exchange Of Series A Warrants

noted above, the Series A and Series A-1 Exchange Offer resulted in the extinguishment of:

249,667 shares of Series A Convertible

Preferred Stock along with the corresponding (bifurcated) conversion option derivative liability, and, 268,001 Series A Warrants,

each resulting from the issue-upon-exchange of:

499,334 shares of Series B Convertible Preferred Stock and 1,340,005 Series Z

Warrants, respectively, each as discussed herein below.

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

B Convertible Preferred Stock Issued-Upon-Exchange of Series A Convertible Preferred Stock

March 15, 2018 Exchange Date estimated fair value of the consideration given of $873,835 of the 499,334 shares of the equity-classified

Series B Convertible Preferred Stock issued-upon-exchange, as compared to the (temporary equity) carrying value of 249,667 shares

of Series A Convertible Preferred Stock and the estimated fair value of the corresponding conversion option derivative liability

of $147,304, resulted in incremental estimated fair value of $726,531 recognized as a deemed dividend charged to accumulated deficit

on the March 15, 2018 Exchange Date, with such deemed dividend included as a component of “net loss attributable to PAVmed

common stockholders”, summarized as follows:

Series B Convertible Preferred Stock Issued-Upon-Exchange

Series A Convertible

Preferred Stock and Conversion Option Derivative Liability

Extinguished-Upon-Exchange

Deemed Dividend Charged to

Accumulated Deficit

March 15, 2018

Exchange Date

Fair value - 499,334 shares of Series B Convertible Preferred

Stock issued-upon-exchange

Fair value - Series

A Convertible Preferred Stock conversion option derivative liability extinguished-upon-exchange

value - 249,667 shares of Series A Convertible Preferred Stock extinguished-upon-exchange

Deemed dividend

charged to accumulated deficit

March 15, 2018 Exchange Date estimated fair value of $873,835 of the 499,334 shares of Series B Convertible Preferred Stock issued-upon-exchange

of 249,667 Series A Convertible Preferred Stock was 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 following

Fair Value Assumptions

Series B Convertible Preferred Stock

‘March 15,

Aggregate fair value

Series B Convertible Preferred Stock

Required rate of return

Common stock conversion factor numerator

Common stock conversion factor denominator

Value of Common Stock

Expected term (years)

Risk free rate

Dividend yield

Series A Convertible Preferred Stock was classified in temporary equity in the consolidated balance sheet and had a carrying value

of $0 resulting from the issuance date initial estimated fair values of the Series A Warrant derivative liability and the Series

A Convertible Preferred Stock conversion option derivative liability being in excess of the Series A Preferred Stock Units private

placement issuance gross proceeds, with such excess recognized as a current period loss in the consolidated statement of operations.

See Note 13, Preferred Stock, for a further discussion of the Series A Preferred Stock Units private placement and the

Series A Convertible Preferred Stock.

Financial Instruments Fair Value Measurements - continued

B Convertible Preferred Stock and Series Z Warrants - Series A and Series A-1 Exchange Offer - March 15, 2018 - continued

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

Z Warrants Issued-Upon-Exchange of Series A Warrants

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

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 expense.

In this regard, the March 15, 2018 Exchange Date adjustment of the

estimated fair value of the Series A Warrants derivative liability resulted in the recognition of a net expense of $96,480 comprised

(i) income of $246,561 upon the Series A Warrant derivative liability being adjusted to its March 15, 2018 Exchange Date estimated

fair value of $514,562, as noted above, and (ii) an expense of $343,041 resulting from the incremental estimated fair value of

the consideration given of $857,603 of the 1,340,005 Series Z Warrants issued-upon-exchange as compared to the estimated fair

value of $514,562 of the 268,001 Series A Warrants derivative liability extinguished-upon-exchange, summarized as follows:

Values Change Series A Warrant

Series Z Warrants Issued

Upon Exchange of Series A Warrants - March 15, 2018

A Warrants Derivative Liability

Liability Other Income (Expenses)

Series A Warrants derivative

liability - December 31, 2017

Series A Warrants

derivative liability change in fair value - March 15, 2018

Series A Warrants derivative

liability - March 15, 2018 Exchange Date

Series Z Warrants

issued-upon-exchange of Series A Warrants - estimated fair value

Series Z Warrants

issued-upon-exchange of Series A Warrants - March 15, 2018

March 15, 2018 Exchange Date estimated fair value of $857,603 of the 1,340,005 Series Z Warrants issued-upon-exchange of 268,001

Series A Warrants was computed using a Black-Scholes valuation model, using the following assumptions:

Fair Value Assumptions

Series Z Warrants issued upon exchange of Series A Warrants

March 15, 2018

Aggregate fair value

Series Z Warrants issued upon exchange

of Series A Warrants

Exercise price per share - Series Z Warrant

Value of Common Stock

Expected term (years)

Risk free rate

Dividend yield

Financial Instruments Fair Value Measurements - continued

B Convertible Preferred Stock and Series Z Warrants - Series A and Series A-1 Exchange Offer - March 15, 2018 - continued

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

B Convertible Preferred Stock Issued-Upon-Exchange of Series A-1 Convertible Preferred Stock

Z Warrants Issued-Upon-Exchange of Series A-1 Warrants

noted above, the Series A and Series A-1 Exchange Offer resulted in the extinguishment of:

357,259 shares of Series A-1 Convertible

Preferred Stock and, 279,837 Series A-1 Warrants, resulting from the issue-upon-exchange of 476,234 shares of Series B Convertible

Preferred Stock and 1,399,185 Series Z Warrants, respectively, each as discussed herein below.

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

B Convertible Preferred Stock Issued Upon Exchange of Series A-1 Convertible Preferred Stock

March 15, 2018 Exchange Date estimated fair value of the consideration given of $833,410 of the equity-classified 476,234 shares

of Series B Convertible Preferred Stock issued-upon-exchange, was less than the carrying value of $1,032,650 of the equity-classified

357,259 shares Series A-1 Convertible Preferred Stock, resulting in an increase to additional paid in capital of $199,241 on the

March 15, 2018 Exchange Date, with such amount included as a component of “net loss attributable to PAVmed Inc.

common stockholders”,

summarized as follows:

B Convertible Preferred Stock Issued-Upon-Exchange

A-1 Convertible Preferred Stock Extinguished-Upon-Exchange

Increase - Additional

Paid-In Capital

March 15, 2018

Exchange Date

Fair value - 476,234 shares

of Series B Convertible Preferred Stock issued-upon-exchange

- 357,259 shares - Series A-1 Convertible Preferred Stock extinguished-upon-exchange

Increase - additional

paid-in capital

March 15, 2018 Exchange Date estimated fair value of $833,410 of the 476.234 shares of Series B Convertible Preferred Stock issued-upon-exchange

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

Fair Value Assumptions

Series B Convertible Preferred Stock - issued upon exchange of Series A-1 Convertible Preferred Stock

March 15, 2018

Aggregate fair value

Series B Convertible Preferred Stock

Required rate of return

Common stock conversion factor numerator

Common stock conversion factor denominator

Value of Common Stock

Expected term (years)

Risk free rate

Dividend yield

Financial Instruments Fair Value Measurements - continued

B Convertible Preferred Stock and Series Z Warrants - Series A and Series A-1 Exchange Offer - March 15, 2018 - continued

A and Series A-1 Exchange Offer - March 15, 2018 (continued)

Z Warrants Issued-Upon-Exchange of Series A-1 Warrants

“Series Z Warrants issued-upon-exchange of Series A-1 Warrants”

in the Series A and Series A-1 Exchange Offer, as

discussed above, 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 expense.

In 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 an incremental estimated fair value of $349,796 recognized as a modification expense included in other income (expense) in

the consolidated statement of operations, with a corresponding increase to additional paid in capital, summarized as follows:

Series Z Warrants -

issued-upon-exchange of Series A-1 Warrants - March 15, 2018

March 15, 2018

Exchange Date

Fair value - 1,399,185 Series

Z Warrants issued-upon-exchange

- 279,837 Series A-1 Warrants extinguished-upon-exchange

Modification expense /increase to additional

paid in capital

Carry value -

279,837 Series A-1 Warrants extinguished-upon-exchange - equity classified

Carry value -

Series Z Warrants issued-upon-exchange of Series A-1 Warrants - equity classified

March 15, 2018 Exchange Date estimated fair value of $895,478 of the 1,399,185 Series Z Warrants issued-upon-exchange of 279,837

Series A-1 Warrants was computed using a Black-Scholes valuation model, using the following assumptions:

Value Assumptions

Z Convertible Preferred Stock - issued upon exchange of Series A-1 Convertible Preferred

March 15, 2018

Aggregate fair value

Series Z Convertible Preferred Stock

Common stock conversion factor denominator

Value of Common Stock

Expected term (years)

Risk free rate

Dividend yield

Financial Instruments Fair Value Measurements - continued

March 15, 2018 Exchange Date estimated fair value of $545,682 of the 279,837 Series A-1 Warrants extinguished-upon-exchange for

1,399,185 Series Z Warrants was computed using a Black-Scholes valuation model, using the following assumptions:

Value Assumptions

A-1 Convertible Preferred Stock - issued upon exchange of Series Z Convertible Preferred

March 15,2018

Aggregate fair value

Series A-1 Warrants exchanged for Series

Exercise price per share - Series A-1 Warrant

Series W Warrants

Exercise price per share - Series W Warrant

Value of Common Stock

Expected term (years)

Risk free rate

Dividend yield

Non-recurring

Fair Value Measurements

addition to the Senior Secured Convertible Debt, 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.

the following Notes herein for further information regarding these non-recurring estimated fair values, including Note 12, Debt,

Note 13, Preferred Stock, and, Note 14, Stockholders’

Equity and Common Stock Purchase Warrants .

recurring and non-recurring estimated fair values discussed herein, utilize 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 values presented herein are subjective and are affected by changes in inputs to the

valuation models /analyses, including the Company’s common stock price, the Company’s dividend yield, the risk-free

rates based on U.S.

Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated

volatility in the value of the Company’s common stock price and /or probabilities associated with the likelihood and timing

of future dilutive transactions.

Changes in these assumptions can materially affect the estimated fair values.

Secured Convertible Notes - Issued November 4 2019

November 3, 2019, the Company 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 the

Company consummated the sale of a Senior Secured Convertible Notes in a private placement with a $14.0 million aggregate face

value principal, referred to herein 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, as discussed below.

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 herein 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 under a separate agreement, the Company is obligated to pay a financial

advisory fee to the placement agent of 6.5% of the cash proceeds of each such note upon their receipt.

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 the Company incurred total offering

costs of $550,254, with such offering costs recognized as an expense in other income (expense) in the accompanying consolidated

statement of operations.

The Series A November 2019 Senior Convertible Note has a contractual

maturity date of September 30, 2021, a face value principal of $7.0 million, and a stated interest rate of 7.875% per annum.

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 the Company

cash proceeds of $6.3 million on March 30, 2020, after deducting $0.7 million of lender fees (which were recognized as a current

period expense on such date), and the Company paid an advisory fee of $409,500 to the placement agent.

The Series B November

2019 Senior Convertible Note has a contractual maturity date of September 30, 2021, a

face value principal of $7.0 million, and a stated interest rate of 7.875% per annum.

noted, the Series A and Series B 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, the Company incurred

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

during such period when such note was not funded by the investors.

SPA contains certain representations and warranties, covenants, and indemnities customary for similar transactions.

are senior secured obligations of the company secured by a lien on all assets.

Debt - continued

Secured Convertible Notes - Issued November 4 2019 - continued

Payments and Conversion

respect to the Series A and Series B November 2019 Senior Convertible Notes, a

bi-monthly principal repayment and corresponding interest payment will be due 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 (each, an “Installment

Date”).

On each bi-monthly Installment Date, the Company will be required to settle a principal repayment totaling $378,380

for the Series A and Series B November 2019 Senior Convertible Notes together with interest thereon, referred

to herein as the “Installment Amount”, which shall be satisfied in shares of common stock of the Company, subject

to customary equity conditions (including minimum price and volume thresholds), at 100% of the Installment Amount (an “Installment

Conversion”), or otherwise (or at the election of the Company, in whole or in part) in cash at 115% of the Installment Amount

(an “Installment Redemption”).

the election of the Holder, commencing March 30, 2020, the Series A and Series B November 2019 Senior Convertible Notes

may be converted into shares of common stock of the Company at an initial contractual conversion price of $1.60 per share,

with such conversion price subject to standard adjustments in the event of any stock split, stock dividend, stock combination,

recapitalization or other similar transaction.

addition to the bi-monthly Installment Amount, the Holder may elect to accelerate the conversion of future bi-monthly Installment

Amounts, and interest thereon, referred to herein as an Acceleration Installment Amount, utilizing the then current conversion

price of the most recent bi-monthly Installment Conversion, with such Accelerated Installment Amount subject to certain restrictions,

and Recognition

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.

(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.

Note 11, Financial Instruments Fair Value Measurements , for Series A November 2019 Senior Convertible Debt November 4,

2019 issue date and December 31, 2019 estimated fair value and face value principal and corresponding changes in fair value and

face value principal payable.

Debt - continued

Secured Convertible Notes - Issued November 2019 - continued

Holder has the option to require the Company to redeem all or a portion of the November 2019 Senior Convertible Notes face value

principal then unpaid /outstanding, as follows:

of Default - Upon the occurrence of an Event of Default, as defined, the Holder has the option to require the Company to redeem

all or a portion of the November 2019 Senior Convertible Notes face value principal then unpaid /outstanding for cash at a

price equal to the greater of (a) 115% of the then unpaid /outstanding November 2019 Senior Convertible Notes face value principal,

plus earned-but-unpaid Non-Installment Payments, and late charge fees, or (b) the market value of the common stock of the

Company underlying the November 2019 Senior Convertible Notes.

of Control - Upon the occurrence of a Change of Control, the Holder has the option to require the Company to redeem all or

a portion of the November 2019 Senior Convertible Notes for cash at a price equal to the greater of:

(a) 115% of the then

unpaid /outstanding November 2019 Senior Convertible Notes face value principal plus earned-but-unpaid Non-Installment Payments,

and late charge fees;

(b) 115% of the market value of the common stock of the Company underlying the November 2019 Senior

Convertible Notes;

or, (c) 115% of the aggregate cash consideration payable in respect of the common stock of the Company

underlying the November 2019 Senior Convertible Notes.

- Upon occurrence of a Bankruptcy Event of Default, as defined, the Company must immediately pay cash to the Holder equal

to 115% of the sum of (a) November 2019 Senior Convertible Notes unpaid /outstanding face value principal, (b) earned-but-unpaid

Non-Installment Payments, and (c) late charge fees.

Notwithstanding, the Holder may waive the right to receive such payment

and retain the conversion and payment rights.

and Other Provisions

the November 2019 Senior Secured Convertible Notes, the Company is 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, and to have an unrestricted cash balance of at least $2.0

million at each quarterly balance sheet date, among other matters, including, under the Securities Purchase Agreement, the following

provisions and covenants:

March 30, 2020, to the extent any portion of the November 2019 Senior Convertible Notes

(Series A and Series B) face value principal remains outstanding, the Company may not

without the consent of the lender, consummate the sale of any equity or equity-linked

security at a price per share less than the initial conversion price of the November

2019 Senior Convertible Notes.

After March 30, 2020, if $700,000 principal of the November

2019 Senor Convertible Notes remain outstanding, the Company may consummate the sale

of any equity or equity-linked security provided the price per share is equal to or greater

than the initial conversion price of the November 2019 Senior Convertible Notes.

Company agreed to hold a stockholder meeting by no later than June 28, 2020 to approve

stockholder resolutions with respect to each of:

approving an increase in the authorized

shares of common stock of the Company to 150 million shares from the current 100 million

and approving the issuance of shares of common stock of the Company in connection

with the November 2019 Senior Convertible Notes for the purposes of compliance with the

stockholder approval rules of The Nasdaq Stock Market (“Nasdaq”).

The November 2019 Senior Convertible Notes private

placement investors may participate up to 50% in future equity and equity-linked securities offered by the Company during

the three year period ended November 4, 2022.

The Company will not effect or enter an agreement to effect any variable rate

Debt - continued

Secured Convertible Notes - Issued November 2019 - continued

payment of all amounts due and payable under the November 2019 Senior Convertible Notes (Series A and Series B) are guaranteed

by the Company and its majority-owned subsidiary Lucid Diagnostics Inc., and the obligations under the November 2019 Senior Convertible

Notes are secured by all of the assets of these entities pursuant to the terms of a Guaranty Agreement executed in connection

with the November 2019 Senior Secured Convertible Notes private placement discussed above.

The Lender may transfer or assign all

or any part of the November 2019 Senior Convertible Notes to any person with the prior written consent of the Company, provided

no consent shall be required from the Company for any transfer to an affiliate of the Lender, or upon the occurrence and during

the continuance of an Event of Default, as defined.

Secured Convertible Note - Issued December 27, 2018

a private placement transaction with an institutional investor (“Investor”, “Lender”, and /or “Holder”)

on December 27, 2018, the Company entered into a Securities Purchase Agreement under which it issued the December 2018 Senior

Secured Convertible Note, having an issue date of December 27, 2018, 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 - referred to herein as the “December 2018

Senior Convertible Note”.

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 the issue 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.

Additionally, concurrent with the December 2018 Senior Convertible

Note, on December 27, 2018 a $5.0 million payment was made with respect to the repayment of the Company’s previously

issued Senior Secured Note (between the Company and Scopia Holdings LLC), as further discussed below.

Payments & Conversion

December 2018 Senior Convertible Note requires bi-monthly payments on the 15th calendar day and the last trading day of the month,

commencing January 15, 2019 and ending December 31, 2020, including a contractually stated face value principal repayment, referred

to as a bi-monthly Installment Amount, and a payment based on the outstanding face value principal and the 7.875% annual interest

rate, referred to herein as a bi-monthly non-installment payment.

The bi-monthly payments of January 15, 2019 through June 15,

2019 were non-installment payments only, and the bi-monthly payments from June 28, 2019 through December 31, 2020 include both

the Installment Amount and the non-installment payment.

originally structured, the December 2018 Senior Convertible Note Installment Amount included 35 bi-monthly payments of $193,750

from June 28, 2019 through November 30, 2020, and two final payments of $484,375 on each of December 15, 2020 and December 31,

2020, with such bi-monthly dates referred to as Installment Dates.

Notwithstanding, future contractual Installment Amounts are

reduced by additional face value principal repayments, with the reductions applied in reverse order of maturity of the bi-monthly

Installment Amounts, starting with the final December 31, 2020 bi-monthly Installment Amount.

In this regard, as of December 31,

2019, the future bi-monthly Installment Amounts have been reduced by an aggregate of $4,330,500 resulting from conversions in

excess of the contractual bi-monthly Installment Amount, including a series of “conversion price voluntary adjustments”

and the “Accelerated Installment Amount”, each as discussed below.

the election of the Holder, at any time after the December 27, 2018 issue date, the December 2018 Senior Convertible Note may

be converted into shares of common stock of the Company at an initial contractual conversion price of $1.60 per share.

on April 11, 2019, commencing with the June 28, 2019 bi-monthly payment, the bi-monthly Installment Amount and non-installment

payment will be paid by the issue of shares of common stock of the Company, subject to the satisfaction of customary equity conditions,

including minimum price and volume thresholds, referred to as an Installment Conversion.

addition to the bi-monthly Installment Amount, the Holder may elect to accelerate the conversion of future bi-monthly Installment

Amounts, and interest thereon, referred to herein as an Acceleration Installment Amount, utilizing the then current conversion

price of the most recent bi-monthly Installment Conversion, with such Accelerated Installment Amount subject to certain restrictions,

December 2018 Senior Convertible Note provides for a voluntary adjustment of the conversion price at the discretion of the Company,

with the consent of the Holder, wherein during the term of the December 2018 Senior Convertible Note, the Company may at any time

reduce the then current conversion price to any amount and for any period of time deemed appropriate by the board of directors

of the Company.

The Company’s board of directors have adopted guidelines surrounding such a December 2018 Senior Convertible

Note voluntary adjustment of the conversion price, if any, to be implemented by management when favorable market conditions exist

for the Company to orderly and effectively reduce its outstanding debt to the investor.

See below for a discussion of the conversion

price voluntary adjustments.

Debt - continued

Secured Convertible Note - Issued December 27, 2018 - continued

and Recognition

December 2018 Senior Convertible Note fair value adjustments resulted in the recognition of current period expense of $333,849

and $153,000 in the years ended December 31, 2019 and 2018, respectively (as no portion of such fair value adjustments resulted

from instrument-specific credit risk of such note as of such dates).

presented above in Note 11, Financial Instruments Fair Value Measurements , the December 2018 Senior Convertible Note had

a fair value of $1,700,000 and a face value principal payable of $1,692,000;

and in the year ended December 31, 2019, aggregate

principal repayments of $6,058,000 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, summarized as follows:

Bi-monthly Installment Amount

principal repayments - common stock

Accelerated Installment Amount principal

repayments - common stock

Voluntary conversion

price adjustments principal repayments - common stock

principal repayments - common

Non-installment payments - common stock

Total Installment repayments and Non-Installment

payments - common stock

Fair Value - Common Stock Issued

Debt Extinguishment

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.

2018 Senior Convertible Note - Subsequent to December 31, 2019

to December 31, 2019, with respect to the December 2018 Senior Convertible Note, a total of $1,642,000 of Acceleration

Installment Amount face value principal repayments and corresponding non-installment payments of $3,963, were settled by the issue

of 2,042,901 shares of common stock of the Company with a fair value of $2,833,579 (with such fair value measured as the respective

issue date quoted closing price per share of the common stock of the Company).

As provided for in the December 2018 Senior Secured

Convertible Note, the Holder elected to defer the bi-monthly Installment Amount repayments for each of the months January, February,

and March 2020.

Debt - continued

Secured Convertible Note - Issued December 27, 2018 - continued

Holder has the option to require the Company to redeem all or a portion of the December 2018 Senior Convertible Note face value

principal then unpaid /outstanding, as follows:

of Default - Upon the occurrence of an Event of Default, as defined, the Holder has the option to require the Company to redeem

all or a portion of the December 2018 Senior Convertible Note face value principal then unpaid /outstanding for cash at a

price equal to the greater of (a) 115% of the then unpaid /outstanding December 2018 Senior Convertible Note face value principal,

plus earned-but-unpaid Non-Installment Payments, and late charge fees, or (b) the market value of the common stock of the

Company underlying the December 2018 Senior Convertible Note.

of Control - Upon the occurrence of a Change of Control, the Holder has the option to require the Company to redeem all or

a portion of the December 2018 Senior Convertible Note for cash at a price equal to the greater of:

(a) 115% of the then unpaid

/outstanding December 2018 Senior Convertible Note face value principal plus earned-but-unpaid Non-Installment Payments, and

late charge fees;

(b) 115% of the market value of the common stock of the Company underlying the December 2018 Senior Convertible

or, (c) 115% of the aggregate cash consideration payable in respect of the common stock of the Company underlying the

December 2018 Senior Convertible Note.

- Upon occurrence of a Bankruptcy Event of Default, as defined, the Company must immediately pay cash to the Holder equal

to 115% of the sum of (a) December 2018 Senior Convertible Note unpaid /outstanding face value principal, (b) earned-but-unpaid

Non-Installment Payments, and (c) late charge fees.

Notwithstanding, the Holder may waive the right to receive such payment

and retain the conversion and payment rights.

and Other Provisions

the December 2018 Senior Secured Convertible Note, the Company is 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, and to have an unrestricted cash balance of at least $1.75

million at each quarterly balance sheet date, among other matters, including, under the Securities Purchase Agreement, as follows:

The December 2018 Senior Convertible Note private

placement investor may participate up to 50% in future equity and equity-linked securities offered by the Company during

the three year period ended December 27, 2021.

The Company will not effect or enter an agreement to effect any variable rate

payment of all amounts due and payable under the December 2018 Senior Convertible Note are guaranteed by PAVmed Inc.

and its majority-owned

subsidiary Lucid Diagnostics Inc., and the obligations under the December 2018 Senior Convertible Note are secured by all of the

assets of these entities pursuant to the terms of a Guaranty Agreement executed in connection with the December 2018 Senior Secured

Convertible Note private placement discussed above.

The Lender may transfer or assign all or any part of the December 2018 Senior

Convertible Note to any person with the prior written consent of the Company, provided no consent shall be required from the Company

for any transfer to an affiliate of the Lender, or upon the occurrence and during the continuance of an Event of Default, as defined.

Debt - continued

Secured Note and Series S Warrants -

July 2017, the Company and Scopia Holdings LLC (“Scopia”

or the “Lender”) previously entered into a Note

and Security Purchase Agreement, whereupon Scopia delivering to the Company $4.8 million in net cash proceeds, the Company issued

to Scopia and its designees, a Senior Secured Note with an initial principal of $5.0 million (“Senior Secured Note”),

and 2,660,000 Series S Warrants to purchase a corresponding number of shares of common stock of the Company.

December 27, 2018, concurrent with the issue of the Senior Convertible Note as discussed above, the Company repaid-in-full the

previously issued Senior Secured 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 to Scopia

of 600,000 shares of common stock of the Company.

The Senior Secured Note repayment was executed under a Notice of Prepayment

agreement dated December 27, 2018.

The Senior Secured Note had a contractual maturity date of June 30, 2019, with such

maturity date not subject-to any early repayment provisions.

The Company recognized as other income (expense), a debt extinguishment

loss of $1.4 million, as discussed below.

Senior Secured Note annual interest rate was 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 its sole discretion, the Company

was 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 Senior Secured Note.

In this regard, the Senior Secured Note principal

balance was $5,780,116, as of December 27, 2018 with each such principal amount comprised of the initial principal of $5.0 million

and the total unpaid semi-annual interest as of December 27, 2018.

Senior Secured Note and the Series S Warrants are freestanding financial instruments, as the Series S Warrants were immediately

legally detachable from the Senior Secured Note and were immediately exercisable.

The Series-S Warrants are equity classified

in the consolidated balance sheet.

See Note 14, Stockholders’

Equity and Common Stock Purchase Warrants , for a further

discussion of the Series S Warrants.

$4.8 million of cash proceeds, which were net of the Lender’s issue costs, were allocated to the Senior Secured Note and

the Series S Warrants based on their respective relative fair value, as discussed below, resulting in an allocation of $1,408,125

to the Senior Secured Note and $3,434,452 to the Series S Warrants, with the resulting difference of $3,591,875 recognized as

Senior Secured Note debt discount, amortized as interest expense over the term of the Senior Secured Note.

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

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

The Senior Secured Note had

remaining unamortized debt discount $1,637,972 on the December 27, 2018 date of extinguishment.

the December 27, 2018 repayment date, the Company recognized 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 Senior Secured Note as follows:

Senior Secured Note

- Debt Extinguishment

Fair value - 600,000 shares of

common stock issued

Debt reacquisition

price Senior Secured Note

Senior Secured Note - original principal

Senior Secured

Note - additional principal - unpaid interest expense

Senior Secured Note - total principal

Secured Note - remaining unamortized debt discount

Senior Secured

Note - debt carrying value, net

Debt extinguishment

$ (1,408,296 )

and in the previous year, on the initial September 30, 2019 ESPP purchase date, 82,772 shares of PAVmed Inc.

common stock were issued for proceeds of approximately $67.

of December 31, 2020, the PAVmed Inc.

ESPP has a total reservation of 750,000 shares of common stock of PAVmed Inc., with 360,673

shares available-for-issue, inclusive of the supplemental share reservation increase of an additional 500,000 shares,

approved by the PAVmed Inc.

board of directors on March 12, 2020, and approved at the PAVmed Inc.

2020 annual meeting of stockholders

on July 24, 2020, and re-approved at a PAVmed Inc.

special meeting of stockholders on March 4, 2021.

A discussion of the

special meeting of stockholders is presented in Note 7, Commitments and Contingencies - Legal Proceedings .

11 - Preferred Stock

Company is authorized to issue 20,000,000 shares of its preferred stock, par value of $0.001 per share, with such designation,

rights, and preferences as may be determined from time-to-time by the Company’s board of directors.

Company is authorized to issue 20 million shares of its preferred stock, par value of $0.001 per share, with such designation,

rights, and preferences as may be determined by the Company’s board of directors.

B Convertible Preferred Stock

of December 31, 2019 and 2018, 1,158,209 and 1,069,941 shares of Series B Convertible Preferred Stock (classified in permanent

equity) were issued and outstanding, including:

975,568 shares issued-upon-exchange in the March 15, 2018 Exchange Offer, as such

exchange offer is discussed below, 33,325 shares of Series B Convertible Preferred Stock converted into a corresponding number

of shares of common stock of the Company in July 2018, at the holders election, and a total of 215,966 shares issued in settlement

of the aggregate Series B Convertible Preferred Stock dividend payouts, as discussed below.

Series B Convertible Preferred Stock has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share,

and is immediately convertible upon its issuance.

of December 31, 2020 and 2019, there were 1,228,075 and 1,158,209 shares of Series B Convertible Preferred Stock (classified in

permanent equity) issued and outstanding, respectively.

During the year ended December 31, 2020 and 2019, a total of 94,866 and

88,268 shares, respectively, were issued in settlement of Series B Convertible Preferred Stock dividends declared in the respective

year ended December 31, 2020 and 2019, as such dividends are discussed below.

Additionally, in March 2020, at the election of

the holder, 25,000 shares of Series B Convertible Preferred Stock were converted into a corresponding number of shares of common

stock of the Company.

Series B Convertible Preferred Stock is issued pursuant to the PAVmed Inc.

Certificate of Designation of Preferences, Rights,

and Limitations of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock Certificate of Designation”),

has a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and is immediately convertible upon

its issuance.

At the holders’

election, a share of Series B Convertible Preferred Stock

is convertible into a number of shares of common stock of the Company at a common stock conversion exchange factor equal to a

numerator and denominator of $3.00, with each such numerator and denominator not subject to further adjustment, except for the

effect of stock dividends, stock splits or similar events affecting the Company’s common stock.

The Series B Convertible

Preferred Stock shall not be redeemed for cash and under no circumstances shall the Company be required to net cash settle the

Series B Convertible Preferred Stock.

The Series B Convertible Preferred Stock is equity-classified and the initial 975,568 shares

issued-upon-exchange were measured at estimated fair value on the March 15, 2018 Exchange Date.

See Note 11, Financial Instruments

Fair Value Measurements , for a discussion of the issue date estimated fair value of the Series B Convertible Preferred Stock.

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.

The Series B Convertible Preferred Stock dividends

are included in the calculation of basic and diluted net loss attributable to PAVmed Inc.

common stockholders as applicable for

each of the periods presented.

of December 31, 2019 and 2018, the Company’s board of directors declared Series B Convertible Preferred Stock dividends,

of $264,599 and $382,920, respectively, each settled by the issue of 88,268 and 127,698 additional shares of Series B Convertible

Preferred Stock, respectively, each in accordance with the PAVmed

Certificate of Designation of Preferences, Rights, and Limitations of Series B Convertible Preferred Stock (“Series

B Convertible Preferred Stock Certificate of Designation”).

Series B Convertible Preferred Stock dividend payable as of July 1, 2018 of earned but unpaid dividends as of June 30, 2018, was

inclusive of $243,994 of total dividends related to the previously held and exchanged respective shares of Series A and Series

A-1 Convertible Preferred Stock, each earned through the March 15, 2018 Exchange Date, and, upon-exchange, such dividend balance

was transferred to the respective holders’

Series B Convertible Preferred Stock dividend balances.

B Convertible Preferred Stock dividends as of December 31, 2019 and 2018 of $69,493 and $64,196, respectively, were cumulatively

earned, unpaid, accumulated, and in arrears, as the Company’s board of directors had not declared such dividends payable

as of such dates, and, therefore, were not recognized as a dividend payable liability in the Company’s accompanying consolidated

balance sheet.

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 $69,493, with such dividend payment settled by the issue of an additional 23,182 shares of Series B Convertible Preferred

and in January 2019, the Company’s board-of-directors declared a Series B Convertible Preferred Stock dividend payment

of earned but unpaid dividends as of December 31, 2018, payable as of January 1, 2019, of $64,196, with such dividend payment

settled by the issue of an additional 21,413 shares of Series B Convertible Preferred Stock, with each such dividends in accordance

with the Series B Convertible Preferred Stock Certificate of Designation.

Preferred Stock - continued

A and Series A-1 Convertible Preferred Stock

a result of the completion of the Series A and Series A-1 Exchange on the March 15, 2018 Exchange Date, there were no issued and

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

Stock and Series A-1 Warrants, as each were fully exchanged-upon-issue of shares of Series B Convertible Preferred Stock and Series

Z Warrants, respectively.

Additionally, 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 of the Series A and Series A-1 Exchange Offer.

See Note 11, Financial Instruments Fair Value Measurements , for further

detail regarding each such derivative liability.

April 13, 2018, the Company filed with the State of Delaware a Certificate of Elimination for the Series A and Series A-1 Convertible

Preferred Stock to cancel all previous and future issuances of Series A and Series A-1 Convertible Preferred stock.

August 2018, the Company’s board of directors declared a Series A Convertible Preferred Stock dividend payment dated July

1, 2018 of earned but unpaid dividends totaling $7,099 with respect to the shares of Series A Convertible Preferred Stock previously

converted in November and December 2017, as discussed above.

The Series A Convertible Preferred Stock dividends were settled with

cash payments.

See below for a further discussion of the Series A Convertible Preferred Stock dividends.

Series A Convertible Preferred Stock provided for dividends at a rate of 8% per annum based on the $6.00 per share stated value

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

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

Upon the closing of the Series A and Series A-1 Exchange Offer

on the March 15, 2018 Exchange Date, cumulative aggregate earned, unpaid, and undeclared Series A Convertible Preferred Stock

dividends of $139,058 were transferred to the respective holders’

Series B Convertible Preferred Stock dividend balances,

with such balance transferred inclusive of $26,487 earned for the period January 1, 2018 through the March 15, 2018 Exchange Date.

I The Series A Convertible Preferred Stock dividends earned and undeclared for the year ended December 31, 2018 are included in

the calculation of basic and diluted net loss attributable to PAVmed Inc.

common stockholders for each respective period.

Series A-1 Convertible Preferred Stock provided for dividends at a rate of 8% per annum on the $4.00 per share stated value of

the Series A-1 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 A-1 Convertible Preferred Stock dividends from October 1,

2017 through October 1, 2021 were payable-in-kind (“PIK”) in additional shares of Series A-1 Convertible Preferred

Upon the closing of the Series A and Series A-1 Exchange Offer on the March 15, 2018 Exchange Date, cumulative aggregate

earned, unpaid, and undeclared Series A-1 Convertible Preferred Stock dividends of $104,936 were transferred to the respective

holders’

Series B Convertible Preferred Stock dividend balances, with such balance transferred inclusive of $25,148 earned

for the period January 1, 2018 through the March 15, 2018 Exchange Date.

The Series A-1 Convertible Preferred Stock dividends

were earned, unpaid, accumulated, and in arrears, as the Company’s board of directors had not declared such dividends payable,

and, therefore, such dividends were not recognized as a dividend payable liability in the consolidated balance sheet until declared

by the Company’s board of directors.

The Series A-1 Convertible Preferred Stock dividends earned and undeclared for the

year ended December 31, 2018 are included in the calculation of basic and diluted net loss attributable to PAVmed Inc.

stockholders for its respective period.

election, a share of Series B Convertible Preferred Stock is convertible into a share of common

stock of the Company at a common stock conversion exchange factor equal to a numerator and denominator of $3.00, with each such

numerator and denominator not subject to further adjustment, except for the effect of stock dividends, stock splits or similar

events affecting the Company’s common stock.

The Series B Convertible Preferred Stock shall not be redeemed for cash and

under no circumstances shall the Company be required to net cash settle the Series B Convertible Preferred Stock.

Series B Convertible Preferred Stock Certificate of Designation 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, with the dividends earned from April

1, 2018 through October 1, 2021 payable-in-kind (“PIK”) by the issue of 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 issue of shares of Series B Convertible Preferred Stock, the issue shares of common stock of the Company, and /or cash

Series B Convertible Preferred Stock dividends earned are included in the calculation of basic and diluted net loss attributable

to PAVmed Inc.

common stockholders for each of the corresponding periods presented.

Notwithstanding, the Series B Convertible

Preferred Stock dividends are recognized as a dividend payable only upon the dividend being declared payable by the Company’s

board of directors.

the year ended December 31, 2020, the Company’s board-of-directors declared an aggregate of approximately $284 of Series

B Convertible Preferred Stock dividends, earned as of each of December 31, 2019, March 31, 2020, June 30, 2020, and September

30, 2020, which have been settled by the issue of an additional aggregate 94,866 shares of Series B Convertible Preferred Stock.

the prior year ended December 31, 2019, the Company’s board-of-directors declared an aggregate of approximately $265 of

Series B Convertible Preferred Stock dividends, earned as of December 31, 2018, March 31, 2019, June 30, 2019, and September 30,

2019, which were settled by the issue of an additional aggregate 88,268 shares of Series B Convertible Preferred Stock.

to December 31, 2020, in January 2021, the Company’s board-of-directors declared a Series B Convertible Preferred Stock

dividend earned as of December 31, 2020 and payable as of January 1, 2021, of approximately $73 to be settled by the issue of

an additional 24,198 shares of Series B Convertible Preferred Stock (with such dividend not recognized as a dividend payable as

the Company’s board of directors had not declared such dividends payable as of December 31, 2020).

Stockholders’

Equity and Common Stock Purchase Warrants

of December 31, 2019, the Company is authorized to issue up to 100,000,000 million shares of common stock, par value of $0.001

There were 40,478,861 and 27,142,979 shares of common stock issued and outstanding, as of December 31, 2019 and 2018,

respectively, summarized as follows:

Shares of Common Stock

Issued and Outstanding

Issued and outstanding as of December 31,

Registered offerings

Conversion of Senior

Secured Convertible Note issued December 27, 2018

stock purchase plan

outstanding as of December 31, 2019

Issued and outstanding as of December

Equity Subscription

Rights Offering

Underwritten public

Repayment of debt

- Senior Secured Note

Series W Warrant

Series S Warrant

B Convertible Preferred Stock conversion

outstanding as of December 31, 2018

Equity, Common Stock Purchase Warrants, and Noncontrolling Interest

Company is authorized to issue up to 150 million shares of its common stock, par value of $0.001 per share, inclusive of an increase

of 50 million shares approved by the Company’s stockholders at their July 24, 2020 annual meeting.

There were 63,819,935

and 40,478,861 shares of common stock issued and outstanding as of December 31, 2020 and December 31, 2019, respectively.

Ended December 31, 2020

April, May, and June 2019, a total of 5,480,000 shares of common stock of the Company were issued in registered offerings,

including 4,950,000 shares issued under common stock share subscription agreements entered into with individual investors

and 530,000 shares issued under a placement agency agreement, resulting in total proceeds of $5,480,000, before placement

agent fees and legal fees of $101,098.

2019, a total of 7,773,110 shares of common stock of the Company were issued upon conversions of the December 2018 Senior

Secured Convertible Note.

See Note 12, Debt, for further information with respect to the Senior Secured Convertible Note issued

December 27, 2018, including the issue of shares of common stock of the Company.

October 2019, 82,772 shares of common stock were purchase by employees in participation of the Employee Stock Purchase Plan.

See Note 10, Stock-Based Compensation, for further information with respect to the ESPP

2020, a total of 10,647,500 shares of common stock of the Company were issued for gross proceeds of approximately $17,036,

before a total placement agent fee and expenses of approximately $1,004, and total offering costs of approximately $100.

shares of 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 the Company’s effective shelf registration statement on

Form S-3 (File No.

2020, a total of 10,929,202 shares of common stock of the Company were issued upon partial conversions of each of the

December 2018 Senior Convertible Note and the November 2019 Senior Convertible Notes, as discussed in

Note 9, Outstanding Debt .

2020, 306,555 shares of common stock were purchased by employees through participation in the PAVmed Inc.

Employee Stock Purchase Plan, as discussed in Note 10, Stock-Based Compensation .

to December 31, 2020, in January 2021, 667,668 shares of the Company’s common stock were issued upon conversion, at the

election of the holder, of the November 2019 Senior Convertible Note remaining face value principal of approximately $956 along

with approximately $7 of interest thereon, as discussed in Note 9, Outstanding Debt .

to December 31, 2020, on January 5, 2021, a total of 6,000,000 shares of common stock of the Company were issued

for gross proceeds of approximately $13,440, before a placement agent fee and expenses of approximately $951, and offering

costs incurred by the Company of approximately $70.

The shares of common stock were issued in a registered direct offering pursuant

to a Prospectus Supplement dated January 5, 2021 with respect to the Company’s effective shelf registration statement on

Form S-3 (File No.

to December 31, 2020, on February 23, 2021, a total of 9,782,609 shares of common stock of the Company were issued for proceeds

of approximately $41,626, before underwriter expenses of approximately $50, and offering costs incurred by the Company of approximately

The shares of common stock were issued in an underwritten registered offering pursuant to a final Prospectus Supplement

dated February 23, 2021, with respect to the Company’s effective shelf registration statement on Form S-3 (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 common stock of the Company, resulting in the issue of a corresponding number of shares of common stock of the Company.

Series Z Warrants are discussed herein below.

Ended December 31, 2019

December 27, 2018, 600,000 shares of common stock of the Company were issued in connection with the repayment of the Senior

Secured Note debt.

See Note 12, Debt, for further information with respect to the Senior Secured Note repayment.

Company completed an equity subscription rights offering on the June 7, 2018 expiration date of the equity subscription period,

with such transaction having a June 12, 2018 close date - referred to herein as the “June 12, 2018 Equity Subscription

Rights Offering”

(“ESRO”) and was completed under a registration statement on Form S-1 - File No.

333-222581 - declared effective by the SEC on May 23, 2018.

June 12, 2018 Equity Subscription Rights Offering involved the Company distributing one non-transferable equity subscription

for each of the 17,509,654 issued and outstanding shares of common stock of the Company, as of the record date of May 21,

2018, subject-to the acceptance by the Company of a maximum of 9,000,000 fully-paid equity subscriptions tendered as of the

June 7, 2018 expiration date of the equity subscription period.

The equity subscription provided for the purchase of a common

stock unit at a $1.15 per unit, with each such unit comprised of one share of common stock of the Company and one Series Z

Warrant, and immediately separated upon issue into its underlying components.

The ESRO 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 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.

The ESRO proceeds after the dealer-manager

commissions and fees and the offering costs incurred by the Company, were allocated based on relative fair value of approximately

$7.1 to the shares of common stock par value and additional paid-in capital and approximately $2.1 million to additional paid-in

capital with respect to the Series Z Warrants.

2019, a total of 5,480,000 shares of common stock of the Company were issued for gross proceeds of approximately $5,480,

before placement agent fees and expenses of approximately $67, and total offering costs of $34.

The shares of common stock

were issued in three registered direct offerings pursuant to respective Prospectus Supplement dated April 12, 2019, May 8,

2019, and June 25, 2019, each with respect to the Company’s effective shelf registration statement on Form S-3 (File

2019, a total of 7,773,110 shares of common stock of the Company were issued upon conversions of the December 2018 Senior

Convertible Note, as discussed in Note 9, Outstanding Debt .

2019, 82,772 shares of common stock were purchase by employees through participation in the PAVmed Inc.

Employee Stock Purchase Plan, as discussed in Note 10, Stock-Based Compensation.

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Stock - continued

Ended December 31, 2018 - continued

January 2018, the Company conducted an underwritten public offering resulting in the issue of a total of 2,649,818 shares

of common stock of the Company pursuant to its previously filed and effective shelf registration statement on SEC Form S-3

333-220549 - declared effective October 6, 2017, along with a corresponding prospectus supplement dated January

On January 19, 2018, the Company entered into an underwriting agreement with Dawson James Securities, Inc., as sole

underwriter, under which the Company agreed to issue to the underwriter at $1.80 per share, 2,415,278 shares of common stock

on a firm commitment basis and up to an additional 362,292 shares solely to cover underwriter over-allotments, if any, at

the option of the underwriter, exercisable within 45 calendar days from January 19, 2018.

On January 23, 2018, 2,415,278 shares

of common stock of the Company were issued, and on January 25, 2018, an additional 234,540 shares of common stock of the Company

were issued under the underwriter’s over-allotment, resulting in cash proceeds, net of the underwriter’s discount

of $4,388,099, before $113,438 of offering costs incurred by the Company.

February 8, 2018, the Company issued at total 34,345 shares of common stock from the exercise of a corresponding number of

Series W Warrants, at temporary exercise price of $2.00 per share, resulting in $68,690 of cash proceeds, before offering

costs of $50,520.

See herein below for a discussion of the “Series W Warrants Offer-to-Exercise”.

March 2018, 274,257 shares of common stock of the Company were issued, resulting from a corresponding number of Series S Warrants

exercised for $2,743 of cash proceeds.

July 2018, 33,325 shares of common stock of the Company were issued upon the conversion of a corresponding number of shares

of Series B Convertible Preferred Stock.

Equity, Common Stock Purchase Warrants, and Noncontrolling Interest

Stock Purchase Warrants

following table summarizes outstanding warrants to purchase common stock of the Company at the dates indicated:

Average Exercise

Equity classified warrants

common stock purchase warrants (classified in permanent equity) outstanding as of the dates indicated are as follows:

Stock Purchase Warrants Issued and Outstanding at

Series Z Warrants

1 unchanged sentence

Series W Warrants

UPO - Series W Warrants

Series S Warrants

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Stock Purchase Warrants - continued

were 16,815,039 Series Z Warrants issued and outstanding as of December 31, 2019 and 2018, including:

the initial issue of 2,739,190

Series Z Warrants on the March 15, 2018 Exchange Date of the Series A and Series A-1 Exchange Offer;

the issue of 5,075,849 Series

Z Warrants on the April 5, 2018 Exchange Date of the Series W Warrants Exchange Offer;

and the issue of 9,000,000 Series Z Warrants

on the June 12, 2018 close date of the Equity Subscription Rights Offering.

issue, a Series Z Warrant is exercisable to purchase one share of common stock of the Company at an exercise price of $1.60 per

share, effective June 1, 2018.

The Series Z Warrant exercise price was initially $3.00 per share through May 31, 2018.

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, upon completion of the period-of-notice to the holders of Series Z Warrants then issued and outstanding.

See herein below for further information with respect to the modification expense recognized in connection with the Series Z Warrant

exercise price adjustment.

The Series Z Warrant $1.60 exercise price is not subject-to further adjustment, unless by action of

the PAVmed Inc board of directors, or the effect of stock dividends, stock splits or similar events affecting the common stock

of the Company.

Under no circumstances will the Company be required to net cash settle the Series Z Warrants, nor to pay any liquidated

damages in lieu of delivery of shares of common stock of the Company resulting from a failure to satisfy any obligations under

the Series Z Warrant, and, the Series Z Warrants expire after the close of business on April 30, 2024, if not earlier redeemed

by the Company, as discussed below.

on May 1, 2019, the Company may redeem the outstanding Series Z Warrants, at the Company’s option, in whole or in part,

at a price of $0.01 per Series Z Warrant at any time while the Series Z Warrants are exercisable, upon a minimum of 30 days’

prior written notice of redemption, if, and only if, the volume weighted average closing price of the common stock of the Company

equals or exceeds $9.00 (subject to adjustment) for any 20 out of 30 consecutive trading days ending three business days before

the Company issues its notice of redemption, and provided the average daily trading volume in the common stock of the Company

during such 30-day period is at least 20,000 shares per day;

and if, and only if, there is a current registration statement in

effect with respect to the shares of Common Stock underlying such Series Z Warrants.

noted above, on April 5, 2018, a total of 5,075,849 Series Z Warrants were issued-upon-exchange of 10,151,682 Series W Warrants,

referred to as the “Series W Warrants Exchange Offer”

and the “April 5, 2018 Exchange Date”.

In this regard,

pursuant to an offer-to-exchange letter dated February 20, 2018, as included in a Tender Offer Statement on Schedule TO filed

with the SEC on February 20, 2018, the Company offered to issue one Series Z Warrant in exchange for two Series W Warrants.

Series W Warrants Exchange Offer commenced on February 20, 2018 and had April 2, 2018 expiration date.

The Series W Warrants Offer-to-Exchange

was completed after expiration of the guaranteed delivery period on April 5, 2018.

Series Z Warrant exercise price adjustment to $1.60 per share from $3.00 per share, as discussed above, resulted in the recognition

of a modification expense on the June 1, 2018 effective date of the Series Z Warrant exercise price adjustment, under the analogous

guidance with respect to stock option modification under FASB ASC Topic 718, Stock-Based Compensation (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 fair value, measured as the difference between the fair value immediately after the modification

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

In this regard, the Series Z Warrant June 1, 2018 exercise price adjustment resulted in the recognition 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.

The modification expense incremental fair value was estimated

using a Black-Scholes valuation model, using the following assumptions:

Fair Value Assumptions

- June 1, 2018

Series Z Warrant Exercise Price Adjustment

after Modification

before Modification

Calculated aggregate estimated

Series Z Warrants - issued and outstanding

- June 1, 2018

Value of common stock per share

Exercise price per share - Series Z Warrant

Expected term - years

Risk free interest rate

Dividend yield

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Stock Purchase Warrants - continued

Z Warrants - continued

Additionally,

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

Offer on April 5, 2018, as each exchange offer is discussed above, 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, resulting in the “Amended

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

principal provisions of the Series Z Warrant Agreement Amendment No.

1, include among other items:

to provide for a “late

delivery fee”

for shares issued outside of the “standard delivery period”, including delivery of shares upon

Series Z Warrant exercise for open market or other purchase transactions - i.e.

“buy-in fee”, with each such payment,

if any, in addition to and not in lieu of delivery of shares, and, to provide for a standard provision (“plain vanilla”)

in the event the Company engages in a “Fundamental Transaction”, as defined, wherein the Series Z Warrant may participate

pari passu with common stockholders in the consideration paid by an acquiror for the Company’s shares, with such payment,

if any, made by the acquiring entity and not paid by the Company as issuer.

The Series Z Warrant Agreement Amendment No.

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 increase in the estimated fair value as described

were 381,818 Series W Warrants issued and outstanding as of December 31, 2019 and 2018.

The Series W Warrants have an exercise

price of $5.00 per share, with such exercise price not subject to further adjustment, except in the event of stock dividends,

stock splits or similar events affecting the common stock of the Company, and became exercisable on October 28, 2016 and expire

on January 29, 2022, or earlier upon redemption by the Company, as discussed below.

Under no circumstances will the Company be

required to net cash settle the Series W Warrants, nor to pay any liquidated damages resulting from a failure to satisfy any obligations

under the Series W Warrant.

Series 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 “Series

Z Warrant June 1, 2018 exercise price adjustment”.

In this regard, the Series W Warrants exchanged-upon-issue of the Series

Z Warrants resulted in the recognition of a current period modification expense of $766,456 included in other income (expense)

in the consolidated statement of operations, with a corresponding increase to additional paid-in capital, resulting from the incremental

estimated fair value of the consideration given of $3,304,377 of the 5,075,849 Series Z Warrants issued-upon-exchange as compared

of the $2,537,921 estimated fair value of the 10,151,682 Series W Warrants extinguished-upon-exchange.

The April 5, 2018 Exchange

Date estimated fair values of each of the Series Z Warrants and Series W Warrants noted above, were each computed using the Black-Scholes

option pricing model, using the following assumptions:

Calculated aggregate estimated

Series Z Warrants issued-upon-exchange

Series W Warrants extinguished-upon-exchange

Value of common stock

Exercise price per share

Expected term (years)

Risk free rate

Dividend yield

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Stock Purchase Warrants - continued

W Warrants - continued

January 11, 2018, the Company 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.

Company may redeem the outstanding Series W Warrants (other than those outstanding prior to the IPO held by the Company’s

management, founders, and members thereof, but including the warrants held by the initial investors), at the Company’s option,

in whole or in part, at a price of $0.01 per warrant:

at any time while the warrants are exercisable;

upon a minimum of 30 days’

the year ended December 31, 2020, 1,199,383 Series S Warrants and 100 Series Z Warrants were exercised for cash at their respective

exercise price per share, resulting in the issue of a corresponding number of shares of common stock of the Company.

Additionally, subsequent to December 31, 2020, as of March 12, 2021, a total of 773,842 Series Z Warrants were exercised for

cash at their exercise price per share, resulting in the issue of a corresponding number of shares of common stock of the Company.

Series Z Warrant is exercisable to purchase one share of common stock of the Company at an exercise price of $1.60 per share,

and expire after the close of business on April 30, 2024, if not earlier redeemed by the Company, as discussed below.

Z Warrant exercise price is not subject-to adjustment, unless by action of the PAVmed Inc.

board of directors, or the effect of

stock dividends, stock splits or similar events affecting the common stock of the Company.

Under no circumstances will the Company

be required to net cash settle the Series Z Warrants, nor to pay any liquidated damages in lieu of delivery of shares of common

stock of the Company resulting from a failure to satisfy any obligations under the Series Z Warrant.

Company may redeem the Series Z Warrants, at the Company’s option, in whole or in part, at a price of $0.01 per Series Z

Warrant at any time while the Series Z Warrants are exercisable, upon a minimum of 30 days’

prior written notice of redemption,

if, and only if, the volume weighted average price of the Company’s common stock equals

or exceeds $10.00 (subject-to adjustment) for any 20 consecutive trading days ending three business days before the Company issues

its notice of redemption, and provided the average daily trading volume in the stock is at least 20,000 shares per day;

and only if, there is a current registration statement in effect with respect to the shares of common stock of the Company underlying

such warrants.

The right to exercise will be forfeited unless the Series W Warrants are exercised prior to the date specified

in the notice of redemption.

On and after the redemption date, a record holder of an Series W Warrant will have no further rights

except to receive the redemption price for such holder’s Series W Warrant upon its surrender.

were 1,199,383 Series S Warrants issued and outstanding as of December 31, 2019 and 2018, respectively.

Previously, under the

Note and Security Purchase Agreement with Scopia, the Company issued a total of 2,660,000 Series S Warrants to Scopia and its

designees, which were immediately exercisable upon issuance and each may be exercised for one share of common stock of the Company

at an exercise price of $0.01 per share, with such exercise price not subject to further adjustment, except for the effect of

if, and only if, the volume weighted average closing price of the common stock of the Company equals or exceeds $9.00 (subject

to adjustment) for any 20 out of 30 consecutive trading days ending three business days before the Company issues its notice of

redemption, and provided the average daily trading volume in the common stock of the Company during such 30-day period is at least

20,000 shares per day;

and if, and only if, there is a current registration statement in effect with respect to the shares of

Common Stock underlying such Series Z Warrants.

Series W Warrant is exercisable to purchase one share of common stock of the Company at an exercise price of $5.00 per share,

and expire after the close of business on January 29, 2022, if not earlier redeemed by the Company, as discussed below.

W Warrant exercise price is not subject-to adjustment, unless by action of the PAVmed Inc.

board of directors, or the effect of

stock dividends, stock splits or similar events affecting the common stock of the Company.

The Series S Warrants may be exercised

for cash or on a cashless basis.

The Senior Secured Note and the Series S Warrants are freestanding financial instruments, as

the Series S Warrants were immediately legally detachable from the Senior Secured Note and were immediately exercisable.

no circumstances will the Company be required to net cash settle the Series S Warrants, nor to pay any liquidated damages resulting

from a failure to satisfy any obligations under the Series S Warrant.

The Series-S Warrants are classified as equity in the consolidated

balance sheet.

to December 31, 2019, in January 2020, the remaining 1,199,383

Series S Warrants were exercised for $11,994 of cash proceeds and the issue of a corresponding number of shares of common stock

of the Company.

Previously, in March 2018, a total of 274,257 Series S Warrants exercised for $2,743 of cash proceeds,

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

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Purchase Options

on the April 28, 2016 closing date of the Company’s IPO, a total of 53,000 unit purchase options were issued to the IPO

selling agents, with each such unit purchase option issued on April 28, 2016 referred to as an “UPO-W”.

with an exercise price of $5.50 per unit, could have been exercised to purchase the same unit issued in the Company’s IPO,

with such unit comprised of one share of common stock of the Company and one Series W Warrant to purchase one share of common

stock of the Company at an exercise price of $5.00 per share, along with the other provisions of the Series W Warrant as discussed

The UPO-W had a January 29, 2021 expiration date.

The issue of the UPO-W to the IPO selling agents was recognized as an

offering cost of the Company’s IPO, with an estimated fair value of $105,100, determined using a Black-Scholes option pricing

model with the following assumptions:

fair value of the underlying unit of $5.00, expected volatility of 50%, risk free rate of

1.28%, remaining contractual term of 4.6 years, and a dividend yield of 0%.

August 22, 2018, the “UPO Exchange Offer”

was completed, wherein, 53,000 “UPO-Z”

were issued-upon-exchange

of all the previously issued and outstanding 53,000 UPO-W.

The UPO-Z, with an exercise price of $5.50 per unit, may be exercised

to purchase a unit comprised of one share of common stock of the Company and one Series Z Warrant to purchase one share of common

stock of the Company at an exercise price of $1.60 per share, along with the other provisions of the Series Z Warrant as discussed

The UPO-Z has a January 29, 2021 expiration date.

UPO Exchange Offer 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 “June 1, 2018 Series Z Warrant exercise price adjustment”.

In this regard, the UPO-Z issued-upon-exchange of the UPO-W resulted in the recognition of a modification expense of $2,120 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, resulting from the incremental estimated fair value of the consideration given of $3,180 of

the 53,000 UPO-Z issued-upon-exchange as compared to the estimated fair value of $1,060 of the 53,000 UPO-W extinguished-upon-exchange.

The August 22, 2018 estimated fair values of each of the UPO-Z and UPO-W were each computed using the Black-Scholes option pricing

model, using the following assumptions:

Fair Value Assumptions

August 22, 2018 UPO Exchange Offer Exchange Date

Calculated aggregate estimated

UPO-Z issued-upon-exchange /UPO-W extinguished-upon-exchange

Value of common stock

Value of Series Z Warrant /Series W

Exercise price per unit - UPO-Z /UPO-W

Expected term (years)

Risk free rate

Dividend yield

Under no circumstances will the Company

be required to net cash settle the Series W Warrants, nor to pay any liquidated damages in lieu of delivery of shares of common

stock of the Company resulting from a failure to satisfy any obligations under the Series W Warrant.

Company may redeem the Series W Warrants (other than those outstanding prior to the Company’s initial public offering (“IPO”)

held by the Company’s management, founders, and members thereof, but including the warrants held by the initial investors),

at the Company’s option, in whole or in part, at a price of $0.01 per warrant, at any time while the warrants are exercisable;

upon a minimum of 30 days’

prior written notice of redemption;

if, and only if, the volume weighted average price of the

Company’s common stock equals or exceeds $10.00 (subject-to adjustment) for any 20 consecutive trading days ending three

business days before the Company issues its notice of redemption, and provided the average daily trading volume in the stock is

at least 20,000 shares per day;

and, if, and only if, there is a current registration statement in effect with respect to the

shares of common stock of the Company underlying such warrants.

The right to exercise will be forfeited unless the Series W Warrants

are exercised prior to the date specified in the notice of redemption.

On and after the redemption date, a record holder of an

Series W Warrant will have no further rights except to receive the redemption price for such holder’s Series W Warrant upon

its surrender.

Stockholders’

Equity and Common Stock Purchase Warrants - continued

Equity, Common Stock Purchase Warrants, and Noncontrolling Interest - continued

Noncontrolling

Interest (“NCI”)

noncontrolling interest (“NCI”) included as a component of consolidated total stockholders’

equity for the periods

indicated is as follows:

equity is with respect

to the Company’s majority-owned subsidiaries Lucid Diagnostics Inc.

and Solys Diagnostics Inc., summarized for the periods

indicated as follows:

December 31, 2020

December 31, 2019

NCI - equity (deficit) -

beginning of period

Investment in majority-owned subsidiary-

Lucid Diagnostics Inc.

Investment in majority-owned subsidiary-

Solys Diagnostics Inc.

Share Subscription Receivable - Solys

Minority Interest investment -Solys

Diagnostics Inc.

Minority Interest share subscription

receivable - Solys Diagnostics Inc.

Lucid Diagnostics Inc.

2018 Equity Plan

stock option exercise

Net loss attributable to NCI - Lucid

3 unchanged sentences

Stock-based compensation

expense - Lucid Diagnostics Inc 2018 Equity Plan

expense - Lucid Diagnostics Inc.

2018 Equity Plan

(deficit) - end of period

consolidated noncontrolling interest presented above is with respect to the Company’s majority-owned subsidiaries Lucid

Diagnostics Inc.

(inception date of May 8, 2018) and Solys Diagnostics Inc.

(inception date of October 7, 2019).

of December 31, 2019, there were 10.0 million shares of common stock of Lucid Diagnostics Inc.

issued and outstanding, of which

holds a 81.875% majority-interest ownership and has a controlling financial interest, with the remaining 18.125% minority-interest

ownership held by CWRU and each of the three physician inventors of the “EsoGuard Technology”.

Accordingly, Lucid

of December 31, 2020 and 2019, there were 10,003,333 and 10,000,000 shares of common stock of Lucid Diagnostics Inc.

outstanding, respectively.

holds 8,187,499 shares of the common stock of Lucid Diagnostics Inc., as of December 31,

2020 and 2019, representing a majority equity ownership interest of 81.85% and 81.875%, respectively, and has a controlling financial

The minority equity ownership interest of the Lucid Diagnostics Inc.

common stock includes:

943,464 shares held by CWRU,

289,679 shares held by each of the three individual physician inventors of the intellectual property underlying the CWRU

License Agreement (as such license agreement is discussed in Note 3, Agreements Related to Acquired Intellectual Property

Rights ), as of December 31, 2020 and 2019;

and 3,333 shares held by an unrelated third-party consultant as of December 31,

2020, upon the exercise for cash at $1.50 per share of a corresponding number of stock options issued under the Lucid Diagnostics

2018 Equity Plan in January 2020 (as such equity plan is discussed in Note 10, Stock-Based Compensation ).

of December 31, 2020 and 2019, Lucid Diagnostics Inc.

is a consolidated majority-owned subsidiary of the Company, and a corresponding

noncontrolling interest (NCI) is included as a separate component of consolidated stockholders’

equity in the consolidated

balance sheet as of December 31, 2020 and 2019, along with the recognition of a net loss attributable to the NCI in the consolidated

statement of operations in the year ended December 31, 2020 and 2019.

Diagnostics Inc.

is a consolidated majority-owned subsidiary of the Company, for which a provision of a noncontrolling interest

(NCI) is included as a separate component of consolidated stockholders’

equity in the consolidated balance sheet as of December

31, 2019 and December 31, 2018, along with the recognition of a net loss attributable to the NCI in the consolidated statement

of operations in the year ended December 31, 2019 and December 31, 2018.

of December 31, 2019, there were 9,189,190 shares of common stock of Solys Diagnostics Inc.

issued and outstanding, of which PAVmed

holds a 90.3235% majority-interest ownership and has a controlling financial interest, with the remaining 9.6765% minority-interest

ownership held by unrelated third parties.

of December 31, 2020 and 2019, there were 9,189,190 shares of common stock of Solys Diagnostics Inc.

issued and outstanding, of

which PAVmed Inc.

holds a 90.3235% majority-interest ownership and has a controlling financial interest, with the remaining 9.6765%

minority-interest ownership held by unrelated third parties.

Accordingly, Solys Diagnostics Inc.

is a consolidated majority-owned subsidiary of

the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component of consolidated stockholders’

equity in the consolidated balance sheet as of December 31, 2019, along with the recognition of a net loss attributable to the

NCI in the consolidated statement of operations in the year ended December 31, 2019.

Note 10, Stock-Based Compensation , for further information with respect to the PAVmed Inc.

2014 Equity Plan, the Lucid

Diagnostics Inc.

2018 Equity Plan, and the corresponding consolidated stock-based compensation expense recognized by the Company.

is a consolidated majority-owned

subsidiary of the Company, for which a provision of a noncontrolling interest (NCI) is included as a separate component of consolidated

stockholders’

equity in the consolidated balance sheet as of December 31, 2020 and 2019, along with the recognition of a

net loss attributable to the NCI in the consolidated statement of operations in the years ended December 31, 2020 and 2019.

tax (benefit) expense for respective periods noted is as follows:

Ended December 31,

Federal, State and Local

State and Local

allowance reserve

reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as

Ended December 31,

federal statutory rate

state and local income taxes, net

of federal benefit

Permanent differences

Effective tax

tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:

Ended December 31,

Deferred Tax Assets

Net operating loss

Non-deductible interest expense

Debt issue costs

Stock-based compensation expense

Patent licenses

Research and development tax credit

carryforwards

Accrued expenses

Section 195 deferred

start-up costs

Deferred Tax Liabilities

Deferred tax assets, net of deferred

tax liabilities

assets, net after valuation allowance

tax assets and deferred tax liabilities resulting from temporary differences 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.

of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted.

Income Taxes - continued

required by FASB ASC Topic 740, Income Taxes, (“ASC 740), a “more-likely-than-not”

applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income,

or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense.

A valuation allowance is established,

when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not,

the full or partial amount of the net deferred tax asset will not be realized.

Accordingly, the Company evaluated the positive

and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s

history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore

recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities,

as of December 31, 2020 and 2019.

Company has 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 Company has not yet conducted a formal analysis and the NOL carryforward may be subject-to limitation

Internal Revenue Code (“IRC”) Section 382 (provided there was a greater than 50% ownership change, as computed

under such IRC Section 382).

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

commencing in 2035.

The Company has 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 in 2035.

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 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 the Company is currently evaluating

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

tax provision.

Company files income tax returns in the United States in federal and applicable state and local jurisdictions.

The Company’s

tax filings for the years 2017 and thereafter each remain subject to examination by taxing authorities.

The Company’s policy

is to record interest and penalties related to income taxes as part of its income tax provision.

The Company has not recognized

any penalties or interest related to its income tax provision.

Loss Per Share

5 unchanged sentences

- for the respective periods indicated - is as follows:

Ended December 31,

Net loss - before noncontrolling

$ (17,268,131 )

$ (18,172,822 )

Net loss attributable

2 unchanged sentences

reported, attributable to PAVmed Inc.

$ (16,457,241 )

$ (17,968,750 )

Convertible Preferred

Stock dividends (1) :

Series A and Series A-1 Exchange Offer

- March 15, 2018 - deemed dividend - incremental fair value - Series B Convertible Preferred Stock issued-upon-exchange of

Series A Convertible Preferred Stock

A and Series A-1 Exchange Offer - March 15, 2018 - Series B Convertible Preferred Stock issued-upon-exchange of Series A-1

Convertible Preferred Stock

B Convertible Preferred Stock dividends –

Net loss attributable

1 unchanged sentence

common stockholders

$ (16,727,136 )

$ (18,750,798 )

Weighted average

2 unchanged sentences

Basic and diluted

Net loss - as reported, attributable to PAVmed Inc.

Net loss attributable to PAVmed Inc.

loss - as reported, attributable to PAVmed Inc.

loss attributable to PAVmed Inc.

common stockholders

Loss Per Share - continued

common stock equivalents excluded from the computation of diluted weighted average shares outstanding have as their inclusion

common stock equivalents have been excluded from the computation of diluted weighted average shares outstanding as their inclusion

would be anti-dilutive, are as follows:

Stock Options and Unvested

Restricted Stock Awards

Unit purchase options

- “UPO-Z”

/”UPO-W”

- as to shares of common stock (4)

Unit purchase options

- “UPO-Z”

- as to shares underlying Series Z Warrants (4)

Plan stock options and restricted stock awards

Unit purchase options - as to shares

of common stock

Unit purchase options - as to shares

underlying Series Z Warrants

Series Z Warrants

Series W Warrants

Series S Warrants (5)

B Convertible Preferred Stock (3)

convertible preferred stock dividends earned as of the each of the respective periods noted, are included in the calculation

of basic and diluted net loss attributable to PAVmed Inc.

common stockholders for each respective periods presented, including:

with respect to the Series B Convertible Preferred Stock, for the year ended December 31, 2019 and from March 16, 2018

to December 31, 2018, and with respect to each of the Series A-1 and Series A Convertible Preferred Stock, from January 1,

2018 to March 15, 2018;

weighted-average number of shares of common stock outstanding for the years ended December 31, 2019 and 2018 include the

shares of the Company issued and outstanding during the year ended December 31, 2019, and during the year ended December 31,

2019, the Series S Warrants for the period February 1, 2019 to December 31, 2019 (as discussed herein below), each on a weighted

average basis.

Series B Convertible Preferred Stock dividends earned as of the each of the respective periods noted, are included

in the calculation of basic and diluted net loss attributable to PAVmed Inc.

common stockholders for each respective period

weighted-average number of shares of common stock outstanding for the years ended December 31, 2020 and 2019 include the shares

of the Company issued and outstanding during the years ended December 31, 2020 and December 31, 2019, each on a weighted average

The basic weighted average number of shares outstanding excludes common stock equivalent incremental shares,

3 unchanged sentences

of the incremental shares would be anti-dilutive.

Series B Convertible Preferred Stock has the right to receive common stock dividends, and prior to the March 15, 2018 Exchange

Date of the Series A and Series A Exchange Offer, holders of the Series A Warrants and the Series A-1 Warrants previously

had the right to receive common stock dividends.

As such, the Series B Convertible Preferred Stock and the Series A Warrants

and Series A-1 Warrants would potentially been considered participating securities under the two-class method of calculating

net loss per share.

However, the Company has incurred net losses to-date, and as such holders are not contractually obligated

to share in the losses, there is no impact on the Company’s net loss per share calculation for the periods indicated.

August 22, 2018, the “UPO Exchange Offer”

was completed, wherein, 53,000 “UPO-Z”

were issued-upon-exchange

of all the previously issued and outstanding 53,000 UPO-W.

The UPO-Z may be exercised to purchase a unit comprised of one

share of common stock of the Company and one Series Z Warrant;

and the UPO-W was exercisable to purchase a unit comprised

of one share of common stock of the Company and one Series W Warrant.

See Note 14, Stockholders’

Equity and Common

Stock Purchase Warrants , for a discussion of the UPO-Z, UPO-W, and the August 22, 2018 UPO Exchange Offer.

Series S Warrants were issued in connection with the Note and Security Purchase Agreement with Scopia Holdings LLC.

S Warrants were not included in weighted average shares outstanding for the year ended December 31, 2018 due to certain contractual

restrictions on the ability of the holder to exercise the Series S Warrant, with such contractual restrictions ending in January

converted at the election of the holder, the shares of Series B Convertible Preferred Stock issued and outstanding would result

in a corresponding number of additional outstanding shares of common stock of the Company.

Subsequent Events

as otherwise noted herein, the Company has evaluated subsequent events through the date of filing of this Annual Report on Form

10-K and determined there to be no further events requiring adjustments to the consolidated financial statements and /or disclosures

converted, at the election of the holder, the shares of

Series B Convertible Preferred Stock issued and outstanding would result in a corresponding number of additional outstanding

shares of common stock of the Company.

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 9A. Controls and Procedures