a.

The information presented as of and for the -month and -month periods ended and is unaudited, but includes all adjustments (which consist only of normal recurring adjustments) that the management of Navidea Biopharmaceuticals, Inc. (“Navidea,” the “Company,” or “we”) believes to be necessary for the fair presentation of results for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The balances as of and the results for the interim periods are necessarily indicative of results to be expected for the year. The consolidated financial statements should be read in conjunction with Navidea’s audited consolidated financial statements for the year ended which were included as part of our Annual Report on Form -K.

b.

In accordance with current accounting standards, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level measurements) and the lowest priority to unobservable inputs (Level measurements). The levels of the fair value hierarchy are described below:

1

Cash, restricted cash, available-for-sale securities, accounts and other receivables, and accounts payable: The carrying amounts approximate fair value because of the short maturity of these instruments.

2

Notes payable: At and the conversion option of certain notes payable was required to be recorded at fair value. The estimated fair value of the conversion option was calculated using a Monte Carlo simulation. This valuation method includes Level inputs such as the estimated current market interest rate for similar instruments with similar creditworthiness. Unrealized gains and losses on the fair value of the conversion option are classified in other expenses as a change in the fair value of financial instruments in the consolidated statements of operations. At the fair value of the conversion option is approximately. See Note

3

Derivative liabilities: Derivative liabilities are related to certain outstanding warrants which are recorded at fair value. Derivative liabilities totaling as of and were included in other liabilities on the consolidated balance sheets. The assumptions used to calculate fair value as of and included volatility, a risk-free rate and expected dividends. In addition, we considered non-performance risk and determined that such risk is minimal. Unrealized gains and losses on the derivatives are classified in other expenses as a change in the fair value of financial instruments in the statements of operations. See Note

4

Warrants:  In in connection with the Asset Sale, the Company granted to each of Cardinal Health and the University of California, San Diego, (“UCSD”), a -year warrant to purchase up to million shares and million shares, respectively, of the Company’s common stock at an exercise price of per share, each of which warrant is subject to anti-dilution and other customary terms and conditions (the “Series NN warrants”).  The assumptions used to calculate fair value at the date of issuance included volatility, a risk-free rate and expected dividends.   The Series NN warrants granted to Cardinal Health had an estimated fair value of million, which was recorded as a reduction of the gain on sale in the consolidated statement of operations for the -month period ended The Series NN warrants granted to UCSD had an estimated fair value of which was recorded as an intangible asset related to the UCSD license in the consolidated balance sheet during the -month period ended See Note

c.

We currently generate revenue primarily from grants to support various product development initiatives. We generally recognize grant revenue when expenses reimbursable under the grants have been paid and payments under the grants become contractually due.

d.

In the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) - .  ASU - simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  ASU - is effective for public business entities for annual periods beginning after and interim periods within those annual periods.  Methods of adoption vary according to each of the amendment provisions.  The adoption of ASU - on did have a material impact on the Company’s financial statements because:

As of million of our U.S. net operating loss carryforwards related to stock-based compensation tax deductions in excess of book compensation expense (“APIC NOLs”), that will be credited to additional paid-in capital when such deductions reduce taxes payable as determined on a "with-and-without" basis. Accordingly, these APIC NOLs will reduce federal taxes payable if realized in future periods. As of we have also recorded a full valuation allowance against these APIC NOLs.  This resulted in a cumulative effect adjustment to accumulated deficit as a result of the adoption of ASU -

Due to the full valuation allowance for the Company’s tax provision, these APIC NOLs have never been recorded in additional paid-in-capital. The Company does anticipate any impact going forward, as any amounts to be recorded in the consolidated statements of operations would be fully offset by the valuation allowance, nor would they result in a related classification in cash flows for operating activities.

The Company will continue to recognize forfeitures through estimates consistent with our past practices as opposed to when they occur.

The Company already classifies cash paid to taxing authorities arising from the withholding of shares from employees in cash flows from financing activities.

e.

In the FASB issued ASU - , which will supersede existing revenue recognition guidance under U.S. GAAP. The core principle of ASU - is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU - defines a -step process that requires companies to exercise more judgment and make more estimates than under the current guidance. These include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since the issuance of ASU - several additional ASUs have been issued and incorporated within Topic to clarify various elements of the guidance. ASU - allows a choice of transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements with a cumulative-effect adjustment reflected in retained earnings. ASU - also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU - is effective for annual reporting periods beginning after including interim periods within those periods.