Delaware
|
|
31-1080091
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
5600 Blazer Parkway, Suite 200, Dublin, Ohio
|
|
43017-7550
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☒
|
Non-accelerated
filer
|
☐
|
Smaller
reporting company
|
☐
|
Emerging
Growth Company
|
☐
|
|
|
PART I – Financial Information
|
|
|
||
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
3
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets as of March 31, 2017 (unaudited) and
December 31, 2016
|
|
3
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations for the Three-Month Periods Ended
March 31, 2017 and 2016 (unaudited)
|
|
4
|
|
|
|
|
|
|
|
Consolidated
Statement of Stockholders’ Equity (Deficit) for the
Three-Month Period Ended March 31, 2017
(unaudited)
|
|
5
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the Three-Month Periods Ended
March 31, 2017 and 2016 (unaudited)
|
|
6
|
|
|
|
|
|
|
|
Notes
to the Consolidated Financial Statements
(unaudited)
|
|
7
|
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
20
|
|
|
|
|
|
|
|
Forward-Looking
Statements
|
|
20
|
|
|
|
|
|
|
|
The
Company
|
|
20
|
|
|
|
|
|
|
|
Product Line
Overview
|
|
21
|
|
|
|
|
|
|
|
Outlook
|
|
25
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
25
|
|
|
|
|
|
|
|
Results of
Operations
|
|
26
|
|
|
|
|
|
|
|
Liquidity and
Capital Resources
|
|
26
|
|
|
|
|
|
|
|
Recent
Accounting Standards
|
|
29
|
|
|
|
|
|
|
|
Critical
Accounting Policies
|
|
29
|
|
|
|
|
|
|
Item
3.
|
Quantitative and
Qualitative Disclosures About Market Risk
|
|
30
|
|
|
|
|
|
|
Item
4.
|
Controls and
Procedures
|
|
31
|
|
|
|
|
|
|
PART II – Other Information
|
|
33
|
||
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
|
33
|
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
|
34
|
|
|
|
|
|
|
Item
5.
|
Other
Information
|
|
34
|
|
|
|
|
|
|
Item
6.
|
Exhibits
|
|
35
|
|
March 31,
2017
|
December 31,
2016
|
ASSETS
|
(unaudited)
|
|
Current
assets:
|
|
|
Cash
|
$13,440,618
|
$1,539,325
|
Restricted
cash
|
—
|
5,001,253
|
Accounts
and other receivables
|
7,185,814
|
203,016
|
Inventory,
net
|
748
|
96,208
|
Prepaid
expenses and other
|
1,071,815
|
842,220
|
Assets
associated with discontinued operations, current
|
—
|
3,144,247
|
Total
current assets
|
21,698,995
|
10,826,269
|
Property
and equipment
|
3,217,061
|
3,232,372
|
Less
accumulated depreciation and amortization
|
2,118,026
|
2,051,787
|
|
1,099,035
|
1,180,585
|
Patents,
trademarks and license agreements
|
480,404
|
146,685
|
Guaranteed
earnout receivable
|
9,437,599
|
—
|
Other
assets
|
209,554
|
202,882
|
Assets
associated with discontinued operations
|
—
|
105,255
|
Total
assets
|
$32,925,587
|
$12,461,676
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$3,133,752
|
$5,165,385
|
Accrued
liabilities and other
|
1,170,315
|
7,857,856
|
Deferred
revenue, current
|
15,037
|
15,037
|
Notes
payable, current
|
2,103,000
|
51,957,913
|
Liabilities
associated with discontinued operations, current
|
3,554,320
|
4,865,597
|
Total
current liabilities
|
9,976,424
|
69,861,788
|
Notes
payable
|
—
|
9,641,179
|
Other
liabilities
|
583,849
|
624,922
|
Total
liabilities
|
10,560,273
|
80,127,889
|
Commitments
and contingencies
|
|
|
Stockholders’
equity (deficit):
|
|
|
Preferred
stock; $.001 par value; 5,000,000 shares authorized; no shares
issued
or outstanding at March 31, 2017 and December 31, 2016 |
—
|
—
|
Common
stock; $.001 par value; 300,000,000 shares authorized;
161,898,338
and
155,762,729 shares issued and outstanding at March 31, 2017
and
December
31, 2016, respectively
|
161,898
|
155,763
|
Additional
paid-in capital
|
330,808,515
|
326,564,148
|
Accumulated
deficit
|
(309,273,807)
|
(394,855,034)
|
Total
Navidea stockholders' equity (deficit)
|
21,696,606
|
(68,135,123)
|
Noncontrolling
interest
|
668,708
|
468,910
|
Total
stockholders’ equity (deficit)
|
22,365,314
|
(67,666,213)
|
Total
liabilities and stockholders’ equity (deficit)
|
$32,925,587
|
$12,461,676
|
|
Three Months Ended
March 31,
|
|
|
2017
|
2016
|
Revenue:
|
|
|
Tc
99m tilmanocept sales revenue
|
$—
|
$8,800
|
Tc
99m tilmanocept license revenue
|
—
|
254,050
|
Grant
and other revenue
|
580,030
|
685,635
|
Total
revenue
|
580,030
|
948,485
|
Cost
of goods sold
|
—
|
1,489
|
Gross
profit
|
580,030
|
946,996
|
Operating
expenses:
|
|
|
Research
and development
|
705,274
|
2,072,271
|
Selling,
general and administrative
|
3,022,434
|
2,633,126
|
Total
operating expenses
|
3,727,708
|
4,705,397
|
Loss
from operations
|
(3,147,678)
|
(3,758,401)
|
Other
(expense) income:
|
|
|
Interest
income, net
|
24,112
|
757
|
Equity
in loss of R-NAV, LLC
|
—
|
(12,239)
|
Change
in fair value of financial instruments
|
140,485
|
1,125,359
|
Loss
on extinguishment of debt
|
(1,314,102)
|
—
|
Other,
net
|
(21,604)
|
(37,292)
|
Total
other (expense) income, net
|
(1,171,109)
|
1,076,585
|
Loss
before income taxes
|
(4,318,787)
|
(2,681,816)
|
Benefit
from income taxes
|
1,454,172
|
—
|
Loss
from continuing operations
|
(2,864,615)
|
(2,681,816)
|
Discontinued
operations, net of tax effect:
|
|
|
Loss
from discontinued operations
|
(255,861)
|
(1,004,433)
|
Gain
on sale
|
88,701,501
|
—
|
Net
income (loss)
|
85,581,025
|
(3,686,249)
|
Less
loss attributable to noncontrolling interest
|
(202)
|
(241)
|
Net
income (loss) attributable to common stockholders
|
$85,581,227
|
$(3,686,008)
|
Income
(loss) per common share (basic):
|
|
|
Continuing
operations
|
$(0.02)
|
$(0.02)
|
Discontinued
operations
|
$0.55
|
$—
|
Attributable
to common stockholders
|
$0.53
|
$(0.02)
|
Weighted
average shares outstanding (basic)
|
160,376,476
|
155,308,094
|
Income
(loss) per common share (diluted):
|
|
|
Continuing
operations
|
$(0.02)
|
$(0.02)
|
Discontinued
operations
|
$0.54
|
$—
|
Attributable
to common stockholders
|
$0.52
|
$(0.02)
|
Weighted
average shares outstanding (diluted)
|
164,871,955
|
155,308,094
|
|
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
Non-controlling
|
Total
Stockholders'
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Interest
|
Equity (Deficit)
|
Balance,
January 1, 2017
|
—
|
$—
|
155,762,729
|
$155,763
|
$326,564,148
|
$(394,855,034)
|
$468,910
|
$(67,666,213)
|
Issued
stock in payment of
Board
retainers
|
—
|
—
|
16,406
|
16
|
10,484
|
—
|
—
|
10,500
|
Issued
stock in payment of
employee
bonuses
|
—
|
—
|
707,353
|
707
|
367,105
|
—
|
—
|
367,812
|
Issued
stock upon exercise of
warrants
|
—
|
—
|
5,411,850
|
5,412
|
48,707
|
—
|
—
|
54,119
|
Issued
warrants in connection
with
Asset Sale
|
—
|
—
|
—
|
—
|
3,337,187
|
—
|
—
|
3,337,187
|
Issued
warrants for extension
of
license agreement
|
—
|
—
|
—
|
—
|
333,719
|
—
|
—
|
333,719
|
Stock
compensation expense
|
—
|
—
|
—
|
—
|
147,165
|
—
|
—
|
147,165
|
Net
income
|
—
|
—
|
—
|
—
|
—
|
85,581,227
|
(202)
|
85,581,025
|
Reclassification
of funds
invested
(see Note 8)
|
—
|
—
|
—
|
—
|
—
|
—
|
200,000
|
200,000
|
Balance,
March 31, 2017
|
—
|
$—
|
161,898,338
|
$161,898
|
$330,808,515
|
$(309,273,807)
|
$668,708
|
$22,365,314
|
|
Three Months Ended
March 31,
|
|
|
2017
|
2016
|
Cash
flows from operating activities:
|
|
|
Net
income (loss)
|
$85,581,025
|
$(3,686,249)
|
Adjustments
to reconcile net income (loss) to net cash provided by (used
in)
operating
activities:
|
|
|
Depreciation
and amortization
|
86,535
|
149,590
|
Loss
on disposal and abandonment of assets
|
100,270
|
—
|
Amortization
of debt discount and issuance costs
|
—
|
72,875
|
Compounded
interest on long term debt
|
143,114
|
824,952
|
Stock
compensation expense
|
147,165
|
340,502
|
Equity
in loss of R-NAV, LLC
|
—
|
12,239
|
Change
in fair value of financial instruments
|
(140,485)
|
(1,125,359)
|
Issued
warrants in connection with Asset Sale
|
3,337,187
|
—
|
Value
of stock issued to directors
|
10,500
|
20,640
|
Value
of stock issued to employees
|
367,812
|
—
|
Other
|
65
|
(12,239)
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
and other receivables
|
(14,821,403)
|
903,147
|
Inventory
|
1,470,078
|
(246,030)
|
Prepaid
expenses and other assets
|
(65,632)
|
193,795
|
Accounts
payable
|
(3,837,463)
|
1,133,840
|
Accrued
and other liabilities
|
(3,719,024)
|
4,418
|
Deferred
revenue
|
(2,315,037)
|
(265,758)
|
Net
cash provided by (used in) operating activities
|
66,344,707
|
(1,679,637)
|
Cash
flows from investing activities:
|
|
|
Purchases
of equipment
|
—
|
(1,847)
|
Net
cash used in investing activities
|
—
|
(1,847)
|
Cash
flows from financing activities:
|
|
|
Proceeds
from issuance of common stock
|
54,119
|
—
|
Principal
payments on notes payable
|
(59,498,721)
|
—
|
Restricted
cash held for payment against debt
|
5,001,188
|
—
|
Payments
under capital leases
|
—
|
(693)
|
Net
cash used in financing activities
|
(54,443,414)
|
(693)
|
Net
increase (decrease) in cash
|
11,901,293
|
(1,682,177)
|
Cash,
beginning of period
|
1,539,325
|
7,166,260
|
Cash,
end of period
|
$13,440,618
|
$5,484,083
|
|
March 31,
2017
|
December 31, 2016
|
Accounts
and other receivables
|
$—
|
$1,598,994
|
Inventory,
net
|
—
|
1,374,618
|
Prepaid
expenses
|
—
|
170,635
|
Assets
associated with discontinued operations, current
|
—
|
3,144,247
|
Property
and equipment, net of accumulated depreciation
|
—
|
70,973
|
Patents
and trademarks, net of accumulated amortization
|
—
|
34,282
|
Assets
associated with discontinued operations, noncurrent
|
—
|
105,255
|
Total
assets associated with discontinued operations
|
$—
|
$3,249,502
|
|
|
|
Accounts
payable
|
$152,108
|
$1,957,938
|
Accrued
liabilities
|
3,402,212
|
607,659
|
Deferred
revenue
|
—
|
2,300,000
|
Liabilities
associated with discontinued operations, current
|
$3,554,320
|
$4,865,597
|
|
Three Months Ended March 31,
|
|
|
2017
|
2016
|
Revenue:
|
|
|
Lymphoseek
sales revenue
|
$2,917,213
|
$3,773,880
|
Grant
and other revenue
|
—
|
190
|
Total
revenue
|
2,917,213
|
3,774,070
|
Cost
of goods sold
|
364,192
|
533,440
|
Gross
profit
|
2,553,021
|
3,240,630
|
Operating
expenses:
|
|
|
Research
and development
|
283,533
|
587,249
|
Selling,
general and administrative
|
820,203
|
1,463,534
|
Total
operating expenses
|
1,103,736
|
2,050,783
|
Income
from discontinued operations
|
1,449,285
|
1,189,847
|
Interest
expense
|
(1,718,506)
|
(2,194,280)
|
Loss
before income taxes
|
(269,221)
|
(1,004,433)
|
Benefit
from income taxes
|
13,360
|
—
|
Loss
from discontinued operations
|
$(255,861)
|
$(1,004,433)
|
Liabilities Measured at Fair Value on a Recurring Basis as of March
31, 2017
|
||||
Description
|
Quoted Prices in
Active Markets
for Identical Liabilities
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
Total
|
Platinum
notes payable
|
$—
|
$—
|
$1,926,218
|
$1,926,218
|
Liability
related to MT warrants
|
—
|
—
|
63,000
|
63,000
|
Liabilities Measured at Fair Value on a Recurring Basis as of
December 31, 2016
|
||||
Description
|
Quoted Prices in
Active Markets for Identical
Liabilities
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
Total
|
Platinum
notes payable
|
$—
|
$—
|
$9,641,179
|
$9,641,179
|
Liability
related to MT warrants
|
—
|
—
|
63,000
|
63,000
|
|
March 31,
2017
|
December 31, 2016
|
Estimated
volatility
|
110%
|
76%
|
Expected
term (in years)
|
0.43
|
4.75
|
Debt
rate
|
8.125%
|
8.125%
|
Beginning
stock price
|
$0.58
|
$0.64
|
|
Three Months Ended March 31, 2017
|
|||
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic
Value
|
Outstanding
at beginning of period
|
3,380,615
|
$2.00
|
|
|
Granted
|
—
|
—
|
|
|
Exercised
|
—
|
—
|
|
|
Canceled
and Forfeited
|
(108,150)
|
1.48
|
|
|
Expired
|
—
|
—
|
|
|
Outstanding
at end of period
|
3,272,465
|
$2.01
|
6.2
years
|
$10,922
|
Exercisable
at end of period
|
3,002,405
|
$2.04
|
6.1
years
|
$10,922
|
|
Three Months Ended
March 31, 2017
|
|
|
Number of
Shares
|
Weighted
Average
Grant-Date
Fair Value
|
Unvested
at beginning of period
|
207,000
|
$1.17
|
Granted
|
—
|
—
|
Vested
|
—
|
—
|
Forfeited
|
—
|
—
|
Unvested
at end of period
|
207,000
|
$1.17
|
|
Three Months Ended
March 31,
|
|
|
2017
|
2016
|
Weighted
average shares outstanding, basic
|
160,376,476
|
155,308,094
|
Dilutive
shares related to warrants
|
4,288,479
|
—
|
Unvested
restricted stock
|
207,000
|
—
|
Weighted
average shares outstanding, diluted
|
164,871,955
|
155,308,094
|
|
March 31,
2017
|
December 31,
2016
|
|
(unaudited)
|
|
Materials
|
$—
|
$94,500
|
Work-in-process
|
—
|
1,708
|
Finished
goods
|
748
|
—
|
Reserves
|
—
|
—
|
Total
|
$748
|
$96,208
|
Three Months Ended March 31, 2017
|
Diagnostics
|
Therapeutics
|
Corporate
|
Total
|
Tc
99m tilmanocept sales revenue:
|
|
|
|
|
United
States
|
$—
|
$—
|
$—
|
$—
|
International
|
—
|
—
|
—
|
—
|
Tc
99m tilmanocept license revenue
|
—
|
—
|
—
|
—
|
Grant
and other revenue
|
571,362
|
8,668
|
—
|
580,030
|
Total
revenue
|
571,362
|
8,668
|
—
|
580,030
|
Cost
of goods sold, excluding depreciation and amortization
|
—
|
—
|
—
|
—
|
Research
and development expenses,
excluding
depreciation and amortization
|
413,202
|
292,072
|
—
|
705,274
|
Selling,
general and administrative expenses,
excluding depreciation and
amortization (1)
|
—
|
2,521
|
2,943,123
|
2,945,644
|
Depreciation and amortization (2)
|
—
|
—
|
76,790
|
76,790
|
Income (loss) from operations (3)
|
158,160
|
(285,925)
|
(3,019,913)
|
(3,147,678)
|
Other
expense
|
—
|
—
|
(1,171,109)
|
(1,171,109)
|
Income
tax (expense) benefit
|
(53,254)
|
96,273
|
1,411,153
|
1,454,172
|
Net
income (loss) from continuing operations
|
104,906
|
(189,652)
|
(2,779,869)
|
(2,864,615)
|
Loss
from discontinued operations, net of tax
|
(255,861)
|
—
|
—
|
(255,861)
|
Gain
on sale of discontinued operations, net of tax
|
88,701,501
|
—
|
—
|
88,701,501
|
Net
income (loss)
|
88,550,546
|
(189,652)
|
(2,779,869)
|
85,581,025
|
Total
assets, net of depreciation and amortization:
|
|
|
|
|
United
States
|
9,692,007
|
897
|
23,116,511
|
32,809,415
|
International
|
115,279
|
—
|
893
|
116,172
|
Capital
expenditures
|
—
|
—
|
—
|
—
|
Three Months Ended March 31, 2016
|
Diagnostics
|
Therapeutics
|
Corporate
|
Total
|
Tc
99m tilmanocept sales revenue:
|
|
|
|
|
United
States
|
$—
|
$—
|
$—
|
$—
|
International
|
8,800
|
—
|
—
|
8,800
|
Tc
99m tilmanocept license revenue
|
254,050
|
—
|
—
|
254,050
|
Grant
and other revenue
|
685,635
|
—
|
—
|
685,635
|
Total
revenue
|
948,485
|
—
|
—
|
948,485
|
Cost
of goods sold, excluding depreciation and amortization
|
1,489
|
—
|
—
|
1,489
|
Research
and development expenses,
excluding
depreciation and amortization
|
1,830,471
|
241,800
|
—
|
2,072,271
|
Selling,
general and administrative expenses,
excluding depreciation and
amortization (1)
|
—
|
(598)
|
2,558,758
|
2,558,160
|
Depreciation and amortization (2)
|
—
|
—
|
74,966
|
74,966
|
Loss from operations (3)
|
(883,475)
|
(241,202)
|
(2,633,724)
|
(3,758,401)
|
Other
income (expense), excluding
equity in loss of R-NAV,
LLC (4)
|
—
|
—
|
1,088,824
|
1,088,824
|
Equity
in loss of R-NAV, LLC
|
—
|
—
|
(12,239)
|
(12,239)
|
Net
income (loss) from continuing operations
|
(883,475)
|
(241,202)
|
(1,557,139)
|
(2,681,816)
|
Loss
from discontinued operations, net of tax
|
(1,004,433)
|
—
|
—
|
(1,004,433)
|
Net
loss
|
(1,887,908)
|
(241,202)
|
(1,557,139)
|
(3,686,249)
|
Total
assets, net of depreciation and amortization:
|
|
|
|
|
United
States
|
4,273,762
|
16,515
|
7,610,817
|
11,901,094
|
International
|
380,982
|
—
|
1,605
|
382,587
|
Capital
expenditures
|
—
|
—
|
1,847
|
1,847
|
|
Three Months Ended
March 31,
|
|
Development Program (a)
|
2017
|
2016
|
Lymphoseek
|
$241,687
|
$585,195
|
Manocept
Platform
|
318,688
|
153,841
|
Macrophage
Therapeutics
|
252,073
|
187,583
|
NAV4694 (b)
|
(553,743)
|
564,558
|
NAV5001
|
—
|
54,424
|
10.1
|
|
Global
Settlement Agreement dated March 3, 2017 by and among Navidea
Biopharmaceuticals, Inc., Cardinal Health 414, LLC, Macrophage
Therapeutics, Inc., Capital Royalty Partners II L.P., Capital
Royalty Partners II (Cayman), L.P., Capital Royalty Partners II
– Parallel Fund “A” L.P., Parallel Investment
Opportunities Partners II L.P. and Capital Royalty Partners II
– Parallel Fund “B” (Cayman) L.P. (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed March 8, 2017).
|
|
|
|
10.2
|
|
License-Back
Agreement, dated March 3, 2017, between Navidea Biopharmaceuticals,
Inc. and Cardinal Health 414, LLC (incorporated by reference to
Exhibit 10.3 to the Company’s Current Report on Form 8-K
filed March 8, 2017).
|
|
|
|
10.3
|
|
Warrant,
dated March 3, 2017, issued to Cardinal Health 414, LLC
(incorporated by reference to Exhibit 10.4 to the Company’s
Current Report on Form 8-K filed March 8, 2017).
|
|
|
|
10.4
|
|
Warrant,
dated March 3, 2017, issued to The Regents of the University of
California (San Diego) (incorporated by reference to Exhibit 10.5
to the Company’s Current Report on Form 8-K filed March 8,
2017).
|
|
|
|
10.5
|
|
Amended
and Restated License Agreement, dated March 3, 2017, between
Navidea Biopharmaceuticals, Inc. and The Regents of the University
of California (San Diego) (portions of this Exhibit have been
omitted pursuant to a request for confidential treatment and have
been filed separately with the Securities and Exchange Commission)
(incorporated by reference to Exhibit 10.6 to the Company’s
Current Report on Form 8-K filed March 8, 2017).
|
|
|
|
10.6
|
|
Employment Agreement dated May 4, 2017,
by and between Navidea Biopharmaceuticals, Inc. and Jed A.
Latkin.*
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*
|
|
|
|
31.2
|
|
Certification of Chief
Operating Officer and Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer of Periodic Financial
Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350.**
|
|
|
|
32.2
|
|
Certification of Chief
Operating Officer and Chief Financial Officer of Periodic Financial
Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350.**
|
|
|
|
101.INS
|
|
XBRL Instance Document*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
Document*
|
|
NAVIDEA
BIOPHARMACEUTICALS, INC.
|
|
|
|
(the
Company)
|
|
|
|
May 10,
2017
|
|
|
|
|
|
|
|
By:
|
/s/ Jed
A. Latkin
|
|
|
|
|
|
|
Jed A.
Latkin
|
|
|
|
Chief Operating Officer and Chief Financial
Officer
|
|
|
|
(authorized
officer; financial and accounting officer)
|
|
10.1
|
|
Global
Settlement Agreement dated March 3, 2017 by and among Navidea
Biopharmaceuticals, Inc., Cardinal Health 414, LLC, Macrophage
Therapeutics, Inc., Capital Royalty Partners II L.P., Capital
Royalty Partners II (Cayman), L.P., Capital Royalty Partners II
– Parallel Fund “A” L.P., Parallel Investment
Opportunities Partners II L.P. and Capital Royalty Partners II
– Parallel Fund “B” (Cayman) L.P. (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed March 8, 2017).
|
|
|
|
10.2
|
|
License-Back
Agreement, dated March 3, 2017, between Navidea Biopharmaceuticals,
Inc. and Cardinal Health 414, LLC (incorporated by reference to
Exhibit 10.3 to the Company’s Current Report on Form 8-K
filed March 8, 2017).
|
|
|
|
10.3
|
|
Warrant,
dated March 3, 2017, issued to Cardinal Health 414, LLC
(incorporated by reference to Exhibit 10.4 to the Company’s
Current Report on Form 8-K filed March 8, 2017).
|
|
|
|
10.4
|
|
Warrant,
dated March 3, 2017, issued to The Regents of the University of
California (San Diego) (incorporated by reference to Exhibit 10.5
to the Company’s Current Report on Form 8-K filed March 8,
2017).
|
|
|
|
10.5
|
|
Amended
and Restated License Agreement, dated March 3, 2017, between
Navidea Biopharmaceuticals, Inc. and The Regents of the University
of California (San Diego) (portions of this Exhibit have been
omitted pursuant to a request for confidential treatment and have
been filed separately with the Securities and Exchange Commission)
(incorporated by reference to Exhibit 10.6 to the Company’s
Current Report on Form 8-K filed March 8, 2017).
|
|
|
|
10.6
|
|
Employment Agreement dated May 4, 2017,
by and between Navidea Biopharmaceuticals, Inc. and Jed A.
Latkin.*
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
|
31.2
|
|
Certification
of Chief Operating Officer and Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer of Periodic Financial Reports pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350.**
|
|
|
|
32.2
|
|
Certification
of Chief Operating Officer and Chief Financial Officer of Periodic
Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.**
|
|
|
|
101.INS
|
|
XBRL
Instance Document*
|
|
|
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document*
|
|
|
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document*
|
|
|
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase Document*
|
|
|
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document*
|
|
|
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document*
|
NAVIDEA BIOPHARMACEUTICALS, INC.
|
|
EXECUTIVE:
|
|
|
|
|
|
By:
|
/s/
Michael M. Goldberg
|
|
/s/ Jed
A. Latkin
|
Name:
|
Michael
M. Goldberg
|
|
Jed A.
Latkin
|
Its:
|
CEO
|
|
|
May 10, 2017
|
|
/s/ Michael M. Goldberg
|
|
|
Michael M. Goldberg, M.D.
|
|
|
President and Chief Executive Officer
|
|
|
(principal executive officer)
|
May 10, 2017
|
|
/s/ Jed A. Latkin
|
|
|
Jed A. Latkin
|
|
|
Chief
Operating Officer and Chief Financial
Officer
|
|
|
(principal financial and accounting officer)
|
May 10, 2017
|
|
/s/ Michael M. Goldberg
|
|
|
Michael M. Goldberg, M.D.
|
|
|
President and Chief Executive Officer
|
|
|
(principal executive officer)
|
May 10, 2017
|
|
/s/ Jed A. Latkin
|
|
|
Jed A. Latkin
|
|
|
Chief Operating Officer and
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Entity Registrant Name | NAVIDEA BIOPHARMACEUTICALS, INC. | |
Trading Symbol | NAVB | |
Entity Central Index Key | 0000810509 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 161,898,338 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred Stock, Par or Stated Value Per Share (USD per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share (USD per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares, Issued | 161,898,338 | 155,762,729 |
Common Stock, Shares Outstanding | 161,898,338 | 155,762,729 |
Consolidated Statement of Stockholders' Equity (Deficit) - 3 months ended Mar. 31, 2017 - USD ($) |
Common Stock [Member] |
Additional Paid In Capital [Member] |
Retained Earnings [Member] |
Noncontrolling Interest [Member] |
Total |
---|---|---|---|---|---|
Balance at Dec. 31, 2016 | $ 155,763 | $ 326,564,148 | $ 394,855,034 | $ 468,910 | $ (67,666,213) |
Balance, shares at Dec. 31, 2016 | 155,762,729 | ||||
Issued stock in payment of Board retainers | $ 16 | 10,484 | 10,500 | ||
Issued stock in payment of Board retainers, shares | 16,406 | ||||
Issued stock in payment of employee bonuses | $ 707 | 367,105 | 367,812 | ||
Issued stock in payment of employee bonuses, shares | 707,353 | ||||
Issued stock upon exercise of warrants | $ 5,412 | 48,707 | 54,119 | ||
Issued stock upon exercise of warrants, shares | 5,411,850 | ||||
Issued warrants in connection with Asset Sale | 3,337,187 | 3,337,187 | |||
Issued warrants for extension of license agreement | 333,719 | 333,719 | |||
Stock compensation expense | 147,165 | 147,165 | |||
Net income | 85,581,227 | (202) | 85,581,025 | ||
Reclassification of funds invested (see Note 8) | 200,000 | 200,000 | |||
Balance at Mar. 31, 2017 | $ 161,898 | $ 330,808,515 | $ 309,273,807 | $ 668,708 | $ 22,365,314 |
Balance, shares at Mar. 31, 2017 | 161,898,338 |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||
Accounting Policies [Abstract] | |||||||
Summary of Significant Accounting Policies |
a. Basis of Presentation: The information presented as of March 31, 2017 and for the three-month periods ended March 31, 2017 and 2016 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 March 31, 2017 and the results for the interim periods are not 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 December 31, 2016, which were included as part of our Annual Report on Form 10-K.
Our consolidated financial statements include the accounts of Navidea and our wholly owned subsidiaries, Navidea Biopharmaceuticals Limited and Cardiosonix Ltd, as well as those of our majority-owned subsidiary, Macrophage Therapeutics, Inc. (“MT”). All significant inter-company accounts were eliminated in consolidation. Prior to termination of Navidea’s joint venture with R-NAV, LLC (“R-NAV”), Navidea's investment in R-NAV was being accounted for using the equity method of accounting and was therefore not consolidated.
On March 3, 2017, pursuant to an Asset Purchase Agreement dated November 23, 2016, (the “Purchase Agreement”), the Company completed its previously announced sale to Cardinal Health 414, LLC (“Cardinal Health 414”) of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer (the “Business”), including the Company’s radioactive diagnostic agent marketed under the Lymphoseek® trademark for current approved indications by the U.S. Food and Drug Administration (“FDA”) and similar indications approved by the FDA in the future (the “Product”), in Canada, Mexico and the United States (the “Territory”) (giving effect to the License-Back described below and excluding certain assets specifically retained by the Company) (the “Asset Sale”). Such assets sold in the Asset Sale consist primarily of, without limitation, (i) intellectual property used in or reasonably necessary for the conduct of the Business, (ii) inventory of, and customer, distribution, and product manufacturing agreements related to, the Business, (iii) all product registrations related to the Product, including the new drug application approved by the FDA for the Product and all regulatory submissions in the United States that have been made with respect to the Product and all Health Canada regulatory submissions and, in each case, all files and records related thereto, (iv) all related clinical trials and clinical trial authorizations and all files and records related thereto, and (v) all right, title and interest in and to the Product, as specified in the Purchase Agreement (the “Acquired Assets”).
Upon closing of the Asset Sale, the Supply and Distribution Agreement, dated November 15, 2007 (as amended, the “Supply and Distribution Agreement”), between Cardinal Health 414 and the Company was terminated and, as a result, the provisions thereof are of no further force or effect (other than any indemnification, payment, notification or data sharing obligations which survive the termination).
Our consolidated balance sheets and statements of operations have been reclassified, as required, for all periods presented to reflect the Business as a discontinued operation. Cash flows associated with the operation of the Business have been combined with operating, investing and financing cash flows, as appropriate, in our consolidated statements of cash flows. See Note 3.
b. Financial Instruments and Fair Value: 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 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities whose fair value is measured on a recurring basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. See Note 4.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
c. Revenue Recognition: 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.
We also earn revenues related to our licensing and distribution agreements. The terms of these agreements may include payment to us of non-refundable upfront license fees, funding or reimbursement of research and development efforts, milestone payments if specified objectives are achieved, and/or royalties on product sales. We evaluate all deliverables within an arrangement to determine whether or not they provide value on a stand-alone basis. We recognize a contingent milestone payment as revenue in its entirety upon our achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. We received a non-refundable upfront cash payment of $2.0 million from SpePharm AG upon execution of the SpePharm License Agreement in March 2015. We determined that the license and other non-contingent deliverables did not have stand-alone value because the license could not be deemed to be fully delivered for its intended purpose unless we performed our other obligations, including specified development work. Accordingly, they did not meet the separation criteria, resulting in these deliverables being considered a single unit of account. As a result, revenue relating to the upfront cash payment was deferred and was being recognized on a straight-line basis over the estimated obligation period of two years. However, the remaining deferred revenue of $417,000 was recognized upon obtaining European approval of a reduced-mass vial in September 2016, several months earlier than originally anticipated.
d. Recently Adopted Accounting Standards: In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 178): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 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 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Methods of adoption vary according to each of the amendment provisions. The adoption of ASU 2016-09 on January 1, 2017 did not have a material impact on the Company’s financial statements as:
· As of December 31, 2016, $15.3 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 December 31, 2016, we have also recorded a full valuation allowance against these APIC NOLs. This resulted in a zero cumulative effect adjustment to accumulated deficit as a result of the adoption of ASU 2016-09.
· 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 not 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. |
Liquidity |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Liquidity [Abstract] | |
Liquidity | Prior to the Asset Sale to Cardinal Health 414 in March 2017, all of our material assets were pledged as collateral for our borrowings under the Term Loan Agreement (the “CRG Loan Agreement”) with CRG. In addition to the security interest in our assets, the CRG Loan Agreement carried covenants that imposed significant requirements on us. An event of default would have entitled CRG to accelerate the maturity of our indebtedness, increase the interest rate from 14% to the default rate of 18% per annum, and invoke other remedies available to CRG under the loan agreement and the related security agreement. During the course of 2016, CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas. On June 22, 2016, CRG exercised control over one of the Company’s primary bank accounts and took possession of $4.1 million that was on deposit. On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms of the settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59 million (the “Deposit Amount”) of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the actual amount owed by the Company to CRG under the CRG Loan Documents (the “Final Payoff Amount”). The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million (the “Low Payoff Amount”) and no more than $66 million (the “High Payoff Amount”). In addition, concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG (at the Company’s cost and expense to be deducted from the closing proceeds due to the Company, and subject to Cardinal Health 414’s indemnification rights under the Purchase Agreement) as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement. The $2 million being held in escrow pursuant to court order in the Ohio case and the $3 million being held in escrow pursuant to court order in the Texas case were released to the Company following the closing of the Asset Sale. In addition, our Loan Agreement with Platinum-Montaur Life Sciences LLC, an affiliate of Platinum Management (NY) LLC, Platinum Partners Value Arbitrage Fund L.P., Platinum Partners Liquid Opportunity Master Fund L.P., Platinum Liquid Opportunity Management (NY) LLC, and Montsant Partners LLC (collectively, “Platinum”) (the “Platinum Loan Agreement”) carries standard non-financial covenants typical for commercial loan agreements that impose significant requirements on us. Our ability to comply with these provisions may be affected by changes in our business condition or results of our operations, or other events beyond our control. The breach of any of these covenants would result in a default under the Platinum Loan Agreement, permitting Platinum to accelerate the maturity of the debt. Such actions by Platinum could adversely affect our operations, results of operations and financial condition, including causing us to curtail our product development activities. The Platinum Loan Agreement includes a covenant that results in an event of default on the Platinum Loan Agreement upon default on the CRG Loan Agreement. As discussed above, the Company is maintaining its position that CRG’s alleged claims do not constitute events of default under the CRG Loan Agreement and believes it has defenses against such claims. The Company has obtained a waiver from Platinum confirming that we are not in default under the Platinum Loan Agreement as a result of the alleged default on the CRG Loan Agreement and as such, we are currently in compliance with all covenants under the Platinum Loan Agreement. In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to Platinum Partners Credit Opportunities Master Fund, LP (“PPCO”) an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement between the Company and Platinum-Montaur Life Sciences, LLC (“Platinum-Montaur”), which, to the extent of such payment, were transferred by Platinum-Montaur to PPCO. The Company was informed by Platinum Partners Value Arbitrage Fund LP (“PPVA”) that it was the owner of the balance of the Platinum-Montaur loan. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA. Based on our projected cash burn for the next twelve months, we believe that substantial doubt about the Company’s financial position and ability to continue as a going concern has been mitigated due to the Company’s efforts achieved, and planned, in reducing salaries and facilities expenses and our considerable discretion over the extent of development project expenditures that are included in the current budget. Although we could still be required to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, the Company’s management believes that the Company will be able to continue as a going concern for at least twelve months following the issuance of this Quarterly Report on Form 10-Q. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | On March 3, 2017, the Company completed the sale to Cardinal Health 414 of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer, including the Company’s radioactive diagnostic agent marketed under the Lymphoseek® trademark for current approved indications by the FDA and similar indications approved by the FDA in the future, in Canada, Mexico and the United States.
In exchange for the Acquired Assets, Cardinal Health 414 (i) made a cash payment to the Company at closing of approximately $80.6 million after adjustments based on inventory being transferred and an advance of $3 million of guaranteed earnout payments as part of the CRG settlement, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additional purchase price) to the Company based on net sales derived from the purchased Product subject, in each case, to Cardinal Health 414’s right to off-set. In no event will the sum of all earnout payments, as further described in the Purchase Agreement, exceed $230 million over a period of ten years, of which $20.1 million are guaranteed payments of $6.7 million per year for each of the three years immediately after closing of the Asset Sale. At the closing of the Asset Sale, $3 million of such earnout payments were advanced by Cardinal Health 414 to the Company, and paid to CRG as part of the Deposit Amount paid to CRG. This advance is to be applied to the third year of guaranteed payments.
We recorded a net gain on the sale of the Business of $88.7 million for the three months ended March 31, 2017, including $16.5 in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by $3.3 million in estimated fair value of warrants issued to Cardinal Health 414, $2.0 million in legal and other fees related to the sale, $800,000 in net balance sheet dispositions and write-offs, and $4.6 million in estimated taxes.
As a result of the Asset Sale, we reclassified certain assets and liabilities as assets and liabilities associated with discontinued operations. The following assets and liabilities have been segregated and included in assets associated with discontinued operations or liabilities associated with discontinued operations, as appropriate, in the consolidated balance sheets:
In addition, we reclassified certain revenues and expenses related to the Business to discontinued operations for all periods presented, including interest expense related to the CRG and Platinum debt obligations as required by current accounting guidance. The following amounts have been segregated from continuing operations and included in discontinued operations in the consolidated statements of operations:
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Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | The Company has been informed by PPVA that it is the owner of the balance of the Platinum-Montaur loan. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA.
Platinum or Dr. Goldberg has the right to convert all or any portion of the unpaid principal or unpaid interest accrued on all draws under the Platinum credit facility, under certain circumstances. The Platinum debt instrument, including the embedded option to convert such debt into common stock, is recorded at fair value on the consolidated balance sheets and deemed to be a derivative instrument as the amount of shares to be issued upon conversion is indeterminable. The estimated fair value of the Platinum notes payable is $1.9 million and $9.6 million at March 31, 2017 and December 31, 2016, respectively.
MT issued warrants to purchase MT Common Stock with certain characteristics including a net settlement provision that require the warrants to be accounted for as a derivative liability at fair value on the consolidated balance sheets. The estimated fair value of the MT warrants is $63,000 at both March 31, 2017 and December 31, 2016, and will continue to be measured on a recurring basis. See Note 1(b)(3).
The following tables set forth, by level, financial liabilities measured at fair value on a recurring basis:
The assumptions used in the Monte Carlo simulation as of March 31, 2017 and December 31, 2016 are summarized in the following table:
There were no Level 1 or Level 2 liabilities outstanding at any time during the three-month periods ended March 31, 2017 and 2016. There were no transfers in or out of our Level 1 or Level 2 liabilities during the three-month periods ended March 31, 2017 or 2016. Changes in the estimated fair value of our Level 3 liabilities relating to unrealized gains (losses) are recorded as changes in fair value of financial instruments in the consolidated statements of operations. The change in the estimated fair value of our Level 3 liabilities during the three-month periods ended March 31, 2017 and 2016 was decreases of $140,000 and $1.1 million, respectively.
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
For the three-month periods ended March 31, 2017 and 2016, our total stock-based compensation expense, which includes reversals of expense for certain forfeited or cancelled awards, was approximately $147,000 and $341,000, respectively. We have not recorded any income tax benefit related to stock-based compensation in either of the three-month periods ended March 31, 2017 and 2016.
In September 2016, the Board of Directors approved the 2016 Stock Incentive Plan (the “2016 Plan”), authorizing a total of 10 million shares. The 2016 Plan has not yet been approved by Navidea’s stockholders. In connection with Dr. Goldberg’s appointment as Chief Executive Officer of the Company in September 2016, the Board of Directors awarded options to purchase 5,000,000 shares of our common stock to Dr. Goldberg, subject to stockholder approval of the 2016 Plan. If approved, these stock options will vest 100% when the average closing price of the Company’s common stock over a period of five consecutive trading days equals or exceeds $2.50 per share, and expire on the tenth anniversary of the date of grant.
A summary of the status of our stock options as of March 31, 2017, and changes during the three-month period then ended, is presented below:
A summary of the status of our unvested restricted stock as of March 31, 2017, and changes during the three-month period then ended, is presented below:
As of March 31, 2017, there was approximately $101,000 of total unrecognized compensation expense related to unvested stock-based awards, which we expect to recognize over the remaining weighted average vesting term of 1.4 years.
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares and, except for periods with a loss from operations, participating securities outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company include convertible debt, convertible preferred stock, options and warrants.
The following table sets forth the reconciliation of the weighted average number of common shares outstanding used to compute basic and diluted earnings (loss) per share for the three-month periods ended March 31, 2017 and 2016:
Diluted earnings (loss) per common share for the three-month periods ended March 31, 2017 and 2016 excludes the effects of 15.9 million and 15.1 million common share equivalents, respectively, since such inclusion would be anti-dilutive. The excluded shares consist of common shares issuable upon exercise of outstanding stock options and warrants, and upon the conversion of convertible debt and convertible preferred stock.
The Company’s unvested stock awards contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as “participating securities”). Therefore, the unvested stock awards are required to be included in the number of shares outstanding for both basic and diluted earnings per share calculations. However, due to our loss from continuing operations, 207,000 and 134,000 shares of unvested restricted stock for the three-month periods ended March 31, 2017 and 2016, respectively, were excluded in determining basic and diluted loss per share from continuing operations because such inclusion would be anti-dilutive.
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Inventory |
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Inventory | All components of inventory are valued at the lower of cost (first-in, first-out) or net realizable value. We adjust inventory to net realizable value if the net realizable value is lower than the carrying cost of the inventory. Net realizable value is determined based on estimated sales activity and margins. We estimate a reserve for obsolete inventory based on management’s judgment of probable future commercial use, which is based on an analysis of current inventory levels, estimated future sales and production rates, and estimated shelf lives.
The components of inventory as of March 31, 2017 and December 31, 2016 are as follows:
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Investment in Macrophage Therapeutics, Inc. |
3 Months Ended |
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Mar. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment in Macrophage Therapeutics, Inc. |
In March 2015, Platinum and Dr. Goldberg (collectively, the “MT Investors”) invested $300,000 and $200,000, respectively, in MT in exchange for shares of MT’s Series A Convertible Preferred Stock (“MT Preferred Stock”) and warrants to purchase common shares of MT (“MT Common Stock”). The MT Preferred Stock and warrants are convertible into, and exercisable for, MT Common Stock.
In December 2015 and May 2016, Platinum made additional investments in MT totaling $200,000. MT was not obligated to provide anything in return, although it was considered likely that the MT Board of Directors would ultimately authorize some form of compensation to Platinum. During the year ended December 31, 2016, the Company recorded the entire additional $200,000 investment as a current liability pending determination of the form of compensation.
In 2016, MT’s Board of Directors authorized modification of the original MT Preferred Stock to a convertible preferred stock with a 10% paid-in-kind (“PIK”) coupon retroactive to the time the initial investments were made. The conversion price of the MT Preferred Stock will remain at the $500 million initial market cap but a full ratchet was added to enable the adjustment of conversion price, warrant number and exercise price based on the valuation of the first institutional investment round. In addition, the MT Board of Directors authorized issuance of additional MT Preferred Stock with the same terms to Platinum as compensation for the additional $200,000 of investments made in December 2015 and May 2016. Based on the decision to issue equity for the additional $200,000 of investments made by Platinum, the liability was reclassified to additional paid-in-capital in January 2017. As of the date of filing of this Form 10-Q, final documents related to the above transactions authorized by the MT Board have not been completed.
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Accounts Payable, Accrued Liabilities and Other |
3 Months Ended |
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Mar. 31, 2017 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Accounts Payable, Accrued Liabilities and Other | Accounts payable at March 31, 2017 and December 31, 2016 includes an aggregate of $81,000 and $116,000, respectively, due to related parties related to director fees and MT scientific advisory board fees. At March 31, 2017, approximately $990,000 of accounts payable is being disputed by the Company related to unauthorized expenditures by a former executive and related legal fees incurred during the year ended December 31, 2016.
Accrued liabilities and other at March 31, 2017 and December 31, 2016 includes an aggregate of $362,000 and $106,000, respectively, due to related parties related to executive bonuses, director fees, deferred salary owed to Dr. Goldberg, and MT scientific advisory board fees. |
Notes Payable |
3 Months Ended |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Platinum
In July 2012, we entered into an agreement with Platinum-Montaur to provide us with a credit facility of up to $50 million. In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to PPCO an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement, which, to the extent of such payment, were transferred by Platinum-Montaur to PPCO. The Company was informed by PPVA that it was the owner of the balance of the Platinum Note. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA.
During the three-month periods ended March 31, 2017 and 2016, $143,000 and $306,000 of interest was compounded and added to the balance of the Platinum Note, respectively. As of March 31, 2017, the remaining outstanding principal balance of the Platinum Note was approximately $1.9 million.
The Platinum Note is reflected on the consolidated balance sheets at its estimated fair value, which includes the estimated fair value of the embedded conversion option of $13,000 and $153,000 at March 31, 2017 and December 31, 2016, respectively. Changes in the estimated fair value of the Platinum Note were decreases of $140,000 and $1.1 million, respectively, and were recorded as non-cash changes in fair value of the conversion option during the three-month periods ended March 31, 2017 and 2016. The estimated fair value of the Platinum Note was $1.9 million and $9.6 million as of March 31, 2017 and December 31, 2016, respectively.
Capital Royalty Partners II, L.P.
In May 2015, Navidea and its subsidiary Macrophage Therapeutics, Inc., as guarantor, executed a Term Loan Agreement (the CRG Loan Agreement) with Capital Royalty Partners II L.P. (CRG) in its capacity as a lender and as control agent for other affiliated lenders party to the CRG Loan Agreement (collectively, the Lenders) in which the Lenders agreed to make a term loan to the Company in the aggregate principal amount of $50 million (the CRG Term Loan), with an additional $10 million in loans to be made available upon the satisfaction of certain conditions stated in the CRG Loan Agreement. During the three-month period ended March 31, 2016, $519,000 of interest was compounded and added to the balance of the CRG Term Loan.
Pursuant to a notice of default letter sent to Navidea by CRG in April 2016, the Company stopped compounding interest in the second quarter of 2016 and began recording accrued interest. As of December 31, 2016, $5.8 million of accrued interest related to the CRG Term Loan is included in accrued liabilities and other on the consolidated balance sheets. As of December 31, 2016, the outstanding principal balance of the CRG Term Loan was $51.7 million.
During the course of 2016, CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas. On June 22, 2016, CRG exercised control over one of the Company’s primary bank accounts and took possession of $4.1 million that was on deposit.
On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms of the settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59 million of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the actual amount owed by the Company to CRG under the CRG Loan Documents. The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million and no more than $66 million. In addition, concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement. The $2 million being held in escrow pursuant to court order in the Ohio case and the $3 million being held in escrow pursuant to court order in the Texas case were released to the Company following the closing of the Asset Sale.
IPFS Corporation
In December 2016, we prepaid $348,000 of insurance premiums through the issuance of a note payable to IPFS Corporation (“IPFS”) with an interest rate of 8.99%. The note is payable in eight monthly installments of $45,000, with the final payment due on July 10, 2017. As of March 31, 2017 and December 31, 2016, the remaining outstanding principal balance of the IPFS note payable is approximately $177,000 and $306,000, respectively, and is included in notes payable, current in the consolidated balance sheets.
Summary
During the three-month periods ended March 31, 2017 and 2016, we recorded interest expense of $1.7 million and $2.2 million, respectively, related to our notes payable. Of these amounts, $0 and $73,000, respectively, related to amortization of the debt discounts related to our notes payable. An additional $143,000 and $825,000 of total interest expense was compounded and added to the balance of our notes payable during the three-month periods ended March 31, 2017 and 2016, respectively.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | We are subject to legal proceedings and claims that arise in the ordinary course of business.
Sinotau Litigation – NAV4694
On August 31, 2015, Hainan Sinotau Pharmaceutical Co., Ltd. (“Sinotau”) filed a suit for damages, specific performance, and injunctive relief against the Company in the United States District Court for the District of Massachusetts alleging breach of a letter of intent for licensing to Sinotau of the Company’s NAV4694 product candidate and technology. The Company believed the suit was without merit and filed a motion to dismiss the action. In September 2016, the Court denied the motion to dismiss. The Company filed its answer to the complaint and the case is currently in the discovery phase. At this time it is not possible to determine with any degree of certainty the ultimate outcome of this legal proceeding, including making a determination of liability. The Company intends to vigorously defend the case.
CRG Litigation
During the course of 2016, CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas. On June 22, 2016, CRG exercised control over one of the Company’s primary bank accounts and took possession of $4.1 million that was on deposit, applying $3.9 million of the cash to various fees, including collection fees, a prepayment premium and an end-of-term fee. The remaining $189,000 was applied to the principal balance of the debt. Multiple motions, actions and hearings followed over the remainder of 2016 and into 2017.
On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms of a settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid the $59 million Deposit Amount of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the Final Payoff Amount. The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million and no more than $66 million. In addition, concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG (at the Company’s cost and expense to be deducted from the closing proceeds due to the Company, and subject to Cardinal Health 414’s indemnification rights under the Purchase Agreement) as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement. The $2 million being held in escrow pursuant to court order in the Ohio case and the $3 million being held in escrow pursuant to court order in the Texas case were released to the Company at closing of the Asset Sale. The Texas hearing is currently set for July 3, 2017. See Notes 2 and 10.
Former CEO Arbitration
On May 12, 2016 the Company received a demand for arbitration through the American Arbitration Association, Columbus, Ohio, from Ricardo J. Gonzalez, the Company’s then Chief Executive Officer, claiming that he was terminated without cause and, alternatively, that he resigned in accordance with Section 4G of his Employment Agreement pursuant to a notice received by the Company on May 9, 2016. On May 13, 2016, the Company notified Mr. Gonzalez that his failure to undertake responsibilities assigned to him by the Board of Directors and otherwise work after being ordered to do so on multiple occasions constituted an effective resignation, and the Company accepted that resignation. The Company rejected the resignation of Mr. Gonzalez pursuant to Section 4G of his Employment Agreement. Also, the Company notified Mr. Gonzalez that, alternatively, his failure to return to work after the expiration of the cure period provided in his Employment Agreement constituted cause for his termination under his Employment Agreement. Mr. Gonzalez is seeking severance and other amounts claimed to be owed to him under his Employment Agreement. In addition, the Company filed counterclaims against Mr. Gonzalez alleging malfeasance by Mr. Gonzalez in his role as Chief Executive Officer. Mr. Gonzalez has withdrawn his claim for additional severance pursuant to Section 4G of his Employment Agreement, and the Company has withdrawn its counterclaims. An arbitration hearing took place April 3-4, 2017 in Columbus, Ohio, and we are currently awaiting a decision.
FTI Consulting, Inc. Litigation
On October 11, 2016, FTI Consulting, Inc. (“FTI”) commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in excess of $782,600 comprised of: (i) $730,264 for investigative and consulting services FTI alleges to have provided to the Company pursuant to an Engagement Agreement, and (ii) in excess of $52,337 for purported interest due on unpaid invoices, plus attorneys’ fees, costs and expenses. On November 14, 2016, the Company filed an Answer and Counterclaim denying the allegations of the Complaint and seeking damages on its Counterclaim, in an amount to be determined at trial, for intentional overbilling by FTI. On February 7, 2017, a preliminary conference was held by the Court at which time a scheduling order governing discovery was issued. The Court set August 31, 2017 as the deadline for FTI to file a Note of Issue and Certificate of Readiness for trial. The Company intends to vigorously defend the action.
Sinotau Litigation – Tc 99m Tilmanocept
On February 1, 2017, Navidea filed suit against Sinotau in the U.S. District Court for the Southern District of Ohio. The Company's complaint included claims seeking a declaration of the rights and obligations of the parties to an agreement regarding rights for the Tc 99m tilmanocept product in China and other claims. The complaint sought a temporary restraining order ("TRO") and preliminary injunction to prevent Sinotau from interfering with the Company’s Asset Sale to Cardinal Health 414. On February 3, 2017, the Court granted the TRO and extended it until March 6, 2017. The Asset Sale closed on March 3, 2017. On March 6, the Court dissolved the TRO as moot. The Ohio case remains open because all issues raised in the complaint have not been resolved.
Sinotau also filed a suit against the Company and Cardinal Health 414 in the U.S. District Court for the District of Delaware on February 2, 2017. On February 18, 2017, the Company and Cardinal Health 414 moved to stay the case pending the outcome of the Ohio case. The Court granted the motion on March 1, 2017, and the stay remains in effect.
In accordance with ASC Topic 450, Contingencies, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the case of the CRG litigation, we could still be required to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, which would have a material negative impact on our financial position. Although the outcome of any litigation is uncertain, in our opinion, the amount of ultimate liability, if any, with respect to any of these actions other than CRG will not materially affect our financial position.
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Equity Instruments |
3 Months Ended |
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Mar. 31, 2017 | |
Equity [Abstract] | |
Equity Instruments | During the three-month periods ended March 31, 2017 and 2016, we issued 16,406 and 16,918 shares of our common stock valued at $10,500 and $20,640 to certain members of our Board of Directors as payment in lieu of cash for their retainer fees.
Also during the three-month period ended March 31, 2017, we issued 707,353 shares of our common stock valued at $367,812 to our employees as partial payment in lieu of cash for their 2015 and 2016 bonuses.
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Stock Warrants |
3 Months Ended |
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Mar. 31, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Stock Warrants | In January 2017, Dr. Michael Goldberg, the Company’s President and CEO, exercised 5,411,850 of his Series LL warrants in exchange for 5,411,850 shares of our common stock, resulting in proceeds to the Company of $54,119.
In March 2017, in connection with the Asset Sale, the Company granted to each of Cardinal Health 414 and the University of California, San Diego (“UCSD”), a five-year warrant to purchase up to 10 million shares and 1 million shares, respectively, of the Company’s common stock at an exercise price of $1.50 per share, each of which warrant is subject to anti-dilution and other customary terms and conditions (the “Series NN warrants”). The fair value of the Series NN warrants was calculated using the Black-Scholes model using our five-year historical weekly volatility of 77% and a risk-free rate equal to the five-year treasury constant maturity rate of 2%. The Series NN warrants granted to Cardinal Health 414 had an estimated fair value of $3.3 million, which was recorded as a reduction of the gain on sale in the consolidated statement of operations for the three-month period ended March 31, 2017. The Series NN warrants granted to UCSD had an estimated fair value of $334,000, which was recorded as an intangible asset related to the UCSD license in the consolidated balance sheet during the three-month period ended March 31, 2017.
At March 31, 2017, there are 16.9 million warrants outstanding to purchase Navidea's common stock. The warrants are exercisable at prices ranging from $0.01 to $3.04 per share with a weighted average exercise price of $1.19 per share. The warrants have remaining outstanding terms ranging from 1 to 18 years.
In addition, at March 31, 2017, there are 300 warrants outstanding to purchase MT Common Stock. The warrants are exercisable at $2,000 per share.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes |
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to the uncertainty surrounding the realization of the deferred tax assets in future tax returns, all of the deferred tax assets have been fully offset by a valuation allowance at March 31, 2017 and December 31, 2016.
Current accounting standards include guidance on the accounting for uncertainty in income taxes recognized in the financial statements. Such standards also prescribe a recognition threshold and measurement model for the financial statement recognition of a tax position taken, or expected to be taken, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company believes that the ultimate deductibility of all tax positions is highly certain, although there is uncertainty about the timing of such deductibility. As a result, no liability for uncertain tax positions was recorded as of March 31, 2017 or December 31, 2016 and we do not expect any significant changes in the next twelve months. Should we need to accrue interest or penalties on uncertain tax positions, we would recognize the interest as interest expense and the penalties as a selling, general and administrative expense. As of March 31, 2017, tax years 2013-2016 remained subject to examination by federal and state tax authorities.
Benefit from income taxes was $1.5 million for the three-month period ended March 31, 2017, representing an effective tax rate of 33.7%, as compared to $0 for the three-month period ended March 31, 2016, representing an effective tax rate of 0%. The increase in the effective rate for the period ended March 31, 2017 compared with the same period in 2016 is primarily due to the gain on sale of our Lymphoseek product.
As of March 31, 2017, we had approximately $123.0 million of federal and $15.8 million of state net operating loss carryforwards. |
Segments |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | We report information about our operating segments using the “management approach” in accordance with current accounting standards. This information is based on the way management organizes and reports the segments within the enterprise for making operating decisions and assessing performance. Our reportable segments are identified based on differences in products, services and markets served. There were no inter-segment sales. We manage our business based on two primary types of drug products: (i) diagnostic substances, including Tc 99m tilmanocept and other diagnostic applications of our Manocept platform, our R-NAV joint venture (terminated on May 31, 2016), NAV4694 and NAV5001 (license terminated in April 2015), and (ii) therapeutic development programs, including therapeutic applications of our Manocept platform and all development programs undertaken by Macrophage Therapeutics, Inc.
The information in the following tables is derived directly from each reportable segment’s financial reporting.
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Supplemental Disclosure for Statements of Cash Flows |
3 Months Ended |
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Mar. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosure for Statements of Cash Flows | During the three-month periods ended March 31, 2017 and 2016, we paid interest aggregating $7.3 million $1.3 million, respectively. During the three-month period ended March 31, 2017, we issued 1 million Series NN warrants to UCSD with an estimated fair value of $334,000. As discussed in Note 8, the liability for the additional $200,000 of investments made by Platinum was reclassified to additional paid-in-capital in January 2017.
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Subsequent Event |
3 Months Ended |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events |
The Company has evaluated events and transactions subsequent to March 31, 2017 and through the date these consolidated financial statements were included in this Form 10-Q and filed with the SEC. On May 4, 2017, the Company executed a 12-month employment agreement with Jed A. Latkin effective May 4, 2017 through May 3, 2018. The employment agreement provides for an annual base salary of $325,000. In connection with his employment agreement, Mr. Latkin was granted options to purchase 1,000,000 shares of our common stock with vesting terms as follows: (i) 333,334 options with a strike price of $0.65 will vest on or after May 4, 2017, so long as the closing market price of the underlying common stock equals or exceeds $0.65; (ii) 333,333 options with a strike price of $0.75 will vest on or after December 31, 2017, so long as the closing market price of the underlying common stock equals or exceeds $1.00, and (iii) 333,333 options with a strike price of $1.00 will vest on or after December 31, 2018, so long as the closing market price of the underlying common stock equals or exceeds $1.25. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||
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Mar. 31, 2017 | |||||||
Accounting Policies [Abstract] | |||||||
Basis of Presentation | a. Basis of Presentation: The information presented as of March 31, 2017 and for the three-month periods ended March 31, 2017 and 2016 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 March 31, 2017 and the results for the interim periods are not 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 December 31, 2016, which were included as part of our Annual Report on Form 10-K.
Our consolidated financial statements include the accounts of Navidea and our wholly owned subsidiaries, Navidea Biopharmaceuticals Limited and Cardiosonix Ltd, as well as those of our majority-owned subsidiary, Macrophage Therapeutics, Inc. (“MT”). All significant inter-company accounts were eliminated in consolidation. Prior to termination of Navidea’s joint venture with R-NAV, LLC (“R-NAV”), Navidea's investment in R-NAV was being accounted for using the equity method of accounting and was therefore not consolidated.
On March 3, 2017, pursuant to an Asset Purchase Agreement dated November 23, 2016, (the “Purchase Agreement”), the Company completed its previously announced sale to Cardinal Health 414, LLC (“Cardinal Health 414”) of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer (the “Business”), including the Company’s radioactive diagnostic agent marketed under the Lymphoseek® trademark for current approved indications by the U.S. Food and Drug Administration (“FDA”) and similar indications approved by the FDA in the future (the “Product”), in Canada, Mexico and the United States (the “Territory”) (giving effect to the License-Back described below and excluding certain assets specifically retained by the Company) (the “Asset Sale”). Such assets sold in the Asset Sale consist primarily of, without limitation, (i) intellectual property used in or reasonably necessary for the conduct of the Business, (ii) inventory of, and customer, distribution, and product manufacturing agreements related to, the Business, (iii) all product registrations related to the Product, including the new drug application approved by the FDA for the Product and all regulatory submissions in the United States that have been made with respect to the Product and all Health Canada regulatory submissions and, in each case, all files and records related thereto, (iv) all related clinical trials and clinical trial authorizations and all files and records related thereto, and (v) all right, title and interest in and to the Product, as specified in the Purchase Agreement (the “Acquired Assets”).
Upon closing of the Asset Sale, the Supply and Distribution Agreement, dated November 15, 2007 (as amended, the “Supply and Distribution Agreement”), between Cardinal Health 414 and the Company was terminated and, as a result, the provisions thereof are of no further force or effect (other than any indemnification, payment, notification or data sharing obligations which survive the termination).
Our consolidated balance sheets and statements of operations have been reclassified, as required, for all periods presented to reflect the Business as a discontinued operation. Cash flows associated with the operation of the Business have been combined with operating, investing and financing cash flows, as appropriate, in our consolidated statements of cash flows. See Note 3.
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Financial Instruments and Fair Value | b. Financial Instruments and Fair Value: 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 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities whose fair value is measured on a recurring basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. See Note 4.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
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Revenue Recognition | c. Revenue Recognition: 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.
We also earn revenues related to our licensing and distribution agreements. The terms of these agreements may include payment to us of non-refundable upfront license fees, funding or reimbursement of research and development efforts, milestone payments if specified objectives are achieved, and/or royalties on product sales. We evaluate all deliverables within an arrangement to determine whether or not they provide value on a stand-alone basis. We recognize a contingent milestone payment as revenue in its entirety upon our achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. We received a non-refundable upfront cash payment of $2.0 million from SpePharm AG upon execution of the SpePharm License Agreement in March 2015. We determined that the license and other non-contingent deliverables did not have stand-alone value because the license could not be deemed to be fully delivered for its intended purpose unless we performed our other obligations, including specified development work. Accordingly, they did not meet the separation criteria, resulting in these deliverables being considered a single unit of account. As a result, revenue relating to the upfront cash payment was deferred and was being recognized on a straight-line basis over the estimated obligation period of two years. However, the remaining deferred revenue of $417,000 was recognized upon obtaining European approval of a reduced-mass vial in September 2016, several months earlier than originally anticipated.
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Recently Adopted Accounting Standards | d. Recently Adopted Accounting Standards: In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 178): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 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 2016-09 is effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Methods of adoption vary according to each of the amendment provisions. The adoption of ASU 2016-09 on January 1, 2017 did not have a material impact on the Company’s financial statements as:
· As of December 31, 2016, $15.3 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 December 31, 2016, we have also recorded a full valuation allowance against these APIC NOLs. This resulted in a zero cumulative effect adjustment to accumulated deficit as a result of the adoption of ASU 2016-09.
· 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 not 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. |
Discontinued Operations (Tables) |
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Discontinued Operations |
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Liabilities Measured on Recurring Basis |
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Fair Value Assumptions |
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Options Activity |
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Schedule of Nonvested Restricted Stock Activity |
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Earnings (Loss) Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares |
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Inventory (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory |
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Segments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information |
|
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounting Policies [Abstract] | ||
Fair value of notes payable | $ 2,100,000 | |
Notes payable | 2,100,000 | |
Derivative liabilities | $ 63,000 | $ 63,000 |
Fair Value (Details 1) - $ / shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value Details 1 | ||
Estimated volatility | 110.00% | 76.00% |
Expected term (in years) | 5 months 5 days | 4 years 9 months |
Debt rate | 8.125% | 8.125% |
Beginning stock price | $ 0.58 | $ .64 |
Fair Value (Details Narrative) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Fair Value Disclosures [Abstract] | ||
Platinum notes payable | $ 1,900,000 | $ 9,600,000 |
Derivative liabilities | 63,000 | 63,000 |
Increase (decrease) in fair value of Level 3 liabilities | $ (140,000) | $ (1,100,000) |
Stock-Based Compensation (Summary of Unvested Restricted Stock) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Number of Shares | |
Unvested at beginning of period, shares | shares | 207,000 |
Granted, shares | shares | 0 |
Vested, shares | shares | 0 |
Forfeited, shares | shares | 0 |
Unvested at end of period, shares | shares | 207,000 |
Weighted Average Grant-Date Fair Value | |
Unvested at beginning of period, USD per share | $ / shares | $ 1.17 |
Granted, USD per share | $ / shares | 0 |
Vested, USD per share | $ / shares | 0 |
Forfeited,USD per share | $ / shares | 0 |
Unvested at end of period, USD per share | $ / shares | $ 1.17 |
Stock-Based Compensation (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Total stock-based compensation expense including reversals of expense for forfeited or cancelled awards | $ 147,165 | $ 340,502 |
Number of restricted stock units vested during period | 0 | |
Number of unvested restricted stock units forfeited during period | 0 | |
Unrecognized compensation expense, Nonvested awards | $ 101,000 | |
Unrecognized compensation cost, Period for Recognition | 1 year 4 months 24 days |
Earnings (Loss) Per Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding, basic | 160,376,476 | 155,308,094 |
Dilutive shares related to warrants | 4,288,479 | 0 |
Unvested restricted stock | 207,000 | 0 |
Weighted average shares outstanding, diluted | 164,871,955 | 155,308,094 |
Earnings (Loss) Per Share (Details Narrative) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Stock Options Warrants Convertible Debt And Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded in determining basic and diluted loss per share | 15,900,000 | 15,100,000 |
Restricted Stock Units R S U [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded in determining basic and diluted loss per share | 207,000 | 134,000 |
Inventory - Components of Inventory, Net of Reserves (Details) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Materials | $ 0 | $ 94,500 |
Work-in-process | 0 | 1,708 |
Finished goods | 748 | 0 |
Reserves | 0 | 0 |
Total | $ 748 | $ 96,208 |
Notes Payable (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Debt Disclosure [Abstract] | |||
Compounded interest on notes payable | $ 143,114 | $ 824,952 | |
Notes payable | 2,100,000 | ||
Platinum notes payable | 1,900,000 | $ 9,600,000 | |
Change in fair value of financial instruments | 140,485 | 1,125,359 | |
Interest expense recorded related to amortization | $ 0 | $ 72,875 |
Equity Instruments (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Class of Stock [Line Items] | ||
Common stock issued in lieu of cash compensation | $ 10,500 | |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock issued in lieu of cash compensation | 16,406 | |
Common stock issued in lieu of cash compensation | $ 16 | |
Director [Member] | Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock issued in lieu of cash compensation | 16,406 | 16,918 |
Common stock issued in lieu of cash compensation | $ 10,500 | $ 20,640 |
Employees [Member] | Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock issued in lieu of cash compensation | 707,353 | |
Common stock issued in lieu of cash compensation | $ 367,812 |
Income Taxes (Details Narrative) |
Mar. 31, 2017
USD ($)
|
---|---|
Federal Jurisdiction [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 123,000,000 |
State And Local Jurisdiction [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 15,800,000 |
Supplemental Disclosure for Statements of Cash Flows (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid during the period for interest | $ 7,300,000 | $ 1,300,000 |
Issued warrants for extension of license agreement | 333,719 | |
Reclassification of funds invested | $ 200,000 |
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