Note 10 - Notes Payable |
9 Months Ended | ||
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Sep. 30, 2017 | |||
| Notes to Financial Statements | |||
| Debt Disclosure [Text Block] |
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 was purportedly 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. The remaining balance of the Platinum Note would have matured under its terms in September 2017, however the Company has not paid the balance as it is still subject to ongoing competing claims of ownership. The Company intends to pay the balance of the debt if it is determined to be due and owing to PPVA or Dr. Goldberg.During the nine -month periods ended September 30, 2017 and 2016, $211,000 and $814,000 of interest was compounded and added to the balance of the Platinum Note, respectively. As of September 30, 2017, the remaining outstanding principal balance of the Platinum Note was approximately $2.0 million.Until such time as there is a legal determination regarding liability under the Platinum Note, it is reflected as a liability on the consolidated balance sheets at its unpaid principal and interest balance of
$1,981,676 and $9,487,822 at September 30, 2017 and December 31, 2016, respectively. Additionally, the estimated fair value of the embedded conversion option of approximately $0 and $153,000 at September 30, 2017 and December 31, 2016, respectively, is included in notes payable on the consolidated balance sheets. Changes in the estimated fair value of the Platinum conversion option were $0 and an increase of $839,000, respectively, and were recorded as non-cash changes in fair value of the conversion option during the three -month periods ended September 30, 2017 and 2016. Changes in the estimated fair value of the Platinum conversion option were decreases of $153,000 and $1.8 million, respectively, and were recorded as non-cash changes in fair value of the conversion option during the nine -month periods ended September 30, 2017 and 2016. 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.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 was payable in
eight monthly installments of $45,000, with the final payment due on July 10, 2017. As of September 30, 2017 and December 31, 2016, the remaining outstanding principal balance of the IPFS note payable is approximately $0 and $306,000, respectively, and is included in notes payable, current in the consolidated balance sheets.Summary During the
three -month periods ended September 30, 2017 and 2016, we recorded interest expense of $26,000 and $2.6 million, respectively, related to our notes payable. Of these amounts, $29,000 and $190,000, respectively, was compounded and added to the balance of our notes payable during the three -month periods ended September 30, 2017 and 2016, respectively. During the nine -month periods ended September 30, 2017 and 2016, we recorded interest expense of $1.8 million and $12.3 million, respectively, related to our notes payable. Of these amounts, $0 and $78,000, respectively, related to amortization of the debt discounts related to our notes payable. An additional $211,000 and $1.4 million of total interest expense was compounded and added to the balance of our notes payable during the nine -month periods ended September 30, 2017 and 2016, respectively. The collection fees of $778,000, prepayment premium of $2.1 million, and the remaining unamortized balance of the CRG debt discount of $2.0 million were also recorded as interest expense during the nine -month period ended September 30, 2016.
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