Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Commitments and Contingencies

Note 12 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies
We are subject to legal proceedings and claims that arise in the ordinary course of business.
Sinotau Litigation
August 31, 2015,
Hainan Sinotau Pharmaceutical Co., Ltd. (“
Sinotau”) filed a suit for damages, specific performance, and injunctive relief against the Company in the U.S. District Court for the District of Massachusetts alleging breach of a letter of intent for licensing to Sinotau of the Company’s
product candidate and technology (the “Sinotau Litigation”).  In
September 2016,
the Court denied the Company’s motion to dismiss.  The Company filed its answer to the complaint and on
July 20, 2017,
the parties filed a joint motion to stay the case for
days pending settlement discussion.  On
October 26, 2017,
the Company executed a letter of intent with Sinotau and Cerveau Technologies, Inc. (“Cerveau”), outlining a plan to sublicense to Cerveau the worldwide rights to conduct research using
as well as grant to Cerveau an exclusive license for the development, marketing and commercialization of
in Australia, Canada, China and Singapore.  The letter of intent includes a provision stating that Sinotau will release all claims in the Sinotau Litigation upon the parties’ execution of a definitive agreement; the commercial rights agreement contemplated by the letter of intent would also include a release of such claims and a covenant
to sue on such claims.
CRG Litigation
During the course of
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
of the Company
’s primary bank accounts and took possession of
million that was on deposit, applying
million of the cash to various fees, including collection fees, a prepayment premium and an end-of-term fee. The remaining
was applied to the principal balance of the debt. Multiple motions, actions and hearings followed over the remainder of
and into
March 3, 2017,
the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health
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
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
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
less than
million and
more than
In addition, CRG agreed that Navidea had the right to assert all affirmative defenses to its claim of default.  In the underlying case the district court had entered summary judgment in favor of CRG finding unspecified events of default but refusing to consider affirmative defenses raised by Navidea as
before the Court.  Subsequent to the settlement CRG moved again for entry of judgment in its favor; Navidea objected that the Settlement Agreement specifically allowed it to raise affirmative defenses and the district court agreed with Navidea setting the case for trial in
December 2017. 
CRG once again moved for summary judgment and the motion was heard by the Court on
October 30, 2017.
The Court did
indicate when it intends to rule on the motion. The trial is currently scheduled for
December 11, 2017.
oncurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health
posted a
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
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
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
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
for the costs incurred by Cardinal Health
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
million shall
be paid by the Company without resort to the letter of credit posted by Cardinal Health
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
for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health
further agree that Cardinal Health
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
or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health
incurs any cost associated with payment to CRG under the settlement. The
million being held in escrow pursuant to court order in the Ohio case and the
million being held in escrow pursuant to court order in the Texas case were released to the Company at closing of the Asset Sale. See Notes
Former CEO Arbitration
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
of his Employment Agreement pursuant to a notice received by the Company on
May 9, 2016.
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 certain provisions in 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 was seeking severance and other amounts claimed to be owed to him under his Employment Agreement. In response, the Company filed counterclaims against Mr. Gonzalez alleging malfeasance by Mr. Gonzalez in his role as Chief Executive Officer. Mr. Gonzalez withdrew his claim for additional severance pursuant to his Employment Agreement, and the Company withdrew its counterclaims. On
May 12, 2017,
the Company received a ruling in favor of Mr. Gonzalez finding that he was terminated by the Company without cause on
April 7, 2016.
Mr. Gonzalez was awarded salary, bonus, and benefits in the aggregate amount of
plus interest, attorneys’ fees, and other costs. The arbitration award is final and binding on the parties. The Company paid an aggregate of
to Mr. Gonzalez on
May 16, 2017.
FTI Consulting, Inc. Litigation
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
comprised of: (i)
for investigative and consulting services FTI alleges to have provided to the Company pursuant to an Engagement Agreement between FTI and the Company, and (ii) in excess of
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. On
June 26, 2017,
the Company and FTI entered into a settlement agreement. According to FTI, as of
June 2017,
FTI was owed
including interest charges and legal fees. Under the terms of the settlement agreement, the Company paid an aggregate of
to FTI on
June 30, 2017.
Sinotau Litigation
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
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
February 3, 2017,
the Court granted the TRO and extended it until
March 6, 2017.
The Asset Sale closed on
March 3, 2017.
March 6,
the Court dissolved the TRO as moot. Sinotau also filed a suit against the Company and Cardinal Health
in the U.S. District Court for the District of Delaware on
February 2, 2017.
July 12, 2017,
the District of Delaware case was transferred to the Southern District of Ohio. On
July 27, 2017
the Ohio Court determined that both cases in the Southern District of Ohio are related and the case was stayed for
days pending settlement discussions. Both cases remain open because all issues raised in the complaints have
been resolved but the parties have continued settlement discussions and the Court extended the stays in both cases.
Platinum-Montaur Life Sciences LLC
November 2, 2017,
Platinum-Montaur commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in the amount of
purportedly due as of
March 3, 2017,
plus interest accruing therea
fter.  The claims asserted are for breach of contract and unjust enrichment in connection with funds received by the Company under the Platinum Loan Agreement (discussed above).  The Company has
yet been served with process in the action.  Because the funds sought by Platinum-Montaur are subject to claims of competing ownership, the Company intends to defend itself in the action and seek a determination as to whether any funds are due and owing to the plaintiff.
In accordance with ASC Topic
, 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
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
materially affect our financial position.