Note 10 - Investment in Macrophage Therapeutics, Inc.
|12 Months Ended|
Dec. 31, 2017
|Notes to Financial Statements|
|Investments in and Advances to Affiliates, Schedule of Investments [Text Block]||
March 2015,MT, our previously wholly-owned subsidiary, entered into a Securities Purchase Agreement to sell up to
50shares of its Series A Convertible Preferred Stock (
“MT Preferred Stock”) and warrants to purchase up to
1,500shares of MT Common Stock to the MT Investors for a purchase price of
$50,000per unit. A unit consists of
oneshare of MT Preferred Stock and
30warrants to purchase MT Common Stock. Under the agreement,
40%of the MT Preferred Stock and warrants are committed to be purchased by Dr. Goldberg, and the balance by Platinum. The full
50shares of MT Preferred Stock and warrants that
maybe sold under the agreement are convertible into, and exercisable for, MT Common Stock representing an aggregate
1%interest on a fully converted and exercised basis. Navidea owns the remainder of the MT Common Stock. On
March 11, 2015,definitive agreements with the MT Investors were signed for the sale of the
10tranche of shares of MT Preferred Stock and warrants to purchase
300shares of MT Common Stock to the MT Investors, with gross proceeds to MT of
$500,000.The MT Common Stock held by parties other than Navidea is reflected on the consolidated balance sheets as a noncontrolling interest.
The warrants have certain characteristics including a net settlement provision that require the warrants to be accounted for as a derivative liability at fair value, with subsequent changes in fair value included in earnings. The fair value of the warrants was estimated to be
$63,000at issuance and at
4.In addition, the MT Preferred Stock was immediately available for conversion upon issuance and includes a beneficial conversion feature, resulting in a deemed dividend of
$46,000related to the beneficial conversion feature. Finally, certain provisions of the Securities Purchase Agreement obligate the MT Investors to acquire the remaining MT Preferred Stock and related warrants for
$2.0million at the option of MT. The estimated relative fair value of this put option was
$113,000at issuance based on the Black-Scholes option pricing model and is classified within stockholders' equity.
In addition, we entered into a Securities Exchange Agreement with the
MT Investors providing them an option to exchange their MT Preferred Stock for our common stock in the event that MT has
notcompleted a public offering with gross proceeds to MT of at least
$50million by the
secondanniversary of the closing of the initial sale of MT Preferred Stock, at an exchange rate per share obtained by dividing
$50,000by the greater of (i)
twenty-day volume weighted average price per share of our common stock on the
secondanniversary of the initial closing or (ii)
$3.00.To the extent that the MT Investors do
nottimely exercise their exchange right, MT has the right to redeem their MT Preferred Stock for a price equal to
$58,320per share. We also granted MT an exclusive license for certain therapeutic applications of the Manocept technology.
May 2016,Platinum contributed a total of
$200,000to MT. MT was
notobligated to provide anything in return, although it was considered likely that the MT Board would ultimately authorize some form of compensation to Platinum.
During the year ended
December 31, 2016,the Company recorded the entire
$200,000as a current liability pending determination of the form of compensation.
’s Board of Directors authorized modification of the original investments of
$300,000by Platinum and
$200,000by Dr. Goldberg to a convertible preferred stock with a
10%PIK coupon retroactive to the time the initial investments were made. The conversion price of the preferred will remain at the
$500million 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
firstinstitutional investment round. In addition, the MT Board authorized issuance of additional convertible preferred stock with the same terms to Platinum as compensation for the additional
$200,000of investments made in
May 2016.Based on the MT Board’s authorization of additional equity, the Company reclassified the additional
$200,000from a current liability to equity during the year ended
December 31, 2017.As of the date of filing of this Form
10-K, final documents related to the above transactions authorized by the MT Board have
The entire disclosure for the information summarizing investments in and advances to majority-owned subsidiaries, other controlled companies, and other affiliates. It reflects specified information about ownership, financial results from, and financial position in such entities.
Reference 1: http://www.xbrl.org/2003/role/presentationRef