Navidea’s Manocept platform is predicated on the ability to specifically target the mannose receptor expressed on activated macrophages. The Manocept platform serves as the molecular backbone of tilmanocept, the product developed and commercialized by Navidea based on the platform.

 

On pursuant to an Asset Purchase Agreement dated the Company completed its previously announced sale to Cardinal Health 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 (giving effect to the License-Back described below and excluding certain assets specifically retained by the Company). 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. Upon closing of the Asset Sale, the Supply and Distribution Agreement, dated as amended, between Cardinal Health and the Company was terminated and, as a result, the provisions thereof are of further force or effect.

 

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.

 

Other than tilmanocept, which the Company has a license to distribute outside of Canada, Mexico and the United States, of the Company’s drug product candidates have been approved for sale in any market.

 

In MT, a majority-owned subsidiary, was formed specifically to explore immuno-therapeutic applications for the Manocept platform.

 

In we established a European business unit, Navidea Biopharmaceuticals Limited, to address international development and commercialization needs for our technologies, including tilmanocept. Navidea owns of the outstanding shares of Navidea Biopharmaceuticals Limited.

 

In we acquired Cardiosonix Ltd. (“Cardiosonix”), an Israeli company with a blood flow measurement device product line in the early stages of commercialization. In the Company’s Board of Directors decided to discontinue the operations and attempt to sell Cardiosonix. However, we were obligated to continue to service and support the Cardiosonix devices through The Company did receive significant expressions of interest in the Cardiosonix business and it was legally dissolved in

 

 

 

 

– Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

– Quoted prices in markets that are active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

 

– 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 price transparency are classified as Level See Note

 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

 

 

 

 

 

 

Stock options granted under the Plan and the Plan generally vest on an annual basis over to years. Outstanding stock options under the plans, if exercised, generally expire years from their date of grant or up to days following the date of an optionee’s separation from employment with the Company. We issue new shares of our common stock upon exercise of stock options.

 

Stock-based payments to employees and directors, including grants of stock options, are recognized in the consolidated statement of operations based on their estimated fair values. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on the Company’s historical volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current circumstances. Navidea uses historical data to estimate forfeiture rates. The expected term of stock options granted is based on the vesting period and the contractual life of the options. The risk-free rate is based on the U.S. Treasury yield in effect at the time of the grant. The assumptions used to calculate the fair value of stock option awards granted during the years ended and are noted in the following table:

 

		2018					2017
Expected volatility		64%	-	76%			66%	-	79%
Weighted-average volatility		69%					75%
Expected dividends		—					—
Expected term (in years)		5.5	-	6.0			5.0	-	6.0
Risk-free rate		2.6%	-	2.7%			1.8%	-	2.1%

 

The portion of the fair value of stock-based awards that is ultimately expected to vest is recognized as compensation expense over either () the requisite service period or () the estimated performance period. Restricted stock awards are valued based on the closing stock price on the date of grant and amortized ratably over the estimated life of the award. Restricted stock vest based on the passage of time, or upon occurrence of a specific event or achievement of goals as defined in the grant agreements. In such cases, we record compensation expense related to grants of restricted stock based on management’s estimates of the probable dates of the vesting events. Stock-based awards that do vest because the requisite service period is met prior to termination result in reversal of previously recognized compensation cost. See Note

 

 

 

 

 

 

 

 

 

 

We also earn revenues related to our licensing and distribution agreements. The consideration we are eligible to receive under our licensing and distribution agreements typically includes upfront payments, reimbursement for research and development costs, milestone payments, and royalties. Each licensing and distribution agreement is unique and requires separate assessment in accordance with current accounting standards. See Note

 

 

 

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, liability for uncertain tax positions was recorded as of or and we do expect any significant changes in the next 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 tax years - remained subject to examination by federal and state tax authorities. See Note

 

 

In the FASB issued ASU - . ASU - requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash or equivalents. Therefore, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU - is effective for public business entities for fiscal years beginning after and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts ASU - in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. We adopted ASU - effective The adoption of ASU - resulted in reclassification of million of restricted cash in the consolidated statement of cash flows for the year ended

 

In the FASB issued ASU - . ASU - provides a screen to determine when a set of assets and activities (collectively, a “set”) is a business. The screen requires that when substantially all of the fair market value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is a business. If the screen is met, ASU - () requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and () removes the evaluation of whether a market participant could replace missing elements. ASU - is effective for public business entities for annual periods beginning after including interim periods within those periods. ASU - should be applied prospectively on or after the effective date. disclosures are required at transition. Early adoption is permitted for certain transactions as described in ASU - We adopted ASU - effective The adoption of ASU - did have a material effect on our consolidated financial statements.

 

In the FASB issued ASU - . ASU - provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following criteria are met: () The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is required to estimate the value immediately before and after the modification. () The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. () The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. Disclosure requirements remain unchanged. ASU - is effective for all entities for annual periods, and interim periods within those annual periods, beginning after Early adoption is permitted as described in ASU - We adopted ASU - effective The adoption of ASU - did have a material effect on our consolidated financial statements.

 

In the FASB issued ASU - . ASU - amends Accounting Standards Codification (“ASC”) Topic to provide guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the “Tax Act”) pursuant to Staff Accounting Bulletin ASU - addresses situations where the accounting under ASC Topic is incomplete for certain income tax effects of the Tax Act upon issuance of the entity’s financial statements for the reporting period in which the Tax Act was enacted. The adoption of ASU - in did have a material effect on our consolidated financial statements.

 

 

In the FASB issued ASU - . ASU - expands the scope of Topic to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASU - specifies that Topic applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards, and that Topic does apply to share-based payments used to effectively provide () financing to the issuer or () awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic . ASU - is effective for public business entities for fiscal years beginning after including interim periods within that fiscal year. The adoption of ASU - is expected to have a significant impact on our consolidated financial statements.

 

In the FASB issued ASU - . ASU - updates a variety of topics in order to clarify, correct errors, or make minor improvements to the Codification, making it easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. Certain amendments in ASU - are effective upon issuance, others are effective for annual periods beginning after for public business entities, and some have been made to recently issued guidance and will be subject to the effective dates within the relevant guidance. The adoption of ASU - is expected to have a significant impact on our consolidated financial statements.

 

Also in the FASB issued ASU - , and ASU - . ASU - updates Topic in order to clarify narrow aspects of the guidance issued in ASU - . ASU - provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic ). An entity that elects this transition method must prove the required Topic disclosures for all periods that continue to be in accordance with Topic The amendments in ASU - and ASU - are effective when ASU - is effective, for fiscal years beginning after We do expect the adoption of ASU - and ASU - to have a significant impact on our consolidated financial statements.

 

In the FASB issued ASU - . ASU - modifies the disclosure requirements on fair value measurements in Topic Fair Value Measurement, including the consideration of costs and benefits. ASU - removes the requirements to disclose () the amount of and reasons for transfers between Level and Level of the fair value hierarchy, () the policy for timing of transfers between levels, () the valuation processes for Level fair value measurements, and () for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level fair value measurements held at the end of the reporting period. ASU - also modifies certain disclosure requirements as follows: () in lieu of a rollforward for Level fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level and purchase and issuances of Level assets and liabilities, () for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly, and () the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Finally, ASU - adds the requirements to disclose () the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level fair value measurements held at the end of the reporting period, and () the range and weighted average of significant unobservable inputs used to develop Level fair value measurements. The amendments in ASU - are effective for fiscal years, and interim periods within those fiscal years, beginning after We do expect the adoption of ASU - to have any impact on our consolidated financial statements, however it have an impact on our fair value disclosures.