We are subject to legal proceedings and claims that arise in the ordinary course of business.

 

 

As disclosed in the Company’s Annual Report on Form -K and other filings, the Company has been engaged in ongoing litigation with 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 the District Court of Harris County, Texas (the “Texas Court”) relating to CRG’s claims of default under the terms the CRG Loan Agreement. Following a trial in the Texas Court ruled that the Company’s total obligation to CRG was in excess of million, limited to million under the Global Settlement Agreement. The Texas Court acknowledged only the million payment made in concluding that the Company owed CRG another million, however the Texas Court did expressly take the Company’s payment of million into account and awarded, as part of the million, amounts that had already been paid as part of the million. The Company believes that this  million should be credited against the million and is currently appealing the Texas Court’s judgment.  The appeal is fully briefed and the parties await the court of appeals’ ruling.

 

On CRG drew approximately million on the Cardinal Health letter of credit.  These were funds to which Navidea would otherwise have been entitled. This was in addition to the million and the million that Navidea had previously paid to CRG.

 

The Company has also been engaged in ongoing litigation with CRG in the Court of Common Pleas of Franklin County, Ohio (the “Ohio Court”) related to Navidea’s claims that the Lenders fraudulently induced Navidea to enter into a settlement agreement and breached the terms of the same through certain actions taken by the Lenders in connection with the Global Settlement Agreement reached in pursuant to which Navidea agreed to pay up to million to Lenders, as well as through actions and misrepresentations by CRG after the Global Settlement Agreement was executed.  The currently pending claims in that suit are for breach of contract, conversion and unjust enrichment against the Lenders for their collection of more than million, the maximum permitted under the Global Settlement Agreement, and their double recovery of amounts paid as part of the million paid in and recovered again as part of the million. CRG’s double recovery and recovery of more than million are due to CRG drawing the entire million on the Cardinal Health letter of credit.  The Lenders sought a Writ of Prohibition in the Ohio Supreme Court to prevent this case from moving forward, which was denied, and proceedings have resumed in front of the Ohio Court. Following an unsuccessful mediation on discovery is ongoing in the case and it is anticipated that the Company will file a Motion for Summary Judgment sometime in

 

CRG filed another lawsuit in the Texas Court in This suit seeks a declaratory judgment that CRG did breach the Global Settlement Agreement by drawing the entire million on the Cardinal Health letter of Credit. CRG also alleges that the Company breached the Global Settlement Agreement by appealing the Texas Court’s judgment and by filing the suit in Franklin County, Ohio. The Company moved to dismiss CRG’s claims under the Texas Citizens’ Participation Act. The Texas Court denied the motion to dismiss. The Company filed an interlocutory appeal of the denial of its motion to dismiss. That appeal is fully briefed, and the parties await the court of appeals’ ruling. Proceedings in the Texas Court are stayed pending resolution of that appeal.  See Note

 

 

In Platinum-Montaur commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages of approximately million purportedly due as of plus interest accruing thereafter.  The claims asserted were for breach of contract and unjust enrichment in connection with funds received by the Company under the Platinum Loan Agreement.  The action was subsequently removed to the United States District Court for the Southern District of New York (the “District Court”).  On the District Court granted judgment for Navidea and dismissed all claims in the case.  The District Court stated that Platinum-Montaur had standing to assert any contractual interest in funds that might be due under the Platinum Loan Agreement.  The District Court also disagreed with Platinum-Montaur’s claim of unjust enrichment on similar grounds and found that Platinum-Montaur lacked any sufficient personal stake to maintain claims against Navidea.  The claims against Navidea were dismissed without prejudice on the grounds of lack of standing to pursue the claims asserted.

 

On Platinum-Montaur filed a notice of appeal with the United States Court of Appeals for the Second Circuit claiming that the District Court erred in dismissing Platinum-Montaur’s claims for breach of contract and unjust enrichment. On Platinum-Montaur filed its brief in the Second Circuit, asking the Second Circuit to reverse the District Court and remand the case to the District Court for further proceedings. On the Company filed its brief in the Second Circuit. It is known at this time whether the Second Circuit will hold oral argument on this matter or when the Second Circuit will render its decision. See Note

 

 

In Dr. Michael Goldberg resigned from his positions as an executive officer and a director of Navidea. In connection with Dr. Goldberg’s resignation, Navidea and Dr. Goldberg entered into an agreement (the “Agreement”), with the intent of entering into or more additional Definitive Agreements, which set forth the terms of the separation from service. Among other things, the Agreement provided that Dr. Goldberg would be entitled to shares of common stock of Navidea, representing in part payment of accrued bonuses and payment of the balance of the Platinum Note. A portion of the shares to be issued to Dr. Goldberg will be held in escrow for up to months in order to reimburse Navidea in the event that Navidea is obligated to pay any portion of the Platinum Note to a party other than Dr. Goldberg. Further, the Agreement provided that the Company’s subsidiary, MT, would redeem all of Dr. Goldberg’s preferred stock and issue to Dr. Goldberg super voting common stock equal to of the outstanding shares of MT. In the Company issued shares of common stock of Navidea to Dr. Goldberg, of which were placed in escrow in accordance with the Agreement. As of the date of filing this Quarterly Report on Form -Q, Definitive Agreements have been signed.

 

On Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On Navidea notified MT that it was terminating the sublicense effective because MT became insolvent pursuant to the sublicense agreement. On the Board of Directors of MT removed Dr. Goldberg as President and Chief Executive Officer of MT and from any other office of MT to which he have been appointed or in which he was serving. Dr. Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and Dr. Bruck remain members of the board of directors of Navidea. The MT Board then appointed Mr. Latkin to serve as President and Chief Executive Officer of MT.

 

On Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District of New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the Agreement as a result of Dr. Goldberg’s actions.  On Dr. Goldberg answered the complaint and asserted counterclaims against Navidea for breach of contract related to the Platinum Note, for tortious interference, and for breach of contract, fraud in the inducement, mutual mistake of fact, unilateral mistake of fact, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, a declaratory judgment, and injunctive relief in connection with the Agreement.  On Navidea filed an amended complaint against Dr. Goldberg which added a claim for breach of fiduciary duty seeking damages related to certain actions Dr. Goldberg took while CEO of Navidea.

 

Also on MT initiated a suit against Dr. Goldberg in the Court of Chancery of the State of Delaware, alleging, among other things, breach of fiduciary duty as a director and officer of MT and conversion, and to obtain a declaratory judgment that the transactions Dr. Goldberg caused MT to enter into are void.  On the Court of Chancery entered an order maintaining status quo, which provided, among other things, that MT’s board of directors authorize any act or transaction on behalf of the Company, and that without prior written authorization of the MT board, Dr. Goldberg shall hold himself out as CEO of MT or purport to act or authorize any action on behalf of MT except as authorized by the MT board.

 

On Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern District of New York.  The complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr. Goldberg funds allegedly due to him under the Platinum Note.  The complaint further alleges a breach of contract claim against Navidea due to Navidea’s failure to issue shares to Dr. Goldberg, to issue MT super voting common stock, by removing Dr. Greene from the MT board of directors, by appointing Mr. Rice and Dr. Bruck to the MT board of directors, and by terminating Dr. Goldberg as CEO of MT.  On Navidea moved to dismiss the claims related to the Platinum Note and MT filed an answer to the complaint.  See Note

 

 

On the Company received a notification (the “Deficiency Letter”) from the NYSE American stating that Navidea was in compliance with certain NYSE American continued listing standards relating to stockholders’ equity. Specifically, the Deficiency Letter stated that Navidea is in compliance with Section (a)(ii) of the NYSE American Company Guide, which requires an issuer to have stockholders’ equity of million or more if it has reported losses from continuing operations and/or net losses in of its most recent fiscal years. The Deficiency Letter noted that Navidea had stockholders’ equity of million as of and had reported net losses in of its most recent fiscal years ended

 

Navidea was required to submit a plan to the NYSE American by advising of actions it has taken or will take to regain compliance with the continued listing standards by Navidea submitted a plan by the deadline.

 

On the Company received a notification (the “Acceptance Letter”) from the NYSE American that the Company’s plan to regain compliance was accepted. The Acceptance Letter also stated that the NYSE American had inadvertently omitted an additional deficiency from the Deficiency Letter. Specifically, the Deficiency Letter should have stated that Navidea is in compliance with Section (a)(iii) of the NYSE American Company Guide, which requires an issuer to have stockholders’ equity of million or more if it has reported losses from continuing operations and/or net losses in its most recent fiscal years. The Acceptance Letter noted that Navidea had stockholders’ equity of million as of and had reported losses from continuing operations and/or net losses in its most recent fiscal years ended

 

The Company is required to provide quarterly updates to the NYSE American staff (the “Staff”) concurrent with its interim/annual SEC filings. If Navidea fails to regain compliance with the stockholders’ equity standards by the NYSE American would commence delisting procedures.

 

In addition, the Deficiency Letter stated that the Staff determined that the Company’s securities have been selling for a low price per share for a substantial period of time and, pursuant to Section (f)(v) of the NYSE American Company Guide, Navidea’s continued listing is predicated on it effecting a reverse stock split of its common stock, par value per share (“Common Stock”) or otherwise demonstrating sustained price improvement within a reasonable period of time. The Staff initially granted Navidea a plan period through to regain compliance with Section (f)(v) by effecting a reverse stock split or otherwise demonstrating sustained price improvement.

 

On the Company received a notice from the NYSE American that they had granted the Company an extension until to regain compliance with Section (f)(v) of the NYSE American’s continued listing standards, and on Navidea announced that it was in discussions with the NYSE American regarding the timing of a potential reverse stock split later than

 

On the Company received a notification (the “NYSE Letter”) from the NYSE American stating that Navidea was in compliance with Section (a)(i) of the NYSE American Company Guide, which requires an issuer to have stockholders’ equity of million or more if it has reported losses from continuing operations and/or net losses in of its most recent fiscal years. The NYSE Letter noted that Navidea’s most recent Form -K reported stockholders’ equity of million as of and that Navidea has reported losses from continuing operations and/or net losses in its most recent fiscal years ended The NYSE Letter advised that the Company must provide the NYSE American with a plan to regain compliance with the price standard by in order to be considered for continued trading through its equity plan period end date of subject to periodic review of progress consistent with the equity plan.

 

As previously disclosed, at the Company’s Annual Meeting of Stockholders held on the Company’s stockholders approved a proposal authorizing the Company’s Board of Directors to effect a reverse stock split by a ratio of less than -for- and more than -for-twenty. On the Company’s Board of Directors approved a -for- reverse stock split of its issued and outstanding shares of common stock, effective at am Eastern Time on Shares of the Company’s common stock began trading on a split-adjusted basis when the NYSE American market opened on that date. The reverse stock split was effected as part of the Company's plan to regain compliance with the minimum bid price continued listing requirement of the NYSE American. See Note

 

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. Although the outcome of any litigation is uncertain, in our opinion, the amount of ultimate liability, if any, with respect to these actions, will materially affect our financial position.