Quarterly report pursuant to Section 13 or 15(d)

Significant Accounting Policies (Policies)

v3.19.1
Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
 
a.
Basis of Presentation:
The information presented as of
March 
31,
2019
and for the
three
-month periods ended
March 
31,
2019
and
2018
is unaudited, but includes all adjustments (which consist only of normal recurring adjustments) that the management of Navidea Biopharmaceuticals, Inc. (“Navidea”, the “Company,” or “we”) believes to be necessary for the fair presentation of results for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The balances as of
March 
31,
2019
and the results for the interim periods are
not
necessarily indicative of results to be expected for the year. The consolidated financial statements should be read in conjunction with Navidea’s audited consolidated financial statements for the year ended
December 
31,
2018,
which were included as part of our Annual Report on Form
10
-K.
 
Our consolidated financial statements include the accounts of Navidea and our wholly owned subsidiary, Navidea Biopharmaceuticals Limited, and our majority-owned subsidiary, Macrophage Therapeutics, Inc. (“MT”). All significant inter-company accounts were eliminated in consolidation.
 
On
April 18, 2019,
the Company’s Board of Directors approved a
one
-for-
twenty
reverse stock split of its issued and outstanding shares of common stock, effective at
12:01
am Eastern Time on
April 26, 2019.
As a result of the reverse split, each
twenty
pre-split shares of common stock outstanding automatically combined into
one
new share of common stock. The number of outstanding common shares was reduced from approximately
201.0
million to approximately
10.1
million shares. The authorized number of shares of common stock was
not
reduced and remains at
300.0
million. The par value of the Company’s common stock remains unchanged at
$0.001
per share after the reverse split. Our consolidated balance sheets, statements of operations, statements of stockholders’ equity, and accompanying notes to the financial statements have been restated, as required, for all periods presented to reflect the reverse stock split as if it had occurred on
January 1, 2018.
Our consolidated statements of cash flows were
not
impacted by the reverse stock split. See Note
17.
Fair Value of Financial Instruments, Policy [Policy Text Block]
 
b.
Financial Instruments and Fair Value:
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
 
 
(
1
)
Cash
and cash equivalents
, available-for-sale securities, accounts and other receivables, and accounts payable:
The carrying amounts approximate fair value because of the short maturity of these instruments.
 
 
(
2
)
Notes payable:
The carrying value of our debt at
March 31, 2019
and
December 
31,
2018
primarily consisted of the face amount of the notes plus accrued interest. At
March 31, 2019,
the fair value of our notes payable was approximately
$199,000,
equal to the carrying value of
$199,000.
At
December 31, 2018,
the fair value of our notes payable was approximately
$316,000,
equal to the carrying value of
$316,000.
See Note
9.
 
 
(
3
)
Derivative liabilities:
Derivative liabilities are related to certain outstanding warrants which are recorded at fair value. Derivative liabilities totaling
$63,000
as of
March 31, 2019
and
December 31, 2018
were included in other liabilities on the consolidated balance sheets. The assumptions used to calculate fair value as of
March 31, 2019
and
December 31, 2018
included volatility, a risk-free rate and expected dividends. In addition, we considered non-performance risk and determined that such risk is minimal. Unrealized gains and losses on the derivatives are classified in other expenses as a change in the fair value of financial instruments in the statements of operations. See Note
4.
Revenue [Policy Text Block]
 
c.
Revenue Recognition:
We currently generate revenue primarily from grants to support various product development initiatives. We generally recognize grant revenue when expenses reimbursable under the grants have been paid and payments under the grants become contractually due.
 
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
3.
New Accounting Pronouncements, Policy [Policy Text Block]
 
d.
Recent
ly Adopted
Accounting
Standards
:
In
February 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No.
2016
-
02,
Leases (Topic
842
)
. ASU
2016
-
02
requires the recognition of right-of-use lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The core principle of Topic
842
is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.
 
In
July 2018,
the FASB issued ASU
No.
2018
-
10,
Codification Improvements to Topic
842,
Leases
, and ASU
No.
2018
-
11,
Targeted Improvements to Topic
842,
Leases
. ASU
2018
-
10
updates Topic
842
in order to clarify narrow aspects of the guidance issued in ASU
2016
-
02,
Leases (Topic
842
)
. ASU
2018
-
11
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
840,
Leases
). An entity that elects this transition method must provide the required Topic
840
disclosures for all periods that continue to be in accordance with Topic
840.
The amendments in ASU
2018
-
10
and ASU
2018
-
11
are effective when ASU
2016
-
02
is effective, for fiscal years beginning after
December 15, 2018.
 
 
The Company adopted ASU
2016
-
02,
ASU
2018
-
10
and ASU
2018
-
11
effective
January 1, 2019
using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. Related to the adoption of these standards, the Company made a short-term lease accounting policy election allowing lessees to
not
recognize right-of-use assets and liabilities for leases with an initial term of
12
months or less.
 
The adoption of ASU
2016
-
02
resulted in the recognition of operating lease right-of-use assets and related lease liabilities of approximately
$407,000
on the consolidated balance sheet as of
January 1, 2019
related to our leases that were previously classified as operating leases, primarily for office space. The adoption of ASU
2016
-
02
did
not
materially impact our operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note
10.
 
In
June 2018,
the FASB issued ASU
No.
2018
-
07,
Compensation—Stock Compensation (Topic
718
) – Improvements to Nonemployee Share-Based Payment Accounting
. ASU
2018
-
07
expands the scope of Topic
718
to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic
718
to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASU
2018
-
07
specifies that Topic
718
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
718
does
not
apply to share-based payments used to effectively provide (
1
) financing to the issuer or (
2
) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic
606,
Revenue from Contracts with Customers
. ASU
2018
-
07
is effective for public business entities for fiscal years beginning after
December 15, 2018,
including interim periods within that fiscal year. The adoption of ASU
2018
-
07
did
not
have a significant impact on our consolidated financial statements.
 
In
July 2018,
the FASB issued ASU
No.
2018
-
09,
Codification Improvements
. ASU
2018
-
09
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
2018
-
09
were effective upon issuance, others are effective for annual periods beginning after
December 15, 2018
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
2018
-
09
did
not
have a significant impact on our consolidated financial statements.