Note 7 - Investment in Macrophage Therapeutics, Inc.
|6 Months Ended|
Jun. 30, 2019
|Notes to Financial Statements|
|Investments in and Advances to Affiliates, Schedule of Investments [Text Block]||
August 2018,the Company entered into an Agreement (the “Agreement”) with Dr. Michael Goldberg related to his resignation from his positions as an executive officer and a director of Navidea. Among other things, the Agreement provided that Dr. Goldberg would become Chief Executive Officer of MT, and that MT would redeem all of Dr. Goldberg’s MT preferred stock and issue to Dr. Goldberg MT super voting common stock equal to
5%of the outstanding shares of MT, subject to execution of
oneor more additional definitive agreements (the “Definitive Agreements”). As of the date of filing of this Quarterly Report on Form
10-Q, Definitive Agreements have
notyet been signed.
February 11, 2019,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
February 19, 2019,Navidea notified MT that it was terminating the sublicense effective
March 1, 2019because MT became insolvent pursuant to the sublicense agreement. On
February 20, 2019,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
mayhave 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.
February 20, 2019,Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District of New York (the “New York Court”), 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
April 26, 2019,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. On
June 13, 2019,Dr. Goldberg answered the amended complaint and asserted counterclaims against Navidea and
third-party claims against MT for breach of the Agreement, wrongful termination, injunctive relief, and quantum meruit. Dr. Goldberg also filed a motion to dismiss Navidea’s breach of fiduciary duty claim and for an order granting Dr. Goldberg advancement of defense costs, attorneys’ fees and sanctions. Navidea has opposed the motion. On
July 5, 2019,Navidea and MT moved to dismiss certain of Dr. Goldberg’s claims. Dr. Goldberg has opposed the motion. The motions have
notbeen ruled upon.
February 20, 2019,MT initiated a suit against Dr. Goldberg in the Court of Chancery of the State of Delaware (the “Delaware Court”), 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 effect are void. On
June 12, 2019,Vice Chancellor Joseph Slights of the Delaware Court found that Dr. Goldberg’s actions were
notauthorized in compliance with the Delaware General Corporate Law. Specifically, the Delaware Court found that Dr. Goldberg’s creation of a new subsidiary of MT and the purported assignment by Dr. Goldberg of MT’s intellectual property to that subsidiary were void. The Delaware Court’s ruling follows the order on
May 23, 2019in the case, in which it found Dr. Goldberg in contempt of its prior order holding Dr. Goldberg responsible for the payment of MT’s fees and costs to cure the damages caused by Dr. Goldberg’s contempt. MT’s claims for breach of fiduciary duty and conversion against Dr. Goldberg remain pending. As a result of the Delaware Court’s ruling and Navidea’s prior termination of the sub-license between itself and MT, all of the intellectual property related to the Manocept platform is now directly controlled by Navidea.
July 26, 2019,Dr. Goldberg also served shareholder demands on the Boards of Navidea and MT repeating many of the claims made in the above lawsuits. The respective boards will respond to Dr. Goldberg’s demands as appropriate. See Note
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://fasb.org/us-gaap/role/ref/legacyRef