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 has appealed the Texas Court’s judgment.  The Court of Appeals dismissed the Company’s appeal without reaching the merits due to a contractual waiver of appeal. The Company is currently considering whether to file a petition for review with the Texas Supreme Court challenging this ruling.

 

On CRG drew approximately million on the Cardinal Health LLC (“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 Navidea moved for Summary Judgment on It is anticipated that the Ohio Court will take the Summary Judgment matter under advisement shortly with a written decision to be issued in the future.

 

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 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. Oral argument has been scheduled before the Second Circuit on and the court will issue its decision at some time thereafter. 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 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 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 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 Dr. Goldberg answered the amended complaint and asserted counterclaims against Navidea and -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 Navidea and MT moved to dismiss certain of Dr. Goldberg’s claims.  Dr. Goldberg has opposed the motion.  The motions have been ruled upon.

 

Also on MT initiated a suit against Dr. Goldberg in 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 Vice Chancellor Joseph Slights of the Delaware Court found that Dr. Goldberg’s actions were authorized 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 in 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. 

 

On 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

 

 

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

 

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 was 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. 

 

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.

 

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 also required the Company to regain compliance with the price standard 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. Accordingly, the Company effected a -for- reverse split of its issued and outstanding common stock on

 

On the Company received a notification (the “Price Compliance Letter”) from the NYSE American that the reverse stock split successfully brought the Company back in compliance with the continued listing standards with respect to low selling price as described in Section (f)(v).  The Price Compliance Letter also noted that the Company continues to be below compliance with Sections (a)(i), (a)(ii) and (a)(iii), and that if the Company fails to regain compliance with the stockholders’ equity standards by the NYSE American will commence delisting procedures.

 

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.