Note 1 - Organization and Summary of Significant Accounting Policies
|12 Months Ended|
Dec. 31, 2020
|Notes to Financial Statements|
|Significant Accounting Policies [Text Block]||
Navidea's Manocept platform is predicated on the ability to specifically target the
CD206mannose receptor expressed on activated macrophages. The Manocept platform serves as the molecular backbone of
firstproduct developed and commercialized by Navidea based on the platform. Other than
Tc99mtilmanocept, which the Company has a license to distribute outside of Canada, Mexico and the United States,
noneof the Company's drug product candidates have been approved for sale in any market.
July 2011,we established a British business unit, Navidea Biopharmaceuticals Limited (“Navidea UK”), to address European and international development and commercialization needs for our technologies, including
Tc99mtilmanocept. Navidea owns
100%of the outstanding shares of Navidea UK.
January 2015,Macrophage Therapeutics, Inc. (“MT”) was formed specifically to explore immuno-therapeutic applications for the Manocept platform. Navidea owns
99.9%of the outstanding shares of MT.
June 2020,in anticipation of the United Kingdom's separation from the European Union (“Brexit”), we established an Irish entity, Navidea Biopharmaceuticals Europe Limited (“Navidea Europe”). Following Brexit, Navidea Europe allows us to continue to develop and commercialize our technologies within the European Union (“EU”) as well as internationally. Navidea owns
100%of the outstanding shares of Navidea Europe.
April 26, 2019,the Company effected a
twentyreverse stock split of its issued and outstanding shares of its common stock, par value
$.001per share (“Common Stock”). As a result of the reverse split, each
twentypre-split shares of Common Stock outstanding automatically combined into
onenew share of Common Stock. The number of outstanding shares of Common Stock was reduced from approximately
201.0million to approximately
10.1million shares. The authorized number of shares of Common Stock was
notreduced and remains at
300.0million. The par value of the Company's Common Stock remained unchanged at
$0.001per share after the reverse split. Our consolidated balance sheets, statements of operations, statements of stockholders' equity (deficit), 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, 2019.Our consolidated statements of cash flows were
notimpacted by the reverse stock split.
Stock options granted under the
2002Plan and the
2014Plan generally vest on an annual basis over
fouryears. Outstanding stock options under the plans, if
notexercised, generally expire
tenyears from their date of grant or up to
90days 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 and restricted stock, are recognized in the statements of operations based on their estimated fair values on the date of grant, subject to an estimated forfeiture rate. The fair value of each option award with time-based vesting provisions is estimated on the date of grant using the Black-Scholes option pricing model. The determination of fair value using the Black-Scholes option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option behaviors. The fair value of each option award with market-based vesting provisions is estimated on the date of grant using a Monte Carlo simulation. The determination of fair value using a Monte Carlo simulation is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option behaviors.
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
December 31, 2020and
2019are noted in the following table:
The portion of the fair value of stock-based awards that is ultimately expected to vest is recognized as compensation expense over either (
1) the requisite service period or (
2) 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
mayvest 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
notvest because the requisite service period is
notmet 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
December 31, 2020or
2019and we do
notexpect any significant changes in the next
twelvemonths. 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
December 31, 2020,tax years
2020remained subject to examination by federal and state tax authorities. See Note
July 2018,the FASB issued ASU
Codification Improvements to Topic, and ASU
Targeted Improvements to Topic. ASU
842in order to clarify narrow aspects of the guidance issued in ASU
Leases (Topic. ASU
11provides 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 U.S. GAAP (Topic
Leases). An entity that elects this transition method must provide the required Topic
840disclosures for all periods that continue to be in accordance with Topic
840.The amendments in ASU
11are effective when ASU
02is effective, for fiscal years beginning after
December 15, 2018.
The Company adopted ASU
January 1, 2019using 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
notrecognize right-of-use assets and liabilities for leases with an initial term of
12months or less.
The adoption of ASU
02resulted in the recognition of operating lease right-of-use assets and related lease liabilities of approximately
on the consolidated balance sheet as of
January 1, 2019related to our leases that were previously classified as operating leases, primarily for office space. The adoption of ASU
notmaterially impact our operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note
June 2018,the FASB issued ASU
Stock Compensation (Topic. ASU
718): Improvements to Nonemployee Share-Based Payment Accounting
07expands the scope of Topic
718to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic
718to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASU
07specifies that Topic
718applies 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
notapply 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
Revenue from Contracts with Customers. ASU
07is effective for public business entities for fiscal years beginning after
December 15, 2018,including interim periods within that fiscal year. The adoption of ASU
nothave a significant impact on our consolidated financial statements.
July 2018,the FASB issued ASU
Codification Improvements. ASU
09updates 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
09were effective upon issuance, others are effective for annual periods beginning after
December 15, 2018for 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
nothave a significant impact on our consolidated financial statements.
August 2018,the FASB issued ASU
Fair Value Measurement (Topic
Changes to the Disclosure Requirements for Fair Value Measurement. ASU
13is intended to improve the effectiveness of disclosure requirements on fair value measurements in Topic
13modifies certain disclosure requirements and is effective for annual and interim reporting periods beginning after
December 15, 2019.The adoption of ASU
nothave any impact on our consolidated financial statements or our fair value disclosures.
August 2020,the FASB issued ASU
Accounting for Convertible Instruments and Contracts in an Entity'
s Own Equity. ASU
06was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. ASU
06reduces the number of accounting models for convertible debt instruments and convertible preferred stock and improves the disclosures for convertible instruments and related earnings-per-share (“EPS”) guidance. ASU
06also amends the guidance for the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance. ASU
06is effective for public business entities except smaller reporting companies for annual and interim reporting periods beginning after
December 15, 2021,and for annual and interim reporting periods beginning after
December 15, 2023for all other entities. Early adoption is permitted, but the guidance must be adopted as of the beginning of a fiscal year. We are currently evaluating the impact of potential early adoption of ASU
06on our consolidated financial statements.
The entire disclosure for all significant accounting policies of the reporting entity.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef