Annual report pursuant to Section 13 and 15(d)

Note 12 - Notes Payable

v3.20.1
Note 12 - Notes Payable
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Debt Disclosure [Text Block]
1
2
.
Notes Payable
 
Platinum-Montaur Life Sciences LLC
 
In
July 2012,
we entered into an agreement with Platinum-Montaur to provide us with a credit facility of up to
$50
million (the “Platinum Loan Agreement”). In
November 2018,
the Company issued
925,000
shares of our Common Stock to Dr. Goldberg, of which approximately
817,857
shares valued at
$3.2
million were applied as final payment of the Platinum debt, including principal and accrued interest of
$2.2
million and loss on extinguishment of debt of
$1.0
million. During the year ended
December 31, 2018,
$153,000
of interest was compounded and added to the balance of the Platinum debt. See Notes
2
and
14.
 
Capital Royalty Partners II, L.P.
 
In
May 2015,
Navidea and MT, as guarantor, executed a Term Loan Agreement (the “CRG Loan Agreement”) 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 which the Lenders agreed to make a term loan to the Company in the aggregate principal amount of
$50.0
million (the “CRG Term Loan”). Closing and funding of the CRG Term Loan occurred on
May 15, 2015 (
the “Effective Date”). The principal balance of the CRG Term Loan bore interest from the Effective Date at a per annum rate of interest equal to
14.0%.
The Company initially had the option of paying (i)
10.00%
of the per annum interest in cash and (ii)
4.00%
of the per annum interest as compounded interest which is added to the aggregate principal amount of the CRG Term Loan. During
2015
and
2016,
a total of
$1.8
million of interest was compounded and added to the balance of the CRG Term Loan. In addition, the Company began paying the cash portion of the interest in arrears on
June 30, 2015.
Principal was due in
eight
equal quarterly installments during the final
two
years of the term. All unpaid principal, and accrued and unpaid interest, was due and payable in full on
March 31, 2021.
Pursuant to a notice of default letter sent to Navidea by CRG in
April 2016,
the Company stopped compounding interest in the
second
quarter of
2016
and began recording accrued interest.
 
The CRG Term Loan was collateralized by a security interest in substantially all of the Company's assets. In addition, the CRG Loan Agreement required that the Company adhere to certain affirmative and negative covenants, including financial reporting requirements and a prohibition against the incurrence of indebtedness, or creation of additional liens, other than as specifically permitted by the terms of the CRG Loan Agreement. The Lenders could accelerate the payment terms of the CRG Loan Agreement upon the occurrence of certain events of default set forth therein. An event of default would entitle CRG to accelerate the maturity of the CRG Term Loan, increase the interest rate from
14%
to the default rate of
18%
per annum, and invoke other remedies available to it under the loan agreement and the related security agreement.
 
During the course of
2016,
CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas (the “Texas Court”) on
April 7, 2016.
On
June 22, 2016,
CRG exercised control over
one
of the Company’s primary bank accounts and took possession of
$4.1
million that was on deposit, applying
$3.9
million of the cash to various fees, including collection fees, a prepayment premium and an end-of-term fee. The remaining
$189,000
was applied to the principal balance of the debt. Multiple motions, actions and hearings followed over the remainder of
2016
and into
2017.
 
On
March 3, 2017,
the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health
414.
In accordance with a Global Settlement Agreement, on
March 3, 2017,
the Company repaid
$59.0
million of its indebtedness and other obligations outstanding under the CRG Term Loan.
 
Following a trial in
December 2017,
the Texas Court ruled that the Company’s total obligation to CRG was in excess of
$66.0
million, limited to
$66.0
million under the Global Settlement Agreement. The Texas Court acknowledged only the
$59.0
million payment made in
March 2017,
concluding that the Company owed CRG another
$7.0
million, however the Texas Court did
not
expressly take the Company’s
June 2016
payment of
$4.1
million into account and awarded, as part of the
$66.0
million, amounts that had already been paid as part of the
$4.1
million. In
April 2018,
CRG drew approximately
$7.1
million on a letter of credit that was established pursuant to the Global Settlement Agreement. This was in addition to the
$4.1
million and the
$59.0
million that Navidea had previously paid to CRG. See Notes
2
and
14.
 
I
PFS Corporation
 
In
November 2017,
we prepaid
$396,000
of insurance premiums through the issuance of a note payable to IPFS Corporation (“IPFS”) with an interest rate of
4.0%.
The note was payable in
ten
monthly installments of
$40,000,
with the final payment made in
August 2018.
In
November 2018,
we prepaid
$393,000
of insurance premiums through the issuance of a note payable to IPFS with an interest rate of
5.1%.
The note was payable in
ten
monthly installments of
$40,000,
with the final payment made in
August 2019.
 
Interest expense related to the IPFS notes payable totaled
$6,000
and
$8,000
during the years ended
December 31, 2019
and
2018,
respectively. The balance of the IPFS note was approximately
$316,000
as of
December 31, 2018,
and was included in notes payable, current in the consolidated balance sheets.
 
First Insurance Funding
 
In
November 2019,
we prepaid
$349,000
of insurance premiums through the issuance of a note payable to First Insurance Funding (“FIF”) with an interest rate of
5.0%.
The note is payable in
eight
monthly installments of
$44,000,
with the final payment due in
July 2020.
 
Interest expense related to the FIF note payable totaled
$1,000
during the year ended
December 31, 2019.
The balance of the FIF note was approximately
$306,000
as of
December 31, 2019,
and was included in notes payable, current in the consolidated balance sheets.
 
Summary
 
During the years ended
December 31, 2019
and
2018,
we recorded interest expense of
$8,000
and
$161,000,
respectively, related to our notes payable. Of those amounts,
$0
and
$153,000
was compounded and added to the balance of the Platinum debt during the year ended
December 31, 2018.
 
Annual principal maturities of our notes payable are
$306,000
in
2020.